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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 27, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-14018
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Norrell Corporation
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(Exact name of Registrant as specified in its charter)
Georgia 58-0953079
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(State or other jurisdiction of (I.R.S.
Employer incorporation or organization) Identification No.)
3535 Piedmont Road N.E., Atlanta, Georgia 30305
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (404) 240-3000
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Securities registered pursuant to Section 12(b) of the Act: None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
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(Title of class)
Indicate by check mark whether 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
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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 the voting stock held by non-affiliates
of the Registrant, as of December 31, 1996, was approximately $290,918,275. This
amount excludes a total of 10,545,377 shares of Common Stock owned either
directly or beneficially by officers, directors and principal stockholders of
the Registrant, who may be deemed to be affiliates under applicable rules of the
Securities and Exchange Commission. As of December 31, 1996, there were
23,885,662 shares of Registrant's Common Stock, no par value, outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement to be mailed to stockholders
in connection with the Company's annual meeting of stockholders, scheduled to be
held on March 4, 1997, are incorporated by reference in Part III of this report.
Except for the portions expressly incorporated by reference, the Company's Proxy
Statement shall not be deemed to be a part of this report.
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PART I
ITEM 1. BUSINESS
GENERAL
Norrell Corporation (the "Company" or "Norrell"), incorporated in 1965
as a Georgia corporation, is a leading national provider of staffing,
outsourcing and professional services to businesses, professional and service
organizations and government agencies. The Company provides a broad range of
services through its national network of 132 Company-owned locations, 115
outsourcing services locations, 133 franchised locations, and 32 professional
services offices as of December 22, 1996. More than 19,000 clients (including
subsidiaries and affiliated companies) in North America were served by the
Company during its latest fiscal year. The Company is benefiting from a
continuing trend toward staffing and outsourcing services and the Company's
implementation of its business strategy. Based upon revenues, the Company's
management believes that it is one of the largest companies in its industry in
North America.
As a national provider of temporary personnel and staffing services,
the Company supplies its clients with the services of individuals having a wide
variety of office, light industrial and other skills, including secretarial,
word processing, data entry, telemarketing, assembly, picking, packing and
sorting, and shipping and receiving. The Company also provides home health aides
and related services to government agencies or home health agencies in the
states of New York, New Jersey and Pennsylvania.
In addition to providing temporary personnel and staffing services,
the Company provides its clients with outsourcing solutions in a wide range of
office and business functions including administrative services, site services,
teleservices, accounting services, information systems, document processing,
data entry services and integrated service offerings. The Company also provides
hospitals with outsourcing solutions in certain office and business functions.
During fiscal 1996, the Company formalized its human resources services offering
and provides clients with recruitment, interviewing, assessment, and other
services associated with the workforce selection process. With its outsourcing
offering, the Company assumes responsibility for the function and its results,
including management of the people, service delivery process and technology
resources.
The Company also provides clients with a range of professional
services. During fiscal 1996, the Company acquired the capability to provide
services in the information technology field. The Company provides computer
professionals for both short-term and long-term assignments, including systems
analysts, computer programmers and computer technicians. The Company also
provides various computer consulting services such as system planning and
development, organizational consulting for business transformation, software
systems integration services and project management services. The Company also
offers professional services in the financial area, and provides clients with
temporary and permanent employees to perform accounting, bookkeeping and other
financial services.
The Company offers its staffing, outsourcing and professional services
through a number of affiliated companies and divisions, including Norrell
Services, Inc. ("Norrell Services"), and Tascor Incorporated ("Tascor"). Norrell
Health Care, Inc. provides home health aides, primarily in the states of New
York, New Jersey and Pennsylvania and Norrell Financial Staffing, a division of
Norrell Services, provides clients with temporary and permanent employees to
perform financial services. HealthTask Corporation, a joint venture between the
Company, Tascor and Ernst & Young U.S. LLP, provides hospitals with outsourcing
solutions in certain office and business functions. Two companies acquired
during fiscal year 1996 - Analytical Technologies, Inc. and ANATEC Canada, Inc.
(collectively referred to as "ANATEC") and American Technical Resources, Inc.,
("ATR") - and a third company acquired effective January 2, 1997 - Comtex
Information Systems, Inc., ("Comtex") - provide professional services in the
information technology field. Two joint venture companies - Norcross
Teleservices, Inc., and CallTask Incorporated - provide outsourcing solutions in
the teleservices arena.
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STRATEGY
The Company's overall business strategy is focused on: (i) providing a
seamless "spectrum of services" to its clients including traditional temporary
services, short-term and long-term staffing, value-added outsourcing solutions,
and professional services; (ii) establishing the Company as a recognized high
quality service provider; and (iii) continuing to grow the Company's existing
base of business by developing new product offerings from existing services,
expanding into additional skill classes, functional areas and technology, and
entering into selected new markets. In 1996, the Company: 1) expanded its
capabilities in higher-growth, higher-margin services, such as teleservices and
information technology services; 2) continued to re-engineer its service
delivery process to enhance customer satisfaction; and 3) continued to focus
upon operational factors that increase efficiency and profitability.
For clients committed to high-quality, value-added services, the
Company offers strategic workforce management, designed to strengthen a client's
organizational effectiveness and flexibility. The Company partners with these
clients to diagnose workforce problems and design an integrated service
solution, ranging from short-term staff augmentation to comprehensive workforce
structures that include dedicated management teams.
SPECTRUM OF SERVICES
The services provided by the Company can be viewed as a spectrum
ranging from traditional temporary services to value-added outsourcing
solutions.
NORRELL CORPORATION'S SPECTRUM OF SERVICES
[GRAPH]
Traditional Temporary Services. Traditional temporary personnel may be
assigned for either a specified or indefinite period of time as necessary to
meet the needs of clients. The expense and inconvenience to a client of
recruiting employees, including advertising, interviewing and testing,
conducting reference and background checks and drug testing are reduced when
temporary personnel are engaged. Use of these services also enables the client
to eliminate or reduce record keeping, expenses associated with fringe benefits,
turnover and related employee costs usually associated with its personnel. A
client pays only for actual hours worked by temporary personnel and may
terminate the use of temporary services without the adverse effects of layoffs.
Staffing Services. The Company offers both short-term and long-term
staffing options tailored to specific client needs. Through short-term staffing,
also known as project or peak period staffing, the Company can meet fluctuating
staffing requirements quickly and easily, helping clients maintain high levels
of productivity without the need to add permanent staff. Short-term staffing is
typically an assignment of less than six months and involves one-time, seasonal
or recurring use of at least five temporary employees. Through long-term
staffing, the Company provides and supervises temporary employees for functions
or departments on an extended basis. Long-term staffing typically involves
staffing specific positions for six months or more.
Managed Staffing. The Company also emphasizes managed staffing, which
is the staffing of positions with personnel on a planned and continuing basis,
in most cases with an on-site Norrell manager who is trained to
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manage the contingent workforce process. Managed staffing represents a
cost-effective solution for employers who spend a significant amount of
administrative and personnel department time managing employees whose jobs are
generally routine and are characterized by high turnover rates and also for
employers in industries with fluctuating personnel needs. Such employers use
staffing personnel as a valuable management tool to control overhead costs and
enhance profitability. Examples of managed staffing clients of the Company
include customer service centers, distribution centers, and various light
manufacturing and packaging businesses. The Company's managed staffing business
grew 26.9% during fiscal 1996 from $65.3 million in revenues in fiscal 1995 to
$82.9 million in revenues in fiscal 1996.
Master Vendor Partnering ("MVP"). The Company offers its MVP program
to its clients in conjunction with its other service offerings. Under the MVP
program the Company will, in addition to providing traditional temporary
services or managed staffing, assume responsibility for coordinating all of the
client's temporary help or staffing functions for one or more client locations.
This coordination includes taking and filling client orders for services,
employee scheduling, new employee orientation, personnel management, quality
reviews, and payroll and invoice processing. These functions are handled by a
Norrell on-site contract manager at the client location. As the Master Vendor,
the Company establishes relationships with other service providers which may be
used as specialty subcontractors to provide services in the event the Company
does not fill an order with its own personnel. These subcontractors receive
orders for services from the Company, usually sign a subcontract agreement with
Norrell, render their invoices directly to the Company, and are paid by the
Company. The Company provides the client with a single aggregated bill for all
of the services provided by Norrell and any subcontractors. The client also
looks to the Company as its single point of contact for placing orders for
temporary services, responding to quality issues and pricing matters as well as
preparing reports concerning usage of temporary services. During fiscal 1996,
revenues from the Company's MVP program increased 66.7% from $85.8 million in
fiscal 1995 to $143 million in fiscal 1996.
The Company's traditional temporary and staffing services can be
divided into four major categories:
Administrative Support Services. Office services are provided by
personnel possessing a wide variety of skills required in the workplace,
including secretarial, reception, desktop publishing, transcription, typing,
data entry, general clerical, switchboard and general office skills. Such
services are most often required by clients at times of peak work loads or
occasional absences or to fill ongoing staffing requirements. Through the
diversity of skills of its personnel, the Company is able to satisfy the needs
of its clients in virtually all areas of office services.
Office Automation Services. The Company provides personnel with word
processing and personal computer skills, including graphics specialists and
trainers, as well as specialists for spreadsheet and data base applications. The
Company not only seeks highly qualified and experienced operators to meet the
needs of its clients, but also trains its employees using an extensive office
automation cross-training curriculum. All Company-owned offices and franchised
locations are equipped with personal computers using several of the most widely
used word processing, data base and spreadsheet software applications. The
Company has developed its own office automation testing, training and support
programs, including course curricula designed for self-paced and instructional
training.
Technical and Light Industrial Services. Technical and light
industrial services personnel are furnished for a variety of assignments,
including general assemblers, machine attendants, shipping and receiving clerks,
inventory personnel, packers and ticketers. The Company also provides
semi-technical personnel, including printed circuit board assemblers, testers
and inspectors. Managed staffing has been an effective delivery channel for the
Company's technical and light industrial services.
Home Health Aide Services. Home health services are provided by
trained, certified home health aides and/or personal care aides in the patient's
home. These certified aides meet the requirements of state Medicaid programs and
generally provide personal care, cooking, cleaning, shopping and other essential
day-to-day services to patients. These services are performed under contracts
with the individual governmental entities administering the programs or with
certified home health agencies. Norrell's certified aides do not provide any
skilled nursing services.
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Outsourcing Services. The Company also provides outsourcing services.
Through this offering, clients can obtain a broad range of administrative and
business support services, with the Company assuming responsibility for managing
the productivity and work output of the functions that it performs. Employees
provide support tailored to the customer's needs on a long-term, contractual
basis. The Company assumes responsibility and accountability for results of the
function, including management of the people, the service delivery process and
the technology resources, enabling the customer to focus on its core business.
The Company's joint venture with Ernst & Young U.S. LLP - HealthTask Corporation
- - has targeted outsourcing solutions to hospitals for certain office and
administrative functions. In addition, during fiscal 1996, the Company entered
into two joint ventures to provide a wide range of teleservices. Norcross
Teleservices, Inc., a joint venture between the Company and the Cross Country
Group LLC, provides teleservices to organizations that outsource their customer
service functions. Norcross focuses on business-to-business and
customer-to-business support, including customer service call centers and help
desks. The Company owns a 51% interest in the Boston-based joint venture. The
Company also owns a 51% interest in CallTask Incorporated, a joint venture
between the Company and Harvard Teleservicing, Inc. CallTask primarily provides
teleservices to assist clients with customer reservations, product information
and order fulfillment.
In fiscal 1996, the Company's outsourcing revenues were $208.1
million, with over 6,000 employees working at client locations. New business
development continues to be a priority of the Company's management.
International Business Machines Corporation ("IBM"), the Company's largest
client, has engaged the Company to provide additional services during the
current year. In addition to IBM, the Company has outsourcing agreements with
other major clients, and outsourcing revenues from non-IBM customers increased
$15.3 million during 1996 to $60.3 million.
The Company's outsourcing services can be divided into several major
business categories:
Administrative Services. Administrative services include
secretarial and clerical support, text processing, desktop publishing, graphics
centers, management support teams and site management functions, such as mail
services and reprographic services.
Teleservices. Teleservices include managing information call
centers, service/dispatch centers, PC product information and warranty
maintenance centers as well as telephone service, network management and related
customized programs.
Accounting Services. Accounting services include performing
accounting functions such as processing accounts payable, accounts receivable,
employee travel reimbursement and asset tracking.
Document Processing and Data Entry Services. These services include
records management and a broad range of value-added services performed at
Company locations or at customer sites.
Human Resources Services. Human resources services include
recruitment, testing, interviewing and selection for a client's workforce.
Professional Services. During 1996, the Company expanded its
capabilities in the information technology field and offers a full spectrum of
services, from staff augmentation and recruiting to systems consulting. With the
acquisition of information technology companies, the Company offers clients a
variety of services, including systems planning and development, organizational
consulting related to business transformation, project management, software
systems integration, software development, and computer professionals for
short-term and long-term assignments, including systems analysts, computer
programmers and computer technicians. During fiscal 1996, revenues from the
Company's information technology services were $50.5 million.
The Company, through its Norrell Financial Staffing division, offers
its clients temporary and permanent employees to perform accounting, bookkeeping
and related financial services. During fiscal 1996, the Company experienced
significant growth in financial staffing due to growth of existing accounts and
an increase in office locations. In addition, subsequent to the fiscal year end,
the Company acquired Accounting Resources, Inc., a
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privately held financial placement firm in Providence, Rhode Island,
which provides staffing, permanent placement and executive search services to
clients in various industries. Revenues from financial staffing increased from
$2.9 million in fiscal 1995 to $14.6 million in fiscal 1996, an increase of
$11.7 million.
The Company offers its clients the option of combining any of the
above services into a single integrated offering, as well as tailoring services
specifically to customer requirements. By applying the principles of continuous
quality improvement and business process engineering to each of these areas, the
Company has been able to reduce costs and improve productivity for many of its
clients.
QUALITY INITIATIVES
The Company is dedicated to providing high quality services and
believes it is an industry leader in its quality focus and related measurement
systems. This quality focus helps attract and retain national accounts with
customers seeking consistent results and a nationwide approach to their needs.
In order to maintain a consistent quality standard for all of its
temporary and staffing employees, the Company uses automated systems to screen
and evaluate potential personnel, to make appropriate assignments, and to
evaluate and review an employee's performance. The Company's quality system,
Qualisys, is comprised of three major components: (i) Exact Match(TM), a
screening and placement process which matches the employee to the client's
needs; (ii) B.O.S.S., its Branch Office Support System, an extensive database of
client and personnel information; and (iii) I.R.I.S.(TM), or Integrated Research
Information System, by which the Company obtains direct client feedback and
measures individual employee performance. These automated services enable the
Company to provide staffing services quickly and efficiently, monitor client
needs and utilization trends, measure the Company's quality and evaluate and
train its employees. This extensive, integrated and automated quality
measurement and control system distinguishes the Company from its competitors.
With its outsourcing clients, the Company also develops customized performance
measurement benchmarks and systems for each client contract as requested. These
standards and systems are designed with client input and take into account
clients' quality needs and standards.
As a result of such quality initiatives, the Company has received
recognition for the quality of its services by groups outside the temporary
services industry. The Company has received the national award for Best
Practices in Customer Satisfaction from Arthur Andersen's Enterprise Group. The
Company has also received the Sears Partners in Progress Award, the Tennessee
Quality Award and the Ford Q-1 Award. Ford gives its coveted Q-1 award only to
selected vendors in recognition of outstanding quality and service. This award
allows the Company to use the Ford Q-1 recognition in advertising and other
promotional material. Such recognition for its quality services enhances the
Company's ability to compete for larger and more complex contracts and business
opportunities.
GROWTH OPPORTUNITIES
The Company increased its revenues from $412.1 million in fiscal 1992
to $1,013.9 million in fiscal 1996. The Company continues to grow its business
and increase the volume of services provided by (i) enhancing new service
offerings; (ii) increasing the range of services provided to existing clients;
(iii) expanding into additional skill classes, functional areas and technology;
(iv) expanding its capabilities in higher-growth, higher-margin services; and
(v) entering into selected new geographic markets.
The Company has employed an effective geographical expansion
strategy with franchise locations providing penetration primarily in markets
with lower density populations and Company-owned offices servicing major
markets. This combination provides an increased local market presence and a
broad network of service locations for national accounts. The Company also
selectively considers the acquisition of local temporary service companies with
strong market presence in order to efficiently enter new markets. Pursuant to
this strategy, during fiscal 1996, the Company acquired Valley Temporary
Services, Inc., a staffing firm in Phoenix, Arizona.
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ORGANIZATIONAL STRUCTURE
The Company provides its services through a network of Company-owned
offices, franchised offices, outsourcing locations, and professional services
offices. The table below sets forth certain historical information concerning
the number of offices and outsourcing locations:
<TABLE>
<CAPTION>
As of the End of Fiscal
Year
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1992 1993 1994 1995 1996
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<S> <C> <C> <C> <C> <C>
Company-Owned Offices........................................... 115 115 115 121 133
Franchised Offices (1).......................................... 112 103 107 119 133
Outsourcing Locations (2)....................................... 43 59 75 91 105
Professional Services Offices................................... 1 2 2 21 30
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Total Company Offices and Locations...................... 271 279 299 352 401
==== ==== ==== ==== ====
</TABLE>
Company-Owned Operations. The Company owns and operates temporary
personnel services offices in major markets, each of which is managed by a
Norrell manager who is responsible for most aspects of the Company's business
within that market. These responsibilities include sales and client development,
recruitment and retention of temporary employees and the implementation of
Norrell's marketing strategies. The Company provides extensive training to field
managers, sales representatives and operations personnel in all of these areas.
A substantial portion of field employees' compensation is based on financial
performance, including the attainment of profit objectives. Company-owned
offices operating in "middle markets" (generally markets with populations
between 500,000 and 1.5 million people) are operated under special incentive
arrangements by managers who receive lower salaries and higher incentive
compensation relative to managers of other Company-owned offices.
Franchised Operations. The Company currently operates franchised
offices throughout the United States and in Canada and Puerto Rico. The Company
developed its initial franchise strategy in the mid-1960s as an important
element of its overall growth plans. Franchising provides the opportunity to
enter targeted markets with substantially less capital than would be required to
establish Company-owned offices. The Company's primary franchise target markets
are cities with populations between 50,000 and 500,000 people. The Company also
establishes franchised offices under its trade name Dynamic People to increase
market penetration in major markets in which the Company may also operate
Company-owned offices.
The preferred franchisee is a person who is familiar with a particular
local market and its business network, has a background in sales and exhibits
entrepreneurial qualities characteristic of a small business owner. The
franchised operation is designed to allow a franchisee to operate the business
autonomously within the framework of the Company's policies and standards. A
franchisee has the exclusive right to operate as a temporary personnel services
provider for specific services within a designated geographic area using the
Company's trade names, advertising materials, sales programs, operating
procedures and proprietary and licensed systems as described in the franchise
agreement.
Franchise agreements generally have 10 to 15 year terms and are subject
to earlier termination as provided in the franchise agreement. Under the
franchise agreements, all customers and temporary employees are the customers
and employees of the Company rather than of the franchisee. The Company is
responsible for all billing and collection procedures and pays the wages of all
temporary personnel. The current franchise agreement provides that the
franchisee receives between 40% and 60% of franchise gross profits depending
upon the volume of gross profits generated by the franchisee. The franchisee is
responsible for the overhead of its own operations, such as utilities, office
furniture and equipment, rent and staff personnel. The Company receives no
initial franchise fee upon the commencement of a franchise relationship. The
Company estimates that a franchisee will need working capital of $70,000 to
$140,000 to open and operate a franchised office.
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1/ Occasionally, the Company acquires a franchised office and operates it
as a Company-owned office until it is refranchised. Such offices are
included in franchised locations.
2/ Outsourcing services are generally performed at the clients' facilities.
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The franchise division assists and supports its franchisees through
regional managers and training development teams. The Company has entered into
agreements with the majority of the franchisees pursuant to which the franchisee
agrees to provide certain services for a fee in order to assist the Company in
certain outsourcing business which is performed in the franchisee's territory.
Those services could include recruiting, basic testing and training of
personnel, and interviewing persons seeking employment as outsourcing services
employees. In the event the Company needs to use temporary services in the
course of providing outsourcing services, the franchise owner may provide such
services. In addition, the Company selectively allows franchise owners to
perform financial staffing services depending upon market size, the amount of
financial staffing business involved, and the ability of the franchise owner to
meet the needs of the particular client. Franchise owners do not provide
outsourcing services in the teleservices area or services in the Company's
information technology business.
Outsourcing Locations
The Company currently has operations at sites throughout the United
States responsible for the delivery of outsourcing services. The majority of the
Company's outsourcing operations are located on site at its customers'
facilities, and the remaining outsourcing sites are located in leased offices.
Other than regional offices and its corporate offices in the Company's
headquarters building, the Company's outsourcing subsidiary does not maintain
sales or administrative offices separate from the locations at which client
services are performed, allowing the Company to control the growth of overhead
costs.
Outsourcing services are delivered by employees who are hired by the
Company to perform services during the term of an outsourcing contract. These
employees and related field operations are managed by the Company's site
managers and area managers who are responsible for service delivery, customer
satisfaction, and sales of additional services to current customers through both
expansion of existing contracts as well as the addition of new contracts.
Outsourcing field operations are supported by a centralized staff which
is responsible for pricing of new or additional business, payroll, performing
client process studies, management training and implementation services, which
includes the initial recruiting, screening, testing, hiring and training of
employees at the start of a new outsourcing services contract.
SALES AND MARKETING
The Company has developed a sales and marketing strategy which is
implemented through its Company-owned and franchised staffing services offices
and its on-site and off-site outsourcing services locations. The Company focuses
these efforts both on a national and local level. The national sales effort is
coordinated by a national account team located in the home office and in the
local division offices. The local branch offices provide the service and sales
efforts needed to support the large national customers. Pursuing national
account partnerships is important to the Company's growth due to the
consolidation of vendors by large national clients and due to the broad spectrum
of services these customers desire. Local accounts are developed by the
Company-owned and franchised offices primarily through client referrals,
community involvement and direct contacts with prospective clients. Contacts are
made through sales representatives, telephone marketing calls and direct mail
solicitation.
For all traditional temporary and staffing clients, national and local,
the Company has developed a system of formal consultation with its clients'
management to determine the clients' specific requirements and to evaluate their
potential use of staffing personnel. This approach involves: (i) an in-depth
study of the client's corporate attitudes and departmental organization to gain
insight into the client's operating philosophy; (ii) an analysis of the client's
performance expectations and work experience requirements for staffing
personnel; (iii) a job-by-job analysis of the cost effectiveness the client can
expect from the use of the Company's staffing employees; and (iv) on-going
management reports evaluating the actual results of utilizing the Company's
services. This process facilitates an effective match of a client's needs with
skills of the staffing employee and enables the client to analyze its use of
staffing services. The Company offers all clients the "Norrell Guarantee", under
which a client will not be billed if the client is not satisfied with a
temporary employee's performance.
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The Company's sales efforts for its outsourcing and professional
services offerings are accomplished by both the field sales organization and the
national accounts teams. Functional experts from Norrell's broad spectrum of
services, including ATR, ANATEC, Comtex, Norrell Financial Staffing, Tascor,
Norcross and CallTask, assist the sales team in their selling efforts. New sales
are generally made to companies at the senior executive level. Sales of
outsourcing and professional services to an existing client are made by both the
operations management team responsible for the client and the above-mentioned
personnel.
The development of awareness and preference for both the Norrell brand
and our service offerings is a primary initiative of the sales and corporate
marketing organizations. Through a variety of national and local marketing and
media vehicles, the Company communicates the attributes of a brand position and
service offerings to current customers, prospects and the business community.
For recruitment purposes, the Company and its franchisees utilize a multi-media
marketing strategy to attract and retain employees to fill the broad spectrum of
staffing and outsourcing services.
RECRUITING AND PLACEMENT
The Company's temporary and staffing personnel are primarily
individuals between jobs or careers, individuals re-entering the job market or
individuals who prefer the flexibility and variety of temporary or shorter-term
work assignments. A substantial proportion of new temporary personnel are
obtained through referrals by other Norrell personnel. Temporary and staffing
personnel are also recruited through local and national advertising media. Due
to shortages in the labor market, the Company focuses upon developing and
implementing recruiting techniques which will attract and retain qualified
personnel.
The Company conducts an interviewing and testing process to screen and
evaluate the skills of potential personnel. Company-developed or purchased
programs are used to determine skill levels and work attitudes in order to
assist in making proper assignments. The Company provides training programs to
increase and improve the skills of its personnel. To maintain the quality and
effectiveness of its temporary and staffing workforce employees, the Company
uses the I.R.I.S. system to review an employee's performance with the client.
To be able to meet demand for qualified home health personnel, who are
generally in short supply, the Company recruits employees and conducts a
two-week training program to qualify employees as certified home health aids or
a one-week training program to qualify them as personal care aides. These
training programs effectively increase the Company's supply of qualified aides.
MANAGEMENT INFORMATION SYSTEMS
The Company's management information systems have been established to
allow the Company to maintain state-of-the-art capabilities while at the same
time reducing management's time and involvement in systems issues. In December
1992, the Company entered into an agreement with Integrated Systems Solutions
Corporation ("ISSC"), a subsidiary of IBM, for information systems operations,
development of new systems and maintenance of current software systems and
related services. In December 1995, the agreement was reduced in scope. The
Company assumed responsibility for development of new systems and maintenance of
current software systems. The services currently being provided by ISSC include
operating the Company's data center and data network, maintaining the hardware
in the data center and data network, generating printed reports previously
prepared by the Company and providing storage and disaster recovery for all data
media. The agreement with ISSC provides the Company with virtually unlimited
computer data storage and operating capacity to meet future information and
systems operations needs. This agreement expires on March 31, 2003 unless
extended by the Company and ISSC.
In 1995 the Company began replacing certain legacy systems. The primary
purpose of this initiative is to install state-of-the-art systems throughout the
Company and support the substantial growth of the Company, provide better
support for the Company's national account strategy, and to facilitate
integration of newly acquired companies. These systems will complete the
Company's transition to Client/Server Systems. In 1997 and beyond,
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the Company will leverage this new platform to introduce system extensions which
will enhance productivity and further our competitive edge.
The Company believes that its B.O.S.S., I.R.I.S.(TM), Exact Match(TM)
and proprietary payroll systems give the Company a competitive edge in service
delivery over its competitors, in that selected client and temporary employee
information, including client satisfaction survey results, are available
electronically in each office and at the corporate headquarters.
CLIENTS
During fiscal 1995 and 1996, revenues generated by the Company from
contracts with IBM equaled $136.2 million and $158.6 million, respectively,
representing 16.2% and 15.6% respectively, of the Company's consolidated
revenues for such periods. Approximately 31.0% and 21.4% of these revenues were
received during fiscal 1995 and fiscal 1996, respectively, for services
performed under a Management Services Agreement. The balance of the Company's
IBM-related revenues are consolidated under multiple contracts with different
purchasing units within IBM.
During fiscal 1996, revenues generated by the Company from contracts
with United Parcel Service, Inc. ("UPS") equaled $122.2 million representing
12.0% of the Company's consolidated revenues for fiscal 1996.
No other client accounted for more than 10% of the Company's
consolidated revenues for fiscal 1996 or 1995.
COMPETITION
The temporary services industry is highly competitive with more than
7,000 temporary services companies operating in the United States. The temporary
personnel services provided by the Company also are provided by several other
companies with nationwide operations that have substantially greater resources
than the Company. In addition, the Company competes with numerous local and
regional companies, which are frequently the strongest competitors in their
particular markets. Accordingly, the Company's competition varies from market to
market. Although the Company and other national firms benefit from having
nationally recognized names, the Company believes that its customers primarily
differentiate among firms by comparing the quality of personnel and services
provided by each local office. Companies typically use more than one temporary
services firm to satisfy their temporary personnel requirements.
The largest competitors of the Company's temporary and staffing
personnel offerings include Kelly Services, Inc., Manpower Inc., Adia Services,
Inc., AccuStaff, Inc., The Olsten Corporation, and Interim Services. In
addition, there are a number of other firms with annual sales in excess of $100
million, many of which are regional and/or emphasize specialized niches. There
are also numerous local and single office firms which are able to compete on
price because of their lower overhead structures. These firms are typically
located in one city and some are able to compete effectively on that limited
basis.
The Company believes that no single competitor has more than a 10%
share of the national temporary services market. Nevertheless, it is expected
that the industry will continue to consolidate with the large national firms
increasing their market share at the expense of firms which are large enough to
require sophisticated information-based systems for the placement of temporary
personnel and payroll functions for their offices but may lack the capital to
compete operationally with larger industry competitors.
The temporary health care market also is highly fragmented and
competitive at the local level. While several national health care companies
compete with the Company in its markets, many local health care staffing
services and home health agencies also compete with the Company. Selections of
home health aide services are made primarily on a local basis by agencies and
health care administrative personnel.
-11-
<PAGE> 12
The principal competitive factors in the temporary services industry
are the availability and quality of personnel, the level of service, the
effective monitoring of job performance and the price of service. The Company
believes that it competes favorably in these areas.
The Company believes that the largest companies that compete with its
outsourcing offering are "niche" players which do not compete with the Company's
full range of outsourcing services. These outsourcing services providers offer a
more limited range of services, assuming responsibility for functions such as
food services, facilities maintenance, mailrooms or reprographics.
The Company considers its principal competitors for its outsourcing
services to be companies such as Pitney-Bowes, Inc., an equipment manufacturer
which provides mailroom services; Manpower; Xerox, an equipment manufacturer
that provides reprographics services; Kelly Services, and other large temporary
services firms which are attempting to expand their services offerings; and Host
Marriott Corporation, which is expanding beyond its traditional hospitality and
food services operations in the area of facilities staffing.
In the professional services industry, a large number of national
companies provides information technology consulting services related to systems
planning and development and business processes and transformation, including
Andersen Consulting & Co., IBM Global Services, and Electronic Data Systems.
Staff augmentation services in the information technology field are provided
primarily by regional and local firms as well as some national firms.
Competitive factors in the information technology industry are a proven track
record in the marketplace, recruitment and retention of employees with the
appropriate skills, development and implementation of effective methodologies,
and process and business expertise.
PERSONNEL
As of January 8, 1997, the Company had a staff of approximately 1,300
(excluding temporary employees and employees who perform services on outsourcing
contracts). The Company maintains employment contracts with all executive and
most field personnel which, among other things, provide agreements not to
compete with or solicit customers of the Company after termination of employment
for varying periods of time. As of January 8, 1997, the Company employed
approximately 6,600 outsourcing services personnel, and approximately 220,000
temporary personnel were employed by the Company during calendar year 1996,
including those operating out of franchised offices. As of January 8, 1997, the
Company's information technology companies employed 194 individuals (excluding
employees who perform services at client locations) and an additional 1,078
employees were assigned to clients to perform systems-related services. This
includes employees of Comtex, acquired by the Company on January 2, 1997. As of
January 8, 1997, Comtex had a staff of 55 internal employees and employed an
additional 222 individuals to perform services at client locations. The Company
has no collective bargaining agreements with its employees. The Company believes
that it has good relations with its employees.
SERVICE MARKS
The Company is the owner of various service marks, including Norrell,
The Norrell Advantage, Dynamic, Dynamic People, Smarter Ways to Get Things Done,
Tascor and ANATEC. The Company protects its service marks and believes that the
"Norrell" service mark is an important asset to the Company's operations.
GOVERNMENTAL REGULATION
The marketing of the Company's franchises is subject to the disclosure
requirements of the Federal Trade Commission and the registration and/or
disclosure requirements of certain states. In certain states, the Company's
relationship with its franchisees also are governed by the franchise laws of
such states.
The Company's home health aide business operates in New York, New
Jersey, and Pennsylvania which require licensing of home care providers. In
those states, the Company is subject to periodic licensure surveys to ensure
continued compliance with licensing requirements. A change in control or the
sale of the Company's home health aide business must be approved by the Public
Health Council of the New York State Department of Public Health.
-12-
<PAGE> 13
In certain states, companies which engage in permanent placement are
subject to regulations. The Company analyzes the applicability of these state
regulations to the permanent placement activities of Norrell Financial Staffing
and complies with these requirements, if applicable. In addition, certain states
require licensure and otherwise regulate companies which provide employee
leasing services. The Company analyzes these state laws in light of its service
offerings and complies when the state law is applicable.
SEASONALITY
Revenues and profits generated in the Company's fourth fiscal quarter
(August through October) are typically the highest of its four fiscal quarters.
Management believes that this results from a heavier demand during this period
and because the fourth quarter includes only one nationally observed holiday.
Conversely, revenues for the first fiscal quarter (November through January) are
typically the lowest of its four fiscal quarters due to the reduced number of
business days for many of the Company's clients because of the number of
observed holidays and inclement weather. Revenues and operating profits for the
Company's first quarter are typically less than the fourth quarter of the
previous year.
ITEM 2. PROPERTIES
The Company leases approximately 150,000 square feet of the building which
houses its office headquarters pursuant to a lease agreement which will expire
June 30, 2007.
On October 27, 1996, the Company was committed under operating leases for
office facilities and certain equipment. Aggregate minimum rental requirements
under these leases are as follows:
<TABLE>
<CAPTION>
-----------------------------------------
YEAR AMOUNT
(IN THOUSANDS)
-----------------------------------------
<S> <C>
1997 $ 9,858
-----------------------------------------
1998 8,511
-----------------------------------------
1999 6,881
-----------------------------------------
2000 5,796
-----------------------------------------
2001 4,790
-----------------------------------------
Thereafter 20,115
-----------------------------------------
TOTAL $55,951
-----------------------------------------
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Company is, from time to time, a party to ordinary, routine
litigation incidental to the Company's business. In the opinion of management,
the ultimate resolution of all pending litigation will not have an adverse
effect on the Company's business or financial condition.
-13-
<PAGE> 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of fiscal 1996 to a
vote of security holders.
ITEM 4A. EXECUTIVE OFFICERS OF THE COMPANY
The Company's executive officers are elected annually and serve at the
discretion of the Board of Directors. Information concerning the executive
officers, as of January 1, 1997, is provided below.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Guy W. Millner...................... 60 Chairman of the Board
C. Douglas Miller................... 55 Director, Chief Executive Officer, President
Larry J. Bryan...................... 53 Director, Executive Vice President
Thomas A. Vadnais .................. 49 Director, President and Chief Operating Officer, Tascor
and Vice President, National Service Management
Stanley E. Anderson................. 43 Senior Vice President of Business Development
James L. Donahue.................... 52 Vice President and General Manager, West Division,
Norrell Services
Caress C. Kennedy................... 46 Vice President and General Manager, Northeast Division,
Norrell Services
Ronald T. Self...................... 40 Senior Vice President and General Manager, Metro
Markets Division, Norrell Services
Eugene F. Obermeyer................. 53 President and Chief Operating Officer, Franchise Division,
Norrell Services, Vice President of the Company
Mark H. Hain........................ 47 Vice President, Secretary and General Counsel
Peter F. Rosen...................... 49 Vice President, Human Resources
C. Kent Garner...................... 50 Vice President and Chief Financial Officer
Thomas E. Fricks.................... 48 Vice President and Chief Information Officer
Stanley Smith....................... 47 Vice President and General Manager, North Central
Division, Norrell Services
Theresa G. Williams................. 37 Vice President and General Manager, Mid Atlantic
Division, Norrell Services
Robert W. Grissom, Jr............... 39 Vice President, Marketing
Timothy E. Tindle.................. 41 President and Chief Executive Officer, ANATEC
Charles F. Phillips................. 40 President, ATR
Michael C. Mullins.................. 48 Chairman and Chief Executive Officer, Comtex
</TABLE>
Guy W. Millner founded the predecessor of the Company in 1961 and has
served as Chairman of the Board since that time. He served as President and
Chief Executive Officer of the Company from November 1983 until October 15,
1993. Mr. Millner is on an unpaid leave of absence effective November 15, 1995.
C. Douglas Miller was elected Chief Executive Officer and President of
the Company effective October 15, 1993. He joined Norrell Services in 1979 and
has served since that time as an Area Manager, Regional Manager, Vice President
and General Manager of the Franchise Division, and President and General Manager
of the Franchise Division for Norrell Services; and as Vice President, President
and Chief Operating Officer of the Company. Before joining Norrell Services, Mr.
Miller spent 11 years with IBM, most recently serving as Marketing Manager for
Major Accounts in the Atlanta Office.
Larry J. Bryan joined the Company in October 1985 and is an Executive
Vice President of the Company. Prior to his current position, Mr. Bryan was
Chief Financial Officer of the Company. From 1984 until he joined the Company,
Mr. Bryan served as Senior Vice President and Chief Financial Officer of
American First Corporation. From 1975 to 1984, Mr. Bryan served as Chief
Financial Officer and in other capacities of divisions or subsidiaries of
Pepsico, Inc., including Pepsico Bottling Group, Taco Bell, Inc., and Leeway
Motor Freight, Inc.
-14-
<PAGE> 15
Thomas A. Vadnais joined Tascor on September 1, 1992 and served as Vice
President -- General Manager until October 31, 1993 when he was elected
President and Chief Operating Officer of Tascor. Mr. Vadnais is also Vice
President, National Service Management and has served in that capacity since
October, 1995. Prior to joining Tascor, Mr. Vadnais was a Vice President of
Operations for the national distribution division of IBM where he was employed
for 24 years.
Stanley E. Anderson has been employed by Norrell Services since 1981.
He is currently Senior Vice President of Business Development, a position he
assumed in February, 1996. Prior to that time, he held the positions of Vice
President and General Manager, Southeast Division, Vice President and General
Manager, East Division, Vice President of Franchise Development, Regional
Manager, Branch Manager, and Sales Training Manager.
James L. Donahue is presently Vice President and General Manager for
the West Division of Norrell Services. He has been employed by Norrell Services
since August, 1994. Prior to that time, he was Vice President of a temporary
services firm in San Juan Capistrano, California from April 1991 until August,
1994.
Caress C. Kennedy has been employed by Norrell Services since 1992. She
is presently Vice President and General Manager, Northeast Division. She
previously held the position of Market Vice President in New York and New
Jersey. Prior to joining Norrell Services, Ms. Kennedy was employed by Thompson
Financial Services as Senior Vice President of Sales and Marketing and by Xerox
as Vice President of Marketing, and Vice President of Strategic Planning and New
Business Development.
Ronald T. Self joined Norrell Services on August 31, 1990. He is Senior
Vice President and General Manager, Metro Markets Division, Norrell Services. He
has held the position of Vice President and General Manager, Central Division,
Vice President - Major Accounts and Market Vice-President. From 1986 to 1990,
Mr. Self was employed by Coca-Cola U.S.A., Atlanta, Georgia, most recently as
Southeast Area Manager.
Eugene F. Obermeyer has been employed by Norrell Services since July 1,
1979. He has been the President and Chief Operating Officer of the Franchise
Division of Norrell Services since 1991. He previously held the positions of
President and Chief Operating Officer, Southeast Division, Regional Vice
President and Regional Manager, District Manager and Branch Manager.
Mark H. Hain has been Vice President, Secretary and General Counsel to
the Company since March 1, 1988, when he joined the Company.
Peter F. Rosen is presently Vice President, Human Resources for Norrell
Corporation and has served in that capacity since September, 1995. Prior to that
time, he was Senior Vice President of Human Resources for GAB Robbins, and
Director of Human Resources for SmithKline Beecham.
Thomas E. Fricks serves as Vice President and Chief Information Officer
of the Company and has served in that capacity since he joined the Company in
August, 1994. From 1983 until 1992, Mr. Fricks was employed by Contel Corp. as
Vice President of Information Services. From 1992 until 1994, Mr. Fricks was
Vice President of the Telecommunications Group for American Management Systems,
Inc.
C. Kent Garner is a Vice President and the Chief Financial Officer of
the Company, and has served in that capacity since joining the company in
October, 1995. Prior to joining the Company, Mr. Garner was Chief Financial
Officer of Dollar General Corporation and Treasurer of Vulcan Materials Company.
Stanley Smith is Vice President and General Manager of the North
Central Division of Norrell Services and has held that position since February,
1996. Prior to February, 1996, Mr. Smith held the position of Regional Vice
President, North Central Region, Norrell Services from March, 1989 until
February, 1996.
Theresa G. Williams has been the Division Vice President, and, General
Manager of the Mid Atlantic Division for Norrell Services since February, 1996.
Ms. Williams has been employed with the Company since
-15-
<PAGE> 16
March, 1984 and has previously held the positions of Region Vice-President,
Region Manager and Branch Manager.
Robert W. Grissom, Jr. has served as Vice President, Marketing since
February, 1996. Mr. Grissom has also held the positions of Vice President, New
Market Development, Region Vice President, Franchise Division and Region
Manager, Franchise Division.
Timothy E. Tindle is President and Chief Executive Officer of
Analytical Technologies, Inc. ("ANATEC") and has held that position since 1994.
Prior to his association with ANATEC, Mr. Tindle was employed with Compaq
Computer Corporation for approximately 11 years where he served as Director,
National Support Center, Director, Systems Support and National Service Manager.
Charles F. Phillips is President of American Technical Resources, Inc.
and has served in that capacity since February, 1986.
Michael C. Mullins is President and Chief Executive Officer of Comtex
Information Systems, Inc., a company he founded in 1976.
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock began trading on the New York Stock Exchange
on October 30, 1995 under the symbol NRL. Prior to this date, the Company's
Common Stock traded in the over-the-counter market on the National Association
of Securities Dealers, Inc.'s Nasdaq National Market. Prior to July 26, 1994,
there was no established public trading market for the Common Stock of the
Company. The following table sets forth the quarterly closing price ranges for
the Company's last two fiscal years.
<TABLE>
<CAPTION>
HIGH/LOW STOCK PRICE
HIGH LOW
------------------------
<S> <C> <C>
First Quarter, 1995 $ 9 7/8 $ 7 3/4
Second Quarter, 1995 $ 12 1/8 $ 9 1/2
Third Quarter, 1995 $ 12 1/8 $ 9 1/2
Fourth Quarter, 1995 $ 17 $ 11 3/4
First Quarter, 1996 $ 16 5/8 $ 13 1/4
Second Quarter, 1996 $ 19 1/8 $ 12 3/4
Third Quarter, 1996 $ 28 3/4 $ 18 3/8
Fourth Quarter, 1996 $ 33 $ 26 5/8
</TABLE>
At January 8, 1997, there were 211 registered record holders of the
Company's Common Stock.
The Company declared a dividend on its Common Stock of $.03 per share in
December, 1994, March, 1995, April, 1995 and September, 1995. The Company
declared a dividend on its Common Stock of $.035 per share in December, 1995,
March, 1996, June, 1996 and September, 1996. The Company declared a dividend of
$.04 per share on its Common Stock in December, 1996. The Company's loan
agreement restricts the amount available
-16-
<PAGE> 17
for the payment of dividends to not more than 40% of the Company's cumulative
net income since November 1, 1993.
On August 5, 1996, the Company issued an aggregate of 1.0 million shares of
its Common Stock, no par value, to five shareholders of ATR in exchange for all
of the issued and outstanding stock of ATR, pursuant to a merger and
reorganization transaction treated as a pooling of interests. Exemption from
registration is claimed pursuant to Section 4(2) of the Securities Act of 1933
due to the limited number of purchasers and isolated nature of this transaction.
-17-
<PAGE> 18
ITEM 6. SELECTED FINANCIAL DATA
SELECTED CONSOLIDATED FINANCIAL DATA
The following Selected Consolidated Financial Data with respect to the
Company's consolidated statements of income for the years ended October 27,
1996, October 29, 1995 and October 30, 1994 and, with respect to the Company's
consolidated balance sheets as of October 27, 1996 and October 29, 1995, have
been derived from the Company's Consolidated Financial Statements for such years
which have been audited by Arthur Andersen LLP, and are included elsewhere
herein. The Selected Consolidated Financial Data with respect to the Company's
consolidated statements of income for the years ended October 31, 1993 and
November 1, 1992, and, with respect to the Company's consolidated balance sheets
as of October 30, 1994, October 31, 1993 and November 1, 1992, have been derived
from the Company's Consolidated Financial Statements for such years which have
been audited by Arthur Andersen LLP. The following data should be read in
conjunction with the Company's Financial Statements and the Notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
Fiscal Years
(In thousands, except per share amounts)
October 27, October 29, October 30, October 31, November 1,
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
INCOME STATEMENT DATA:
<S> <C> <C> <C> <C> <C>
Revenues $1,013,877 $ 842,360 $ 701,921 $ 576,748 $ 412,071
Cost of services 795,013 656,517 543,330 436,287 304,427
---------- ---------- ---------- ---------- ----------
Gross profit 218,864 185,843 158,591 140,461 107,644
Operating expenses 169,206 149,745 128,919 117,196 87,843
Depreciation and amortization 5,904 4,261 4,677 3,596 7,586
Write-off of goodwill -- -- -- 6,584 --
Write-off of software development costs -- -- -- 1,527 --
Provision for lease, legal and other charges -- -- -- 1,381 --
---------- ---------- ---------- ---------- ----------
Income from operations 43,754 31,837 24,995 10,177 12,215
---------- ---------- ---------- ---------- ----------
Other income (expense)
Recovery of preferred
stock investment -- -- 5,000 -- --
Interest expense (1,200) (365) (1,956) (3,797) (4,618)
Other (1,485) (1,628) (408) (398) (838)
---------- ---------- ---------- ---------- ----------
(2,685) (1,993) 2,636 (4,195) (5,456)
---------- ---------- ---------- ---------- ----------
Income from continuing
operations before income taxes 41,069 29,844 27,631 5,982 6,759
Income taxes 15,812 12,518 11,827 2,699 3,652
---------- ---------- ---------- ---------- ----------
Income from continuing operations 25,257 17,326 15,804 3,283 3,107
Discontinued operations:
Loss from operations, net -- -- -- (2,909) (843)
Gain (loss) on disposal, net -- (348) -- 5,813 --
Extraordinary item -- -- -- (499) --
Cumulative effect of change in
accounting principle -- -- 3,414 -- --
---------- ---------- ---------- ---------- ----------
Net income $ 25,257 $ 16,978 $ 19,218 $ 5,688 $ 2,264
========== ========== ========== ========== ==========
Earnings (loss) per common share:
Continuing operations $ 1.00 $ 0.71 $ 0.69 $ 0.13 $ 0.13
Discontinued operations -- (0.01) -- 0.12 (0.04)
Extraordinary item -- -- -- (0.02) --
Cumulative effect of change in
accounting principle -- -- 0.15 -- --
---------- ---------- ---------- ---------- ----------
Net income $ 1.00 $ 0.70 $ 0.84 $ 0.23 $ 0.09
========== ========== ========== ========== ==========
Weighted average number of shares 25,344 24,357 22,782 24,872 23,895
CONSOLIDATED BALANCE SHEET DATA:
Current assets $ 167,388 $ 138,495 $ 111,735 $ 120,612 $ 83,438
Working capital 64,590 55,492 46,952 30,556 27,662
Total assets 263,231 182,024 153,243 166,274 138,308
Long-term debt 23,316 2,057 386 19,180 27,763
Shareholders' equity 98,032 72,934 67,266 43,600 44,515
</TABLE>
-18-
<PAGE> 19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the Selected
Consolidated Financial Data and the Consolidated Financial Statements of the
Company and related notes thereto appearing elsewhere in this Form 10-K.
INTRODUCTION
The Company is organized into three service groups: Staffing Services,
which provides temporary administrative, teleservices and light industrial
staffing; Professional Services, which provides information technology and
accounting staffing; and Outsourcing Services, which provides administrative
services and teleservices through contracts in which the Company assumes
responsibility for the results of a client process. The Company's customers are
businesses, professional and service organizations, and government agencies in
the United States and Canada.
Revenue is generally recognized upon the performance of services.
Certain services are performed under long-term contracts and revenue from these
contracts is recognized by the percentage-of-completion method.
A portion of the Company's revenues is attributable to franchised
operations. Employees and customers of the franchised operations are employees
and customers of the Company. The Company includes such revenues and related
direct costs in its revenues and cost of services, respectively. The net
distribution paid to franchisees is based upon a percentage of the gross profit
generated and is included in the Company's selling, general and administrative
expenses.
In years prior to fiscal 1996, the Company's fiscal year ended on the
Sunday closest to October 31. In 1996, the fiscal year end was changed to the
last Sunday in October. The fiscal year ended October 27, 1996 is referred to as
"1996", the fiscal year ended October 29, 1995 is referred to as "1995" and the
fiscal year ended October 30, 1994 is referred to as "1994".
RESULTS OF OPERATIONS
The following table sets forth certain statement of income items as a
percentage of revenues for 1996, 1995 and 1994:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Revenues 100.0% 100.0% 100.0%
Cost of services 78.4 77.9 77.4
------ ------ ------
Gross profit 21.6 22.1 22.6
Operating expenses 16.7 17.8 18.4
Depreciation and amortization 0.6 0.5 0.6
------ ------ ------
Income from operations 4.3 3.8 3.6
Other income (expense)
Recovery of preferred stock investment -- -- 0.7
Interest expense (0.1) (0.1) (0.3)
Other (0.1) (0.2)
------ ------ ------
Income from continuing operations before income
taxes 4.1 3.5 3.9
Income tax expense 1.6 1.4 1.6
------ ------ ------
Income from continuing operations 2.5 2.1 2.3
------ ------ ------
Net income 2.5 2.0 2.7
====== ====== ======
</TABLE>
-19-
<PAGE> 20
YEAR ENDED OCTOBER 27, 1996 COMPARED TO YEAR ENDED OCTOBER 29, 1995
Revenues increased 20.4%, or $171.5 million to $1,013.9 million in
1996. Staffing Services revenues grew 16.7% to $740.7 million, and accounted for
73.1% and 75.3% of total 1996 and 1995 revenues, respectively. Staffing Services
volume, as measured by hours that staffing employees worked, increased 12.4% and
prices rose 3.9% compared to 13.4 % and 7.0% for 1995. Staffing Services office
openings, net of closings, for 1996 included 12 company-owned and 14 franchise
offices. During 1996, the Company acquired two information technology companies:
Analytical Technologies, Inc., and ANATEC Canada, Inc. (collectively "ANATEC")
and American Technical Resources, Inc. ("ATR"). ANATEC, which specializes in
information technology consulting, project management, training, and software
systems integration, was purchased for cash on July 15, 1996. ATR, which
provides short and long-term contract programmers, was acquired in a transaction
accounted for as a pooling of interests on August 5, 1996. These two
acquisitions plus the Company's existing Financial Staffing division, which
provides temporary accounting and financial staffing, have been combined into
the Professional Services group. The accompanying financial statements include
the results of operations of ANATEC from July 15, the acquisition date. ATR was
accounted for as a pooling and, accordingly, the accompanying financial
statements include the results of ATR for all periods presented. Professional
Services revenues were $65.1 million in 1996 compared to $34.0 million in 1995,
a 91.5% increase. Professional Services offices increased by 9 to a total of 30
offices. Outsourcing Services revenues grew 19.7% to $208.1 million. Outsourcing
Services revenues from customers other than IBM increased $15.3 million from
1995 to $60.3 million. Included in Outsourcing Services revenues was the
recognition of $2.2 million and $4.5 million in 1996 and 1995, respectively, of
deferred gain from the return in January 1995 of Company stock held by IBM.
Outsourcing Services sites increased by 14 to a total of 105 sites.
Gross profit increased 17.8%, or $33.0 million, to $218.9 million in
1996. Gross margin (gross profit as a percent of revenues) decreased from 22.1%
in 1995 to 21.6 % in 1996. Staffing Services gross margin decreased slightly
from 22.4% in 1995 to 22.0% in 1996. During the first quarter of 1996, workers'
compensation liability for the franchise division of Norrell Services was
adjusted to give effect to much better than expected loss experience. The
adjustment resulted in a reduction of $800,000 in cost of services which added
0.1% to the Staffing Services gross margin. Without this adjustment, gross
margin declined to 21.9% in 1996. Outsourcing Services gross margin declined
from 20.4% in 1995 to 18.2% in 1996 due to the renegotiation of a large contract
with IBM. The renegotiation extended the contract term through December 1998. Of
the 2.2 percentage point decline in Outsourcing Services gross margin, 1.8
percentage points were the result of the renegotiation. Professional Services
gross margin increased from 24.6% in 1995 to 27.6% in 1996.
Operating expenses increased 13.0%, or $19.5 million. Depreciation and
amortization expense increased 38.6%, or $1.6 million. The increase included
$2.6 million of higher franchise commissions associated with increased franchise
revenues, $15.7 million of increased personnel and personnel related costs, and
$2.1 million of increased costs associated with 1996 additions to offices and
sites.
Interest expense increased from $365,000 in 1995, to $1.2 million in
1996 as a result of borrowings to fund the purchase of ANATEC.
Other expense decreased from $1.6 million in 1995 to $1.5 million in
1996. Included in other expense is the Company's share of losses from its 50%
ownership in a joint venture formed in October 1994 to provide administrative
outsourcing for health care facilities. The losses totaled $830,000 in 1996 and
$875,000 in 1995. Other expenses for 1995 also included a loss of $307,000 from
the sale in October 1995 of rental real estate. The property had a net book
value of $4.3 million and the Company received cash and a $3.4 million
three-year, 7% note.
The effective income tax rate declined from 41.9% in 1995 to 38.5% in
1996 primarily as a result of reduced stated income taxes.
Earnings per share from continuing operations rose to $1.00 in 1996
from $.71 in 1995. The 1995 period included a discontinued loss of $.01 per
share.
-20-
<PAGE> 21
YEAR ENDED OCTOBER 29, 1995 COMPARED TO YEAR ENDED OCTOBER 30, 1994
Revenues increased 20.0%, or $140.4 million, to $842.4 million in 1995.
Staffing Services revenues grew 21.3%, or $111.4 million, and accounted for
75.3% and 74.5% of total 1995 and 1994 revenues, respectively. Staffing Services
volume increased 13.4% and prices rose 7.0% compared to 21.1% and 1.7%,
respectively, for 1994. Office openings, net of closings, for 1995 included 6
company-owned offices and 12 franchise offices. In addition, 16 Outsourcing
Services sites were opened, net of closings. Outsourcing Services revenues grew
10.2%, or $16.2 million, to $173.9 million. Outsourcing Services revenues from
customers other than IBM increased $22.5 million from 1994 to $45.0 million.
Included in 1995 Outsourcing Services was the recognition of $4.5 million of
deferred gain from the return in January 1995 of Company stock held by IBM.
Professional Services revenues grew 61.0% to $34.0 million. Professional
Services offices increased by 19 to a total of 21 offices.
Gross profit increased 17.2%, or $27.3 million, to $185.8 million in
1995. Gross margin declined from 22.6% in 1994 to 22.1% in 1995. Staffing
Services gross margin remained constant year-over-year at 22.4%. Outsourcing
Services gross margin declined from 22.9% in 1994 to 20.4% in 1995. The decline
resulted from the renegotiation of a contract with IBM. Professional Services
gross margin increased from 23.9% in 1994 to 24.6% in 1995.
Operating expenses increased 16.2%, or $20.8 million. The increase
included $5.6 million of higher franchise commissions associated with increased
franchise revenues and $10.7 million of personnel and personnel related costs.
Operating expenses, as a percentage of revenues declined from 18.4% in 1994 to
17.8% in 1995 as the Company experienced favorable operating leverage.
Interest expense declined from $2.0 million in 1994 to $365,000 in 1995
as a result of the repayment of debt with the proceeds from the Company's August
1994 initial public offering and the collection of sale proceeds and accounts
receivable from the disposition in October 1993 of the Company's home health
care operations.
Other expense increased from $408,000 in 1994 to $1.6 million in 1995.
Included in the 1995 amount is a loss of $875,000 representing the Company's
share of losses from its 50% ownership in a joint venture which provides
administrative outsourcing for health care facilities. The joint venture was
formed in October 1994 and incurred a loss of $197,000 that year. The increased
loss in 1995 was due to a full year of start-up operation. Other expense for
1995 also included a loss of $307,000 from the sale in October 1995 of rental
real estate. The 1994 amount included a gain of $760,000 from termination of two
interest rate swaps and a loss of $288,000 from the write-off of deferred loan
costs upon renegotiation of the Company's credit agreement.
The effective income tax rate declined from 42.8% in 1994 to 41.9% in
1995. As pretax income increases, the impact of nondeductible goodwill expense
declines thereby reducing the effective rate. In addition, state income tax
expense declined as a percentage of pretax income.
Discontinued operations resulted in a loss of $348,000, net of tax, in
1995. The Company provided for additional legal costs related to the October
1993 sale of its home health care operations.
Earnings per share from continuing operations rose to $0.71 in 1995
from $0.69 in 1994. The loss per share from discontinued operations in 1995 was
$0.01 and in 1994 the Company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109) increasing 1994
earnings per share by $0.15.
-21-
<PAGE> 22
LIQUIDITY AND CAPITAL RESOURCES
The Company's short-term liquidity depends primarily upon its level of
net income, accounts receivable, accounts payable and accrued expenses. The
nature of the Company's business requires payment of wages to its temporary
personnel on a weekly basis and to its other employees on a bi-weekly basis
while payments from its clients are received on average 30 to 60 days after
billing. As a result of this timing difference, the Company's working capital
requirements increase proportionately with its revenue increases. The Company
has no binding commitments for capital expenditures during the next fiscal year
but does expect 1997 capital and information systems development spending ,
excluding acquisitions, to range from $17 to $21 million as the Company
completes the conversion of its headquarters and field information systems. See
Note 11 of Notes to Consolidated Financial Statements regarding commitments
under the Company's headquarters office building lease and information systems
contract. The Company's primary sources of liquidity are operating cash flows
and credit facilities totaling $135.0 million. See Note 6 of Notes to
Consolidated Financial Statements.
Cash provided from operations in 1996 was $38.0 million compared to
$7.3 million in 1995, an increase of $30.7 million. Included in the 1996 amount
was $13.0 million provided by the gain from the December 1995 sale of the
Company's interest in its Atlanta headquarters building that was sold by its
joint venture owner. The Company had a 50% interest in the joint venture.
Concurrent with the sale, the Company extended its lease for office space in the
building for an additional seven years to now expire in 2007. The gain is being
deferred and amortized on a straight-line basis through July 2005 since the
landlord may terminate the lease as of this date, and is recorded as a
reduction in rent expense. The 1995 amount included an increase of $28.9
million in trade accounts and notes receivable, compared to an increase of
$20.2 million in 1996. The larger 1995 increase resulted from higher revenues
and a change in payment terms of a large contract.
Investing activities used cash of $56.9 million in 1996 compared to
cash used of $11.3 million in 1995. The purchase of ANATEC in July 1996 and
Valley Staffing Services, Inc. in January 1996, resulted in uses of cash of
$26.2 million and $6.8 million, respectively. The 1996 and 1995 amounts included
additions to property and equipment of $7.4 million and $6.0 million in 1996 and
1995, respectively, and MIS development costs of $14.7 million and $4.7 million
in 1996 and 1995, respectively. Increased additions to property and equipment
were primarily for desk top computers required by new operations and support
software. In connection with its acquisition of ANATEC, the Company is obligated
to make an additional payment of approximately $10.0 million in February 1997 if
ANATEC'S gross profit for the twelve month period ending December 31, 1996
exceeds a specified level. See Note 2 of Notes to Consolidated Financial
Statements.
The Company's long-term liquidity is also dependent upon cash flows
from operations and borrowing under its credit facilities. The Company has
historically been able to obtain debt financing adequate to fund its operations.
As described in Note 6 to the Notes to Consolidated Financial Statements, the
Company has an unsecured revolving credit facility of $95.0 million which
extends until September 30, 1999, and $40.0 million of unsecured bank lines of
credit. Management believes the Company's relationships with its lenders are
good and that it will be able to obtain any required financing upon maturity of
its existing credit facilities. The Company has no long-term commitments other
than those described in Note 11 to the Notes to Consolidated Financial
Statements.
The Company believes that funds provided from operations and available
borrowings under its credit facilities will be sufficient to meet its needs for
working capital and capital expenditures at least through the end of the coming
fiscal year.
INFLATION
The effects of inflation were not significant to the Company's
operations during 1996, 1995, or 1994.
-22-
<PAGE> 23
SUBSEQUENT EVENT
On December 8, 1996, the Company executed an agreement to purchase all
of the outstanding common and preferred stock and all vested and unvested stock
rights of Comtex Information Systems, Inc. ("Comtex") for $67.0 million of cash
plus options to acquire approximately 141,000 shares of Norrell Corporation
common stock at an average exercise price of $4.43 per share. The transaction,
which will be accounted for under the purchase method of accounting, is
scheduled to close on or about January 2, 1997. Comtex is a New York City-based
provider of information systems services, including systems planning and
development, organizational consulting related to business transformation and
staff augmentation support. Comtex has locations in New York City, White Plains,
New York, and Miami, Florida. At October 31, 1996, Comtex had net assets of
$10.9 million.
SPECIAL NOTE REGARDING "FORWARD-LOOKING" INFORMATION
The foregoing section contains "forward-looking" statements which
represent the Company's expectations or beliefs concerning future events,
including capital spending for 1997 and the sufficiency of funds from operations
and available borrowings to meet the Company's working capital and capital
expenditure needs for 1997. A number of important factors could, individually or
in the aggregate, cause actual results to differ materially from those forming
the basis of the forward-looking statements, including changes in the Company's
relationship with its largest customers and increased competition in, and
changes in laws and regulations relating to, the temporary services and
outsourcing industry.
-23-
<PAGE> 24
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NORRELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
October 27, 1996 and October 29, 1995
(In thousands, except share amounts)
<TABLE>
<CAPTION>
ASSETS 1996 1995
- ------ --------- ---------
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 8,876 $ 5,115
Accounts receivable trade,
less allowances of $7,411 in 1996 145,843 122,206
and $4,869 in 1995
Prepaid expenses 2,674 2,456
Other 9,995 8,718
--------- ---------
Total current assets 167,388 138,495
--------- ---------
PROPERTY AND EQUIPMENT, less
accumulated depreciation 13,513 9,513
--------- ---------
NONCURRENT DEFERRED INCOME TAXES 6,034 6,059
--------- ---------
OTHER ASSETS
Goodwill and other intangibles, net of amortization 45,069 13,617
MIS development costs, net of amortization 18,634 4,612
Investments and other assets 12,593 9,728
--------- ---------
Total other assets 76,296 27,957
--------- ---------
TOTAL ASSETS $ 263,231 $ 182,024
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 9,789 $ 2,571
Accounts payable 14,651 10,590
Accrued expenses 67,536 59,663
Deferred revenue and gain 10,822 10,179
--------- ---------
Total current liabilities 102,798 83,003
LONG-TERM DEBT, less current maturities 23,316 2,057
LONG-TERM DEFERRED GAIN 11,471 --
LONG-TERM ACCRUED EXPENSES 27,614 24,030
--------- ---------
Total liabilities 165,199 109,090
--------- ---------
SHAREHOLDERS' EQUITY
Common stock, stated value $.01 per share;
50,000,000 shares authorized, with shares
issued of 23,566,204 in 1996 and 23,213,808
in 1995 236 232
Treasury stock, at cost; 29,091 shares in 1996
and 41,290 shares in 1995 (575) (476)
Additional paid-in capital 44,096 41,382
Notes receivable from officers and employees (111) (398)
Retained earnings 54,386 32,194
--------- ---------
Total shareholders' equity 98,032 72,934
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 263,231 $ 182,024
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-24-
<PAGE> 25
NORRELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED OCTOBER 27, 1996, OCTOBER 29, 1995 AND OCTOBER 30, 1994
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
REVENUES $ 1,013,877 $ 842,360 $ 701,921
COST OF SERVICES 795,013 656,517 543,330
------------- ------------- -------------
Gross profit 218,864 185,843 158,591
OPERATING EXPENSES 169,206 149,745 128,919
DEPRECIATION AND AMORTIZATION 5,904 4,261 4,677
------------- ------------- -------------
Income from operations 43,754 31,837 24,995
OTHER INCOME (EXPENSE)
Recovery of preferred stock investment -- -- 5,000
Interest (1,200) (365) (1,956)
Other (1,485) (1,628) (408)
------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 41,069 29,844 27,631
INCOME TAXES 15,812 12,518 11,827
------------- ------------- -------------
INCOME FROM CONTINUING OPERATIONS 25,257 17,326 15,804
DISCONTINUED OPERATIONS
Loss on disposal, net -- (348) --
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE -- -- 3,414
------------- ------------- -------------
NET INCOME $ 25,257 $ 16,978 $ 19,218
============= ============= =============
EARNINGS (LOSS) PER COMMON SHARE
Continuing operations $ 1.00 $ 0.71 $ 0.69
Discontinued operations -- (0.01) --
Cumulative effect of change in
accounting for income taxes -- -- 0.15
------------- ------------- -------------
$ 1.00 $ 0.70 $ 0.84
============= ============= =============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 25,344 24,357 22,782
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-25-
<PAGE> 26
NORRELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended October 27, 1996, October 29, 1995 and October 30, 1994
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Additional Receivable
Common Stock Treasury Paid-In From Officers Retained
Shares Amount Stock Capital and Employees Earnings
---------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE at October 31, 1993 11,584 $ 115 $ -- $ 19,360 $ (4,163) $ 26,814
Adjustment to reflect two-for-one
stock split in 1996 11,584 115 -- -- -- (115)
Adjustment to reflect pooling of
interests in 1996 1,000 10 -- (6) -- 1,470
---------- ---------- ---------- ---------- ---------- ----------
BALANCE at October 31, 1993, restated 24,168 240 -- 19,354 (4,163) 28,169
Stock options exercised 446 5 128 1,422 -- --
Common stock issued 4,850 49 33 30,913 -- --
Dividends on common stock
($0.03 per share) -- -- -- -- -- (685)
Issuance of options for discounted
stock option plan -- -- -- 586 -- --
Purchase and retirement of common
stock (5,608) (55) -- (9,240) (21,948)
Purchase of treasury stock -- -- (378) -- -- --
Decrease in receivable from major
shareholder -- -- -- -- 4,163 --
Increase in receivable from employees -- -- -- -- (545) --
Net income -- -- -- -- -- 19,218
---------- ---------- ---------- ---------- ---------- ----------
BALANCE at October 30, 1994 23,856 239 (217) 43,035 (545) 24,754
Stock options exercised 560 5 299 1,987 (96) --
Common stock issued 12 -- 28 78 (14) --
Dividends on common stock
($0.12 per share) -- -- -- -- -- (2,639)
Issuance of options for discounted
stock option plan -- -- -- 703 -- --
Purchase and retirement of common
stock (1,162) (12) -- (4,421) -- (6,899)
Purchase of treasury stock (52) -- (586) -- -- --
Decrease in receivable from employees -- -- -- -- 257 --
Net income -- -- -- -- -- 16,978
---------- ---------- ---------- ---------- ---------- ----------
BALANCE at October 29, 1995 23,214 232 (476) 41,382 (398) 32,194
Stock options exercised 337 4 436 1,213 -- --
Common stock issued 41 -- -- 563 (40) --
Dividends on common stock
($0.14 per share) -- -- -- -- -- (3,065)
Issuance of options for discounted
stock option plan -- -- -- 938 -- --
Purchase of treasury stock (26) -- (535) -- -- --
Decrease in receivable from employees -- -- -- -- 327 --
Net income -- -- -- -- -- 25,257
---------- ---------- ---------- ---------- ---------- ----------
BALANCE at October 27, 1996 23,566 $ 236 $ (575) $ 44,096 $ (111) $ 54,386
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-26-
<PAGE> 27
NORRELL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended October 27, 1996, October 29, 1995 and October 30, 1994
(In thousands)
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 25,257 $ 16,978 $ 19,218
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization - operating expenses 5,904 4,261 4,677
Depreciation and amortization - cost of services/other expenses 409 235 661
Cumulative effect of change in accounting principle -- -- (3,414)
Recovery of investment -- -- (5,000)
Loss on disposal of discontinued operations -- 348 --
Gain on retirement of common stock (2,177) (4,499) --
Loss on disposal of property and equipment 218 326 242
Provision for doubtful accounts 2,315 1,699 2,509
Deferred income taxes 173 963 783
Deferred gain on sale of building 12,967 -- --
Long-term accrued expenses 2,304 3,222 7,370
Other 106 270 (358)
Change in current assets and current liabilities
Accounts receivable, trade (20,235) (28,899) (6,258)
Prepaid expenses 245 181 (846)
Deferred revenue 1,202 (251) 1,680
Accounts payable 3,025 6,180 (926)
Accrued expenses 7,759 8,320 (1,706)
Other (1,491) (1,987) (331)
----------- ----------- -----------
Net cash provided by operating activities 37,981 7,347 18,301
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cost of acquisitions, net of cash acquired (32,963) (2,861) --
Proceeds from sale of discontinued operations -- -- 16,500
Increase in MIS development costs, net (14,741) (4,687) --
Additions to property and equipment (7,439) (5,999) (2,132)
Disposal of property and equipment 559 663 --
(Increase) decrease in goodwill and other intangibles, net (270) 1,599 5,596
Recovery of preferred stock investment -- -- 5,000
Reduction in receivable from major shareholder -- -- 4,163
Cash investments in and advances to joint ventures (1,849) (908) (332)
Cash distributions from joint venture 325 780 850
Increase in other investments (522) (155) (1,128)
Decrease (increase) in other noncurrent assets -- 233 (413)
----------- ----------- -----------
Net cash (used in) provided by investing activities (56,900) (11,335) 28,104
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt 27,893 2,598 629
Repayments of long-term debt (4,109) (381) (42,879)
Purchase of common stock -- -- (30,966)
Proceeds from the issuance of common stock 564 58 30,394
Dividends paid on common stock (3,065) (2,639) (685)
Stock options exercised 1,646 2,186 1,175
Acquisition of treasury stock (536) (552) (217)
Reduction in receivables from officers and employees 287 257 --
----------- ----------- -----------
Net cash provided by (used in) financing activities 22,680 1,527 (42,549)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS 3,761 (2,461) 3,856
CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF PERIOD 5,115 7,576 3,720
----------- ----------- -----------
CASH AND SHORT-TERM INVESTMENTS AT END
OF PERIOD $ 8,876 $ 5,115 $ 7,576
=========== =========== ===========
SUPPLEMENTARY CASH FLOW DISCLOSURES
Cash payments during the period for
Interest $ 1,183 $ 364 $ 2,811
Income taxes, net of refunds 17,303 12,907 4,212
Noncash investing and financing activity
Issuance of options to benefit plan 98 703 586
Exercise of benefit plan stock options (630) (385) (323)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-27-
<PAGE> 28
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 27, 1996, OCTOBER 29, 1995 AND OCTOBER 30, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
Basis of Presentation
The consolidated financial statements include the accounts of Norrell
Corporation and its subsidiaries (the "Company"). All material intercompany
accounts and transactions have been eliminated.
Business and Revenue Recognition
The Company operates in one industry segment, providing staffing and
outsourcing services in the United States and parts of Canada.
Revenue is generally recognized upon the performance of services. Certain
services are performed under long-term contracts. Revenue from these contracts
is recognized using the percentage-of-completion method based on the percentage
that incurred costs to date bear to total estimated costs after giving effect to
the most recent estimates of total cost. Losses expected to be incurred on jobs
in process would be charged to income as soon as such losses are known. Amounts
received from customers in excess of revenues recognized to date are classified
as deferred revenues and are included in current liabilities.
A portion of the Company's revenue is attributable to franchise
operations. Employees and customers of franchise operations are employees and
customers of the Company. The Company includes such revenues and related direct
costs in its revenue and cost of services, respectively. The net distribution
paid to the franchisee is based on a percentage of the gross profit generated
and is included in operating expenses.
Significant Customer Information
For fiscal year 1996, two customers accounted for 27.6% of revenues.
For fiscal years 1995 and 1994, one customer accounted for revenues of 16.2% and
20.0%, respectively.
Statements of Cash Flows
For purposes of the statements of cash flows, the Company considers all
liquid investments with a maturity of three months or less at the time of
purchase to be cash equivalents.
Intangible Assets
Intangible assets consist primarily of goodwill associated with acquired
businesses, which is amortized on a straight-line basis over 40 years.
Subsequent to an acquisition, the Company regularly evaluates whether events and
circumstances have occurred that indicate the carrying amount of goodwill may
warrant revision or may not be recoverable. When factors indicate that goodwill
should be evaluated for possible impairment, the Company uses an estimate of the
future undiscounted net cash flows of the related business over the remaining
life of the goodwill in measuring whether the goodwill is recoverable. Other
intangible assets are amortized over two to seven years. Amortization expense
for fiscal years 1996, 1995 and 1994 was $1,015,000, $641,000, and $1,486,000,
respectively. Accumulated amortization of intangibles was $7,853,000 and $
6,944,000 at October 27, 1996 and October 29, 1995, respectively.
-28-
<PAGE> 29
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Management Information Systems ("MIS") Development Costs
During fiscal 1996 and 1995, the Company incurred costs associated with
the purchase and development of management information systems. These costs are
capitalized and amortized on a straight-line basis over five years. MIS
development cost amortization for 1996 and 1995 was $719,000 and $70,000,
respectively.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of no par preferred
stock. The Board of Directors is authorized to fix relative rights, preferences,
and limitations of any unissued series of preferred stock. No preferred stock
was issued or outstanding at October 27, 1996 or October 29, 1995.
Other Income (Expense)
Other income (expense) consists of the following:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Interest income $ 481 $ 428 $ 497
Gain on settlement of interest
rate swap agreements -- -- 760
Dividend income -- -- 444
Equity in loss of joint ventures (803) (656) (201)
Amortization of deferred loan costs and
bank fees (885) (762) (1,142)
Loss on disposal of fixed assets (218) (335) (266)
Other, net (60) (303) (500)
------- ------- -------
Total $(1,485) $(1,628) $ (408)
------- ------- -------
</TABLE>
Earnings (Loss) Per Share
Earnings (loss) per share is computed by dividing income (loss)
attributable to common shareholders by the weighted average number of shares of
common stock outstanding during each period adjusted to reflect the assumed
exercise of dilutive stock options under the treasury stock method.
Stock Split
On June 4, 1996, the Board of Directors authorized a two-for-one split of
common stock for shareholders of record on June 24, 1996. The stated value
remained at $.01 per share. All references in the accompanying financial
statements to the number of common shares, except shares authorized, and to
per-share amounts have been restated to reflect the stock split. The stated
value of the additional shares of common stock issued in connection with the
stock split has been credited to common stock with the like amount charged to
retained earnings.
Use of 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.
-29-
<PAGE> 30
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Reclassifications
Certain amounts have been reclassified in the 1995 and 1994 financial
statements to conform to the 1996 presentation.
Fiscal Year
Prior to 1996, the Company's fiscal year was a 52 or 53 week period which
ended on the Sunday closest to October 31. In 1996, the fiscal year end was
changed to the last Sunday in October. Each of the fiscal years ended October
27, 1996, October 29, 1995 and October 30, 1994 included 52 weeks.
2. ACQUISITIONS
Effective July 15, 1996, the Company acquired all of the assets and
certain of the liabilities of Analytical Technologies, Inc. and ANATEC Canada,
Inc. (collectively, "ANATEC"). ANATEC is a software services and technology
organization serving primarily Fortune 500 companies in the Midwestern United
States. Services include consulting, project management, software development,
training and software systems integration services. The $25,905,000 excess of
the acquisition cost over the fair value of ANATEC's tangible assets has been
allocated to goodwill and is being amortized over 40 years. In addition to the
$27,100,000 paid at closing, ANATEC has the right to receive a contingent
payment based on its achieving a specified level of gross profit for the
12-month period ending December 31, 1996. At June 30, 1996, ANATEC had net
assets of $1,469,000.
On August 5, 1996, the Company acquired all of the issued and outstanding
stock of American Technical Resources Inc. ("ATR") in exchange for 1,000,000
shares of company common stock in a transaction accounted for as a pooling of
interests. ATR is an information technology staffing company that specializes in
providing computer professionals for short and long term assignments including
contract programming, contract recruiting and payrolling services. At July 31,
1996, ATR had net assets of $3,224,000. The Company's financial statements have
been restated to include the results of ATR for all periods presented.
3. DISCONTINUED OPERATIONS
On October 29, 1993, the Company sold substantially all assets of its
comprehensive home care and nursing resource management operations to Hooper
Holmes, Inc., a New York corporation. In the third quarter of 1995, a loss on
disposal of $348,000, net of tax, was provided for legal expenses and expenses
associated with the wind down of these operations.
4. PROPERTY AND EQUIPMENT, INVESTMENTS AND NON-OPERATING ASSETS
Property and Equipment
The major classes of property and equipment are as follows:
<TABLE>
<CAPTION>
October 27, October 29,
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Leasehold improvements $ 5,542 $ 4,823
Furniture, fixtures and equipment 31,508 24,141
------- -------
37,050 28,964
Less accumulated depreciation 23,537 19,451
------- -------
Net property and equipment $13,513 $ 9,513
======= =======
</TABLE>
Property and equipment are stated at cost. Depreciation is provided on a
straight-line basis over the estimated asset lives of three to twelve years for
leasehold improvements and three to ten years for furniture, fixtures and
equipment.
Depreciation expense for fiscal years 1996, 1995 and 1994 was $4,273,000,
$3,413,000 and $2,893,000, respectively.
-30-
<PAGE> 31
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Investments and Other Assets
Investments consist principally of securities held for employee benefit
plans and are carried at market.
On October 29, 1995, the Company sold for $4,250,000 all land and
buildings which had been held as rental property. Proceeds from the sale
included a $3,425,000 note receivable. The note bears interest at 7% and is due
in October 1998. The sale resulted in a pretax loss of $307,000.
In October 1994, the Company acquired a 50% equity interest in a joint
venture formed for the purpose of providing administrative outsourcing services
for health care facilities. During fiscal years 1996, 1995 and 1994, the Company
contributed $1,059,000, $908,000 and $167,000, respectively, for general
operating purposes in accordance with the joint venture agreement.
In 1994, the Company recovered $5,000,000 of principal and $444,000 of
dividends from an investment in preferred stock which had been written off in
1991.
5. ACCRUED EXPENSES
Current and long-term accrued expenses are summarized as follows:
<TABLE>
<CAPTION>
October 27, October 29,
1996 1995
---- ----
(In thousands)
<S> <C> <C>
Current:
Accrued wages, salaries and related taxes $48,905 $41,522
Workers' compensation reserve, current portion 6,737 7,008
Other 11,894 11,133
------- -------
Total $67,536 $59,663
======= =======
Long-term:
Workers' compensation reserve, less current portion $16,146 $16,796
Other 11,468 7,234
------- -------
Total $27,614 $24,030
======= =======
</TABLE>
The Company self-insures up to specified limits for certain risks related
to workers' compensation liability. The estimated costs of existing and future
claims under the insurance program are accrued as incidents occur based on
historical loss development trends which may be subsequently revised based on
developments relating to such claims.
-31-
<PAGE> 32
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
6. NOTES PAYABLE AND LONG-TERM DEBT
The Company's debt is summarized as follows:
<TABLE>
<CAPTION>
October 27, October 29,
1996 1995
---- ----
(In Thousands)
<S> <C> <C>
Revolving credit facility, due September 30, 1999,
with varying interest rates, interest payable monthly $23,000 $ 2,194
Bank lines of credit due in varying installments before
October 26, 1997, with varying interest rates,
interest payable monthly 9,555 1,775
Other notes payable in various
installments through 2000 550 659
------- -------
Total 33,105 4,628
Less current maturities 9,789 2,571
------- -------
Total long-term debt $23,316 $ 2,057
======= =======
</TABLE>
At October 27, 1996, the Company had a $95,000,000 revolving credit
facility expiring September 30, 1999 with a group of commercial banks.
Borrowings are unsecured and bear interest at LIBOR, plus an applicable margin.
The revolving credit facility contains negative and affirmative covenants
which (a) limit additional indebtedness, liens, investments, payment of
dividends and disposition of assets and (b) require maintenance of certain
financial ratios. In addition, four commercial banks make available unsecured
lines of credit that total $40,000,000. Maturities and interest rates on
borrowings under these lines are negotiated at the time such borrowings occur.
The Company's policy is to classify borrowings under the revolving credit
facility as long-term debt since the Company has the ability under the credit
agreement, and the intent, to maintain the obligation for longer than one year.
-32-
<PAGE> 33
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following is a summary of data concerning total debt (Dollars in thousands):
<TABLE>
<CAPTION>
Revolving Credit Facility Lines of Credit
------------------------------------ ---------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Outstanding borrowings at end of period $23,000 $2,194 $9,555 $1,775
Outstanding month-end balances:
Maximum 33,448 3,073 11,470 4,450
Average 30,835 2,020 5,274 670
Weighted average interest rate:
At end of period 5.63 % 8.75 % 5.57 % 6.22 %
For the period 5.95 % 9.41 % 5.65 % 6.15 %
</TABLE>
Future maturities of long-term debt as of October 27, 1996 are as follows:
Year Amount
---- ------
(In thousands)
Fiscal 1998 $ 182
Fiscal 1999 23,134
-------
Total $23,316
=======
7. DEFERRED REVENUE AND GAIN
On December 11, 1995, the Company's headquarters building was sold by the
joint venture which owned it. The Company had a 50% interest in this joint
venture which was formed in 1986 to construct, finance, own and operate a
300,000-square-foot office building in Atlanta, Georgia. The cost of the
building was approximately $26,000,000. Each partner contributed $3,000,000 (the
other partner also contributed the land for the project), and the balance was
financed with a 9.75% nonrecourse 20-year mortgage loan. The investment was
accounted for by the equity method. Because of cash distributions, the Company
had a negative investment balance of $1,584,000 at October 29, 1995. The
Company's share of the pretax gain from the sale was $14,251,000. Concurrent
with the sale, the Company extended its lease for office space in the building
for an additional seven years. The gain has been deferred and is being amortized
on a straight-line basis through July 2005 since the landlord may terminate the
lease as of this date, and is recorded as a reduction in rent expense. At
October 27, 1996, the deferred gain was $12,967,000 of which $11,471,000 was
classified as long-term and $1,496,000 was classified as a current liability in
the accompanying balance sheets.
Included in deferred revenue in the accompanying balance sheets was
$4,121,000 and $6,298,000 at October 27, 1996 and October 29, 1995,
respectively, resulting from redemption of 580,947 shares of the Company's
common stock. On December 1, 1994, the stock was returned by a major customer as
partial consideration for the Company agreeing to renegotiate that customer's
contract for services. The difference between the fair market value of the stock
at the redemption date and the unamortized cost of the prior service contract
(approximately $11,000,000) was deferred and is being amortized into income
through December 1998, the term of the new service contract.
-33-
<PAGE> 34
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
8. STOCK OPTION AND PURCHASE PLANS
The Company has a stock incentive plan for the grant of equity-based
incentives in the form of nonqualified stock options, incentive stock options,
shares of restricted stock, unrestricted bonus stock, performance units, phantom
stock, stock appreciation rights and dividend equivalent rights. There are
3,111,113 shares of common stock reserved for issuance under the plan. Incentive
stock options are granted at not less than fair value and expire five to ten
years after the date of grant. Nonqualified options are granted at prices
determined by the Board of Directors and expire five to ten years after the date
of grant. The exercise period for all options is fixed by the Board. No shares
of restricted stock, unrestricted bonus stock, performance units, phantom stock,
stock appreciation rights or dividend equivalent rights have been issued.
Nonqualified stock options to purchase common stock have been granted to certain
directors.
A summary of stock option activity follows:
<TABLE>
<CAPTION>
Shares
Under Price Range
Options Per Share
------- -----------
<S> <C> <C>
Outstanding, at October 31, 1993 2,133,690 $ 3.05 - $ 5.25
Granted 779,362 7.00 - 8.25
Exercised (490,716) 3.05 - 5.25
Cancelled/Expired (171,426) 3.05 - 5.25
---------
Outstanding, at October 30, 1994 2,250,910 3.05 - 8.25
Granted 1,379,598 9.25 - 16.32
Exercised (525,586) 3.05 - 9.25
Cancelled/Expired (107,172) 3.05 - 11.25
---------
Outstanding, at October 29, 1995 2,997,750 3.05 - 16.32
Granted 469,674 14.56 - 32.00
Exercised (298,733) 3.05 - 12.75
Cancelled/Expired (151,331) 3.05 - 14.94
---------
Outstanding, at October 27, 1996 3,017,360 $ 3.05 - $32.00
=========
</TABLE>
At October 27, 1996, options to purchase 1,517,514 shares were exercisable and
93,753 shares were reserved and available for future options.
On January 1, 1996, the Company instituted an employee stock purchase plan for
all employees. Employees may contribute up to 15% of their compensation to
purchase the Company's common stock at 85% of the lower of the fair market value
on the first or last business day of quarterly purchase periods. The Company has
reserved 600,000 shares of common stock for the plan. At October 27, 1996,
570,366 shares were available for future issuance.
-34-
<PAGE> 35
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
9. BENEFIT PLANS
The Company has a tax qualified 401(k) profit sharing plan which covers
substantially all nonhighly compensated employees, as defined under the Internal
Revenue Code, other than temporary employees. The plan provides for a matching
company contribution of an amount up to 1% of employee compensation. In
addition, the Company may make discretionary contributions to the plan. Company
contributions are 100% vested after two years of service (three years in the
case of employees hired on or after January 1, 1994).
The Company has an unfunded, nonqualified plan for those highly
compensated employees not covered by the qualified plan. Under this plan, the
Company may match participant contributions up to a percentage of participant
compensation determined by the Company. In addition, the Company may make
discretionary contributions to the plan. Participants are immediately 100%
vested in their contributions and are 100% vested in the Company's contribution
after three years of service. Participant contributions may be used to purchase
rights to buy company stock or may be invested in funds established by the plan
administrator. Company contributions are used to purchase rights to buy company
stock. Rights are purchased for the fair value of the underlying stock at the
time of grant, less the exercise price of $0.15 per share. Rights may not be
exercised until the date the participant terminates employment. At October 27,
1996, 383,529 rights ranging in price from $3.05 to $31.25 per share were
outstanding and 91,056 were available for grant.
Effective in June 1994, the Company instituted a management equity
program under which members of senior management who are designated as
participants in the plan may purchase, at fair market value, shares of common
stock, and for those participants who meet certain minimum stock ownership
thresholds, stock options will be granted as set forth in the plan. There are
400,000 shares of common stock reserved for issuance under this plan. At October
27, 1996, 106,932 shares had been issued. The remaining reserve totaled 293,068
shares. Any stock options granted under this plan will be issued under the
Company's stock incentive plan. At October 27, 1996, the balance of notes
receivable from plan participants for stock purchases was $111,000.
Certain highly compensated employees may also qualify for an unfunded,
nonqualified salary continuation plan. The plan provides for a benefit upon
reaching age 62 and ending at age 76 equal to 20% of average annual compensation
as defined in the plan. Vesting occurs over ten years (starts in year six at 20%
and reaches 100% in year ten).
Total expense related to the above described benefit plans for the years
ended 1996, 1995 and 1994 was $3,164,000, $2,408,000 and $1,646,000,
respectively.
10. INCOME TAXES
Effective November 1, 1993, the Company changed its method of accounting
for income taxes from the deferred method to the liability method as required by
Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting
for Income Taxes". As permitted under the new rules, prior years' financial
statements have not been restated. The cumulative effect of adopting SFAS 109 as
of November 1, 1993 was to increase net income by $3,414,000.
-35-
<PAGE> 36
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The provision (benefit) for federal, foreign and state income taxes
consists of the following:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(In thousands)
Current:
<S> <C> <C> <C>
Federal $ 14,197 $ 9,749 $ 7,509
State 1,576 1,758 2,595
Foreign (83) 68 (73)
-------- -------- --------
15,690 11,575 10,031
-------- -------- --------
Deferred:
Federal (1,415) 1,009 (1,317)
State 1,537 (318) (301)
-------- -------- --------
122 691 (1,618)
-------- -------- --------
Total $ 15,812 $ 12,266 $ 8,413
======== ======== ========
Income tax provision
(benefit)
Continuing operations $ 15,812 $ 12,518 $ 11,827
Discontinued operations -- (252) --
Cumulative effect of
change in accounting
principle -- -- (3,414)
-------- -------- --------
Total $ 15,812 $ 12,266 $ 8,413
======== ======== ========
</TABLE>
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
October 27, October 29,
1996 1995
-------- --------
(In thousands)
<S> <C> <C>
Deferred tax liabilities:
MIS development costs $ (4,099) $ (1,794)
Other (4,680) (2,159)
-------- --------
(8,779) (3,953)
-------- --------
Deferred tax assets:
Workers' compensation 8,000 10,716
Profit sharing 4,767 3,898
Bad debts 2,510 1,467
Gains on sale of interest in headquarters building 5,094 --
Other 398 91
-------- --------
20,769 16,172
-------- --------
Net deferred tax assets $ 11,990 $ 12,219
======== ========
</TABLE>
-36-
<PAGE> 37
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Subsequent to the preparation of the financial statements as of October
31, 1993, the Company, based on the advice of tax counsel, determined that the
1993 tax loss on disposal of a subsidiary should be reported as an ordinary loss
in the 1993 tax return which was filed in July 1994. This resulted in claims for
federal and state refunds of approximately $6,900,000, all of which had been
collected and credited to goodwill as of October 29, 1995.
The reconciliation of income tax attributable to continuing operations
computed at the U.S. statutory tax rate to income tax expense is:
<TABLE>
<CAPTION>
Fiscal Years
------------------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Income taxes at statutory rate 35.0% 35.0% 35.0%
State taxes, net of federal benefit 2.4 6.0 6.4
Amortization of goodwill 0.4 0.4 1.0
Other, net 0.7 0.5 0.4
------ ------ ------
38.5% 41.9% 42.8%
====== ====== ======
</TABLE>
11. COMMITMENTS AND CONTINGENCIES
At October 27, 1996, the Company was committed under operating leases for
office facilities and certain equipment. Aggregate minimum rental requirements
under these leases are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
(In thousands)
<S> <C>
1997 $ 9,858
1998 8,511
1999 6,881
2000 5,796
2001 4,790
Thereafter 20,115
-------
Total $55,951
=======
</TABLE>
Rent expense was $8,409,000, $8,441,000 and $7,863,000 for fiscal years
1996, 1995 and 1994, respectively.
Effective April 1, 1993, the Company entered into a ten year contract for
the purchase of information systems operations services at an annual base cost
ranging from $3,000,000 to $5,000,000.
The Company is, from time to time, a party to ordinary, routine
litigation incidental to the Company's business. In the opinion of management,
the ultimate resolution of all pending legal proceedings will not have an
adverse effect on the Company's business or financial condition.
-37-
<PAGE> 38
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
12. SELECTED QUARTERLY INFORMATION (UNAUDITED)
Fiscal 1996 Quarter Ended
-------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
January 28 April 28 July 28 October 27
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 229,251 $ 250,334 $ 255,275 $ 279,017
Gross profit 49,434 53,323 53,977 62,130
Net income $ 5,114 $ 6,249 $ 6,619 $ 7,275
=========== =========== =========== ===========
Earnings per common share $ 0.21 $ 0.25 $ 0.26 $ 0.28
=========== =========== =========== ===========
Weighted average number of shares outstanding 24,774 24,929 25,485 25,820
=========== =========== =========== ===========
</TABLE>
Fiscal 1995 Quarter Ended
-------------------------
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
January 29 April 30 July 30 October 29
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 192,650 $ 203,987 $ 209,785 $ 235,938
Gross profit 42,660 44,167 46,380 52,636
Income from continuing operations before 3,989 4,034 4,464 4,839
discontinued operations
Discontinued operations -- (348) -- --
----------- ----------- ----------- -----------
Net income $ 3,989 $ 4,034 $ 4,116 $ 4,839
=========== =========== =========== ===========
Earnings per common share:
Continuing operations $ 0.16 $ 0.17 $ 0.18 $ 0.20
Discontinued operations -- -- (0.01) --
----------- ----------- ----------- -----------
Net income $ 0.16 $ 0.17 $ 0.17 $ 0.20
=========== =========== =========== ===========
Weighted average number of shares outstanding 24,400 24,236 24,288 24,564
=========== =========== =========== ===========
</TABLE>
-38-
<PAGE> 39
NORRELL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
13. SUBSEQUENT EVENT
On December 8, 1996, the Company executed an agreement to purchase all of the
outstanding common and preferred stock and all vested and unvested stock rights
of Comtex Information Systems, Inc. ("Comtex") for $67 million of cash plus
options to acquire approximately 141,000 shares of Norrell Corporation common
stock at an average exercise price of $4.43 per share. The transaction, which
will be accounted for under the purchase method of accounting, is scheduled to
close on or about January 2, 1997. Comtex is a New York City-based provider of
information systems services, including systems planning and development,
organizational consulting related to business transformation and staff
augmentation support. Comtex has locations in New York City, White Plains, New
York, and Miami, Florida. At October 31, 1996, Comtex had net assets of
$10,921,000.
-39-
<PAGE> 40
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The Shareholders of Norrell Corporation:
We have audited the accompanying consolidated balance sheets of Norrell
Corporation (a Georgia corporation) and subsidiaries as of October 27, 1996 and
October 29, 1995 and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended October 27, 1996. 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 financial position of Norrell Corporation and
subsidiaries as of October 27, 1996 and October 29, 1995 and the results of
their operations and their cash flows for each three years in the period ended
October 27, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
December 10, 1996
-40-
<PAGE> 41
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
We have audited in accordance with generally accepted auditing
standards, the financial statements of Norrell Corporation included in the Form
10-K and have been issued our report thereon dated December 10, 1996. Our audit
was made for the purpose of forming an opinion on the financial statements taken
as a whole. The schedule listed in the preceding index is presented for the
purpose of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
December 10, 1996
-41-
<PAGE> 42
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
Information regarding Executive Officers of the Company is contained in
Item 4A of Part I. Information as to Directors required by this item is
incorporated by reference from the Company's definitive Proxy Statement, under
the caption "Proposal 1. Election of Directors", which Proxy Statement will be
mailed to stockholders in connection with the Company's annual meeting of
stockholders, which is scheduled to be held March 4, 1997 and will be filed with
the Securities and Exchange Commission pursuant to Regulation 14A.
ITEM 11. EXECUTIVE COMPENSATION.
Information as to Executive Compensation required by this item is
incorporated by reference from the Company's definitive Proxy Statement, under
the caption "Executive Compensation" which Proxy Statement will be mailed to
stockholders in connection with the Company's annual meeting of stockholders,
which is scheduled to be held March 4, 1997 and will be filed with the
Securities and Exchange Commission pursuant to Regulation 14A.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information as to Security Ownership of Certain Beneficial Owners and
Management required by this item is incorporated by reference from the Company's
definitive Proxy Statement, under the caption "Voting Rights and Principal
Shareholders", which Proxy Statement will be mailed to stockholders in
connection with the Company's annual meeting of stockholders, which is scheduled
to be held March 4, 1997 and will be filed with the Securities and Exchange
Commission pursuant to Regulation 14A.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information as to Certain Relationships and Related Transactions
required by this item is incorporated by reference from the Company's definitive
Proxy Statement, under the caption "Certain Transactions and Relationships",
which Proxy Statement will be mailed to stockholders in connection with the
Company's annual meeting of stockholders, which is scheduled to be held March 4,
1997 and will be filed with the Securities and Exchange Commission pursuant to
Regulation 14A.
-42-
<PAGE> 43
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A) FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND EXHIBITS.
1. FINANCIAL STATEMENTS.
The following consolidated financial statements of the Company and
it subsidiaries are included in Item 8 of this report:
<TABLE>
<S> <C>
Consolidated Balance Sheets as of October 27, 1996 and October 29, 1995. p. 24
Consolidated Statements of Income for fiscal years 1996, 1995, and 1994. p. 25
Consolidated Statements of Shareholders' Equity for fiscal years 1996, 1995, and 1994. p. 26
Consolidated Statements of Cash Flows for fiscal years 1996, 1995, and 1994. p. 27
Notes to Consolidated Financial Statements. p. 28
Reports of Independent Public Accountants. p. 40, 41
Selected quarterly financial data for the fiscal years ended October 27, 1996 and
October 29, 1995 is set forth in Note 12 - Selected Quarterly Information (Unaudited)
included in Item 8 of this report. p. 38
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES.
The following financial statement schedule of the Company is
included herein:
<TABLE>
<S> <C>
II. Valuation and Qualifying Accounts p. 53
</TABLE>
Schedules not listed above have been omitted because they are not
applicable, or the required information is included in the
financial statements or notes thereto.
3. EXHIBITS.
The Exhibits filed as a part of this Form 10-K are listed in Item
14(c) of this report, which listing is incorporated herein by
reference.
(B) REPORTS ON FORM 8-K.
During the last quarter of the period covered by this report on Form
10-K, the Company filed the following Current Reports on Form 8-K:
(1) Current Report on Form 8-K filed August 6, 1996 providing
information under Items 2 and 7 relating to the acquisition of
Analytical Technologies, Inc. and ANATEC Canada, Inc.
(2) Amendment Number One on Form 8-K/A filed October 2, 1996 to
Current Report on Form 8-K providing information under Items 2 and
7 relating to the acquisition of Analytical Technologies, Inc. and
ANATEC Canada, Inc., and including the following financial
statements:
(a) Financial statements of Analytical Technologies, Inc. as of
December 31, 1995 and 1994, (audited).
(b) Financial statements of ANATEC CANADA, Inc. as of December
31, 1995, (audited).
(c) Balance sheet of Analytical Technologies, Inc. as of June,
30, 1996, (unaudited).
-43-
<PAGE> 44
(d) Statements of operations and statements of cash flows of
Analytical Technologies, Inc. as of June 30, 1996 and June 30,
1995, (unaudited).
(e) Balance sheet of ANATEC CANADA, Inc. as of June 30, 1996,
(unaudited).
(f) Statements of operations and statements of cash flows of ANATEC
CANADA, Inc. as of June 30, 1996 and June 30, 1995, (unaudited).
(g) Norrell Corporation pro forma condensed consolidated statement of
income for the year ended October 29, 1995, (unaudited).
(h) Norrell Corporation pro forma condensed consolidated statement of
income for the nine month period ended July 28, 1996, (unaudited).
(3) Current Report on Form 8-K filed August 20, 1996 providing information
under Items 2 and 7 relating to the acquisition of American Technical
Resources, Inc.
(4) Amendment Number One on Form 8-K/A filed October 15, 1996 to Current
Report on Form 8-K, providing information under Items 2 and 7 relating to
the acquisition of American Technical Resources, Inc. and including the
following financial statements:
(a) Financial statements of American Technical Resources, Inc. as of
July 30, 1996, (unaudited) and October 31, 1995, (audited).
(b) Norrell Corporation pro forma combined balance sheet as of July
28, 1996, (unaudited).
(c) Norrell Corporation pro forma combined statement of income for the
nine month period ended July 28, 1996, (unaudited).
(d) Norrell Corporation pro forma combined statements of income for
the years ended October 29, 1995, October 30, 1994 and October 31,
1993, (unaudited).
-44-
<PAGE> 45
3. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
--------------------------------------------------------------------
<S> <C>
3.1 Amended and Restated Articles of Incorporation of the
Company, incorporated by reference to Exhibit 3.1 of the
Company's Amendment No. 1 to Registration Statement on Form
S-1, as filed with the Securities and Exchange Commission
on June 22, 1994.
3.2 Amended and Restated Bylaws of the Company, incorporated by
reference to Exhibit 3.2 of the Company's Registration
Statement on Form S-1, as filed with the Securities and
Exchange Commission on June 10, 1994.
4.1 See Exhibits 3.1 and 3.2 for provisions of the Amended and
Restated Articles of Incorporation and the Amended and
Restated Bylaws of the Company defining the rights of the
holders of securities of the Company.
4.2 Form of Specimen Stock Certificate, incorporated by
reference to Exhibit 4.2 to Amendment No. 3 to the
Company's Registration Statement on Form S-1 filed with the
Securities and Exchange Commission on July 21, 1994.
10.1 Stock Purchase Agreement executed in 1981 by and among Guy
W. Millner, Robert J. Gibson, Norrell Corporation and the
several purchasers named therein and related stock purchase
option agreement, incorporated by reference to Exhibit 10.1
of the Company's Registration Statement on Form S-1, as
filed with the Securities and Exchange Commission on June
10, 1994.
10.2 Norrell Corporation Employee Stock Purchase Plan,
incorporated by reference to Exhibit 10.2 to the Company
Form 10-K for the year ended October 29, 1995.*
10.3 Agreement and Plan of Reorganization among American
Technical Resources, Inc., Charles F. Phillips, Ralph L.
Lary, III, Gary L. Kilgore, William C. Holman, George G.
Lytle, Norrell Corporation and N. Acquisition Corp., dated
August 5, 1996, incorporated by reference to Exhibit 1 of
the Company's Current Report on Form 8-K filed on August
20, 1996.
10.4 Asset Purchase Agreement among Analytical Technologies,
Inc., Anatec Canada, Inc., Albert G. Schornberg, James A.
Barbour, Timothy E. Tindle, David H. Cleland and Norrell
Corporation, Norrell Technical Services, Inc., and Norrell
Services, Ltd., dated July 22, 1996, incorporated by
reference to Exhibit 1 of the Company's Current Report on
Form 8-K filed on August 6, 1996.
10.5 Agreement of Acquisition dated October 29, 1993 by and
among Hooper Holmes, Inc., Norrell Health Care, Inc. and
Norrell Corporation, incorporated by reference to Exhibit
10.5 of the Company's Registration Statement on Form S-1,
as filed with the Securities and Exchange Commission on
June 10, 1994.
10.6 Shareholders Agreement among Norrell Corporation, Harvard
Teleservicing, LLC and CallTask Incorporated, dated March
22, 1996.
</TABLE>
* A management contract or compensatory plan, contract or
arrangement
-45-
<PAGE> 46
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
--------------------------------------------------------------------
<S> <C>
10.7 Agreement for Systems Operations Services dated December
17, 1992 by and between Norrell Corporation and Integrated
Systems Solutions Corporation, incorporated by reference to
Exhibit 10.7 of the Company's Registration Statement on
Form S-1, as filed with the Securities and Exchange
Commission on June 10, 1994.
10.8 Form of Franchise Agreement used by Dynamic Temporary
Services, Inc. The schedules used in the table of contents
have been omitted. The Company agrees to furnish
supplementally to the Commission upon its request a copy of
any such schedule.
10.9 Form of Franchise Agreement used by Norrell Services, Inc.,
incorporated by reference to Exhibit 10.9 of the Company's
Registration Statement on Form S-1, as filed with the
Securities and Exchange Commission on June 10, 1994.
10.10 Form of Master Vendor Agreement used by Norrell Services,
Inc.
10.11 Form of Agreement between Tascor Incorporated and
franchisees of Norrell Services, Inc., incorporated by
reference to Exhibit 10.11 of the Company's Registration
Statement on Form S-1, as filed with the Securities and
Exchange Commission on June 10, 1994.
10.12 Form of Management Services Agreement used by Tascor
Incorporated.
10.13 Joint Venture Agreement dated as of October 15, 1986
between Habersham Venture, Ltd. and Norrell Corporation,
incorporated by reference to Exhibit 10.13 of the Company's
Registration Statement on Form S-1, as filed with the
Securities and Exchange Commission on June 10, 1994.
10.14 Lease dated October 15, 1986 between Norhab Associates and
Norrell Corporation, as amended by that certain amendment
dated May 3, 1988, that certain amendment No. 2 dated
September 13, 1988, and that certain amendment No. 3 dated
May 1, 1989, incorporated by reference to Exhibit 10.14 of
the Company's Registration Statement on Form S-1, as filed
with the Securities and Exchange Commission on June 10,
1994.
10.15 Amendment to Lease, dated December 11, 1995, amending Lease
Agreement dated October 15, 1986 between Norhab Associates
and Norrell Corporation, incorporated by reference to
Exhibit 10.15 to the Company Form 10-K for the year ended
October 29, 1995.
10.16 First Amendment to Lease, (two), dated December 11, 1995
between Norhab Associates and Norrell Corporation, amending
Lease Agreement dated May 3, 1988, incorporated by
reference to Exhibit 10.16 to the Company Form 10-K for the
year ended October 29, 1995.
10.17 Form of Indemnification Agreement, incorporated by
reference to Exhibit 10.17 of the Company's Registration
Statement on Form S-1, as filed with the Securities and
Exchange Commission on June 10, 1994.
</TABLE>
-46-
<PAGE> 47
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
--------------------------------------------------------------------
<S> <C>
10.18 Employment Agreement dated May 24, 1993 between Norrell
Corporation and Larry J. Bryan, incorporated by reference
to Exhibit 10.18 of the Company's Registration Statement on
Form S-1, as filed with the Securities and Exchange
Commission on June 10, 1994.*
10.19 Employment Agreement dated October 15, 1993 between Norrell
Corporation and C. Douglas Miller, incorporated by
reference to Exhibit 10.19 of the Company's Registration
Statement on Form S-1, as filed with the Securities and
Exchange Commission on June 10, 1994.*
10.20 Form of agreement for executive officers relating to
confidentiality and non-competition.*
10.21 Omitted.
10.22 Omitted.
10.23 Omitted.
10.24 Omitted.
10.25 Norrell Corporation Horizon - Vision Supplemental Plan, as
amended and restated on June 8, 1994, incorporated by
reference to Exhibit 10.25 of the Company's Registration
Statement on Form S-1, as filed with the Securities and
Exchange Commission on June 10, 1994.*
10.26 Form of Norrell Corporation Non-Management Director
Restricted Stock Grant Agreement, incorporated by reference
to Exhibit 10.26 of the Company's Registration Statement on
Form S-1, as filed with the Securities and Exchange
Commission on June 10, 1994.*
10.27 Norrell Corporation 1994 Stock Incentive Plan, incorporated
by reference to Exhibit 10.27 of the Company's Registration
Statement on Form S-1, as filed with the Securities and
Exchange Commission on June 10, 1994.*
10.28 Norrell Corporation Management Equity Plan, incorporated by
reference to Exhibit 10.28 of the Company's Amendment No. 1
to Registration Statement on Form S-1, as filed with the
Securities and Exchange Commission on June 22, 1994.*
10.29 The Norrell Corporation 1991 Stock Option Plan,
incorporated by reference to Exhibit 10.29 of the Company's
Registration Statement on Form S-1, as filed with the
Securities and Exchange Commission on June 10, 1994.*
10.30 Preferred Vendor Agreement, executed May 14, 1993 between
Norrell Services, Inc. and United Parcel Service General
Services Company. The Exhibit A of the Agreement has been
omitted. The Company agrees to furnish supplementally to
the Commission upon its request a copy of such Exhibit.
</TABLE>
* A management contract or compensatory plan, contract or
arrangement
-47-
<PAGE> 48
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
--------------------------------------------------------------------
<S> <C>
10.31 Management Services Agreement between International
Business Machines and Tascor Incorporated, executed on
December 1, 1994 ("MSA"), incorporated by reference to
Exhibit 10.31 to the Company Form 10-K for the year ended
October 30, 1994. The attachments to the MSA listed on page
11 of the Agreement have been omitted. The Company agrees
to furnish supplementally to the Commission upon its
request a copy of any such attachment.
10.32 Amended and Restated Credit Agreement, dated October 21,
1996, by and among Norrell Corporation as the Company,
certain Commercial Lending Institutions as the Lenders,
Bank of America National Trust and Savings Association, as
the Agent for the Lenders, and SunTrust Bank, Atlanta, as
the co-Agent for the Lenders. The Credit Agreement contains
a list of schedules and exhibits on page (v) of the table
of contents. These schedules and exhibits have been
omitted. The Company agrees to furnish supplementally to
the Commission upon its request a copy of any such
schedules and exhibits.
10.33 First Amendment to Credit Agreement, dated December 26,
1996, amending the Amended and Restated Credit Agreement
dated October 21, 1996 among Norrell Corporation as the
Company, certain Commercial Lending Institutions as the
Lenders, Bank of America National Trust and Savings
Association, as the Agent for the Lenders and SunTrust
Bank, Atlanta, as co-agent for the Lenders. Schedules and
exhibits referenced in the Agreement have been omitted. The
Company agrees to furnish supplementally to the Commission
upon its request a copy of any such schedules and exhibits.
10.34 Agreement of Limited Partnership executed October 6, 1994
by and between HealthTask Corporation, Tascor Incorporated
and Ernst & Young U.S. LLP, incorporated by reference to
Exhibit 10.34 to the Company Form 10-K for the year ended
October 30, 1994.
10.35 Letter agreement between Norrell Corporation and Integrated
Systems Solutions Corporation, executed between the parties
on August 23, 1995 amending the Agreement for Systems
Operation Services dated December 17, 1992 by and between
Norrell Corporation and Integrated Systems Solutions
Corporation, incorporated by reference to Exhibit 10.35 to
the Company Form 10-K for the year ended October 29, 1995.
10.36 Non-Technical Services Agreement between International
Business Machines Corporation and Tascor Incorporated,
entered into between the parties on April 4, 1995 and April
11, 1995, incorporated by reference to Exhibit 10.36 to the
Company Form 10-K for the year ended October 29, 1995. The
attachments and appendices listed on page iii of the
Agreement have been omitted. The Company agrees to furnish
supplementally to the Commission upon its request a copy of
any such attachment or appendix.
10.37 Purchase and Sale Agreement between Norhab Associates, a
joint venture comprised of Norrell Corporation and
Habersham Venture, Ltd. as Seller and Oregon Public
Employees' Retirement Fund, or its nominee, as Buyer, dated
October 25, 1995, incorporated by reference to Exhibit
10.37 to the Company Form 10-K for the year ended October
29, 1995. The exhibits listed on page iii of the Agreement
have been omitted. The Company agrees to furnish
supplementally to the Commission upon its request a copy of
any such exhibit.
</TABLE>
-48-
<PAGE> 49
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
--------------------------------------------------------------------
<S> <C>
10.38 First Amendment to Purchase and Sale Agreement between
Norhab Associates, a joint venture comprised of Norrell
Corporation and Habersham Venture, Ltd. as Seller and
Oregon Public Employees' Retirement Fund, or its nominee,
Property Georgia OBJLW One Corporation, an Oregon
Corporation, as Buyers, dated December 4, 1995,
incorporated by reference to Exhibit 10.38 to the Company
Form 10-K for the year ended October 29, 1995.
10.39 Closing Document # 3 Assignment and Assumption of Leases
dated October 25, 1995 between Norhab Associates, a joint
venture, comprised of Norrell Corporation and Habersham
Venture, Ltd. ("Assignor") and Property Georgia OBJLW One
Corporation, an Oregon Corporation ("Assignee"),
incorporated by reference to Exhibit 10.39 to the Company
Form 10-K for the year ended October 29, 1995.
10.40 Stockholders Agreement among Norrell Corporation, The Cross
Country Group, LLC and Norcross, Inc. dated August 15,
1996.
10.41 Norrell Corporation 401(k) Retirement Savings Plan.
10.42 Norrell Corporation Non-Qualified Deferred Compensation
Plan, effective January 1, 1995, incorporated by reference
to Exhibit 10.42 to the Company Form 10-K for the year
ended October 29, 1995. *
11.1 Computation of Primary Earnings Per Share.
11.2 Computation of Fully Diluted Earnings Per Share.
21 Subsidiaries of the Company.
23 Consent of Arthur Andersen LLP.
27 Financial Data Schedule (for SEC use only).
</TABLE>
* A management contract or compensatory plan, contract or
arrangement
-49-
<PAGE> 50
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
NORRELL CORPORATION
The Company
By /s/ C. DOUGLAS MILLER
-----------------------------------------------
C. Douglas Miller
Chief Executive Officer and President
Date: January 16, 1997
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 Company
and in the capacities and on the dates indicated.
By: /s/ C. DOUGLAS MILLER
-----------------------------------------------
C. Douglas Miller
Director, Chief Executive Officer and President
(Principal Executive Officer)
Date: January 16, 1997
-----------------------------------------------
By: /s/ C. KENT GARNER
-----------------------------------------------
C. Kent Garner
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: January 16, 1997
-----------------------------------------------
By:
-----------------------------------------------
Guy W. Millner
Chairman of the Board
Date:
-----------------------------------------------
By: /s/ THOMAS A. VADNAIS
-----------------------------------------------
Thomas A. Vadnais
Director, President and Chief
Operating Officer, Tascor
Date: January 16, 1997
-----------------------------------------------
-50-
<PAGE> 51
By: /s/ LARRY J. BRYAN
-------------------------------------
Larry J. Bryan
Director and Executive Vice President
Date: January 16, 1997
-------------------------------------
By: /s/ CARL E. SANDERS
-------------------------------------
Carl E. Sanders
Director
Date: January 16, 1997
-------------------------------------
By: /s/ LUCIUS E. BURCH, III
-------------------------------------
Lucius E. Burch, III
Director
Date: January 16, 1997
-------------------------------------
By: /s/ DONALD A. MC MAHON
-------------------------------------
Donald A. McMahon
Director
Date: January 16, 1997
-------------------------------------
By: /s/ NANCY CLARK REYNOLDS
-------------------------------------
Nancy Clark Reynolds
Director
Date: January 16, 1997
-------------------------------------
By: /s/ FRANK A. METZ, JR.
-------------------------------------
Frank A. Metz, Jr.
Director
Date: January 16, 1997
-------------------------------------
-51-
<PAGE> 52
By: /s/ KAAREN JOHNSON-STREET
-------------------------------------
Kaaren Johnson-Street
Director
Date: January 16, 1997
-------------------------------------
-52-
<PAGE> 53
SCHEDULE II
NORRELL CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED OCTOBER 30, 1994, OCTOBER 29, 1995 AND OCTOBER 27, 1996
<TABLE>
<CAPTION>
(In thousands) 1994 1995 1996
------- ------- ------
<S> <C> <C> <C>
Allowance for doubtful accounts,
balance at beginning of year $ 2,909 $ 4,835 $4,869
Addition charged to cost and expense 2,509 1,699 2,315
Charged to other accounts -- -- 227
Deductions (583) (1,665) --
------- ------- ------
Allowance for doubtful accounts,
balance at end of year $ 4,835 $ 4,869 $7,411
======= ======= ======
</TABLE>
-53-
<PAGE> 1
EXHIBIT 10.6
================================================================================
SHAREHOLDERS AGREEMENT
AMONG
NORRELL CORPORATION,
HARVARD TELESERVICING, LLC
AND
CALLTASK INCORPORATED
Dated March 22, 1996
================================================================================
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
ARTICLE I
DEFINITIONS................................................ 1
1.1 "Affiliate"................................................................................... 1
1.2 "Articles of Incorporation"................................................................... 1
1.3 "Board of Directors".......................................................................... 2
1.4 "Buyout Period"............................................................................... 2
1.5 "Code"........................................................................................ 2
1.6 "Company"..................................................................................... 2
1.7 "Exchange Act"................................................................................ 2
1.8 "GAAP"........................................................................................ 2
1.9 "GBCC"........................................................................................ 2
1.10 "Harvard"..................................................................................... 2
1.11 "Harvard Directors"............................................................................ 2
1.12 "Initial Contributions"........................................................................ 2
1.13 "Norrell"...................................................................................... 2
1.14 "Norrell Directors"............................................................................ 2
1.15 "Person"....................................................................................... 2
1.16 "Regulations"................................................................................. 2
1.17 "Remaining Balances"........................................................................... 2
1.18 "Shareholder"................................................................................. 2
1.19 "Shares"...................................................................................... 2
ARTICLE II
BUSINESS OF THE COMPANY; ADDRESSES AND AGENT................................ 3
2.1 Business of the Company....................................................................... 3
2.3 Registered Office and Agent................................................................... 3
2.4 Principal Office.............................................................................. 3
ARTICLE III
INITIAL CONTRIBUTIONS; ADDITIONAL CONTRIBUTIONS.............................. 3
3.1 Initial Contributions......................................................................... 3
3.2 Balance of Initial Contributions.............................................................. 4
3.3 Additional Contributions...................................................................... 5
3.4 Call for Additional Contributions............................................................. 6
3.5 Collection of Amounts Required to be Contributed; Issuance of Additional
Shares Upon Failure to Contribute............................................................. 8
3.6 Limitation of Liability....................................................................... 8
3.7 Loans......................................................................................... 9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV
REIMBURSEMENT OF SHAREHOLDER EXPENSES.................................... 9
ARTICLE V
DISTRIBUTIONS OF CASH............................................ 9
5.1 Cash Flow...................................................................................... 9
5.2 Distribution of Cash Flow..................................................................... 10
5.3 Limitations on Distribution................................................................... 10
ARTICLE VI
DISPOSITION OF SHARES........................................... 10
6.1 Disposition................................................................................... 10
6.2 Lapse of Restrictions in Certain Instances.................................................... 10
ARTICLE VII
REMEDIES OF A SHAREHOLDER
UPON BREACH BY THE OTHER SHAREHOLDER.................................... 10
7.1 Opportunity for Cure.......................................................................... 11
7.2 Remedies for Failure to Cure.................................................................. 11
ARTICLE VIII
PURCHASE RIGHTS OF NORRELL........................................ 11
8.1 Initiation.................................................................................... 11
8.2 Closing....................................................................................... 11
ARTICLE IX
SALE RIGHTS OF HARVARD.......................................... 12
9.1 Initiation.................................................................................... 12
9.2 Closing....................................................................................... 12
ARTICLE X
BUY/SELL PROVISIONS............................................ 12
10.1 Initiation; Valuation......................................................................... 13
10.2 Disclosure of Third-Party Offers.............................................................. 13
10.3 Earnest Money Deposits........................................................................ 13
10.4 Closing....................................................................................... 13
10.5 Enforcement................................................................................... 14
10.6 Contemporaneous Offers; Ineffective Offers.................................................... 14
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE XI
ACCOUNTING AND RECORDS; NONSOLICITATION UPON TRANSFER........................... 15
11.1 Accounting Period............................................................................. 15
11.2 Records to be Maintained...................................................................... 15
11.3 Reports to be Furnished....................................................................... 15
11.4 Assignment of Rights.......................................................................... 16
11.5 Nonsolicitation upon Transfer................................................................. 16
ARTICLE XII
LEGEND ON STOCK CERTIFICATES........................................ 17
ARTICLE XIII
VOTING AGREEMENT.............................................. 17
13.1 Election of Directors......................................................................... 17
13.2 Other Voting Rights........................................................................... 17
ARTICLE XIV
TERM.................................................... 18
14.1 Normal Duration................................................................................. 18
14.2 Early Termination............................................................................... 18
14.3 Effect of Termination........................................................................... 18
ARTICLE XV
MISCELLANEOUS PROVISIONS.......................................... 19
15.1 Determination of Fair Market Value............................................................. 19
15.2 Entire Agreement............................................................................... 19
15.3 Activities of the Shareholders................................................................. 19
15.4 Application of Georgia Law..................................................................... 19
15.5 Execution of Additional Instruments............................................................ 19
15.6 Construction................................................................................... 19
15.7 Headings; References........................................................................... 20
15.8 Waivers........................................................................................ 20
15.9 Rights and Remedies Cumulative................................................................. 20
15.10 Counterparts................................................................................... 20
15.11 Certification of Non-Foreign Status............................................................ 20
15.12 Banking........................................................................................ 20
15.13 Determination of Matters Not Provided for in This Agreement.................................... 20
15.14 Further Assurances............................................................................. 21
15.15 Time........................................................................................... 21
15.16 Certain Shareholder Transactions............................................................... 21
</TABLE>
<PAGE> 5
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement"), made and entered into
as of March 22, 1996 (the "Effective Date"), by and among CallTask Incorporated,
a Georgia corporation (the "Company"), Norrell Corporation, a Georgia
corporation ("Norrell"), and Harvard Teleservicing, LLC, a Texas limited
liability company ("Harvard"; Norrell and Harvard being sometimes referred to
hereinafter collectively as the "Shareholders" and individually as a
"Shareholder", it being understood and agreed that any holder of Common Stock of
the Company during the term of this Agreement shall become a party to this
Agreement and shall be referred to within the term "Shareholder");
W I T N E S S E T H:
WHEREAS, Norrell and Harvard own all of the issued and outstanding
shares of Common Stock, par value $.01 per share, of the Company; and
WHEREAS, the Shareholders believe it is in their and the Company's best
interests to make certain provisions with respect to the shares of Common Stock
now or hereafter owned by them (collectively, with any shares of Common Stock
hereafter issued by the Company during the term of this Agreement, the
"Shares"), and to make certain other agreements as set forth herein;
NOW, THEREFORE, for and in consideration of the mutual covenants
herein, the premises, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
<PAGE> 6
1.1 "Affiliate" of a specified Person shall mean a Person that directly,
or indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, that Person.
1.2 "Articles of Incorporation" shall mean the Articles of Incorporation
of the Company filed with the Georgia Secretary of State on March 13, 1996, as
the same may be properly amended from time to time by the Shareholders and
filed with the Georgia Secretary of State.
1.3 "Board of Directors" shall consist of all of the Norrell Directors and
all of the Harvard Directors.
1.4 "Buyout Period" shall have the meaning set forth in Section 8.1.
1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.6 "Company" shall mean CallTask Incorporated, a Georgia corporation, and
any successor thereto.
1.7 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.8 "GAAP" shall mean generally accepted accounting principles, applied on
a consistent basis throughout the periods indicated.
1.9 "GBCC" shall mean the Georgia Business Corporation Code, as in effect
from time to time.
1.10 "Harvard" shall mean Harvard Teleservicing, LLC, a Texas limited
liability company.
-2-
<PAGE> 7
1.11 "Harvard Directors" shall have the meaning set forth in Section 13.1.
1.12 "Initial Contributions" shall have the meaning set forth in Section
3.1.
1.13 "Norrell" shall mean Norrell Corporation, a Georgia corporation.
1.14 "Norrell Directors" shall have the meaning set forth in Section 13.1.
1.15 "Person" shall mean an individual, a corporation, a partnership
(general or limited), a limited liability company, an association, a joint-stock
company, a business trust, a trust, an estate or other organization.
1.16 "Regulations" shall mean the regulations of the Department of
Treasury promulgated under the Code.
1.17 "Remaining Balances" shall have the meaning set forth in Section 3.1.
1.18 "Shareholder" shall mean Norrell and Harvard and any additional
Persons who acquire Shares during the Term.
1.19 "Shares" shall mean the shares of common stock of the Company which
are issued and outstanding and owned by the Shareholders on the date hereof or
which may at any time hereafter be issued and outstanding. The Shares which the
Shareholders have agreed to purchase as of the Effective Date are as follows:
<TABLE>
<CAPTION>
No. of Shares of
Shareholder Common Stock
----------- ------------
<S> <C>
Norrell 1,020
Harvard 980
</TABLE>
-3-
<PAGE> 8
The foregoing Shares shall be issued as and when payment is made therefor and
all certificates representing such Shares shall remain in the custody of the
Company.
ARTICLE II
BUSINESS OF THE COMPANY; ADDRESSES AND AGENT
2.1 Business of the Company. The general nature of the business or
businesses to be transacted shall consist of inbound and outbound teleservices,
consisting primarily of catalogue and direct catalogue marketing and federal
government teleservices outsourcing and other businesses, in all cases limited
to such customers, contracts and/or businesses listed on Schedule A, as such
Schedule may be revised by the Board of Directors from time to time), and the
Company shall have the authority to do all things necessary or convenient to
accomplish such purpose and operate its business as described in this Article
II. In the event for whatever reason the Company is unable to perform a contract
listed on Schedule A, then Norrell shall have the right to refer such contract
to Tascor Incorporated, which shall have the right to perform such contract by
paying a fee to the Company equal to 1% of the revenue received by Tascor
Incorporated paid as collected and reimbursement of all out of pocket expenses
associated with the sales and development of the account.
2.2 Name. The name of the Company is "CallTask Incorporated" and all
business of the Company shall be conducted under such name or under any other
name adopted by the Board of Directors of the Company (to the extent permitted
by law).
2.3 Registered Office and Agent. The Company's registered office shall be
located at 1201 Peachtree Street, N.E., Suite 1240, Atlanta, Georgia 30361. The
name of its registered agent is CT Corporation.
2.4 Principal Office. The principal office of the Company shall be located
at 3535 Piedmont Road, N.E., Atlanta, Georgia 30305.
-4-
<PAGE> 9
ARTICLE III
INITIAL CONTRIBUTIONS; ADDITIONAL CONTRIBUTIONS
3.1 Initial Contributions. The Shareholders have agreed to make payment to
the Company of the following amounts in exchange for the number of shares of
Common Stock issued by the Company set forth below:
<TABLE>
<CAPTION>
Amount
Committed Number
Shareholder to be Paid of Shares
----------- ---------- ---------
<S> <C> <C>
Norrell $1,020,000 1,020
Harvard 980,000 980
---------- -----
Total $2,000,000 2,000
========== =====
</TABLE>
The foregoing Shares shall be issued as and when payment is made therefor and
all certificates representing such Shares shall remain in the custody of the
Company. The above amounts committed to be paid by the Shareholders are
sometimes referred to hereinafter collectively as the "Initial Contributions"
and the difference between the Initial Contributions and the amounts, if any,
paid by the Shareholders on the date hereof are sometimes referred to
hereinafter collectively as the "Remaining Balances" and individually as a
"Remaining Balance." Norrell and Harvard agree to contribute their respective
Remaining Balances to the capital of the Company as, when and if needed (as
determined by the Board of Directors of the Company pursuant to Section 3.2),
and such amounts shall be treated as a contribution to the capital of the
Company when and as such contributions are made.
-5-
<PAGE> 10
3.2 Balance of Initial Contributions.
(a) The Shareholders acknowledge and agree that the Board of
Directors shall have the right to require that the Shareholders fund all
or a portion of their respective Remaining Balances owed at one time or
from time to time on a pro-rata basis in accordance with their respective
Share ownership as prescribed by the Board of Directors. If the Board of
Directors determines that it is advisable or in the best interests of the
Company or that the business of the Company so requires for the
Shareholders to fund all or a portion of their Remaining Balance, the
Board of Directors shall send a notice to each Shareholder to that effect,
setting forth the amount required to be contributed and the terms and
conditions of such contribution, including the time required for
contribution, which shall not be less than ten (10) days from the date of
such notice.
(b) If any Shareholder is unable or unwilling or refuses (the
"Defaulting Shareholder") to deliver to the Company the Defaulting
Shareholder's portion of any amount required to be contributed pursuant to
a call under Section 3.2(a) (with such portion not being contributed being
referred to herein as the "Defaulted Amount") within the time prescribed
by Board of Directors, the other Shareholder (the "Advancing Shareholder")
shall have the right, but not the obligation, without further notice, to
contribute to the Company the funds required by the Defaulting Shareholder
(the "Advanced Amount") and the Advanced Amount shall be treated as an
additional capital contribution by the Advancing Shareholder. The
Advancing Shareholder may elect, upon notice given to the Defaulting
Shareholder, to treat the Advanced Amount as an additional capital
contribution to the Company by such Advancing Shareholder, and the number
of Shares of Common Stock owned by the Advancing Shareholder and the
Defaulting Shareholder shall be adjusted as provided in Section 3.2(c).
(c) If the Advancing Shareholder elects to follow the procedures
under Section 3.2(b), and have the Advanced Amount contributed to the
Company (with each such contribution of an Advanced Amount being referred
to as an "Advancement Event"), then the number of Shares of Common Stock
of the Company owned by the Shareholders shall be adjusted by increasing
the number of Shares of Common Stock to be owned by the Advancing
Shareholder and by decreasing the number of Shares of Common Stock to be
owned by the Defaulting Shareholder by an amount equal to the Advanced
Amount contributed by the Advancing Shareholder divided by $250; provided,
however, that no such adjustment shall increase the number of all shares
of Common Stock outstanding and or the number of any Shareholder's Shares
below zero.
-6-
<PAGE> 11
By initialling below, each of the Shareholders hereby acknowledges that
the effect on all Shareholders and the Company of an Advancement Event
could be material and severe, and that this Section 3.2 has been knowingly
negotiated by the Shareholders, and it is acknowledged by the Shareholders
that it is and will be difficult for the Shareholders to value the damage
to the Company and the other Shareholders in the event the Remaining
Balance of such Shareholder is not contributed when so requested and that
the adjustment provided for above is deemed a reasonable reflection by the
Shareholders of the value of the damages in such event:
Norrell __________
Harvard __________
3.3 Additional Contributions. If following the payment of the Initial
Contributions the Board of Directors from time to time determines that Company
funds are not adequate to pay (a) the operating costs of the Company, (b) all
capital needs of the Company or (c) all other costs and expenses necessary or
appropriate in order for the Company to take any actions which the Company is
permitted or required to take hereunder, then the Shareholders shall contribute
to the Company such sums as are designated to be needed by the Company in the
call given by the Board of Directors pursuant to Section 3.4 ("Additional
Contributions"), in proportion to such Shareholders' Share ownership, which
notice of call shall set forth the amount required to be contributed and the
terms and conditions of such contribution, including the time required for
contribution, which shall not be less than sixty (60) days from the date of such
notice; provided, however, that unless otherwise agreed by all of the
Shareholders, the aggregate amount of Additional Contributions in any calendar
year plus all or a portion of any Initial Contributions made in such year shall
not exceed Two Million Dollars ($2,000,000) and the aggregate amount of all
Additional Contributions plus the Initial Contributions over a five (5) year
period shall not exceed Ten Million Dollars ($10,000,000). In the event the
Board of Directors determines that the Company's need for Additional
Contributions exceeds the aggregate amount of Two Million Dollars ($2,000,000)
in any calendar year or Ten Million Dollars (10,000,000) over a five (5) year
period, and Harvard is unable or unwilling to contribute its portion of such
Additional Contribution (plus all or a portion of any Initial Contribution in
such year) in excess of Two Million Dollars ($2,000,000) or in excess of
$10,000,000, as the case may be, then Harvard shall have the right to sell to
Norrell for cash all, but not less than all, of its Shares for a period of
thirty (30) days following receipt of notice of such call for a purchase price
equal to the Company's fair market value as determined pursuant to Section 15.1
times a fraction, the numerator of which shall be the number of Shares then
owned by Harvard and the denominator of which shall be all of the
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issued and outstanding Shares. If Harvard elects not to contribute its portion
of such Additional Contribution and not to put its Shares, then Harvard shall be
subject to the provisions of this Article III for failing to contribute.
3.4 Call for Additional Contributions.
(a) A call for Additional Contributions pursuant to Section 3.3
shall be made by written notice given by the Board of Directors to all of
the Shareholders and shall be subject to the annual limitations set forth
in such Section. In said notice the Board of Directors shall have the
right to elect that the Additional Contributions shall be in the form of
loans from the Shareholders to the Company, in lieu of cash capital
contributions, in which event such loans shall be evidenced by separate
instruments in form acceptable to the Board of Directors. The provisions
of Sections 3.4(b) through (e) (inclusive) and Section 3.5(a) shall apply
to any Shareholder who fails to make an Additional Contribution as
required above. Shareholders shall have not less than sixty (60) days to
make any Additional Contribution provided for hereunder, but shall
endeavor to make such Additional Contribution as soon as practicable.
(b) If any Shareholder is unable or unwilling or refuses to (the
"Non-Contributing Shareholder") deliver to the Company its portion of any
amount required to be contributed pursuant to a call made pursuant to
Section 3.4(a) and within the annual limitations set forth in Section 3.3
(with such portion not being contributed being referred to herein as the
"Non-Contributed Amount") within the time prescribed by the Board of
Directors, the other Shareholders shall have the option, but not the
obligation of funding any amount, without further notice, either to
advance to the Company or to contribute to capital the funds required by
the Non-Contributing Shareholder. Any advancement made pursuant to this
Section shall be treated as a loan to the Non-Contributing Shareholder
(each, a "Contribution Loan" and any Shareholder making such Contribution
Loan, a "Lending Shareholder"). If the Shareholder other than the
Non-Contributing Shareholder so desires, it may instead elect to
contribute to capital the funds required by the Non-Contributing
Shareholder, and the respective Share ownership shall be adjusted as
provided in Section 3.4(e) as if such Shareholder had initially made a
Contribution Loan of such amount, then elected to proceed as provided in
Section 3.4(d). The sole remedy for the failure of a Shareholder to
provide his or its share of an Additional Contribution shall be as
provided in this Section 3.4.
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(c) In the event a Contribution Loan is made, each such Contribution
Loan shall bear interest at the lesser of (i) eighteen percent (18%) per
annum, or (b) the maximum legal rate allowed by law, and shall be payable
solely as provided in the following sentence, and in Section 3.4(d) and
(e). Each such loan, including accrued but unpaid interest, shall be
repaid from all distributions under this Agreement that the
Non-Contributing Shareholder would otherwise be entitled to hereunder
until repaid in full. The Non-Contributing Shareholder may also repay the
Contribution Loan directly at any time. If not sooner repaid, all
Contribution Loans, including accrued but unpaid interest, shall become
immediately due and payable upon liquidation of the Company from amounts
such Non-Contributing Shareholder is otherwise entitled to upon
liquidation; provided that, any further amounts remaining outstanding
following such liquidation shall be an obligation of such Shareholder due
and payable on demand. In the event repayment of the Contribution Loan is
made from the distributions the Non-Contributing Shareholder would
normally be entitled to, such distributions shall be treated as if having
been distributed to the Non-Contributing Shareholder then paid by the
Non-Contributing Shareholder to the Lending Shareholder; provided that the
Non-Contributing Shareholder shall not acquire any beneficial interest in
any amount so distributed.
(d) At any time until such Contribution Loan has been repaid in
full, including accrued interest, such Lending Shareholder may elect to
proceed as provided below; provided that unless and until such Lending
Shareholder has elected to proceed as provided below, such Contribution
Loan shall remain in place and shall bear interest and be repaid as
provided in Section 3.4(c). Upon an election to proceed hereunder, and
upon one (1) day prior written notice to the Non-Contributing Shareholder,
the Lending Shareholder may elect to treat its proportionate share of the
outstanding balance of the Contribution Loan, together with interest
thereon accrued pursuant to Section 3.4(c), as an additional capital
contribution to the Company by such Lending Shareholder, and the Shares of
the Lending Shareholder and the Non-Contributing Shareholder shall be
adjusted as provided in Section 3.4(e).
(e) If any Shareholder (each a "Contributing Shareholder") elects to
follow the procedures under Section 3.4(d), and is deemed to have
contributed a share of the Defaulted Amount plus accrued interest thereon
to the Company (with each such contribution of a Defaulted Amount being
referred to as an "Adjusting Event"), then the Shares of the Company shall
be adjusted by increasing the Shares to be held by the Contributing
Shareholder and by decreasing the Shares to be held by the
Non-Contributing Shareholder by an amount equal to the Advanced Amount
contributed by the Lending Shareholder divided by $500. By initialling
below, each of the
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Shareholders hereby acknowledges that the effect on all Shareholders and
the Company of an Adjusting Event could be material and severe, and that
this Section 3.4 has been knowingly negotiated by the Shareholders, and it
is acknowledged by the Shareholders that it is and will be difficult for
the Shareholders to value the damage to the Company and the other
Shareholders in the event an Additional Contribution approved by the Board
of Directors is not made by a Shareholder and that the adjustment provided
for above is deemed a reasonable reflection by the Shareholders of the
value of the damages in such event:
Norrell __________
Harvard __________
3.5 Collection of Amounts Required to be Contributed; Issuance of
Additional Shares Upon Failure to Contribute.
(a) In the event any Shareholder shall fail to make any Capital
Contribution that is required hereunder and that is within the annual
limitations set forth herein, whether it be an Initial Contribution or an
Additional Contribution, the Company shall be entitled, without limiting
or otherwise restricting any other remedies available to the Company,
pursue the collection of the amounts required to be contributed, plus
interest at the rate of eighteen (18) percent per annum, and the
Non-Contributing Shareholder shall be liable to the Company for any and
all costs of collection, including court costs and attorneys' fees.
(b) In the event the Shareholders do not fund their respective
shares and the other Shareholders do not elect to fund such shares
following written notice to the other Shareholders and the Board of
Directors determines that it would be in the best interests of the Company
to have capital in excess of that which the Shareholders will provide
pursuant to a call for Additional Contributions made by the Board of
Directors in accordance with Section 3.4, then the Board of Directors
shall be authorized to issue stock upon receipt of such consideration as
the Board of Directors shall deem adequate therefor to one or more
Persons, and thereafter, such Persons shall be included when reference is
made herein to a "Shareholder" or to the "Shareholders."
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3.6 Limitation of Liability. Except as is specifically required by the
GBCC, no Shareholder shall be personally liable to any third party for or in
connection with any obligation, act or omission of the Company. No Shareholder
shall be responsible for any loss of any other Shareholder. The Board of
Directors shall not be liable for the return of the capital contributions of the
Shareholders or any portion thereof; consequently, no such claim may be made
against the assets of any Shareholder, any equity owner or Affiliate of such
Shareholder, any Director or any equity owner or Affiliate of such Director, and
any judgment obtained against the Board of Directors shall be so noted.
3.7 Loans. Except as set forth in this Article III, no loan to the Company
by any Shareholder shall increase or decrease the number of Shares of any
Shareholder, nor entitle such Shareholder to an increase in such Shareholder's
share of the distributions of the Company, except for the repayment of the
principal and interest on, and any other amounts payable in connection with such
loan. The then currently due and payable principal and interest on, and any
other amounts payable in connection with, any such loan shall be fully paid
before any dividend is made to the Shareholders under the provisions of this
Agreement with respect to their Shares. If, at the time any funds are available
for distribution to the Shareholders, such funds are not adequate to pay all of
the then currently due and payable interest and principal on such Shareholder
loans, payment shall be made pro rata according to the currently due and payable
balance of principal and interest on each loan.
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ARTICLE IV
REIMBURSEMENT OF SHAREHOLDER EXPENSES
Each Shareholder shall be reimbursed for all out-of-pocket expenses directly
incurred on behalf of the Company and unanimously approved by the Board of
Directors, including, without limitation, any organizational, incorporation and
pre-subscription expenses incurred on behalf of the Company that have been so
approved by the Board of Directors. In addition, each Shareholder shall be
authorized to have the Company pay the following fees to such Shareholder, its
affiliates and third parties pursuant to appropriate agreements, if the
Shareholders unanimously decide to use such Shareholder: (a) administrative fees
equal to five percent (5%) of the Company's revenues, as compensation to such
Shareholder for accounting, administrative and other services furnished to the
Company by such Shareholder; (b) a fee equal to the cost to the provider of any
personnel of such Shareholder or its Affiliate assigned to the Company following
the Effective Date; and (c) rent equal to the cost to the provider of any office
or other space leased to the Company by such Shareholder or its Affiliate
following the Effective Date.
ARTICLE V
DISTRIBUTIONS OF CASH
5.1 Cash Flow. The Board of Directors, in the exercise of its discretion,
shall determine whether the financial condition and financing agreements and
commitments of the Company will permit the distribution of any monies of the
Company; provided however, that the Board of Directors, in making such
determination, may provide for the retention of a reasonable cash reserve
(taking into consideration the availability in the future of other assets or
income of the Company), as determined by the Board of Directors, in an amount at
least equivalent to the sums determined by it in its discretion as necessary to
be retained for future contemplated capital expenditures, expenses and
obligations of the Company. The Board of Directors shall make a determination at
least as of the end of each calendar year as to whether or not there are funds
available for distribution.
5.2 Distribution of Cash Flow. All funds so determined by the Board of
Directors to be available for distribution shall be distributed as follows:
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(a) First, to repay the currently due and payable portions of any
loan (including principal and interest) made by any Shareholder to the
Company; and
(b) Second, to the Shareholders in accordance with their respective
Share ownership.
5.3 Limitations on Distribution. No distribution shall be made to
Shareholders if prohibited by O.C.G.A. Section 14-2-640.
ARTICLE VI
DISPOSITION OF SHARES
6.1 Disposition. Except as provided herein, no Shareholder shall have the
right to assign, transfer, sell, mortgage, convey or pledge its Shares or
otherwise encumber such Shares as security for borrowed funds or other
obligations, or make any other disposition of all or any part of its Shares,
without the prior written consent of a majority of the Shares of the
non-transferring Shareholders, such consent not to be unreasonably withheld;
provided, however, that Norrell may assign all or a portion of its Shares to an
Affiliate of Norrell, which Affiliate shall thereafter be a Shareholder for all
purposes hereof. Any transferor of any Shares agrees that it shall, as a
condition to such transfer, execute and deliver in favor of the Company the
Confidentiality and Nonsolicitation Agreement described in Section 11.4.
6.2 Lapse of Restrictions in Certain Instances. Notwithstanding Section
6.1, Harvard shall be entitled to dispose of all or any portion of its Shares
without restriction other than as may be imposed by applicable law and the
restrictions on Harvard contained in Section 6.1 shall lapse and no longer be of
any force or effect in the event of (a) a sale of all or substantially all of
Norrell's assets to any Person other than an Affiliate of Norrell, or (b) the
acquisition by any one Person (or more than one Person, if acting in concert) of
more than fifty percent (50%) of the voting securities of Norrell by means of a
sale or exchange or a merger or recapitalization in which Norrell is not the
surviving corporation.
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ARTICLE VII
REMEDIES OF A SHAREHOLDER
UPON BREACH BY THE OTHER SHAREHOLDER
7.1 Opportunity for Cure. In the event of any material breach by a
Shareholder of an "Operative Article" of this Agreement (it being agreed that
Articles III, VI, IX and X shall be the "Operative Articles"), the nonbreaching
Shareholder shall notify the breaching Shareholder to that effect, specifying
the nature of the breach and the Operative Article or Articles having been
breached. The breaching Shareholder shall then have thirty (30) days from the
date of receipt of such notice to cure such breach, including the payment to the
Company of any amounts, fines, penalties, expenses or losses imposed upon the
Company as a result of such breach. In the event the nonbreaching Shareholder
determines, in its reasonable discretion, that the cure proffered by the
breaching Shareholder is insufficient to satisfy the breach, the nonbreaching
Shareholder shall notify the breaching Shareholder in writing to that effect,
specifying the deficiency in the breaching Shareholder's attempted cure. The
breaching Shareholder shall have ten (10) days from the date of receipt of
notice from the nonbreaching Shareholder in order to remedy such defective cure.
7.2 Remedies for Failure to Cure. In the event the breaching Shareholder
fails timely to cure its material breach or to remedy a defective cure following
notice by the nonbreaching Shareholder pursuant to Section 7.1, the nonbreaching
Shareholder shall be entitled, in addition to any other remedies it or the
Company may possess, upon notice given to the breaching Shareholder, to purchase
or cause an Affiliate or third party purchaser to purchase the breaching
Shareholder's Shares at a price equal to seventy-five percent (75%) of the fair
market value of such breaching Shareholder's Shares as determined by an
investment banking firm of recognized national standing selected by the
nonbreaching Shareholder. Upon such purchase, the breaching Shareholder shall
thereafter cease to be a Shareholder of the Company, and all of its rights,
privileges, remedies and entitlement under this Agreement shall cease.
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ARTICLE VIII
PURCHASE RIGHTS OF NORRELL
8.1 Initiation. Subject to the terms and conditions hereof, at any time
during the one hundred eighty (180) day period (the "Buyout Period") commencing
on the fifth anniversary of the Effective Date, Norrell shall be entitled, in
its sole discretion and at its expense, by giving not less than thirty (30)
days' prior written notice to Harvard, to purchase all, but not less than all,
of Harvard's Shares for a purchase price in cash equal to the fair market value
of Harvard's Shares as determined pursuant to Section 15.1.
8.2 Closing. Any purchase provided for in Section 8.1 shall be consummated
on the later to occur of (a) the date specified in the notice referred to in
Section 8.1 or (b) ten (10) days after the date on which the determination of
Fair Market Value pursuant to Section 15.1 is final, at the office of the
Company (or at such other place as Norrell shall specify), by payment to Harvard
of the purchase price in cash as calculated pursuant to Section 8.1. At such
closing, Harvard shall execute and deliver the materials required to be
delivered by a selling Shareholder in Section 10.4(a).
ARTICLE IX
SALE RIGHTS OF HARVARD
9.1 Initiation. Subject to the terms and conditions hereof, at any time
during the thirty (30) day period (the "Put Period") commencing at the end of
the Buyout Period, and thereafter during the thirty (30) day period beginning on
each of the next four(4) subsequent anniversaries of the termination date of the
Buyout Period, Harvard shall be entitled, in its sole discretion, by giving not
less than thirty (30) days' prior written notice, to sell to Norrell up to
twenty percent (20%) of Harvard's Shares as existing at the end of the Buyout
Period for a purchase price in cash equal to the fair market value of Harvard's
Shares to be sold thereby determined in accordance with the provisions of
Section 15.1. In the event Harvard fails to exercise its put rights granted
pursuant to this Section 9.1 for any one or more years, such rights shall not
accumulate or compound with respect to succeeding years, but shall continue.
9.2 Closing. Any purchase provided for in Section 9.1 shall be consummated
on the later to occur of (a) the date specified in the notice referred to in
Section 9.1 (which shall
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not be less than sixty (60) days following the date of the notice given by
Harvard pursuant to Section 9.1) at the office of the Company (or at such other
place as Norrell shall specify), or (b) ten (10) days after the date on which
the determination of Fair Market Value pursuant to Section 15.1 is final, by
payment to Harvard of the purchase price in cash as calculated pursuant to
Section 15.1. At such closing, Harvard shall execute and deliver the materials
required to be delivered by a selling Shareholder in Section 10.4(a).
ARTICLE X
BUY/SELL PROVISIONS
10.1 Initiation; Valuation.
(a) At any time after the expiration of the Buyout Period (except
during the pendency of a Put Period), any Shareholder may exercise its
right to initiate the provisions of this Section 10.1. The Shareholder
desiring to exercise such right (the "Offeror") shall do so by giving
notice (the "Notice") to the other Shareholder (the "Offeree") setting
forth a statement of intent to purchase all of the Offeree's Shares under
this Section 10.1 for a purchase price in cash designated by the Offeror
(the "Per Share Price"), which Per-Share Price shall take into account any
outstanding Contribution Loan. In order to be effective, the Notice must
be accompanied by the payment to the Offeree of an earnest money deposit
equal to ten percent (10%) of the Per Share Price times the number of
Shares owned by the Offeree.
(b) After receipt of the Notice, the Offeree shall either (i) sell
all of its Shares to the Offeror or its designee for an amount in cash
equal to the Per Share Price times the number of Shares owned by the
Offeree; or (ii) purchase, or cause its designee to purchase, the shares
of Common Stock of the Company owned by the Offeror for cash in an amount
equal to the Per Share Price times the number of Shares owned by the
Offeror. The Offeree shall have seventy-five (75) days from its receipt of
notice of the designation of the purchase price as provided in Section
10.1(b) in which to exercise either of its options by giving written
notice to the Offeror, including therewith the earnest money refund and
payment set forth below. If the Offeree does not exercise either of its
options by giving written notice within such time period, the Offeree
shall be deemed to have elected to sell its Shares to the Offeror or its
designee on the date of expiration of such seventy-five (75)-day period
for the Offeror Price. In
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the event the Offeree elects to buy the Offeror's Shares, then in order to
be effective, the Offeree's notice of its election must be accompanied by
a refund of the ten percent (10%) earnest money deposit made by the
Offeree, and the election must be accompanied by the payment to the
Offeror of an earnest money deposit equal to ten percent (10%) of the Per
Share Price times the number of Shares owned by the Offeror, and closing
shall follow within forty-five (45) days thereafter.
10.2 Disclosure of Third-Party Offers. At any time during the period in
which a Notice has been given to invoke a Shareholder's right pursuant to this
Article X, in the event either Shareholder holds a bona fide written third-party
offer to buy the Company or all or a portion of any Shares, such offer must be
disclosed to the other Shareholder.
10.3 Earnest Money Deposits. All earnest money deposits required hereunder
shall be deposited into a separate interest-bearing account until disposed of in
accordance with the provisions of this Article X. All interest earned on such
accounts shall become a part of such earnest money deposit for all purposes. The
Shareholder receiving such interest shall be liable for all federal and state
income taxes on such interest; provided, however, that if the interest is paid
to the selling Shareholder upon the Closing of any sale pursuant to this Article
X, then the acquiring Shareholder (and not the selling Shareholder) shall be
liable for the federal and state income tax on the amount of interest earned on
such accounts.
10.4 Closing. The closing of an acquisition by a Shareholder pursuant to
this Article X shall be held at the principal place of business of the Company
on a mutually acceptable date (the "Final Date") not later than thirty (30) days
after Offeree's election, deemed or otherwise. At the closing of the disposition
and acquisition of such interest the following shall occur:
(a) The disposing party shall transfer and assign its Shares to the
acquiring party or its designee, which Shares shall be free and clear of
all liens, claims and encumbrances, and with covenants of general
warranty, and shall execute and deliver to the acquiring party all
instruments and documents which may be required to give effect to the sale
and transfer to the acquiring party of such Shares; and
(b) The acquiring party shall pay to the disposing party the
consideration therefor in cash or immediately available funds.
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10.5 Enforcement. It is expressly agreed that the remedy at law for breach
of the obligations of the Shareholders set forth in this Article X is inadequate
in view of (a) the complexities and uncertainties in measuring the actual damage
to be sustained by reason of the failure of a Shareholder to comply fully with
such obligations, and (b) the uniqueness of the Company business and the
Shareholders' relationship. Accordingly, each of such obligations shall be, and
is hereby expressly made, enforceable by specific performance. Furthermore,
should any Shareholder (the "Failing Shareholder") be obligated to acquire the
Shares of the other Shareholder pursuant to this Article X and thereafter fail
to do so, then the other Shareholder may, by giving written notice to the
Failing Shareholder within thirty (30) days after such failure, elect to acquire
all of the Shares of the Failing Shareholder for seventy-five percent (75%) of
the amount the Failing Shareholder would be entitled to receive pursuant to
Section 10.1. If a Shareholder entitled to do so exercises its rights under this
Article X to acquire all of the Shares of the Failing Shareholder, then the
other provisions set forth in this Article X shall be applicable in consummating
such transaction. Each Shareholder hereby constitutes and appoints the other
Shareholder its agent and attorney-in-fact for the purpose of executing and
delivering any and all documents necessary to convey all of its Shares pursuant
to the provisions of this Article X and any conveyance so made shall fully
divest the Shareholder whose Shares are to be conveyed of all right, title and
interest in and to the Company and its property and its interest therein;
provided that such power of attorney shall be exercised only if the Failing
Shareholder shall fail to so execute and deliver such documents. The power of
attorney herein granted, being coupled with an interest, is irrevocable. Each
Shareholder hereby releases the Shareholder who validly conveys any Shares
pursuant to this Article X from any and all claims and liabilities for so
conveying such Shares.
10.6 Contemporaneous Offers; Ineffective Offers. No offer made pursuant to
this Article X shall have any effect if made by a Shareholder after receipt of
an effective offer from the other Shareholder pursuant to Section 10.1. In the
event that the Shareholders contemporaneously make offers pursuant to this
Article X, each prior to the receipt of the other Shareholder's offer, the offer
containing the higher Per-Share Price shall be effective and shall control.
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ARTICLE XI
ACCOUNTING AND RECORDS; NONSOLICITATION UPON TRANSFER
11.1 Accounting Period. The Company's accounting period shall be the
calendar year. The Company may, by majority vote of the Board of Directors,
provide for an audit of the books and records of the Company to be made at the
Company's expense.
11.2 Records to be Maintained.
(a) At its principal office, the Company shall maintain its records,
including:
(i) a copy of the Articles of Incorporation and all amendments
thereto;
(ii) copies of records that would enable a Shareholder to
determine the relative voting rights of the Shareholders;
(iii) copies of the Company's federal, foreign, state and
local income tax returns and reports, if any, for the three most
recent years; and
(iv) any financial statements of the Company for the three
most recent years.
(b) A Shareholder may, at such Shareholder's own expense, inspect
and copy any Company record upon reasonable request during ordinary
business hours.
11.3 Reports to be Furnished. The Company will mail the following reports
to each Shareholder for as long as such Shareholder is a holder of any Shares in
the Company:
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(a) As soon as practicable after the end of each fiscal year, and in
any event within 90 days thereafter, such financial statements of the
Company as of the end of such fiscal year prepared in accordance with
GAAP, as the Board of Directors shall decide.
(b) As soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company and
in any event within 45 days thereafter, such quarterly financial
information of the Company for such period as the Board of Directors shall
decide.
(c) As soon as practicable after the end of each fiscal month and in
any event within 30 days thereafter, such monthly financial information of
the Company for such period as the Board of Directors shall decide.
(d) Within 30 days prior to the beginning of each fiscal year, an
Annual Budget, which shall be developed and approved by the Board of
Directors. The Annual Budget shall set forth full and complete forecasted
balance sheets, statements of operations and statements of cash flows for
such fiscal year and for each month within that year. The Annual Budget
shall also describe the marketing, production, research and development,
organization and staffing and financial strategies that support the Annual
Budget's forecasted figures.
11.4 Assignment of Rights. The rights granted pursuant to Section 11.3 may
not be assigned or otherwise conveyed by any Shareholder or by an subsequent
transferee of any such rights without the prior written consent of the Company;
provided, however, that any Shareholder may assign to any transferee (other than
a competitor of the Company or of any other Shareholder) the rights granted
pursuant to Section 11.3 in connection with a transfer of all of such
Shareholder's Shares that has been approved and consented to by the Company and
each other Shareholder after full disclosure of the terms and conditions of such
sale.
11.5 Nonsolicitation upon Transfer. In the event of any such sale or
transfer, the transferring Shareholder shall execute a Confidentiality and
Nonsolicitation Agreement in such form as may be prepared by the Company which
(a) shall restrict such Shareholder's disclosure of any proprietary,
confidential and trade secret information of the Company such Shareholder may
have been provided; and (b) shall provide that, for a period of five (5) years
from the date of such transfer, such Shareholder shall agree that neither it nor
its Affiliates
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shall directly or indirectly solicit the customers or contracts of the Company
listed on Schedule A hereto, as the same shall be in existence at the time of
such transfer.
ARTICLE XII
LEGEND ON STOCK CERTIFICATES
Each certificate representing Shares subject to this Agreement, whether
they be Shares originally issued or issued or transferred pursuant to this
Agreement, shall bear on its face in conspicuous type the following legend:
"The shares of stock represented by this certificate (and all transfers
or pledges hereof) are subject to the restrictions of and are
transferable only in compliance with the provisions of that certain
Shareholders Agreement dated as of March 22, 1996, by and among
CallTask Incorporated (the "Company") and its shareholders, a copy of
which is on file at the office of the Company. Any attempted transfer
or pledge hereof in violation of the terms of such Shareholders'
Agreement shall be null and void and may not be recognized by the
Company."
In the event that such legend cannot practicably be placed on the face of
such certificate, either alone or in connection with other legends required by
law or by agreement to be placed on the face of such certificate, the legend
shall be set out on the back of the certificate, and notice thereof shall be
given in conspicuous type on the front.
ARTICLE XIII
VOTING AGREEMENT
13.1 Election of Directors.
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(a) Except as provided in Section 13.1(b), all of the Shareholders
hereby agree that, with respect to any vote by them for the election of
directors for the Company (whether said vote shall be in writing, by
consent or at a regular or special meeting), the Shareholders shall at all
times throughout the Term vote for, or shall otherwise take such action as
may be appropriate to cause the voting for, the election of the following
individuals to the Board, provided such individuals meet any requirements
established by applicable law to serve on the Board: (a) four individuals
nominated by Norrell (the "Norrell Directors"); and (b) three individuals
nominated by Harvard (the "Harvard Directors"). No additional individuals
(or their replacements, if any), other than as set forth herein, may be
elected to the Board throughout the Term unless Shareholders holding more
than seventy-five percent (75%) of the then-current issued and outstanding
Shares consent and provided that any such other individuals meet any
requirements established by applicable law to serve on the Board.
(b) Notwithstanding Section 13.1(b), Harvard's rights to elect three
Harvard Directors shall continue only as long as Harvard owns more than
thirty percent (30%) of the outstanding Shares. In the event Harvard owns
more than twenty percent (20%) of the outstanding Shares but not more than
thirty percent (30%) of the Shares, then Harvard shall be entitled to
nominate and elect two (2) directors. In the event Harvard owns any
outstanding Shares but not more than twenty percent (20%) of the Shares,
then Harvard shall be entitled to nominate and elect one (1) director. The
provisions of this Section 13.1(b) shall control over any conflicting
provisions of the Company's Bylaws.
13.2 Other Voting Rights. The following actions require the approval of
the holders of not less than two-thirds (2/3) of the outstanding Shares: (a) any
change in the business of the Company from that specified in Section 2.1 (other
than revisions to Schedule A, which the Board of Directors shall have the
authority to make from time to time); (b) any amendment to the Articles of
Incorporation, the Bylaws or this Agreement; (c) the continuation of the Company
after a Dissolution Event; (d) sale, exchange, lease or other transfer of all or
substantially all of the assets of the Company; (e) the dissolution of the
Company pursuant to Section 14-2-1402 of the GBCC; (f) the merger of the Company
pursuant to Section 14-2-1101 of the GBCC; and (g) incurring any indebtedness of
the Company in excess of $5,000,000 (except for such indebtedness as may
otherwise be authorized herein).
ARTICLE XIV
TERM
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<PAGE> 27
14.1 Normal Duration. This Agreement shall commence on the Effective Date
and shall, unless sooner terminated pursuant to Section 14.2, continue in full
force and effect as provided herein for an initial term (the "Initial Term") of
twenty (20) years thereafter. This Agreement shall be automatically renewed for
an additional twenty (20)-year period after the expiration of the Initial Term,
provided that all parties consent in writing prior to the expiration of the
Initial Term. The Initial Term, as it may be extended or earlier terminated
pursuant hereto, is referred to herein sometimes as the "Term."
14.2 Early Termination. This Agreement shall terminate on the occurrence
of any of the following events:
(a) the liquidation, bankruptcy or dissolution of the Company;
(b) a single Shareholder becoming the owner of all of the
outstanding Shares; or
(c) the execution of a written instrument to that effect by the
Company and all Shareholders of the Company who are then parties to this
Agreement.
14.3 Effect of Termination. Upon the termination of this Agreement, all
Shares shall be relieved from the terms and provisions hereof, and any
certificates evidencing such Shares may be surrendered to the Company for
cancellation and issuance of a new certificate without the legend provided for
in Article XII.
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<PAGE> 28
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 Determination of Fair Market Value. Whenever this Agreement calls for
the fair market value of all or a portion of a Shareholder's Shares to be
determined, such fair market value shall be determined as follows: Norrell and
Harvard shall each select an investment banking firm of recognized national
standing to make such determination, and the average of the valuations of the
two investment banking firms so selected (which shall be furnished to the
Shareholders within sixty (60) days of the notice giving rise to the provisions
of this Section 15.1) shall be binding; provided, however, that in the event the
two valuations vary by more than five percent (5%) of one another, then the two
investment banking firms so selected shall select a third investment banking
firm of recognized national standing, each of which shall work together to make
such determination. The decision of a majority of the investment banking firms
shall be binding and conclusive on Norrell and Harvard, and shall be furnished
to the Shareholders within sixty (60) days from the date of the initiation of
the provisions of this Agreement giving rise to the necessity of determining
fair market value. The party initiating the provisions giving rise to the
necessity of determining fair market value shall bear the costs and expenses of
the investment banking firms.
15.2 Entire Agreement. This Agreement represents the entire Agreement
among all the Shareholders of the Company.
15.3 Activities of the Shareholders. Subject to the provisions of Article
II, each of the Shareholders shall, in its individual capacity or otherwise, be
free to engage in, to conduct or to participate in any business or activity
whatsoever, including, without limitation, the provision of "inbound" and
"outbound" teleservices, without any accountability, liability or obligation
whatsoever to the Company or to any other Shareholder, even if such business or
activity competes with or is enhanced by the business of the Company. Each
Shareholder hereby agrees that engaging in any activity permitted by this
Section 15.3 shall not be considered a breach of any duty that the Shareholders
may have to the Company or to the other Shareholders and that the Company shall
not have any interest in any profits which may be realized with respect to any
such activity.
15.4 Application of Georgia Law. This Agreement, the application and
interpretation hereof shall be governed exclusively by its terms and the laws of
the State of Georgia.
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<PAGE> 29
15.5 Execution of Additional Instruments. Each Shareholder hereby agrees
to execute such other and further statements of interest and holdings,
designations, powers of attorney and other instruments necessary to comply with
any laws, rules or regulations.
15.6 Construction. Whenever the singular form is used in this Agreement,
and when required by the context, the same shall include the plural and vice
versa, and the masculine gender shall include the feminine and neuter genders
and vice versa.
15.7 Headings; References. The headings in this Agreement are inserted for
convenience only and are in no way intended to describe, interpret, define, or
limit the scope, extent or intent of the Company Agreement or any provision
hereof. Any reference in this Agreement to an "Article", "Section", "Schedule"
or "Exhibit" shall mean the specified Article or Section of, or Schedule or
Exhibit to, this Agreement.
15.8 Waivers. The failure of any party to seek redress for violation of or
to insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
15.9 Rights and Remedies Cumulative. The rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive the right not use any or all other remedies.
Such rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
15.10 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same instrument.
15.11 Certification of Non-Foreign Status. In order to comply with Section
1445 of the Code and the applicable Regulations, in the event of the disposition
by the Company of a United States real property interest as defined in the Code
and Regulations, each Shareholder shall provide to the Company, an affidavit
stating, under penalties of perjury, (i) the Shareholder's address, (ii) United
States taxpayer identification number, and (iii) that the Shareholder is not a
foreign person as that term is defined in the Code and Regulations.
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<PAGE> 30
Failure by any Shareholder to provide such affidavit by the date of such
disposition shall authorize the Shareholders to withhold ten percent (10%) of
each such Shareholder's distribution share of the amount realized by the Company
on the disposition.
15.12 Banking. All funds of the Company shall be deposited in its name in
an account or accounts as shall be designated from time to time by the Board of
Directors. All funds of the Company shall be used solely for the business of the
Company. All withdrawals from the Company bank accounts shall be made only upon
a check signed by the President or Treasurer or by such other persons as the
Board of Directors may designate from time to time.
15.13 Determination of Matters Not Provided for in This Agreement. The
Shareholders shall decide any questions arising with respect to the Company and
this Agreement which are not specifically or expressly provided for in this
Agreement.
15.14 Further Assurances. The Shareholders each agree to cooperate, and
to execute and deliver in a timely fashion any and all additional documents
necessary to effectuate the purposes of the Company and this Agreement.
15.15 Time. TIME IS OF THE ESSENCE OF THIS AGREEMENT, AND TO ANY PAYMENTS,
ALLOCATIONS AND DISTRIBUTIONS SPECIFIED UNDER THIS AGREEMENT.
15.16 Certain Shareholder Transactions. Each of the Shareholders and the
Company agrees that, with respect to the Company's needs from time to time for
goods, services and other item the Company shall consider obtaining such goods,
services and other items from one or more of the Shareholders; provided,
however, that the Company shall have no obligation to obtain any such goods,
services or other items from the Shareholders and provided further that the
Company shall deal at arms' length with such Shareholders and shall otherwise
ensure that any transactions entered into between the Company and one or more
Shareholders shall be fair to the Company.
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<PAGE> 31
IN WITNESS WHEREOF, the parties have caused this Shareholders Agreement to
be duly executed as of the Effective Date.
NORRELL CORPORATION
By:
------------------------------------
Title:
---------------------------------
HARVARD TELESERVICING, LLC
By:
------------------------------------
Title:
---------------------------------
CALLTASK INCORPORATED
By:
------------------------------------
Title:
---------------------------------
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<PAGE> 32
SCHEDULE A
BUSINESS OF THE COMPANY
1. Management Services Agreement dated March 26, 1996, by and between
CallTask and LaQuinta Inns, Inc.
Approved and Accepted:
NORRELL CORPORATION
By:
---------------------------
HARVARD TELESERVICING, LLC
By:
---------------------------
CALLTASK INCORPORATED
By:
---------------------------
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<PAGE> 1
EXHIBIT 10.8
DYNAMIC FRANCHISE AGREEMENT
1. Definitions
2. Grant of Franchise
3. Ownership of DYNAMIC Names and Marks
4. Use of Name
5. Franchise Fee
6. DYNAMIC Manual and Software
7. Obligations of Franchisee
8. Obligations of DYNAMIC
9. Covenants of Franchisee
10. Term of Franchise
11. Independent Contractors
12. Insurance
13. Indemnification
14. Books and Records
15. Assignment by DYNAMIC
16. Assignment by Franchisee
17. Termination
18. Notices
19. Waiver of Default by DYNAMIC
20. Interpretation and Execution of Agreement
21. Acknowledgements
Schedule "A" Area
Schedule "B" Job Classifications for the Franchised Business
Schedule "C" Minimum Performance Criteria
<PAGE> 2
DYNAMIC FRANCHISE AGREEMENT
This Agreement is made this_____day of _______, 19____ between DYNAMIC
TEMPORARY SERVICES, INC., a Georgia corporation ("DYNAMIC"), and
____________________________________________________________[as husband and wife
jointly and severally] ("Franchisee"),___________ an individual[s]____________
a partnership____________ a corporation, of the State of_______________.
WHEREAS, as the result of the expenditure of time, effort and money,
DYNAMIC has developed a unique system for providing to business and industry, on
a temporary basis, personnel to perform certain jobs and services, and such
system and the business of DYNAMIC and its licensees and franchisees transacted
in accordance with that system has acquired a distinctive, high quality
reputation and public identity; and
WHEREAS, DYNAMIC, through its advertising programs and its quality service,
has established a reputation and a demand for qualified temporary personnel it
makes available to business and industry under its licensed trademarks and trade
names; and
WHEREAS, Franchisee desires to obtain the benefits of that system and the
right to operate a franchised DYNAMIC Temporary Help Service Business under
DYNAMIC=s Names and Marks, upon the terms and conditions herein set out;
THEREFORE, the parties agree as follows:
1. DEFINITIONS.
As used in this Agreement,
(a) Accounting Period means one of the four or five week periods generally
coinciding with calendar months and producing twelve such periods per calendar
year, as determined by DYNAMIC.
(b) Area means the geographic territory described on Schedule AA@ hereto,
which Schedule is a part of this Agreement.
(c) Customer means business and industrial users of Temporary Employees
furnished through the Franchised Business.
(d) Franchised Business means the Temporary Help Service Business
franchised to and operated by the Franchisee under this Agreement.
(e) Gross Margin means the Net Billings during the applicable Accounting
Period less all payroll and other direct labor costs with respect to Temporary
Employees (including, without limitation, payroll taxes, workers= compensation
insurance, vacation pay, and charges for liability insurance carried by DYNAMIC)
paid or incurred by DYNAMIC in that Accounting Period with respect to the
Franchised Business.
(f) Liquidation Fees means those amounts payable or paid by Customers who
hire for positions of permanent employment Temporary Employees furnished to such
Customers through the Franchised Business.
(g) Net Billings means the gross billings to Customers with respect to
Temporary Employees furnished through the Franchised Business, less any
discounts and other adjustments to such gross billings, and excluding
Liquidation Fees, if any. Adjustments may include, without limitation,
corrections of errors in billings and billings with respect to services rendered
but either not billed or billed in a reduced amount, or billed and then reduced
or cancelled, due to complaints or dissatisfaction of Customers, in order to
develop and maintain customer relations and goodwill.
(h) DYNAMIC Manual means the confidential operations and procedures
manuals of DYNAMIC for a Temporary Help Service Business and the DYNAMIC System
as developed and maintained by DYNAMIC and as the same may be modified or
supplemented from time to time by DYNAMIC.
(i) DYNAMIC Names and Marks means the names and words "DYNAMIC", "DYNAMIC
Services", "DYNAMIC People Skilled People. With People Skills.", "DYNAMIC
Temporary Services, Inc.", and all other trade names, trademarks, service marks,
logos, designs, slogans and other such marks now or hereafter used by DYNAMIC,
either alone or in conjunction with other words or phrases, to identify the
DYNAMIC System and Temporary Help Service Businesses operated, licensed and
franchised by DYNAMIC.
(j) DYNAMIC System means the unique system and plan for the promotion,
development and operation of a Temporary Help Service Business as developed by
DYNAMIC including, without limitation, the following distinctive elements
thereof:
(i) the DYNAMIC Names and Marks, which Franchisee recognizes are
unique and publicly-recognized, either alone or in combination
with or in association with words or ideas connotating a
nationwide service of providing Temporary Employees of high
quality;
(ii) the color scheme, pattern, design, furnishings, equipment and
decoration of offices of DYNAMIC and its franchisees and
licensees in a uniform manner;
(iii) unique methods of operating a Temporary Help Service Business
such that a high quality of service is provided to customers;
(iv) a program of advertising and publicity of DYNAMIC and the
Temporary Help Service Business operated by DYNAMIC and its
licensees and franchisees;
(v) methods and procedures, whether or not embodied in tangible
form which standardize (insofar as practical) the operation
and development of a Temporary Help Service Business of the
type and character identified with the DYNAMIC Names and
Marks; and
(vi) DYNAMIC Software.
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<PAGE> 3
(k) DYNAMIC Software means computer programs and software developed by or
licensed to DYNAMIC for use in the DYNAMIC System, including, without
limitation, the BOSS System, other operational programs and software, screening
and testing programs and software, and training programs and software.
(l) Temporary Employees means persons furnished to business and industrial
customers and who perform, on a temporary or part-time basis, jobs or services
for such customers.
(m) Temporary Help Service Business means the business of marketing and
providing, on a temporary or part-time basis, personnel to perform services for
business and industrial customers.
(n) Working Days means the week days of Monday through Friday, excluding
any legal holidays.
2. GRANT OF FRANCHISE.
(a) DYNAMIC grants to the Franchisee, and the Franchisee accepts, subject
to and in accordance with the terms and conditions of this Agreement, a license
to use the DYNAMIC Names and Marks, the DYNAMIC System and the DYNAMIC Manual in
the operation, solely within the Area, of one (1) Temporary Help Service
Business for providing Temporary Employees to perform the specific jobs and
services listed on Schedule B to this Agreement.
(b) The license granted hereby is restricted to the operation, solely
within the Area, of a Temporary Help Service Business for providing Temporary
Employees to perform the specific jobs and services listed on Schedule B; and no
license is granted for the use of the DYNAMIC Names and Marks, the DYNAMIC
System or the DYNAMIC Manual (i) outside the Area, or (ii) in connection with
any Temporary Help Service Business other than one that provides Temporary
Employees to perform the specific jobs and services listed on Schedule B, or
(iii) in connection with any other business or enterprise whatsoever. DYNAMIC
reserves the right to operate directly, and to license and franchise others to
use the DYNAMIC Names and Marks, the DYNAMIC System and the DYNAMIC Manual in
the operation of other Temporary Help Service Businesses outside the Area,
Temporary Help Service Businesses within the Area where the Temporary Employees
thereof perform jobs and services other than those specifically listed on
Schedule B, and, in the circumstances set forth in, and subject to, Sections 2
(d) and (e) below, Temporary Help Service Businesses within the Area where the
Temporary Employees thereof perform the jobs and services listed on Schedule B.
(c) So long as Franchisee fully performs its duties, obligations and
covenants under this Agreement, DYNAMIC agrees that, except as provided in
Sections 2 (d) and (e) below, it will neither operate directly nor license or
franchise others to operate within the Area a Temporary Help Service Business
for providing Temporary Employees to perform the jobs and services listed on
Schedule B under the name DYNAMIC. However, Franchisee expressly acknowledges
and understands that it may directly compete within the Area with other
temporary help service businesses operating under different names or marks (such
as "Norrell") owned or licensed by DYNAMIC's parent or affiliates and which are
authorized to provide temporary employees to perform any jobs and services
listed on Schedule B.
(d) Anything to the contrary in this paragraph 2 notwithstanding, in the
event that DYNAMIC or an affiliate of DYNAMIC acquires from an unrelated third
party, through a purchase of assets or stock, including the acquisition of a
majority voting interest, or through a merger, consolidation or any other form
of business combination, a Temporary Help Service Business with an owned or
franchised office in the Area, DYNAMIC, the affiliate of DYNAMIC and the
surviving entity in a merger, consolidation or other form of business
combination, as the case may be, will have the right to continue the operation
of such office in the Area as a company owned or franchised office under the
trade name utilized by the acquired business for such office before the
acquisition.
(e) Franchisee acknowledges that certain temporary help business customers
have offices in more than one state of the United States of America (such
customers are hereinafter referred to as ANational Account Customers@), and in
order to obtain the business of National Account Customers, a temporary help
service business normally must agree to provide temporary help services to all
offices of the National Account Customer on the same terms and conditions, and
while the Franchisee has certain exclusive rights in the Area pursuant to this
Agreement, the Franchisee would not normally be able to obtain the temporary
help service business of a National Account Customer in the Area except through
DYNAMIC, under a contract between DYNAMIC and the National Account Customer,
since DYNAMIC has the capability to provide nationwide temporary help services
but the Franchisee does not. Accordingly, during the term of this Agreement:
(i) DYNAMIC will have the right to negotiate and enter into
agreements with National Account Customers to provide
temporary help services to the offices of such National
Account Customers wherever located, including, without
limitation, those offices located in the Area.
(ii) Within ten (10) business days of the execution of a contract
between DYNAMIC and a National Account Customer (or within ten
(10) business days of the opening of an office of the National
Account Customer in the Area, if, at the time of the execution
of the contract with the National Account Customer, the
National Account Customer has no office in the Area), DYNAMIC
will offer to the Franchisee the right to provide to the
National Account Customer office or offices in the Area, on
the terms and conditions set forth in the contract between
DYNAMIC and the National Account Customer, those temporary
help services which the Franchisee is licensed to provide by
this Agreement.
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<PAGE> 4
(iii) The Franchisee will have ten (10) business days from the date
of the offer made under subparagraph 2 (e) (ii) above within
which to accept, in writing, the offered rights to the
National Account Customers' business in the Area.
(iv) The Franchisee's exclusivity rights in this Agreement
notwithstanding, if the Franchisee does not accept the offer
made under subparagraph 2 (e) (ii) within the time required by
subparagraph 2 (e) (iii), then DYNAMIC will have the right (A)
to provide temporary help services to the National Account
Customer office or offices in the Area on the terms and
conditions in the contract between DYNAMIC and the National
Account Customer, or (B) to contract with another temporary
help service business in the Area to provide those temporary
help services on the terms and conditions in the contract
between Norrell and the National Account Customer, in either
case ((A) or (B)), utilizing the names and marks of DYNAMIC.
(f) Nothing in this paragraph 2 will be construed to prohibit DYNAMIC,
directly or through an affiliate, from providing billing, collecting and
accounting services and financing of receivables to unrelated third party
Temporary Help Businesses for a fee, whether within the Area or otherwise. As
part of those services, DYNAMIC may license to the unrelated third party the use
of the DYNAMIC operations software system or the Norrell BOSS System or a
variation of that system, but the unrelated third party to which those services
might be provided will be prohibited from using the DYNAMIC and Norrell Name and
Marks in any fashion.
3. OWNERSHIP OF DYNAMIC NAMES AND MARKS.
Franchisee acknowledges DYNAMIC's ownership of and exclusive right to:
(a) the DYNAMIC Names and Marks;
(b) the DYNAMIC System, and the DYNAMIC Manual and all other materials and
confidential and proprietary information which are a part thereof; and
(c) all trademarks, trademark registrations, service marks, service mark
registrations, and trade names hereafter applied for or used by DYNAMIC in
connection with the operation, licensing or franchising of a Temporary Help
Service Business.
Franchisee will not, at any time, take any action or do anything, either
directly or indirectly, which would contest the validity or ownership by DYNAMIC
of the foregoing and shall cooperate with and assist DYNAMIC with respect to the
protection of the DYNAMIC System and the DYNAMIC Names and Marks, all as
hereinafter set out.
4. USE OF NAME.
Franchisee, in the conduct of the Franchised Business, will use only the
name "DYNAMIC" and other DYNAMIC Names and Marks authorized by DYNAMIC.
Franchisee will not use or permit the use, either directly or indirectly, of the
name "DYNAMIC" or any DYNAMIC Names or Marks in any territory other than the
Area or in connection with any business or enterprise other than the Franchised
Business. Franchisee shall not interfere with or prohibit in any manner the
proper use of the DYNAMIC Names and Marks by DYNAMIC or other franchisees and
licensees of DYNAMIC in any territory.
5. FRANCHISE FEE.
(a) For the franchise and license granted in this Agreement, for payroll
and billing services and for financing of receivables, Franchisee agrees to pay
to DYNAMIC during the term of this Agreement a continuing fee and royalty of
forty percent (40%) of the Gross Margin of the Franchised Business for each
Accounting Period.
The foregoing notwithstanding, for each Accounting Period during the term
of this Agreement Franchisee's fee and royalty paid to DYNAMIC shall not be less
than ten percent (10%) of the Net Billings of the Franchised Business during
that Accounting Period. Upon request of Franchisee, DYNAMIC will review any
proposed business and may, at its discretion, exclude that business from this
minimum fee and royalty calculation.
(b) DYNAMIC shall be responsible for billing Customers for work and
services performed by Temporary Employees furnished through the Franchised
Business, and shall also pay all wages of such Temporary Employees and all
payroll taxes, workers' compensation insurance charges, vacation pay, state
unemployment charges and taxes, and (to the extent maintained by DYNAMIC)
liability insurance charges attributable to such Temporary Employees, all of
which payments shall be deducted from the amount billed to Customers in
determining Gross Margin. Payment of the fee and royalty specified in Section
(a) above shall be made in each Accounting Period by DYNAMIC deducting from and
retaining the amount calculated per subparagraph (a) for that Accounting Period;
and DYNAMIC will pay to Franchisee, after deduction of any reserve or charge
back for uncollectable accounts of the Franchisee as hereinafter provided, the
balance of the Gross Margin for the Accounting Period, within ten (10) Working
Days following such Accounting Period.
(c) The amount of any billing to a Customer that, in the good faith
judgment of DYNAMIC, becomes uncollectable in that period, will be deducted in
that Accounting Period from the Gross Margin for that Accounting Period. If any
billing or account becomes, in the good faith judgment of DYNAMIC, uncollectable
after the Accounting Period in which it was originally billed, the Franchisee
will be charged back the same percentage of the uncollectable billing or account
as the percentage of Gross Margin remitted to Franchisee for the Accounting
Period during which the uncollectable billing or account was orginally billed.
In any event, any uncollectable billing or account with respect to the
Franchised Business will be borne by and accounted for between the parties with
DYNAMIC assuming responsibility for the same proportion its fee and royalty
bears to the Gross Margin for the Accounting Period in which the billing or
account was originally invoiced. At DYNAMIC's sole discretion, any account
remaining unpaid
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<PAGE> 5
more than 120 days after the original invoice date may be written off as
uncollectable.
(d) Franchisee will pay interest to DYNAMIC on Franchisee's share of all
accounts serviced by the Franchised Business which remain unpaid ninety (90)
days after the original invoice date at an annual rate of Prime plus one (1%)
percent, where Prime is the prime rate published in the Wall Street Journal on
the first Working Day of DYNAMIC's fiscal year. That interest will be paid each
Accounting Period by deduction of the interest amount from the amount remitted
to Franchisee.
(e) In order to establish a reserve for the Franchisee's share of
uncollectable accounts with respect to the Franchised Business and to secure the
performance by Franchisee of its duties, obligations and covenants hereunder,
Franchisee will establish a deposit with DYNAMIC by permitting DYNAMIC to
withhold from all amounts to be remitted to Franchisee by DYNAMIC as provided in
Section (b) above an amount equal to two percent (2%) of the Net Billings for
the Accounting Period with respect to which such remittance is made; provided,
however, except as provided in the next sentence, the maximum amount of such
deposit will not exceed three percent (3%) of the highest Net Billings for any
Accounting Period occurring during the twelve-month period ending on the last
day of the Accounting Period just ended. In addition to such deposit, if
DYNAMIC, in its good faith judgment, believes that the Franchisee's share of
actual or potential uncollectable amounts of Customers will exceed the then
aggregate amount of such deposit, DYNAMIC may deduct from remittances to be made
to Franchisee under Section (b) above (and shall credit to such deposit balance)
such additional sums as DYNAMIC, in its good faith judgment, deems adequate to
cover Franchisee's share of such actual or potential uncollectable accounts. If
in any Accounting Period the accounts for the Franchised Business that become
uncollectable in that Accounting Period exceed the Gross Margin for that
Accounting Period, DYNAMIC shall have the right to debit such deposit account by
an amount equal to the percent of such excess equal to the percent of Gross
Margin paid to Franchisee for the Accounting Period in which the account was
billed. DYNAMIC will also have the right to debit such deposit account by all
amounts Franchisee shall be obligated to pay or reimburse DYNAMIC hereunder.
DYNAMIC will not be obligated to establish or maintain the deposit account as a
separate or segregated account, but may commingle such funds and deposit
accounts with other funds and accounts of or maintained by DYNAMIC and use such
funds in its business. DYNAMIC will pay to Franchisee interest on any such
deposit at an annual rate of Prime plus one (1%) percent, where Prime is the
prime rate published in the Wall Street Journal on the first Working Day of
DYNAMIC's fiscal year, with that interest to be paid each Accounting Period
there is a deposit.
(f) In addition, all Liquidation Fees collected by either DYNAMIC or
Franchisee shall be divided between the parties so that Franchisee will receive
SIXTY (60%) PERCENT, and DYNAMIC will receive FORTY (40%) PERCENT of such
Liquidation Fees. Billing for all Liquidation Fees will be through DYNAMIC's
normal billing and collecting process, but remittance by DYNAMIC to Franchisee
for Liquidation Fees will not be made until after collection. All billing
information for Liquidation Fees will be submitted to DYNAMIC weekly with the
remainder of the payroll and billing information. In no event may Franchisee
invoice a Customer directly for Liquidation Fees.
(g) Each Accounting Period, Franchisee and DYNAMIC will each pay into a
local marketing and advertising fund (the "Local Advertising Fund") one eighth
(1/8) of one (1%) percent of the Net Billings for the Accounting Period. The
purpose of the Local Advertising Fund is to provide funding for marketing
efforts in Franchisee's market area and will be used as may be jointly agreed by
DYNAMIC and Franchisee. The Local Advertising Fund will be held by DYNAMIC and
will not bear or accrue interest. DYNAMIC is not required to establish or
maintain a separate or segregated account for the Local Advertising Fund, but
may commingle this money with other funds or accounts maintained by DYNAMIC and
use the money in its business. Franchisee acknowledges that the Local
Advertising Fund must be used to be effective, so all amounts in the Local
Advertising Fund, whether credited from DYNAMIC or Franchisee, which are not
expended within two (2) years of their credit to the Local Advertising Fund,
will, at DYNAMIC's discretion, revert solely to DYNAMIC. DYNAMIC will show the
balance of the Local Advertising Fund on the Franchise Statement sent to
Franchisee each Accounting Period. Upon termination of this Agreement for any
reason, DYNAMIC will pay to Franchisee one-half (1/2) of the balance in the
Local Advertising Fund.
6. DYNAMIC MANUAL AND SOFTWARE.
The Dynamic Manual (including all forms and reports used in the DYNAMIC
System) and the DYNAMIC Software are for the exclusive use of DYNAMIC and its
licensees and franchisees. The DYNAMIC Manual and the DYNAMIC Software are to be
treated at all times as confidential and are not to be copied or duplicated,
either in whole or in part, at any time (other than for normal backup in the
case of DYNAMIC Software), nor are the contents thereof to be provided or
disclosed to any unauthorized person. The DYNAMIC Manual and the DYNAMIC
Software and all copies thereof shall be and remain the sole and exclusive
property of DYNAMIC.
7. OBLIGATIONS OF FRANCHISEE.
Franchisee will:
(a) Develop and conduct the Franchised Business in full and strict
compliance with the terms and conditions of this Agreement through its fullest
and best efforts in a manner becoming to a good, ethical business establishment
and the standards of the DYNAMIC System. Franchisee will comply with all
applicable county and municipal, state and Federal laws, and proper orders,
rules and regulations issued pursuant thereto by lawful authorities.
(b) Adhere to the procedures, methods and standards set forth in the
DYNAMIC Manual and such directives, including all changes, as may, from time to
time, be issued by
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DYNAMIC pertaining to the DYNAMIC System and the Franchised Business.
(c) Establish and maintain in the Area and at its expense an office
properly identified as a DYNAMIC Temporary Service office for the Franchised
Business. The office must be located in a safe and suitable location, be
maintained in a safe and orderly manner, present a neat and businesslike
appearance, and be adequately staffed, consistent with the standards of DYNAMIC.
Franchisee will submit to DYNAMIC, for its review and approval in advance in
writing, the planned location, layout, furnishings and decoration for the
office. Franchisee will redecorate and relocate its office from time to time as
necessary to comply with these standards for the office or as may be reasonably
required by DYNAMIC for the conduct of the Franchised Business in the Area, with
any relocation or redecoration subject to the review and approval in advance by
DYNAMIC.
(d) Fulfill all pre-opening requirements as are set forth in the DYNAMIC
Manual and commence full operation of the Franchised Business within sixty (60)
days of the date of this Agreement, unless DYNAMIC consents in advance in
writing to an extension of the commencement date.
(e) Devote full time to the development and operation of the Franchised
Business, or such lesser reasonable amount of time as DYNAMIC consents to in
advance in writing. Franchisee will not directly or indirectly own or operate or
be employed by or in any other business, without the prior written consent of
DYNAMIC; provided Franchisee will not be prevented from investing in or owning
less than one (1%) percent of the shares or obligations of any business, the
shares or obligations of which are listed and traded on any national securities
exchange, and which investments do not adversely affect the time, supervision,
management and operation by Franchisee of the Franchised Business.
(f) Obtain, maintain and pay for any and all necessary or appropriate
licenses to conduct the Franchised Business in compliance with all applicable
laws. Insofar as permitted by applicable law, those licenses will be obtained by
Franchisee in the name of "DYNAMIC Temporary Services" or "DYNAMIC People.
Skilled People. With People Skills." and, at the option of DYNAMIC, exercisable
at any time, all legal and equitable rights and benefits in such licenses will
become and be the property of DYNAMIC and will be transferred to any person at
the request or instruction of DYNAMIC.
(g) Operate under the name "Dynamic Temporary Services" or "DYNAMIC People.
Skilled People. With People Skills." and register under applicable fictitious
name statutes to do business as "Dynamic Temporary Services" or "DYNAMIC People.
Skilled People. With People Skills.", as DYNAMIC instructs. The Franchisee
acknowledges that DYNAMIC has sole rights to any of those registrations and,
agrees, upon request of DYNAMIC, to execute any documents required by DYNAMIC
from time to time to cancel or transfer (at the sole discretion of DYNAMIC) any
of those registrations, provided that DYNAMIC will hold the executed documents
in escrow until termination or expiration of this Agreement.
(h) Fully and aggressively promote the Franchised Business in and through
such media, in such manner and with such materials as may be selected and
provided by DYNAMIC or which may be selected and provided by Franchisee
consistent with the standards of the DYNAMIC System and approved in advance in
writing by DYNAMIC.
(i) If, with the prior written consent of DYNAMIC, Franchisee is not
engaged full time in the development and operation of the Franchised Business,
employ at least one full-time employee to operate the Franchised Business,
unless DYNAMIC otherwise agrees in advance in writing. Such employee must be
acceptable to and approved in advance in writing by DYNAMIC and must be trained
by DYNAMIC as promptly as possible after the commencement of their employment as
provided herein. Franchisee will also employ one other full-time employee to
assist in the operation of the Franchised Business and other managerial and
staff employees as necessary or appropriate for the proper conduct of the
Franchised Business with those employees to be acceptable to and approved in
advance in writing by DYNAMIC. All those employees are the employees of the
Franchisee and not of DYNAMIC.
(j) Obtain from each of the employees of Franchisee and furnish to DYNAMIC,
within five (5) days of the date of this Agreement or the date of employment of
each employee, whichever is later, covenants and agreements in form and
substance satisfactory to DYNAMIC, which covenants and agreements will be for
the benefit of and enforceable by DYNAMIC against the employee. In the event
Franchisee becomes aware of any actual or threatened violation of any of those
covenants and agreements by any of its employees, Franchisee will promptly and
fully advise DYNAMIC in writing of all related facts known to Franchisee.
Franchisee may take action to prevent or stop any such violation as it deems
appropriate, at its own expense, except that it may not waive its rights or give
any release without the express written consent of DYNAMIC, as the covenants and
agreements are also for the benefit of and enforceable by DYNAMIC. DYNAMIC may
also request that Franchisee take action or take action itself to prevent or
stop any such violation. Franchisee will cooperate with DYNAMIC in all ways
reasonably requested by DYNAMIC to prevent or stop any such violation,
including, without limitation, instituting or permitting to be instituted in the
name of Franchisee any demand, suit or action which DYNAMIC determines to be
necessary or appropriate. If DYNAMIC makes such a request, then any such demand,
suit or action will be maintained and prosecuted at the expense of DYNAMIC
unless otherwise agreed.
(k) Exercise diligent efforts to recruit, screen, interview, test, train,
indoctrinate, contract with and for, and assign, place and dispatch Temporary
Employees on behalf of DYNAMIC and in conformity with the standards and
procedures of DYNAMIC and the DYNAMIC System, and without regard to race, color,
religion, sex, national origin or age. Franchisee will obtain and maintain from
each Temporary Employee, prior to any placement through the Franchised Business,
a current application for employment as a Temporary Employee, in form
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<PAGE> 7
satisfactory to DYNAMIC, with a copy of each application for employment to be
promptly provided to DYNAMIC if requested by DYNAMIC. Notwithstanding anything
herein to the contrary, such Temporary Employees are the employees of DYNAMIC
and not of Franchisee, and the services of Franchisee with respect to such
Temporary Employees will not affect the relationship of DYNAMIC and Franchisee
as independent contractors as set out herein.
(l) Upon reasonable request of DYNAMIC, Franchisee will provide to DYNAMIC
such monthly, quarterly or annual profit and loss statements showing the results
of operation and financial position of the Franchised Business and other
operating information relating to the Franchised Business as DYNAMIC may
specify. All information to be furnished by Franchisee to DYNAMIC shall be
accurate, correct and complete, so as to provide DYNAMIC a true and accurate
picture of the operation and financial condition of the Franchised Business and
the financial condition of the Franchisee. The annual statements will be
provided to DYNAMIC within thirty (30) Working Days from the end of the fiscal
year of the Franchisee. All reports and statements of the Franchisee to DYNAMIC
will be prepared in accordance with generally accepted accounting principles and
will either be prepared and certified by an independent certified public
accountant, or will be certified by Franchisee, under oath, as being accurate,
correct and complete in all material respects and fairly presenting the
financial condition and results of operation of the Franchised Business for the
period covered.
(m) Submit to DYNAMIC not later than Tuesday of each week (Wednesday if
Monday of such week is not a Working Day) the complete and accurate payroll and
billing information for Temporary Employees furnished through the Franchised
Business for the previous week, which DYNAMIC may use and rely on as the basis
for weekly payments to such Temporary Employees and the preparation of bills to
Customers in accordance with methods and procedures of the DYNAMIC System. Such
billing information will include information with respect to both temporary
services performed by the Temporary Employee and Liquidation Fees. Franchisee
will further submit to DYNAMIC, upon request by DYNAMIC, reports giving complete
information on sales and promotional activities and other relevant information
concerning activity of the Franchised Business, including but not limited to
personal and telephone sales calls, advertising materials sent out, and new
Customers and identified potential new Customers, all in such form and at such
times as DYNAMIC may request.
(n) Keep the office of the Franchised Business open and conduct the
Franchised Business in and from that office in accordance with the practices and
procedures of the DYNAMIC System. The Franchisee or a designated employee of the
Franchisee will meet DYNAMIC standards as to outside sales call activity. The
minimum hours of operation will be determined by DYNAMIC, and will be at least
on all Working Days from the hours of 8:00 a.m. to 5:15 p.m.. local time, with
the exception only of legal holidays observed by business and industry in the
Area, and may include additional hours, split shifts or double shifts, and
additional days. The provision of this subparagraph, however, will not in any
manner prevent Franchisee from keeping the office of the Franchised Business
open or conducting the Franchised Business, either on a regular or only
occasional basis, on Saturday or Sunday or legal holidays, or for longer hours,
if that activity is not illegal under any applicable law.
(o) Obtain, maintain and pay for adequate telephone service for the sole
and exclusive use of the Franchised Business, with that telephone service to be
in the name of "Dynamic Temporary Services" or "DYNAMIC People. Skilled People.
With People Skills." The bill for such telephone service must be sent directly
to the office of the Franchised Business, and must be paid on a timely basis by
Franchisee. Franchisee will also obtain and maintain a listing in bold face type
in the classified section (yellow pages) of the city telephone directory for the
largest city in the Area and the telephone directory for any other city or
county in the Area where the office of the Franchised Business is located, with
the listing to be under the name "Dynamic Temporary Services" or "DYNAMIC
People. Skilled People. With People Skills." The content and appearance of any
telephone listing of the Franchised Business will be subject to the prior
written approval of DYNAMIC. At the option of DYNAMIC, exercisable at any time,
all rights and benefits in the telephone numbers, listings and service shall
become and be the property of DYNAMIC and may be transferred to any person or
location at the request or instruction of DYNAMIC. The Franchisee acknowledges
that DYNAMIC has sole rights to all the telephone numbers and listings and
acknowledges that a direction by DYNAMIC is conclusive evidence of the rights of
DYNAMIC in the telephone numbers and listings and its authority to direct their
transfers and further agrees, upon request of DYNAMIC, to execute any documents
required by DYNAMIC from time to time to effect a transfer to DYNAMIC of all
numbers and listings. DYNAMIC will hold those executed documents in escrow until
termination or expiration of this Agreement.
(p) Make timely payment of all bills and expenses of the Franchised
Business, including instant payments to Temporary Employees without assistance
from DYNAMIC where it is necessary or appropriate to do so, with any payment to
Temporary Employees to be promptly reported and accounted for to DYNAMIC. With
respect to instant payments to Temporary Employees by Franchisee, DYNAMIC will
reimburse Franchisee for these payments within ten (10) Working Days of its
receipt of the related payroll information from Franchisee.
(q) Utilize and adhere to promotional programs of DYNAMIC and the DYNAMIC
System, including without limitation personal sales calls, telephone calls and
mailings.
(r) Personally attend or take and successfully complete, and cause its
manager, if any, and all its employees to attend or take and successfully
complete, such training programs as DYNAMIC determines and makes available.
(s) In the event of any actual, threatened or suspected infringement or
piracy of any of the DYNAMIC Names or Marks or the confidential and proprietary
information which is part of and comprises the DYNAMIC System which comes to
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the attention of Franchisee, Franchisee will promptly report all known facts in
writing to DYNAMIC. Franchisee agrees to be a named party in any demand, suit or
action which DYNAMIC decides to institute in connection with the matter, but
DYNAMIC may in its sole discretion determine whether to institute any demand,
suit or action with respect to any infringement or piracy of any part of the
DYNAMIC System. If any demand, suit or action is instituted by DYNAMIC it will
be maintained and prosecuted solely by and at the expense of DYNAMIC. In
addition, in the event Franchisee is named as a party in any suit or action
where any part of the DYNAMIC System is alleged to violate the rights of any
other person, Franchisee will promptly report all known facts in writing to
DYNAMIC. DYNAMIC will, at its expense, take over the defense of the action and
maintain and control the defense, and will further, at its expense, solely
determine how to respond to any such challenge, and whether to institute and how
to maintain or prosecute any demand, suit or action. In any such matters
Franchisee will cooperate in all ways and take all action and do all things
reasonably requested by DYNAMIC.
(t) Immediately notify DYNAMIC in writing concerning, and forward to
DYNAMIC copies of and otherwise fully advise DYNAMIC with respect to, any and
all actual or threatened demands, notices, suits or actions or other legal
process served on or otherwise coming to the attention of Franchisee or the
Franchised Business, and any facts, circumstances or events that might result in
a suit or action against Franchisee or the Franchised Business.
(u) Lease or purchase computer hardware which meets DYNAMIC's
specifications and standards, which is compatible with other systems utilized by
DYNAMIC, and which is capable of operating the DYNAMIC Software including,
without limitation, operational, training, testing or screening systems and the
BOSS System and any modifications to or replacements of those systems. DYNAMIC
may loan the DYNAMIC Software to Franchisee during the term of this Agreement
and may require Franchisee to utilize the DYNAMIC Software in connection with
the operation of the Franchised Business. Upon DYNAMIC's request from time to
time, Franchisee shall execute any additional software license, document or
agreement DYNAMIC or Norrell deems necessary to protect its proprietary
interests in the BOSS System or in the DYNAMIC Software.
(v) Since the grant of territorial rights herein is specifically
conditional on the successful market penetration of the Area, Franchisee must
achieve the Minimum Performance Criteria set forth on Schedule "C" to this
Agreement.
8. OBLIGATIONS OF DYNAMIC.
DYNAMIC will:
(a) Promptly provide to Franchisee a copy of the DYNAMIC Manual, and during
the term of this Agreement keep such copy complete and up-to-date, including
modifications and supplements and directives and instructions of DYNAMIC as
DYNAMIC may determine are reasonable and appropriate for the Franchisee and the
Franchised Business.
(b) Within thirty (30) days following the execution of this Agreement, or
at such other time as DYNAMIC and Franchisee may agree, make available to
Franchisee and to the employee designated by Franchisee and approved by DYNAMIC
to be the manager of the Franchised Business, initial instruction, advice and
guidance as DYNAMIC, in its judgment, deems necessary or appropriate to the
establishment and operation of the Franchised Business. This training program
will consist of not less than one day nor more than ten days of intensive
training provided in a continuous training period of one to fourteen days,
conducted in Atlanta, Georgia, or another reasonably convenient place and manner
as DYNAMIC determines. DYNAMIC will also make available similar training to one
additional employee of Franchisee designated by Franchisee and approved by
DYNAMIC as a manager of the Franchised Business. This training will be provided
by DYNAMIC to Franchisee at no cost or charge by DYNAMIC, but Franchisee will be
solely responsible for any and all expense of the Franchisee and its employees
of attending the training, including but not limited to, salary, lodging, meals,
travel and personal expenses.
(c) Develop regional, national and other promotional programs and sales
campaigns as DYNAMIC deems appropriate, which DYNAMIC may implement
independently or with the participation of its licensees and franchisees,
including Franchisee, as DYNAMIC may, in its discretion, determine.
(d) Cooperate with Franchisee in the development of sales, recruiting and
promotional programs for the Franchised Business. DYNAMIC will assist and
cooperate with Franchisee in the development of a list of prospective Customers;
however, the primary responsibility for actually compiling the list and the
names on the list will be that of the Franchisee. DYNAMIC will then set up and
maintain through updated lists provided to it by Franchisee a direct mail list,
up to, but not exceeding, what DYNAMIC deems to be a reasonable number of
Customers and prospective Customers for the Franchised Business. DYNAMIC will
further provide direct mail advertising and sales materials for prospective
Customers, and will conduct on behalf of the Franchised Business direct mailings
to the Customers on the mailing list of Franchisee maintained by DYNAMIC, in the
amounts and with the frequency as Dynamic determines to be reasonable and
appropriate for the Franchised Business.
(e) Hire and contract with Temporary Employees to be furnished to
Customers. Notwithstanding anything else herein to the contrary, the Temporary
Employees will be the employees of DYNAMIC and not of Franchisee, and the
services of Franchisee with respect to the Temporary Employees will not affect
the relationship of DYNAMIC and Franchisee as independent contractors as set out
in this Agreement.
(f) Process the payroll and billing information provided to it by
Franchisee, and based on that information bill the Customers for work and
services performed by Temporary Employees furnished through the Franchised
Business and for Liquidation Fees. Based on that information, DYNAMIC will pay
the Temporary Employees on a regular weekly basis for services rendered to
Customers. DYNAMIC will make a diligent effort to collect all Net Billings and
Liquidation Fees.
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DYNAMIC will perform bookkeeping and other services as it deems necessary or
appropriate incident to the payroll, billing and collecting, except the services
to be performed by Franchisee, and will pay appropriate, related payroll and
withholding taxes, workers' compensation and liability insurance of or with
respect to the Temporary Employees. DYNAMIC will also mail the payroll checks to
Franchisee=s office and prepare W-2 forms and other necessary payroll reports
for the Temporary Employees.
(g) Supply to Franchisee, at the expense of DYNAMIC, an initial reasonable
amount of the necessary forms, letterhead, envelopes, advertising materials, art
work for the classified advertisement in the telephone directory and other
printed materials with the DYNAMIC Names and Marks. DYNAMIC will further supply
Franchisee with reasonable amounts of all internal report forms (including, but
not limited to time sheets for Temporary Employees), and may continue to supply
Franchisee with reasonable amounts of printed materials with the DYNAMIC Names
and Marks, with those materials to be provided to Franchisee by DYNAMIC at a
cost to Franchisee which does not exceed the reasonable cost of the materials to
DYNAMIC.
(h) Resolve in good faith disputes arising between Franchisee and Customers
or Temporary Employees, or between Franchisee and other licensees or franchisees
of DYNAMIC, and the determinations made in such resolution by DYNAMIC will be
binding upon Franchisee.
9. COVENANTS OF FRANCHISEE.
During the term of this Agreement and for the period of one year
thereafter, except as otherwise expressly set out below, Franchisee covenants
and agrees as follows:
(a) Franchisee will not, without the prior written consent of DYNAMIC,
within the Area, either directly or indirectly, on its own behalf or in the
service or on behalf of others, engage in or be employed by any Temporary Help
Service Business providing Temporary Employees to do any or all of the services
listed on Schedule "B", other than the Franchised Business (any such other
business being herein referred to as a ACompeting Business@) as a partner,
officer, executive or managerial employee, guarantor, director, shareholder
(other than as owner of less than five (5%) percent of the issued and
outstanding stock of a publicly owned corporation whose securities are traded on
a nationally recognized stock exchange), consultant, or salesperson.
(b) Franchisee will not, without the prior written consent of DYNAMIC,
within the Area, either directly or indirectly, on its own behalf or in the
service or on behalf of others, solicit or service for, or divert or appropriate
to any Competing Business, or attempt to solicit, divert or appropriate to or
from any Competing Business, any person or entity which is, or was at any time
during the preceding two (2) year period a Customer.
(c) Franchisee will not, either directly or indirectly, on its own behalf
or on the behalf of others, solicit, divert or hire away, or attempt to solicit,
divert or hire away, to any Competing Business any person employed by DYNAMIC,
whether or not such employee is a full-time or Temporary Employee of DYNAMIC,
and whether or not such employment was pursuant to written agreement and whether
or not such employment was for a determined period or was at will; nor will
Franchisee solicit, divert or hire away or attempt to solicit, divert or hire
away to the Franchised Business or any Competing Business any such employee of
any licensee or franchisee of DYNAMIC, without the prior written consent of such
licensee or franchisee of DYNAMIC.
(d) Franchisee agrees that all customer lists, sales and promotional
information, employee lists, financial information furnished or disclosed to
Franchisee by DYNAMIC, the DYNAMIC Software, the DYNAMIC Manual and other
information with respect to DYNAMIC, the DYNAMIC System, the Customers or other
customers of DYNAMIC (i) of which the Franchisee becomes aware as a result of
its franchise relationship with DYNAMIC (ii)which has actual or potential
economic value to DYNAMIC from it not being generally known to other persons who
could obtain economic value from its disclosure or use, and (iii)which is the
subject of reasonable efforts by DYNAMIC to maintain its secrecy or
confidentiality, whether assembled and compiled by Franchisee or produced and
provided by DYNAMIC, and the physical embodiments of such information, are and
will be and remain the confidential and trade secret property of DYNAMIC. Upon
termination of this Agreement for any reason, and as a prior condition to
receiving any final payments due from DYNAMIC, Franchisee will promptly deliver
to DYNAMIC all such lists and information and all copies thereof in the
possession or control of Franchisee. Franchisee will not, at any time disclose
or make available to any person, business concern or other entity any
proprietary or confidential information relating to DYNAMIC, the DYNAMIC System,
the Franchised Business, the Customers, or the employees or other customers of
DYNAMIC, which was disclosed to Franchisee by DYNAMIC during the course of this
Agreement, nor will Franchisee make or cause to be made any use of such
proprietary or confidential information other than as proper in the conduct of
the Franchised Business.
(e) Franchisee acknowledges that the entire DYNAMIC System and the DYNAMIC
Names and Marks, the DYNAMIC Manual, the DYNAMIC Software and other confidential
and proprietary information constituting parts of the DYNAMIC System are the
sole and exclusive property of DYNAMIC, and no right is given or acquired to use
or duplicate the DYNAMIC System or portion thereof other than the right to use
the same in the operation of the Franchised Business hereunder. Franchisee will
not challenge or contest the right, title or interest of DYNAMIC in and to the
DYNAMIC System and all parts thereof; nor will Franchisee claim any right, title
or interest (other than as licensee hereunder) in or to the DYNAMIC System or
the DYNAMIC Names and Marks, the DYNAMIC Manual or any other confidential or
proprietary information constituting part of the DYNAMIC System.
(f) Franchisee will not in any manner or fashion, disparage the name or
goodwill of DYNAMIC, or the DYNAMIC Names and Marks or the DYNAMIC System.
(g) Upon termination of this Agreement for any reason, Franchisee will
immediately cease using the DYNAMIC
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Names and Marks, the DYNAMIC Manual and the DYNAMIC System; cease to identify
itself as a member or part of the DYNAMIC System; and remove from its business
premises all signs bearing the DYNAMIC Names and Marks or other identification
of DYNAMIC or the DYNAMIC System. In addition, at the request of DYNAMIC,
Franchisee shall cooperate with and assist DYNAMIC in the transition of the
Franchised Business to an office of DYNAMIC, or with the transfer thereof to a
licensee or franchisee of DYNAMIC, in order to continue such business as
smoothly, or with as little interruption, as possible. In this regard, upon the
request of DYNAMIC, Franchisee shall, to the best of its ability, bring about a
complete and effective transfer of the Customers, facilities, and services to
DYNAMIC or such licensee or franchisee of DYNAMIC as DYNAMIC may designate. If
DYNAMIC does not request such a transfer of the trade name registration or
telephone listings of the Franchised Business, then Franchisee shall promptly
cause the same to be cancelled or withdrawn. Franchisee shall also immediately
deliver and turn over to DYNAMIC all property of DYNAMIC, as provided herein,
including but not limited to the DYNAMIC Manual, customer lists, employee lists,
sales and promotional information, the DYNAMIC Software, financial records and
other confidential or proprietary information, with respect to DYNAMIC, the
DYNAMIC System, the Franchised Business, and all materials and supplies bearing
the DYNAMIC Names and Marks or other identification of DYNAMIC or the DYNAMIC
System, including all copies and embodiments thereof and without making or
retaining any copies or other embodiments thereof, and DYNAMIC is hereby
authorized and empowered peaceably to take possession thereof.
(h) The covenants and agreements contained in the Sections of this
Paragraph of the Agreement are of the essence of this Agreement; each such
covenant and agreement is reasonable and necessary to protect and preserve the
interests and properties of DYNAMIC, the DYNAMIC Names and Marks and the DYNAMIC
System for the benefit of DYNAMIC; irreparable loss and damage will be suffered
by DYNAMIC should Franchisee breach any of such covenants and agreements; each
of such covenants and agreements is separate, distinct and severable, not only
from the other of such covenants and agreements but also from the other and
remaining provisions of this Agreement; the unenforceability of any such
covenant or agreement will not affect the validity or enforceability of any
other such covenant or agreement or any other provision of this Agreement; and
in addition to all other remedies available to it, DYNAMIC will be entitled to
both temporary and permanent injunctions to prevent a breach or contemplated
breach by Franchisee of any of such covenants or agreements. Any breach of any
of the foregoing covenants will be deemed a material breach of this Agreement.
(i) The existence of any claim, demand, action or cause of action by
Franchisee against DYNAMIC, or any parent, subsidiary or affiliate of DYNAMIC,
whether predicated upon this Agreement or otherwise, will not constitute a
defense to the enforcement by DYNAMIC of any of its rights hereunder.
10. TERM OF FRANCHISE.
(a) The term of the franchise and license granted in this Agreement is for
a period of fifteen (15) years beginning on the date of the Agreement.
(b) If Franchisee has not been in default under this Agreement during the
fifteenth (15th) year of the term of this Agreement, upon the expiration of the
term hereof, DYNAMIC will, upon one hundred eighty (180) days notice, either:
(i) renew the franchise and license for the operation of a Temporary
Help Service Business in the Area on DYNAMIC's then current terms
and conditions; including without limitation, different or
additional license and royalty fee rates; or
(ii) pay to the Franchisee an amount equal to the total amount of
Gross Margin paid or payable to Franchisee pursuant to paragraph
5 in respect of the last nine (9) Accounting Periods of the term
of this Agreement.
The choice of which of the above alternatives applies will be in the sole
discretion of DYNAMIC. If DYNAMIC elects alternative (ii), payment of the amount
specified will be made in twelve (12) equal consecutive monthly installments
without interest, the first monthly installment to be paid ninety (90) days
after the expiration of the term of this Agreement. It is expressly agreed that
the payment of the amount specified in alternative (ii) is in part consideration
for Franchisee's covenants and agreements contained in paragraph 9 of this
Agreement and payment of that amount is expressly conditioned on Franchisee's
compliance with those covenants and agreements.
(c) Anything to the contrary herein notwithstanding, this Agreement and the
license and franchise granted hereunder may be terminated prior to the
expiration of the term hereof as provided in Paragraph 17 of this Agreement.
11. INDEPENDENT CONTRACTORS.
(a) DYNAMIC and Franchisee are completely separate entities and are not
partners, joint venturers, or agents of the other in any sense, and neither will
have the power to bind the other.
(b) Except as herein specifically provided, Franchisee will be solely
responsible for and will promptly pay when due all expenses of the Franchised
Business, including, without limitation, all taxes and levies imposed on or
assessed against the Franchised Business, and DYNAMIC will not in any way be
liable for any such expenses, taxes, levies or disbursements in connection with
the establishment and maintenance of the Franchised Business.
(c) Franchisee will conspicuously identify itself and the Franchised
Business, and in all dealings with associates, temporary employees, clients,
contractors, suppliers, public officials and others, as an independent
franchisee of DYNAMIC, and will place such notice of independent ownership on
all forms, business cards, stationery, advertising, signs and other materials in
such fashion as DYNAMIC may, in its sole discretion, specify and require from
time to time, in
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the DYNAMIC Manual (as same may be amended from time to time) or otherwise.
12. INSURANCE.
(a) Franchisee will, at its own cost and expense, purchase and maintain,
continuously throughout the term of this Agreement, the following insurance
coverages:
(i) Public Liability (including property damage, bodily injury, owned
and non-owned automobile) in no less than the amount of
$1,000,000 combined single limits.
(ii) Worker's Compensation Insurance, as required by applicable state
laws, with respect to Franchisee's employees.
(iii) Fidelity Bond: $50,000 per loss on the employees of Franchisee,
covering employee dishonesty.
(b) Franchisee will, upon request by DYNAMIC, increase the coverage
afforded under policies described in Section 12(a)(i) above to such amounts as
DYNAMIC may reasonably establish.
(c) All policies of insurance required to be provided and maintained by
Franchisee by this Agreement must name DYNAMIC as an additional insured (without
obligation to pay the premium or any deductible amounts, all of which will be
paid by Franchisee), and must be carried with such responsible insurance
companies and be in such form as is reasonably satisfactory to DYNAMIC.
Franchisee will deliver to DYNAMIC, within ten (10) days after the date of this
Agreement and thereafter within ten (10) days following the issuance or renewal
of any such policy of insurance, the original policies or certificates of
insurance, in form reasonably satisfactory to DYNAMIC, evidencing the policies
required to be provided and maintained by Franchisee. All the policies must be
endorsed to provide that they may not be terminated or cancelled, or the
coverages afforded reduced in any respect, except upon thirty (30) days prior
written notice by the insurer to DYNAMIC.
(d) In the event Franchisee fails to provide and maintain the insurance
coverages required, DYNAMIC may, in addition to any other rights and remedies it
may have with respect to such failure, and without in any way waiving any other
rights and remedies, obtain policies of insurance and make any payments required
for that insurance. All such payments made by DYNAMIC must be reimbursed by
Franchisee promptly upon demand by DYNAMIC.
(e) Public Liability Insurance of the Temporary Employees of the Franchised
Business will be provided and maintained by DYNAMIC. That insurance, which may
be provided through blanket policies maintained by DYNAMIC, will be in such
amounts as DYNAMIC deems adequate.
13. INDEMNIFICATION.
Franchisee agrees to indemnify and to save and hold harmless DYNAMIC, its
officers, agents and employees, and their successors and assigns, of, from,
against and in respect of all actions, causes of action, claims, demands,
liabilities, loss, damages, litigation or other expenses, including, but not
limited to, interest and attorneys' fees, which DYNAMIC or any of its officers,
agents or employees, shall or may sustain or incur by reason of any claims of
whatsoever nature which may arise against it or them or part of them as a result
of the establishment and/ or maintenance of the Franchised Business or the
nonperformance by Franchisee of any of its obligations hereunder; provided,
however, the Franchisee will not be obligated to indemnify or to save and hold
harmless DYNAMIC, or its officers, agents or employees, for any claim against it
or them based on the negligence of DYNAMIC, or its officers, agents and
employees or claims arising out of nonperformance by DYNAMIC of its obligations
hereunder. Franchisee will pay all attorneys' fees and costs which DYNAMIC, or
any of its officers, agents or employees, become liable to pay in the
negotiation or prosecution of any claim to enforce the obligation of this
indemnity provision; and Franchisee will pay DYNAMIC, and/or any of its
officers, agents or employees, as the case may be, all sums of money, plus
interest thereon at the legal rate, which DYNAMIC and/or any of its officers,
agents or employees, as the case may be, advances, pays or causes to be paid as
a result of the establishment and/or maintenance of the Franchised Business
other than amounts specifically provided to be paid by DYNAMIC in this
Agreement. All vouchers, cancelled checks, receipts, receipted bills or other
evidence of payments for any loss, liabilities, costs, damages, charges or
expenses of whatsoever nature incurred by DYNAMIC and/or its officers, agents or
employees, as the case may be, or its or their attorney or attorneys, will be
taken as prima facie evidence of Franchisee's obligation set out in this
Agreement.
14. BOOKS AND RECORDS.
(a) DYNAMIC will have the right, upon reasonable notice and during regular
business hours of Franchisee, to inspect and copy all books and records of
account of the Franchised Business.
(b) Franchisee will keep and maintain at the office of the Franchised
Business true and correct records and books of account and operations of the
Franchised Business, and in connection therewith will employ such bookkeeping,
accounting and reporting systems as are necessary and appropriate and as may be
established by DYNAMIC for its licensees and franchisees or reasonably requested
by DYNAMIC.
(c) Franchisee will, in addition to all other records and accounts required
to be maintained by it in this Agreement, maintain true, correct and current
listings of the name, address and telephone number of each Customer and of each
Temporary Employee furnished through the Franchised Business. These listings,
together with all other books, records and accounts of or relating to the
Franchised Business, excepting only the financial, tax and accounting records of
the Franchisee and the Franchised Business, are the sole property of DYNAMIC.
15. ASSIGNMENT BY DYNAMIC.
DYNAMIC's rights under this Agreement will inure to the benefit of its
successors and assigns. DYNAMIC may assign
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this Agreement without the consent of Franchisee, if DYNAMIC's commitments to
establish the franchise have been met, the assignee agrees in writing to assume
all of DYNAMIC's obligations to Franchisee, and notice of the assumption is
given to Franchisee. Such assignment will discharge DYNAMIC from any further
obligation to Franchisee.
16. ASSIGNMENT BY FRANCHISEE.
(a) Franchisee will not sell, assign, transfer, sublicense or encumber this
Agreement or any right or interest of Franchisee herein, or suffer or permit any
such sale, assignment, transfer, sub-license or encumbrance to occur by
operation of law or otherwise, without the prior written consent of DYNAMIC. Any
violation by Franchisee of this subsection will constitute a material breach of
this Agreement.
(b) In the event of the death or disability (provided such disability shall
have existed or be expected to exist for more than six (6) months and shall be
confirmed in writing by a medical doctor competent in the field of medicine to
which such disability relates) of the Franchisee, DYNAMIC will not unreasonably
withhold its consent to the transfer of this Agreement to Franchisee's spouse or
heirs, whether such transfer is by will or by operation of law, if in the sole
judgment of DYNAMIC the transferee(s) is capable of conducting the Franchised
Business in a manner satisfactory to DYNAMIC and if such transferee(s) executes
such documentation of assumption of the Franchisee's obligations hereunder as
DYNAMIC reasonably requires.
If DYNAMIC determines that Franchisee's spouse or heirs are not capable of
conducting the Franchised Business in a manner satisfactory to DYNAMIC, DYNAMIC
will allow the estate of Franchisee or the disabled Franchisee a reasonable
period of time, not to exceed six (6) months from the date of death or
determination of disability, to sell the Franchised Business to a third party
who satisfies any reasonable conditions DYNAMIC imposes which may include,
without limitation, the following:
(i) The purchaser must fully satisfy all obligations to DYNAMIC
arising out of the operation of the Franchised Business, and
will if requested by DYNAMIC, deposit with DYNAMIC funds
sufficient in the judgment of DYNAMIC to pay all known
creditors of the Franchised Business;
(ii) The purchaser must demonstrate to the satisfaction of DYNAMIC
that it meets all financial and managerial requirements then
applicable to new licensees or franchisees of DYNAMIC;
(iii) The purchaser must meet the same standards with respect to
personal characteristics required of new applicants for
DYNAMIC franchises;
(iv) The purchaser must not be a competitor of DYNAMIC or an
affiliate of a competitor of DYNAMIC;
(v) The purchaser must agree to take all training programs then
required by DYNAMIC for its new licensees or franchisees; and
(vi) The purchaser will, at the sole discretion of DYNAMIC, execute
a new Franchise Agreement containing DYNAMIC's then standard
terms and conditions, or such documents of assumption of the
Franchisee's obligations hereunder as DYNAMIC may require.
During the time between the death or determination of disability of Franchisee
and the transfer of the franchise, DYNAMIC shall permit the estate of the
deceased franchisee or the disabled franchisee to appoint a designee to operate
the Franchised Business, which designee must be approved by DYNAMIC, but DYNAMIC
shall not unreasonably withhold its approval of such designee. If the Franchised
Business is not sold within the six (6) month period, DYNAMIC may, upon request,
extend the period for one other six (6) month period. Approval of such extension
request will not be unreasonably withheld.
(c) If Franchisee receives a bona fide offer, which it desires to accept,
for the purchase of the Franchised Business and its rights in this Agreement,
Franchisee will before accepting any such offer first disclose and furnish a
copy of the offer in writing to DYNAMIC and offer in writing to sell its rights
in this Agreement and all assets of the Franchised Business to DYNAMIC on the
same terms and conditions as contained in the bona fide offer, but without any
provision for or consideration related to any retained management contract or
arrangement. DYNAMIC will have the right, exercisable by it by written notice to
Franchisee given within thirty (30) days after DYNAMIC's receipt of Franchisee's
written offer, to purchase the rights of Franchisee in this Agreement and the
assets of the Franchised Business upon those terms and conditions. If DYNAMIC
accepts the offer, the purchase and sale will be consummated not later than
thirty (30) days following DYNAMIC's acceptance. If DYNAMIC fails to accept the
offer within the thirty (30) day period, that failure shall be deemed the
consent by DYNAMIC to the sale by Franchisee and Franchisee will be free to
accept the bona fide offer and sell its interest in the Franchised Business and
this Agreement to the bona fide offeror upon those terms and conditions.
However, the purchaser must, before the consummation of its purchase of
Franchisee's interest in this Agreement, satisfy all reasonable conditions
DYNAMIC imposes, which may include, without limitation, the following:
(i) The purchaser must fully satisfy all obligations to DYNAMIC
arising out of the operation of the Franchised Business, and
will if requested by DYNAMIC, deposit with DYNAMIC funds
sufficient in the judgment of DYNAMIC to pay all known
creditors of the Franchised Business;
(ii) The purchaser must demonstrate to the satisfaction of DYNAMIC
that it meets all financial and managerial requirements then
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<PAGE> 13
applicable to new licensees or franchisees of DYNAMIC;
(iii) The purchaser must meet the same standards with respect to
personal characteristics which are required of new applicants
for DYNAMIC franchises;
(iv) The purchaser must not be a competitor of DYNAMIC or an
affiliate of a competitor of DYNAMIC;
(v) The purchaser must agree to take all training programs then
required by DYNAMIC for its new licensees or franchisees; and
(vi) The purchaser will, at the sole discretion of DYNAMIC, execute
a new franchise agreement containing DYNAMIC's then standard
terms and conditions, or such documents of assumption of the
Franchisee's obligations hereunder as DYNAMIC requires.
Franchisee will pay to DYNAMIC a transfer fee of $3,000 to cover the
legal and administrative costs to DYNAMIC involved in such a purchase.
If the sale to the purchaser is not consummated within ninety (90) days
following the failure of DYNAMIC to exercise its option as above provided, then
the restrictions of this Section are renewed, and any sale or transfer by
Franchisee of the Franchised Business and its interest in this Agreement,
whether to purchaser or any other person or entity, will again be subject to the
restrictions herein stated.
(d) If Franchisee desires to conduct the Franchised Business in an
incorporated form, DYNAMIC will not unreasonably withhold its consent to the
transfer of this Agreement and Franchisee's interest herein to any corporation
formed for that purpose; provided Franchisee and such corporation must, prior to
such transfer, satisfy such reasonable requirements as DYNAMIC imposes, which
may include, without limitation, the following:
(i) Franchisee must at all times be the record and/or beneficial
owner of and must have, by law or by written agreement
satisfactory to DYNAMIC, voting control of not less than
fifty-one (51%) percent of each class of the capital stock of
such corporation;
(ii) No other person or entity, except members of Franchisee's
immediate family or trusts for the benefit of such members,
may own or have any right to acquire any capital stock or
securities of such corporation;
(iii) The form and content of the Articles of Incorporation and
bylaws of such corporation must have been approved by DYNAMIC,
and will contain provisions enforceable under applicable law
restricting the issuance and transfer of capital stock or
securities of the corporation to such extent as DYNAMIC
reasonably requires; and
(iv) DYNAMIC must have been furnished in writing the names and
addresses of all shareholders or prospective shareholders of
the corporation, and Franchisee and (if requested by DYNAMIC)
each such shareholder or prospective shareholder must have
guaranteed in writing (in form and substance satisfactory to
DYNAMIC) the performance by the corporation of the obligations
of the Franchisee under this Agreement.
After assignment of this Agreement to a corporation as provided above, or
if Franchisee is a corporation at the date of this Agreement, the issue, sale,
transfer, assignment or encumbrance of any capital stock or securities of such
corporation, whether by operation of law or otherwise, will be deemed a sale by
Franchisee of the Franchised Business and its interest in this Agreement and
will in all respects be subject to the limitations set forth in this Section on
the sale of the Franchised Business and Franchisee's interest in this Agreement.
Any merger, consolidation or reorganization by any corporation having an
interest in this Agreement will be deemed a sale of such interest and, unless
done with the prior written consent of DYNAMIC, constitutes a material breach
hereof.
(e) No sale, transfer, conveyance or assignment by Franchisee of all or any
part of its interest in this Agreement relieves Franchisee from its duties,
obligations and covenants to DYNAMIC arising prior to such sale, transfer,
conveyance or assignment, and Franchisee remains liable therefor notwithstanding
such sale, transfer, conveyance or assignment.
17. TERMINATION.
(a) This Agreement and the franchise and license granted hereunder may be
terminated:
(i) By Franchisee upon not less than ninety (90) days prior
written notice to DYNAMIC;
(ii) by DYNAMIC
(A) Immediately upon any material breach of this Agreement;
(B) Upon thirty (30) days written notice to Franchisee in the
event of any other breach or failure of performance by
Franchisee which is not cured to the satisfaction of
DYNAMIC within that thirty (30) day period;
(C) Upon ninety (90) days written notice if Franchisee has not
achieved the minimum Performance Criteria set forth on
Schedule AC@ hereto, which Schedule is a part hereof;
(D) Subject to the provisions of paragraph 16(b), upon thirty
(30) days written notice to the Franchisee or his estate
or personal representative, where the Franchisee is an
individual, if upon the disability or death of Franchisee
DYNAMIC shall in its sole judgment determine that the
Franchisee or assignee of the Franchisee is not capable
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of conducting the Franchised Business in a manner satisfactory
to DYNAMIC;
(E) Immediately, if the Franchisee becomes insolvent or commits an
act of bankruptcy; or makes a general assignment for the
benefit of creditors, or to an agent authorized to liquidate
its property or assets; or becomes or is adjudicated a
bankrupt, or voluntarily files a petition in bankruptcy or
reorganization, or to effect a plan or other arrangement with
creditors; or files an answer to the creditor=s petition or
other petitions filed against it (admitting the material
allegations in the respective petition) for an adjudication of
bankruptcy, or for reorganization, or to effect a plan or
other arrangement with creditors; or applies for or suffers
the appointment of a receiver or trustee of any of its assets
and property, or such receiver or trustee is appointed for any
of its property or assets, and such trustee or receiver so
appointed is not discharged within fifteen (15) days after the
date of his appointment; or all or substantially all of the
property of the Franchisee is attached by the United States or
any officer or instrumentality thereof, and so remains and
continues for a period of fifteen (15) days; or a writ or
warrant of attachment, or similar process, is issued by any
court against all or any substantial portion of the property
or assets of the Franchisee, and such writ, warrant of
attachment, or any similar process is not released or bonded
within fifteen (15) days after entry or levy;
(F) Immediately, if Franchisee is convicted of a felony or a crime
involving moral turpitude or the operation of the Franchised
Business, or if Franchisee takes or appropriates for its own
use any property of DYNAMIC;
(G) Immediately, if Franchisee shall cease operation of the
Franchised Business during regular business hours for more
than five (5) successive Working Days;
(H) Immediately, where the Franchisee is two individuals who are
husband and wife, upon the consent to or adjudication of
divorce or other dissolution of the marriage of or by such
persons, or the initiation and filing of formal, legal
proceedings by one of such individuals for divorce or other
dissolution of the marriage of such persons;
(I) Immediately, where the Franchisee is a corporation, upon the
dissolution or liquidation of the corporation; and
(J) Immediately, where the Franchisee is a partnership composed of
two or more persons, upon written notice to the Franchisee, in
the event of the death or disability of any one or more of the
partners, or the attempted assignment or transfer of the
interest of one or more of the partners, or the occurrence of
any act or event resulting in the dissolution of the
partnership in accordance with applicable law. (b) The right
of DYNAMIC to terminate this Agreement and the franchise and
license herein granted is in addition to all other rights and
remedies, whether at law or in equity, that DYNAMIC might have
against Franchisee as a result of any breach or default by
Franchisee of any provision of this Agreement.
(c) Upon any termination of this Agreement, whether by DYNAMIC or
Franchisee, or upon expiration of the term hereof, the parties will properly
report to each other all payroll and billing information and account for and pay
to each other proper percentages and amounts of all Gross Margin, Liquidation
Fees, deposits, advances, uncollectable billings and accounts and other sums, if
any, pursuant to this Agreement.
18. NOTICES.
All notices permitted or required hereunder must be in writing, must be
delivered personally or, if mailed, sent by certified or registered mail, return
receipt requested, in an envelope with proper postage, addressed to the party to
whom the notice is directed at its address shown below or at such other address
as that party designates in writing, or, in the case of the Franchisee, at the
premises of the Franchised Business. Notices sent by mail shall be deemed given
and received three (3) business days after deposit in the mails.
19. WAIVER OF DEFAULT BY DYNAMIC.
The waiver by DYNAMIC of any particular breach or default by the Franchisee
shall not affect or impair DYNAMIC's right with respect to any subsequent breach
or default of the same or a different kind; nor will any delay or omission of
DYNAMIC to exercise any right arising from any breach or default affect or
impair DYNAMIC's right as to the same or any future breach or default. No
failure of DYNAMIC to exercise any power given it hereunder, or to insist upon
strict compliance by the Franchisee with any obligation hereunder, and no custom
or practice at variance with the terms hereof, shall constitute a waiver of
DYNAMIC's right to demand exact compliance with the terms hereof.
20. INTERPRETATION AND EXECUTION OF AGREEMENT.
(a) This Agreement shall be governed by and construed in accordance with
the laws of or applicable to the State of Georgia.
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(b) The parties hereto agree that it is in their best interest to resolve
disputes between them in an orderly fashion and in a consistent manner.
Therefore, the parties hereby agree as follows:
(i) Franchisee consents and agrees that the following courts shall
have personal jurisdiction over it in all lawsuits relating to
or arising out of this Agreement and hereby waives any defense
Franchisee may have of lack of personal jurisdiction in any
such lawsuits filed in these courts:
(A) All courts included within the state court system of
the State of Georgia; and
(B) All courts of the United States of America sitting
within the State of Georgia including, but not
limited to, all the United States District Courts
sitting within the State of Georgia.
(ii) Franchisee consents and agrees that venue shall be proper in
any of the following courts in all lawsuits relating to or
arising out of this Agreement and hereby waives any defense it
may have of improper venue in any such lawsuits filed in these
courts:
(A) The state court of the county where DYNAMIC has its
principal place of business (presently, Fulton
County); and
(B) The United States District Court for the Northern
District of Georgia, Atlanta Division.
In the event any of these courts are abolished, Franchisee agrees that
venue shall be proper in the state or federal court in Georgia which most
closely approximates the subject-matter jurisdiction of the abolished court as
well as any of these courts which are not so abolished. All lawsuits filed by
Franchisee against DYNAMIC relating to or arising out of this Agreement shall be
required to be filed in one of these courts; provided, however, that if none of
these courts has subject-matter jurisdiction over such a lawsuit, such lawsuit
may be filed in any court having such subject-matter jurisdiction if in-personam
jurisdiction and venue in such court are otherwise proper. Lawsuits filed by
DYNAMIC against Franchisee may be filed in any of the courts named in this
subparagraph or in any court in which jurisdiction and venue are proper.
(iii) In all lawsuits relating to or arising out of the Agreement,
Franchisee consents and agrees that it may be served with
process outside the State of Georgia in the same manner as
service may be made within the State of Georgia by any person
authorized to make service by the laws of the state,
territory, possession or country in which service is made or
by any duly qualified attorney in such jurisdiction, and
Franchisee hereby waives any defense it may have of
insufficiency of service of process relating to such service.
This method of service shall not be the exclusive method of
service available in such lawsuits and shall be available in
addition to any other method of service allowed by law.
(c) It is the intention of the parties that this Agreement comply with the
provisions and requirements of all applicable laws. This Agreement shall be
deemed to contain and shall be construed so as to contain and be consistent with
all mandatory provisions and requirements of applicable laws, which provisions
and requirements are hereby incorporated herein by reference.
(d) All terms and words used in this Agreement, regardless of the number
and gender in which they are used, are deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context or sense of this Agreement or any paragraph or clause herein may
require, the same as if the words had been fully and properly written in the
number and gender.
(e) This Agreement, the documents incorporated by reference, and the
Schedules annexed, constitute the entire Agreement between the parties
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations and discussions with respect to the subject matter
hereof, whether oral or written. Except as provided herein, there are no
conditions, representations, warranties, undertakings, promises, inducements or
agreements, whether direct, indirect, collateral, express or implied, oral or
otherwise, made by DYNAMIC to the Franchisee concerning this Agreement, the
subject matter hereof, the Franchised Business, or any other matter embodied
herein.
(f) This Agreement may not be amended or modified except in writing signed
by the parties hereto.
(g) Should any part of this Agreement for any reason be declared invalid,
that decision shall not affect the validity of any remaining portion, which
remaining portion will remain in force and effect as if this Agreement had been
executed with the invalid portion eliminated.
(h) The provisions of this Agreement where the context or sense of this
Agreement so indicates will survive any termination or cancellation of the
Agreement.
(i) DYNAMIC will not be liable to Franchisee or any other person for its
failure to perform or comply with any of its obligations under this Agreement
where its nonperformance or noncompliance is caused by or due to events or
circumstances beyond its control.
(j) This Agreement will not be binding upon DYNAMIC until it has been fully
executed by the Franchisee and approved by DYNAMIC and fully executed by a duly
authorized officer of DYNAMIC at DYNAMIC's offices in Atlanta, Georgia.
21. ACKNOWLEDGMENTS.
(a) Franchisee understands and acknowledges that the business licensed
under this Agreement involves business risks and that Franchisee's volume,
profit, income and success is primarily dependent upon Franchisee's ability and
efforts as an independent business operator.
(b) Franchisor expressly disclaims the making of, and Franchisee
acknowledges that it has not received from any
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party, any warranty or guaranty, expressed or implied, as to the potential
volume, profit, income or success of the business licensed under this Agreement.
(c) Franchisee acknowledges that because complete and detailed uniformity
under many varying conditions may not be possible or practical, DYNAMIC
specifically reserves the right and privilege, in its sole discretion and as it
may deem in the best interest of all concerned in any specific instance, to vary
standards for any other franchisee based upon the peculiarities of a particular
site or circumstance, density of population, business potential, population of
trade area, existing business practices or any other conditions which DYNAMIC
deems to be of importance to the successful operation of such franchisee=s
business. Franchisee will have no recourse against DYNAMIC on account of any
variation from standard specifications and practices granted to any other
franchisee and will not be entitled to require DYNAMIC to grant Franchisee a
like or similar variation hereunder.
(d) Franchisee acknowledges that no warranty or representation has been
made by DYNAMIC that all DYNAMIC System franchise agreements issued by DYNAMIC
before or after this Agreement do or will contain terms substantially similar to
those contained in this Agreement. Further, Franchisee recognizes and agrees
that DYNAMIC may, in its reasonable business judgment, due to local business
conditions or otherwise, waive or modify comparable provisions of other
franchise agreements granted before or after this Agreement to other DYNAMIC
System franchisees in a nonuniform manner, subject, however, to those provisions
of this Agreement which require DYNAMIC to act toward its franchisees on a
reasonably non-discriminatory basis.
(e) FRANCHISEE ACKNOWLEDGES THAT FRANCHISOR OR ITS AGENT HAS PROVIDED
FRANCHISEE WITH A FRANCHISE OFFERING CIRCULAR NOT LATER THAN THE EARLIER OF THE
FIRST PERSONAL MEETING HELD TO DISCUSS THE SALE OF A FRANCHISE, TEN (10)
BUSINESS DAYS BEFORE THE EXECUTION OF THIS AGREEMENT OR TEN (10) BUSINESS DAYS
BEFORE ANY PAYMENT OR ANY CONSIDERATION. FRANCHISEE FURTHER ACKNOWLEDGES THAT
FRANCHISEE HAS READ SUCH FRANCHISE OFFERING CIRCULAR AND UNDERSTANDS ITS
CONTENT.
(f) FRANCHISEE ACKNOWLEDGES THAT FRANCHISOR HAS PROVIDED FRANCHISEE WITH A
COPY OF THIS AGREEMENT AND ALL RELATED DOCUMENTS, FULLY COMPLETED, FOR AT LEAST
FIVE (5) BUSINESS DAYS PRIOR TO FRANCHISEE'S EXECUTION HEREOF.
IN WITNESS WHEREOF, the parties have entered into this Agreement the day
and year first written above.
FRANCHISEE: DYNAMIC TEMPORARY SERVICES, INC.:
By:
- -------------------------------- ----------------------------------------
Title:
- -------------------------------- -------------------------------------
- --------------------------------
ADDRESS OF FRANCHISEE: ADDRESS OF DYNAMIC:
3535 Piedmont Road, NE
- --------------------------------
Atlanta, Georgia 30305
- --------------------------------
Attention: President, Franchise Division
- --------------------------------
<PAGE> 1
EXHIBIT 10.10
MASTER VENDOR AGREEMENT
THIS MASTER VENDOR AGREEMENT made as of this ___ day of ____ , 199__ ,
by and between Norrell Services, Inc., a Georgia corporation ("Norrell"), and
______________ , a _____________ corporation ("Client").
W I T N E S S E T H:
WHEREAS, Client has a continuing need for supplemental personnel; and
WHEREAS, Norrell is a leading provider of such personnel to businesses
in the United States and Canada;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree as follows:
1. Services Provided. Norrell will provide to Client the services
described in Exhibit A attached hereto and made a part hereof (the "Services")
as Client shall require, pursuant to the terms and conditions of this Agreement.
Unless specifically authorized in Exhibit A, Client agrees that Norrell
employees will not be placed in any jobs involving driving Client vehicles;
handling cash, credit card information or other valuables; lifting over forty
(40) pounds; handling of chemicals; the operation of unguarded machinery and any
work above floor level, including elevated platforms, scaffolding, manlifts,
ladders, etc. The parties may, from time to time, amend Exhibit A in a writing
signed by a duly authorized representative of each party.
2. Master Vendor Program. During the term of this Agreement, Client
agrees to use Norrell exclusively for the Services. In the event Norrell is
unable to fill any Client order with a Norrell employee, Client agrees that
Norrell, as Master Vendor, may subcontract for such services with another
vendor.
3. Term. This Agreement shall continue for a term of two (2) years
after the date first entered above, unless sooner terminated as set forth
herein, and may be automatically renewed for like terms unless either party
serves written notice of its intent to terminate the Agreement not less than
thirty (30) days prior to the expiration of any such term. Either party hereto
may terminate this Agreement with or without cause by giving not less than sixty
(60) days written notice to the other party hereto. If Client delivers notice to
Norrell of its intent to terminate, Client shall include therein the reasons for
such termination and Norrell shall have thirty (30) days to rectify or modify
its performance, after which 30-day period Client shall revoke or affirm its
termination.
<PAGE> 2
4. Rates for Services. For the term of this Agreement, the rates for
the performance of the Services pursuant to this Agreement shall be as set forth
in Exhibit A attached hereto and made a part hereof.
5. Invoices. Norrell shall submit to Client a weekly invoice for the
Services performed during the previous Monday through Sunday billing period.
Invoices submitted hereunder shall be due and payable by Client net fifteen (15)
days. Client agrees to pay reasonable costs, expenses and fees of collection, if
Client's account is in default and placed with a collection agency or attorney
for collection. In the event of termination of this Agreement, Client shall pay
Norrell for all Services performed prior to the date of termination.
6. Buyer Satisfaction. Norrell agrees that the Services will be
performed to the satisfaction of Client and agrees to allow Client a reasonable
period of time to determine if the Services provided by Norrell were performed
in a satisfactory manner. If Client determines within a reasonable period of
time that the Services provided by a Norrell employee are not satisfactory, and
Norrell is so notified, Client will not be charged for such Services performed
and Norrell will provide corrective Services and, if necessary or requested,
replacement personnel upon notification from Client or within a mutually agreed
upon period of time.
7. Hiring of Norrell Employees by Client. Client agrees that
utilization of any Norrell employee by Client within six months of the last use
of such Norrell employee through Norrell shall only be through Norrell. If
Client desires to hire any Norrell employee on a permanent basis, Client will
notify Norrell, in writing. Client may directly hire any Norrell employee at any
time after the employee has been assigned to Client by Norrell for thirteen (13)
full time weeks (or 520 hours), without further obligation to Norrell.
8. Independent Contractor. Norrell shall act at all times as an
independent contractor, and nothing contained herein shall be construed to
create the relationship of principal and agent, or employer and employee,
between Norrell and Client. The Norrell employees assigned to perform the
Services for Client are the employees of Norrell, and any subcontractor's
employees assigned to perform the Services for Client are the employees of that
subcontractor.
9. Norrell Employees. Norrell shall recruit, interview, test, select,
hire, and train the persons who shall provide the Services hereunder. Client
agrees that the costs of any pre-assignment screening required by Client which
is not routinely performed by Norrell as a part of its regular hiring procedures
(drug testing, credit checks, and criminal background checks are examples of
non-routine screening) shall be paid or reimbursed by Client. Norrell shall have
sole responsibility to counsel, discipline, review, evaluate, set the pay rates
of, and terminate its employees assigned to Client. Norrell assumes full
responsibility for all contributions, taxes and assessments with respect to its
employees under all applicable federal, state and local
2
<PAGE> 3
laws (including withholding from wages of employees where required). Norrell
further agrees that it will comply with all other applicable federal, state or
local laws or regulations applicable to Norrell as an employer regarding
compensation, hours of work or other conditions of employment.
10. Client Contractors. If Client desires Services not described in
Exhibit A to this Agreement which are outside the normal scope of Services
provided by Norrell, Norrell agrees that Client may hire contractors (the
"Client Contractors") to provide such Services, and that Client may request that
such Client Contractors forward invoices directly to Norrell. Norrell agrees to
dispatch job orders to the Client Contractors and submit to Client a weekly
invoice, as more fully described in Section 5 of this Agreement, which is an
aggregate bill for Services rendered by Norrell, by Norrell's subcontractors and
by the Client Contractors, if any. In no event shall Norrell be responsible for
supervising or controlling the Client Contractors nor shall Norrell be liable
for any acts or omissions of Client Contractors, their agents or employees.
11. Indemnification.
(a) Norrell shall indemnify and hold harmless Client, its
agents and employees from and against any and all claims, losses, actions,
damages, expenses, and all other liabilities, including but not limited to
attorneys' fees (the "Liabilities"), arising out of or resulting from Norrell's
negligent performance of or failure to perform the work hereunder to the extent
any such Liabilities are attributable to bodily injury to or death of any person
or to damage to or destruction of any property, whether belonging to Client or
to another, provided, however, that Norrell shall not indemnify or hold harmless
Client to the extent any such Liabilities are caused by the negligent or
unlawful acts or omissions of Client, its employees or third parties. Work
product produced by Norrell employees shall be reviewed and approved by a Client
representative prior to its incorporation into Client's work product, processes
or plans, and Norrell shall have no liability for such end product or process.
In the event that the Liabilities are the result of the joint or concurrent
negligence of Norrell and Client, Norrell's duty of indemnification shall be in
the same proportion that the negligence of Norrell contributed thereto. Client
acknowledges and agrees that in no event shall Norrell or any of its officers,
directors, employees, or representatives be liable to Client for any special,
indirect, incidental or consequential damages in connection with this Agreement.
(b) Norrell agrees to require each of its subcontractors to
execute an indemnification agreement which directly indemnifies Client and holds
it harmless under the same terms and conditions as outlined in this Section 11.
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<PAGE> 4
12. Insurance. Norrell shall maintain at its expense: (a) Workers'
Compensation and Employer's Liability Insurance, (b) Commercial General
Liability Insurance, and (c) a Fidelity Bond. Norrell shall require each of its
subcontractors to list Norrell and Client as additional insureds on each such
subcontractor's Commercial General Liability Insurance. If Norrell's insurance
policy is to be canceled or changed by insured or insurer so as to affect the
coverage required by this contract, at least ten (10) days prior written notice
of such cancellation or change shall be sent to Client at the address to which
invoices are to be sent by Norrell.
13. Payrolling Services [if applicable].
(a) If requested by Client and at the payrolling rates set
forth in Exhibit A of this Agreement, Norrell will perform a payrolling function
for Client with respect to certain individual workers whom Client selects for
employment (the "Payrolled Workers"). Norrell agrees to pay the Payrolled
Workers at a rate to be determined by Client, less all legally required
withholdings. Norrell assumes responsibility for remitting all required taxes
and withholdings with respect to the Payrolled Workers under all applicable
federal, state and local laws. Furthermore, Norrell will, during the term of
this agreement: (i) provide Workers' Compensation insurance covering the
Payrolled Workers, (ii) verify the work authorization and identity of the
Payrolled Workers as required by the Immigration Reform and Control Act of 1986,
and (iii) handle all claims by the Payrolled Workers for unemployment
compensation.
(b) Norrell and Client acknowledge that Client shall have sole
responsibility to screen, test, select, supervise, counsel, discipline, review,
evaluate, set the pay rates of and terminate the Payrolled Workers. Norrell and
Client each agrees that it will comply with all laws and regulations applicable
to Client's employees, including the Fair Labor Standards Act, Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the
Rehabilitation Act of 1973, the Immigration Reform and Control Act of 1986, and
the Americans with Disabilities Act of 1990.
(c) Client shall release, indemnify and hold harmless Norrell,
its agents and employees from and against any and all claims, losses, actions,
damages, expenses, and all other liabilities, including but not limited to
attorneys' fees, arising out of or resulting from the services performed by the
Payrolled Workers, from Client's negligent or unlawful acts or omissions
(including claims alleging wrongful termination or breach of the laws referred
to in paragraph (b) above), and from all acts taken or statements made by Client
with respect to the Payrolled Workers.
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<PAGE> 5
14. Notices. All notices which it may be necessary or proper for either
Client or Norrell to give or deliver to the other shall be sent, and shall be
deemed given when received by registered or certified mail, postage prepaid and
return receipt requested, and if given by Client to Norrell shall be addressed
to:
Norrell Services, Inc.
-----------------------------------
-----------------------------------
Attn:
------------------------------
With a copy to: Norrell Corporation
3535 Piedmont Road, NE
Atlanta, GA 30305
Attn: General Counsel
and if given by Norrell to Client, shall be addressed to:
-----------------------------------
-----------------------------------
-----------------------------------
Attn:
------------------------------
15. Assignment. The rights and obligations of the parties hereunder
shall not be assigned without the prior written consent of the other party,
except that Norrell may assign its rights and obligations hereunder to any
affiliate of Norrell without the prior written consent of the Client. Otherwise,
this contract shall be binding upon and shall inure to the benefit of the
parties hereto, and their respective successors and assigns.
16. Amendments. This Agreement, and the provisions hereof, may be
altered, amended, modified or superseded only in a writing executed by both of
the parties hereto.
17. Force Majeure. The obligations of Norrell hereunder shall be
excused during any period of delay caused by matters such as strikes, acts of
God, shortages of raw material or power, governmental actions or compliance with
governmental requirements, whether voluntary or pursuant to order, or any other
matter which is beyond the reasonable efforts of Norrell to control.
18. Enforcement, Waiver. No waiver of or failure to exercise any
option, right or privilege under the terms of this Agreement by either of the
parties hereto on any occasion or occasions shall be construed to be a waiver of
the same or of any other option, right or privilege on any other occasion.
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<PAGE> 6
19. Entire Agreement. This Agreement, together with the Exhibits
referenced herein, shall constitute the entire Agreement between the parties
with respect to the subject matter and supersedes all previous Agreements
between Client and Norrell relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
NORRELL SERVICES, INC.
--------------------------------------
By: By:
---------------------------------- -----------------------------------
Title: Title:
------------------------------- --------------------------------
6
<PAGE> 7
EXHIBIT A
SERVICES AND RATES
I. Positions to be Filled; Rates.
II. Cost of Living Adjustments
The fees for the Services shall be increased effective on each
anniversary date of this Agreement over the fees shown in Part I above by the
percentage increase equal to the percentage increase in the applicable regional
Consumer Price Index for the month which is two months immediately preceding
such anniversary date over the applicable regional Consumer Price Index for the
same month one year prior.
III. Governmentally Mandated Cost Increases
If Norrell's compliance with any law or the requirements of any
governmental agency after the date of execution of this Agreement shall result
in an increase in the labor cost to Norrell of providing the Services (an "Event
of Change"), then Norrell shall have the right to immediately increase its fees
to compensate for such increased costs and to place Norrell in the same position
after any Event of Change as Norrell was in prior to such Event of Change (e.g.
a change to minimum wage rates, state unemployment insurance, workers'
compensation, mandatory benefits requirements).
<PAGE> 1
EXHIBIT 10.12
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT is made as of this ____ day of _______________ , 199__,
by and between Tascor Incorporated, a Georgia corporation ("Tascor"), and
________________________, a __________________ corporation ("Client").
W I T N E S S E T H:
WHEREAS, Client has a need for management services; and
WHEREAS, Tascor is a leading provider of such management services to
businesses in the United States and Canada;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. Services Provided. Tascor will provide to Client the management
services described in the Scope of Work attached hereto as Exhibit A and made a
part hereof (the "Services") as Client shall require, pursuant to the terms and
conditions of this Agreement. Unless specifically authorized in Exhibit A,
Client agrees that Tascor employees will not be placed in any jobs involving
lifting over forty (40) pounds, handling of chemicals, the operation of
unguarded machinery and any work above floor level, including elevated
platforms, scaffolding, manlifts, ladders, etc.
2. Term. This Agreement shall continue for a term (the "Term") of three
(3) years after the date first entered above and will be automatically renewed
for two additional one-year terms.
3. Rates for Services; Direct Expenses.
(a) For the initial term of this Agreement, the rates and
payment terms for the performance of the Services pursuant to this Agreement
shall be as set forth in Exhibit B attached hereto and made a part hereof.
Thereafter the rates and payment terms shall be as mutually agreed upon by
Client and Tascor and shall be set forth in a written amendment to Exhibit B
signed by each of the parties hereto.
(b) Client shall provide all supplies, materials, office
space, utilities, and other operating expense items necessary for the
performance of the Services. Client shall provide, and maintain in good working
order, all equipment deemed necessary by Client and Tascor to the provision of
the Services by Tascor.
<PAGE> 2
4. Invoices.
(a) Tascor shall, on the fifteenth day of each month, submit
to Client a monthly invoice in advance equal to 1/12th of the annual fee for the
Services to be provided, as described in Exhibit B. Invoices submitted hereunder
shall be due and payable by Client thirty (30) days from invoice date.
Adjustments to the monthly invoice for rate or transaction variances (if any)
will be included in the next month's billing.
(b) Client agrees to pay reasonable costs, expenses and fees
of collection, if Client's account is in default and/or placed with a collection
agency or attorney for collection. In the event of termination of this
Agreement, Client agrees to pay Tascor for all Services performed prior to the
date of termination.
5. Reports. Tascor shall provide to Client such written reports as
Tascor and Client shall agree upon from time to time.
6. Termination. This Agreement may not be terminated prior to the end
of the Term except as follows:
(a) Client may terminate this Agreement for Cause (as herein
defined) upon delivery to Tascor of written notice of its intent to terminate
for Cause. Client shall include in such notice the basis for such termination
and Tascor shall have ninety (90) days to rectify or modify its performance,
after which 90 day period Client shall revoke or affirm its termination. As used
herein, "Cause" shall mean a material breach of the terms of this Agreement by
Tascor.
(b) Client may terminate this Agreement for Client's
convenience upon payment of liquidated damages in an amount equal to twenty-five
percent (25%) of the remaining fees owed by Client to Tascor for the remaining
Term of this Agreement. In the event that Client's termination of this Agreement
(either in full or in part) would impose notice requirements on Tascor pursuant
to the federal Work Adjustment and Retraining Notification Act and/or state or
local laws or regulations pertaining to business or plant closings, or partial
or complete business cessations or business relocations, Client will provide
Tascor with at least ninety (90) days prior written notice of such termination.
7. Performance Requirements. Tascor shall meet or exceed written
performance standards to which Client and Tascor mutually agree after the
Services have been provided by Tascor for ninety (90) days ("Performance
Standards"). The Performance Standards shall be attached to this Agreement as
Exhibit C. In the event no written standards are attached as Exhibit C to this
Agreement, Tascor shall provide the Services in a commercially reasonable
manner.
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<PAGE> 3
8. Laws and Regulations. Tascor agrees that it will comply with all
laws and regulations applicable to Tascor's employees, including the Fair Labor
Standards Act, Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act of 1967, the Rehabilitation Act of 1973, the Immigration
Reform and Control Act of 1986, and the Americans with Disabilities Act of 1990.
9. Independent Contractor. Tascor shall act at all times as an
independent contractor, and nothing contained herein shall be construed to
create the relationship of principal and agent, or employer and employee,
between Tascor and Client.
10. Tascor Employees.
(a) The Tascor employees assigned to perform the Services for
Client are solely the employees of Tascor. Tascor shall have sole responsibility
to counsel, discipline, review, evaluate, set the pay rates of, and terminate
its employees who perform the Services. Tascor will maintain all necessary
payroll and personnel records, and compute wages and withhold applicable
federal, state and local taxes and social security payments for the Tascor
personnel performing the Services.
(b) During the term of this Agreement and for six (6) months
thereafter, Client agrees not to hire, nor to solicit for the purpose of hiring,
any Tascor employee who has provided Services to Client pursuant to this
Agreement without the prior written approval of Tascor and payment to Tascor of
liquidated damages in the amount of $3,000.00 for each Tascor employee hired.
11. Indemnification.
(a) Tascor and Client, as Indemnitors, shall each indemnify
and hold harmless the other party to this Agreement and such party's agents and
employees, as Indemnitees, from and against any and all claims, losses, actions,
damages, expenses, and all other liabilities, including but not limited to
attorneys' fees (the "Liabilities"), to the extent arising out of or resulting
from the Indemnitor's negligent performance of or failure to perform its
obligations hereunder to the extent any such Liabilities are attributable to
bodily injury to or death of any person or to damage to or destruction of any
property, provided, however, that the Indemnitor shall not indemnify or hold
harmless the Indemnitee to the extent any such Liabilities are caused by the
negligent or unlawful acts or omissions of the Indemnitee, its agents, employees
or third parties. In the event that the Liabilities are the result of the joint
or concurrent negligence of Tascor and Client, the Indemnitor's duty of
indemnification shall be in the same proportion that the negligence of the
Indemnitor contributed thereto. Client acknowledges and agrees that in no event
shall Tascor, any affiliate, or any of its officers,
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<PAGE> 4
directors, employees, or representatives be liable to Client for any special,
indirect, incidental or consequential damages in connection with this Agreement.
(b) Tascor agrees to require each of its subcontractors to
execute an indemnification agreement which directly indemnifies Client and holds
it harmless under the same terms and conditions as outlined in this Section 11.
12. Confidentiality.
(a) Tascor and Client each agree that they will not, either
during the term of Tascor's provision of the Services to Client or for three (3)
years thereafter, without the prior written consent of the other party hereto,
disclose or make available any Confidential Information (as herein defined) to
any person or entity, nor shall either party make or cause to be made, or permit
or allow, either on its own behalf or on behalf of others, any use of the other
party's Confidential Information. Tascor and Client agree not to use,
transcribe, copy, duplicate or otherwise reproduce or retain all or any portion
of the Confidential Information in any manner whatsoever and shall cause all
Confidential Information or copies thereof to be returned to the other party
promptly upon termination of the Services. "Confidential Information" shall mean
all personnel records, fees and charges, and all documents evidencing business
plans, proposals, strategies, sales and marketing information, training and
operations material and memoranda, and pricing and financial information, and
all computer software and computer programs identified to the recipient of such
information by the giving party as proprietary, and which are obtained by or
furnished, disclosed or disseminated to the recipient during the course of
Tascor's engagement by Client, as well as all other information provided to one
party to this Agreement by the other party orally or in writing which is
identified as confidential prior to disclosure or delivery to the recipient, and
all information and matters which constitute trade secrets of the disclosing
party, all of which are hereby agreed to be the property of and confidential to
the owner and discloser of such Confidential Information. Notwithstanding the
terms of this Agreement, the obligations of each party as set forth in this
Agreement with respect to the Confidential Information of the other party shall
not apply to any Confidential Information which: (i) is at the time of
disclosure, or thereafter becomes, a part of the public domain through no act or
error by either party; (ii) was otherwise in the lawful possession of the other
party prior to disclosure, as shown by competent evidence; or (iii) is hereafter
received by the other party from a third party lawfully in possession thereof
and who has the lawful power to disclose such to the other party.
(b) In the event of a breach or threatened breach of the
provisions of this paragraph, Tascor or Client shall be entitled to an
injunction restraining such breach or threatened breach without having to prove
actual damages. Such injunctive relief as Tascor or Client may obtain shall be
in addition to other rights and remedies available at law and in equity to the
parties. The rights and
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<PAGE> 5
obligations of this paragraph shall survive the termination or expiration of
this Agreement for such time as the rights and obligations created by
subparagraph 12(a) above shall continue.
(c) At the request of Client, Tascor shall have each of its
employees assigned to perform the Services execute a non-disclosure agreement in
a form mutually acceptable to Client and Tascor.
13. Insurance. Tascor shall maintain at its expense: (a) Workers'
Compensation and Employer's Liability Insurance, (b) Commercial General
Liability Insurance, and (c) a Fidelity Bond. Tascor shall require each of its
subcontractors to list Client and Tascor as additional insureds on each such
subcontractor's Commercial General Liability Insurance. If Tascor's insurance
policy is to be canceled or changed by insured or insurer so as to affect the
coverage required by this contract, at least ten (10) days prior written notice
of such cancellation or change shall be sent to Client at the address to which
invoices are to be sent by Tascor.
14. Notices. All notices which it may be necessary or proper for either
Client or Tascor to give or deliver to the other shall be sent, and shall be
deemed given when received by registered or certified mail, postage prepaid and
return receipt requested, and if given by Client to Tascor shall be addressed
to:
Tascor Incorporated
3535 Piedmont Road, N.E.
Atlanta, Georgia 30305
Attn: Manager, Business Management
with a copy to:
Tascor Incorporated
3535 Piedmont Road, N.E.
Atlanta, Georgia 30305
Attn: Mark H. Hain, General Counsel
and if given by Tascor to Client, shall be addressed to:
---------------------------------
---------------------------------
---------------------------------
Attn:
----------------------------
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<PAGE> 6
15. Assignment. The rights and obligations of the parties hereunder
shall not be assigned without the prior written consent of the other party,
except that Tascor may assign its rights and obligations hereunder to any
affiliate of Tascor without the prior written consent of Client, provided that
any such assignment shall in no way affect the rights and obligations of Client
hereunder. Otherwise, this contract shall be binding upon and shall inure to the
benefit of the parties hereto, and their respective successors and assigns.
16. Amendments. This Agreement, and the provisions hereof, may be
altered, amended, modified or superseded only in a writing executed by both of
the parties hereto.
17. Force Majeure. Neither party shall be liable to the other nor be
deemed to be in breach of this Agreement for failure or delay in rendering
performance arising out of causes factually beyond its control and without its
fault or negligence. Such causes may include, but are not limited to: Acts of
God or the public enemy, wars, fires, floods, epidemics, quarantine
restrictions, strikes, unforeseen freight embargoes or unusually severe weather.
Dates or times of performance shall be extended to the extent of delays excused
by this section, provided that the party whose performance is affected notifies
the other party promptly of the existence and nature of such delay.
18. No Waiver. No waiver of or failure to exercise any option, right or
privilege under the terms of this Agreement by either of the parties hereto on
any occasion or occasions shall be construed to be a waiver of the same or of
any other option, right or privilege on any other occasion.
19. Entire Agreement. This Agreement, together with the Exhibits
referenced herein, shall constitute the entire Agreement between the parties
with respect to the subject matter and supersedes all previous agreements
between Client and Tascor relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
TASCOR INCORPORATED
-------------------------------------
By: By:
-------------------------------- ----------------------------------
Title: Title:
----------------------------- --------------------------------
6
<PAGE> 7
EXHIBIT A
Scope of Work
<PAGE> 8
EXHIBIT B
Fees for Services
I. Fees for Services.
II. Cost of Living Adjustments
The fees for the Services shall be increased effective on each
anniversary date of this Agreement over the fees shown in Part I above by the
percentage increase equal to the percentage increase in the applicable regional
Consumer Price Index for the month which is two months immediately preceding
such anniversary date over the applicable regional Consumer Price Index for the
same month one year prior.
III. Governmentally Mandated Cost Increases
If Tascor's compliance with any law or the requirements of any
governmental agency after the date of execution of this Agreement shall result
in an increase in the labor cost to Tascor of providing the Services (an "Event
of Change"), then Tascor shall have the right to immediately increase its fees
to compensate for such increased costs and to place Tascor in the same position
after any Event of Change as Tascor was in prior to such Event of Change (e.g. a
change to minimum wage rates, state unemployment insurance, workers'
compensation, mandatory benefits requirements).
<PAGE> 1
EXHIBIT 10.20
EMPLOYMENT AND NONCOMPETITION AGREEMENT
(BSC Corporate)
THIS AGREEMENT is effective this ______ day of _____________, 199___,
between Norrell Corporation and/or any of its Subsidiaries (the "Company"), and
_________________________ whose address is ___________________________
(the "Associate").
W I T N E S S E T H:
WHEREAS, the Company desires to employ or to continue the employment of
the Associate to perform, throughout the Area (as defined in Section 1(a)), the
services described in Section 2(b), and the Associate desires to accept or to
continue such employment on the terms and conditions hereinafter set forth; and
WHEREAS, in the course of the Associate's employment, the Company will
provide Associate and the Associate will gain knowledge of the business,
affairs, finances, management, marketing programs and philosophy, customers and
methods of operation of the Company, the Company will train the Associate at the
expense of the Company in the operation and management of the Business of the
Company and the marketing and sale of the Company's services through the use of
techniques, systems, forms and methods used and devised by the Company; and the
Associate will be furnished by Company with access to lists of the Company's
Customers and their needs, and will or has become personally known to and
acquainted with the Company's Customers in the Area thereby establishing a
personal relationship with such Customers for the benefit of the Company; and
WHEREAS, the Company would suffer irreparable harm if the Associate
were to use such knowledge, information, business acumen and personal
relationships in competition with the Company; and
NOW, THEREFORE, in consideration of the employment or continued
employment of the Associate by the Company, the above premises and the other
agreements hereinafter set forth, the Company and the Associate (collectively,
the "Parties" and individually, a "Party"), intending to be legally bound,
hereby agree as follows:
1. Definitions.
(a) "Area" shall mean the area set forth in Exhibit "A" which the
Parties acknowledge is no broader than the geographical areas in which or for
which Associate will perform the Duties. As and when the territory in which the
Associate performs the Duties materially changes, the Parties agree to amend
Exhibit "A".
(b) "Business of the Company" shall mean and include the business of
marketing and providing personnel, including personnel to provide accounting,
financial, bookkeeping, clerical, health care, technical and light industrial
services, on a temporary basis to customers located in the Area, and marketing
and providing to customers located in the Area facilities staffing, contract
services, teleservices, communication skills training, human resource services,
staffing services, Management Services and outsourcing, permanent placement, and
data entry services, or the licensing or franchising of others to engage in any
such business. It shall also mean the business of conducting the affairs and
activities of the Corporate Office functions in conjunction with all such
business described in this section.
(c) "Competing Business" shall mean a person or entity engaged in any
business which is the same or essentially the same as the Business of the
Company.
(d) "Confidential Information" of the Company shall mean all
non-public, competitively sensitive information or data of or about Company
other than "Trade Secrets" (as defined below). Confidential Information shall
not include (1) information released to the public at large without restriction,
(2) information generally known to be obtainable from public sources in usable
form without significant effort or expense, (3) information lawfully and
independently developed or acquired without reliance in any way on the
information received pursuant to the Associate's employment hereunder, and (4)
general skills and learning lawfully and independently acquired.
(e) "Corporate Office" shall mean the office of the Company at 3535
Piedmont Road, N.E., Atlanta, Georgia 30305.
(f) "Customers" shall mean actual customers and clients of the Company
and actively solicited prospective customers and clients of the Company.
(g) "Duties" shall mean the duties set forth on Exhibit "B" attached
hereto and made a part hereof. As and when the duties of the Associate
materially change, the Parties agree to amend Exhibit "B" to reflect such
changes in duties, and such other tasks as the Board of Directors, the Chairman
or the President of the Company, or their respective designees, may assign to
the Associate from time to time.
(h) "Management Services" shall mean the managing and performing of all
or part of a client's business activities or functions, in which the provider of
<PAGE> 2
the services has responsibility for the function or activity performed and for
the results of such performance.
(i) "Subsidiaries" shall mean any entities in which Norrell Corporation
has greater than a 20% beneficial interest.
(j) "Trade Secrets" shall mean information that: (a) derives economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use; and (b) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. To the extent that
applicable law mandates a definition of "trade secret" inconsistent with the
foregoing definition, then the foregoing definition shall be construed in such a
manner as to be consistent with the mandated definition under applicable law.
Assuming the criteria of applicable law are met, Trade Secrets shall include,
without limitation, actual and potential customer lists, sales and marketing
information, customer account records, training and operations material and
memoranda, computer software and systems, personnel records, code books, pricing
information and financial information concerning or relating to the business,
accounts, customers, associates and affairs of the Company or its franchisees
and licensees and all physical embodiments of the foregoing.
2. Terms of Employment; Duties.
(a) The Company employs or agrees to continue the employment of the
Associate and the Associate accepts or agrees to continue such employment with
the Company subject to the terms and conditions of this Agreement.
(b) The Company employs or agrees to continue the employment of the
Associate to perform the Duties and the Associate agrees to devote all of the
Associate's business time to performing the Duties for the Company, subject to
the terms and conditions of this Agreement.
(c) All funds and property received by the Associate on behalf of the
Company or its parent or any affiliated corporation shall be received and held
by the Associate in trust, and the Associate shall account for and remit all
such funds to the Company.
3. Compensation.
(a) In consideration for the Associate's performing the Associate's
obligations hereunder, the Company shall pay to the Associate that salary set
forth in the Personnel Change Notice pertaining to the Associate effective as of
the date of this Agreement, subject to adjustment from time to time by agreement
of the Parties, and shall permit Associate to participate in any present or
future incentive compensation, bonus, profit-sharing, stock option, stock
purchase, pension, retirement, medical or insurance plan of the Company as and
to the extent Associate's participation in such plan(s) is approved by the Board
of Directors of the Company.
(b) The Company shall have the right to withhold any sums otherwise
payable to the Associate hereunder and to apply the same to any indebtedness of
the Associate to the Company.
(c) The Associate shall be entitled to be reimbursed in accordance with
the policies of the Company, as adopted and amended from time to time, for all
reasonable and necessary expenses incurred by the Associate in connection with
the performance of the Duties; provided Associate shall, as a condition of such
reimbursement, submit verification of the nature and amount of such expenses in
accordance with the reimbursement policies from time to time adopted by the
Company.
(d) The Associate shall not be entitled to any compensation other than
that set forth in this Section 3 for any services rendered by the Associate in
any capacity to the Company or its parent or any affiliated corporation.
4. Termination of this Agreement.
(a) The employment of the Associate by the Company may be terminated by
either party at any time, provided that the Associate shall give the Company no
less than two (2) weeks' prior notice.
(b) Upon the termination of the Associate's employment hereunder, the
Company shall have no further obligation to the Associate or the Associate's
personal representative with respect to this Agreement, except for base salary
(exclusive of bonus) accrued hereunder and unpaid at the date of such
termination and payment of severance amounts, if any, payable in accordance with
the severance policy of the Company in effect at the time of termination.
(c) The covenants of the Associate in Sections 5, 6, 7 and 8 shall
survive the termination or replacement of this Agreement and termination of the
Associate's employment hereunder, and shall not be extinguished by any such
events.
5. Agreement Not to Compete.
In consideration of the Company's providing the Associate with access
to its Confidential Information and Trade Secrets, the Company's training the
Associate in the Business of the Company, and the Company's agreement to employ
or continue the employment of the Associate hereunder, the Associate agrees that
during the Associate's employment by the Company and for a period of one (1)
year following the termination, for any reason, of this Agreement or of the
Associate's employment with the Company, whichever shall first occur, the
Associate will not, without the prior written consent of the Company, within the
Area, either directly or indirectly, on the Associate's own behalf or in the
service or on behalf of others, affiliate with any Competing Business as either
(i) a manager, supervisor, administrator, consultant, instructor, officer,
director, employee, independent contractor or salesperson providing services the
same as or substantially similar to the Duties, or (ii) as a shareholder or
owner of any equity interests in any Competing Business other than up to a
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<PAGE> 3
five percent (5%) ownership of publicly traded equity interests of a Competing
Business.
6. Agreement Not to Solicit Customers.
In consideration of the Company's providing the Associate with access
to its Confidential Information and Trade Secrets, the Company's training the
Associate in the Business of the Company and the Company's agreement to employ
or continue the employment of the Associate hereunder, the Associate agrees that
during the Associate's employment by the Company and for a period of one (1)
year following the termination, for any reason, of this Agreement or of the
Associate's employment with the Company, whichever shall first occur, the
Associate will not, without the prior written consent of the Company, either
directly or indirectly, on the Associate's own behalf or in the service or on
behalf of others, solicit, or attempt to solicit, any Customer (i) whose account
with the Company was sold, serviced or actively solicited by or under the
supervision of the Associate during the two (2) years preceding the termination
of such employment or (ii) that is otherwise located in the Area, for the
purpose of providing such Customer or having such Customer provided with
services competitive with those that have been offered by the Company to such
Customer. The foregoing subsection (ii) shall not apply where the Area is
defined as the United States or the United States and Canada.
7. Agreement Not to Solicit Personnel.
In consideration of the Company's providing the Associate with access
to its Confidential Information and Trade Secrets, the Company's training the
Associate in the Business of the Company and the Company's agreement to employ
or continue the employment of the Associate hereunder, the Associate agrees that
during the Associate's employment by the Company and for a period of one (1)
year following the termination, for whatever reason, of this Agreement or of the
Associate's employment with the Company, the Associate will not, either directly
or indirectly, on the Associate's own behalf or in the service or on behalf of
others, solicit away or attempt to solicit away to any Competing Business (i)
any person employed by or under an independent contractor relationship with the
Company or any franchisee or licensee of the Company within the Area, whether or
not such person is a full-time associate or a temporary employee of the Company
or such franchisee or licensee, and whether or not such employment is pursuant
to written agreement and whether or not such employment is for a determined
period or is at will, or (ii) any person or entity that is a franchisee or
licensee of the Company within the Area, nor will Associate at any time during
such period, either directly or indirectly, induce or attempt to induce any such
employee, franchisee or licensee to terminate, breach or otherwise fail fully to
perform any employment agreement, franchise or license agreement with the
Company.
8. Ownership and Non-disclosure and Non-use of Confidential Information.
(a) In consideration of the Associate's receipt of and access to
confidential information, the Associate acknowledges and agrees that all
Confidential Information and Trade Secrets of the Company, and all physical
embodiments thereof, are confidential to and shall be and remain the sole and
exclusive property of the Company. Upon request by the Company, and in any event
upon termination of the Associate's employment with the Company for any reason,
as a prior condition to receiving any final wage or salary check or any employee
benefit payment, the Associate shall promptly deliver to the Company all
property belonging to the Company including, without limitation, all
Confidential Information and Trade Secrets of the Company (and all embodiments
thereof) then in the Associate's custody, control or possession, but any
forfeiture of such wage or salary check or any employee benefit payment shall
not be considered as satisfaction or a release of or liquidated damages for any
claims for damages against the Associate which may accrue to the Company as a
result of any breach of this Section 8(a) by the Associate.
(b) In consideration of the Company's providing the Associate with
access to its Confidential Information and Trade Secrets, the Company's training
the Associate in the Business of the Company and the Company's agreement to
employ or continue the employment of the Associate hereunder, the Associate
agrees that the Associate will not, either during the term of the Associate's
employment by the Company or, in the case of Confidential Information, for three
(3) years thereafter and, in the case of Trade Secrets, for the life of the
trade secret, without the prior written consent of the Company, disclose or make
available any Confidential Information or Trade Secret to any person or entity
or make or cause to be made or permit or allow, either on the Associate's own
behalf or on behalf of others, any use of any Confidential Information or Trade
Secret other than in the proper performance of the Associate's duties hereunder.
The Company agrees that the Associate is not prohibited hereby from disclosing
or using any Confidential Information or Trade Secret which the Associate is
required to disclose pursuant to a requirement of a governmental agency or of
law without similar restrictions or other protections against public disclosure,
provided, however, that the Associate shall first have given written notice of
such required disclosure to the Company and have taken reasonable steps to allow
the Company to seek to protect the confidentiality of the information required
to be disclosed.
9. Inventions.
(a) The Associate agrees that all Subject Inventions (as defined below)
conceived or first practiced by the Associate during his or her employment by
the Company, and all patent rights and copyrights to the Subject Inventions
shall become the property of the Company, and the Associate hereby irrevocably
assigns to the Company all of the Associate's rights to all Subject Inventions.
"Subject Invention" means any Invention (as defined below) which is conceived by
the Associate alone or in a joint effort with others during the Associate's
employment by the Company which (i) may be reasonably expected to be used in a
product of the Company; (ii) results from work that the Associate has been
assigned as part of his or her duties as an employee of the Company; (iii) is in
an area of technology which is the same as or substantially related to the areas
of technology with which the Associate is involved in the
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<PAGE> 4
performance of his or her duties as an employee of the Company; or (iv) is
useful, or which the Associate reasonably expects may be useful, in any
manufacturing or product design process of the Company. "Invention" means any
discovery, whether or not patentable, including, but not limited to, any useful
process, method, formula, technique, machine, manufacture, composition of
matter, algorithm or computer program, as well as improvements thereto, which is
new or which the Associate has a reasonable basis to believe may be new.
(b) The Associate agrees that if he or she conceives an Invention
during his or her employment and there is a reasonable basis to believe that the
Invention is a Subject Invention, the Associate will promptly provide a written
description of the Invention to the Company adequate to allow evaluation for a
determination as to whether the Invention is a Subject Invention. If the
Associate is required by his or her supervisor as a part of the Associate's
duties to maintain an engineering or similar notebook, the proper maintenance of
the notebook shall satisfy the requirement of providing a written disclosure of
any Subject Inventions. It is agreed that all the notebooks and written
disclosures are the property of the Company.
(c) If, upon commencement of the Associate's employment with the
Company, the Associate has previously conceived an Invention or acquired any
ownership interest in any Invention, which: (i) is the Associate's property, or
of which the Associate is a joint owner with another person or company; (ii) is
not described in any issued patent as of the commencement of the Associate's
employment with Company; and (iii) would be a Subject Invention if such
Invention were made while a Company employee; then the Associate must, at the
Associate's election, either: (i) provide the Company with a written description
of the Invention on Exhibit C, if any, in which case the written description
(but no rights to the Invention) shall become the property of the Company; or
(ii) provide the Company with the license described in Section 9(d) of this
Agreement.
(d) If the Associate has previously conceived or acquired any ownership
interest in an Invention described above in Section 9(c) and the Associate
elects not to disclose the same to the Company as provided above, then the
Associate hereby grants to the Company a nonexclusive, paid up, royalty-free
license to use and practice the Invention, including a license under all patents
to issue in any country which pertain to the Invention.
(e) The Associate owns no patents, individually or jointly with others,
except those described on Exhibit C, if any.
10. Patent Applications.
(a) The Associate agrees that should the Company elect to file an
application for patent protection, either in the United States or in any foreign
country on a Subject Invention of which the Associate was an inventor, the
Associate will execute all necessary documentation relating to the patent
applications, including formal assignments to the Company.
(b) The Associate further agrees that he or she will cooperate with
attorneys or other persons designated by the Company by explaining the nature of
any Subject Invention for which the Company elects to file an application for
patent protection, reviewing applications and other papers and providing any
other cooperation required for prosecution of the patent applications. The
Company will be responsible for all expenses incurred for the preparation and
prosecution of all patent applications on Subject Inventions assigned to the
Company.
11. Copyrights.
(a) The Associate agrees that any Works (as defined below) created by
the Associate in the course of the Associate's duties as an employee of the
Company constitute "Work for Hire" as defined in Sections 101 and 201 of the
United States Copyright Law, Title 17 of the United States Code. "Work" means a
copyrightable work of authorship, including without limitation, any technical
descriptions for products, user's guides, illustrations, advertising materials,
computer programs (including the contents of read only memories) and any
contribution to such materials. All right, title and interest to copyrights in
all Works which have been or will be prepared by the Associate within the scope
of his or her employment with the Company will be the property of the Company.
The Associate acknowledges and agrees that, to the extent the provisions of
Title 17 of the United States Code do not vest in the Company the copyrights to
any Works, the Associate hereby assigns to the Company all right, title and
interest to copyrights which the Associate may have in the Works.
(b) The Associate agrees to disclose to the Company all Works referred
to in Section 11(a) and will execute and deliver all applications,
registrations, and documents relating to the copyrights to the Works and will
provide assistance to secure the Company's title to the copyrights in the Works.
The Company will be responsible for all expenses incurred in connection with the
registration of all the copyrights.
(c) The Associate claims no ownership rights in any Works, except those
described on Exhibit C, if any.
12. Contracts or Other Agreements with Former Employer or Business.
(a) The Associate agrees that he or she will provide to the Company,
upon the execution and delivery of this Agreement, a copy of the pertinent
portions of any employment agreement or similar document (described on Exhibit
C, if any), executed by the Associate with a former employer or any business
with which the Associate has been associated, which prohibits the Associate
during a period of time from: (i) competing with or participating in a business
which competes with the Associate's former employer or business; (ii) soliciting
personnel of the former employer or business to leave the former employer's
employment or to leave the business; or (iii) soliciting customers of the former
employer or business on behalf of another business.
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<PAGE> 5
(b) The Associate hereby represents to the Company that he or she has
not executed any agreement with any other party which purports to require the
Associate to assign any Work or any Invention created, conceived or first
practiced by the Associate during a period of time which includes the date of
his or her commencement of employment with the company, except as described on
Exhibit C, if any. The Associate will obtain and provide to the Company a copy
of the above described agreement(s).
13. Severability, Etc.
(a) The Associate agrees that the covenants and agreements contained in
Sections 5, 6, 7 and 8 of this Agreement, and the subsections of those Sections,
are of the essence of this Agreement; that each of such covenants is reasonable
and necessary to protect and preserve the interests and properties of the
Company and the Business of the Company; that the Company is engaged in and
throughout the Area in the Business of the Company; that the Associate will
perform or has performed the Duties in and throughout the Area; that irreparable
loss and damage will be suffered by the Company should Associate breach any of
such covenants and agreements; that each of such covenants and agreements is
separate, distinct and severable not only from the other of such covenants and
agreements but also from the other and remaining provisions of this Agreement;
that the unenforceability of any such covenant or agreement shall not affect the
validity or enforceability of any other such covenant or agreement or any other
provision or provisions of this Agreement; and that, in addition to other
remedies available to it, the Company shall be entitled to both temporary and
permanent injunctions to prevent a breach or contemplated breach by Associate of
any of such covenants or agreements. In the event that the Company should seek
an injunction hereunder, the Associate waives any requirement that the Company
post a bond or any other security.
(b) The Parties intend that in the event that a court, in construing
the enforceability of any provision of this Agreement, determines that the
covenant is unenforceably broad or ambiguous, such court shall have full power
and authority to disregard or strike through any portion of the provision that
renders the provision unenforceably broad or ambiguous or to modify or to reform
the provision to the extent necessary to render it enforceable.
(c) In the event that the Associate shall breach any of the covenants
set forth in Section 5, 6, 7 or 8 hereof, the running of the period of the
restriction set forth in such Section shall be tolled during the continuation of
any such breach by the Associate for a period of not more than two (2) years,
and the running of the period of such restrictions shall commence only upon
compliance by the Associate with the terms of the applicable Section.
14. No Set-off by Associate.
The existence of any claim, demand, action or cause of action by the
Associate against the Company, or any parent, subsidiary or affiliate of the
Company, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company of any of its rights
hereunder.
15. Amendment.
This Agreement and the Exhibits attached hereto, which are all hereby
incorporated into and made a part of this Agreement, may be altered, amended,
modified or superseded only in a writing executed by both of the Parties hereto.
Notwithstanding anything to the contrary in this Agreement, any Exhibit hereto
which is amended or superseded shall, for the purposes of Sections 5, 6 and 7
hereof only, remain effective for a period of one (1) year from the effective
date of the Exhibit amending or superseding it.
16. Assignment; Entire Agreement.
(a) This Agreement may be assigned by the Company and shall inure to
the benefit of any such assignee. The waiver by the Company of any breach of
this Agreement by the Associate shall not be effective unless in writing, and no
such waiver shall constitute the waiver of the same or another breach on a
different occasion.
(b) This Agreement and those provisions of prior employment agreements
(if any) between the Associate and the Company which are expressly stated to
survive the termination or the replacement of any such agreement embody the
entire agreement of the parties hereto relating to the employment by the Company
of the Associate in the capacity herein stated.
17. Acknowledgement.
THE ASSOCIATE ACKNOWLEDGES THAT HE OR SHE HAS BEEN PROVIDED WITH AMPLE
TIME TO CAREFULLY REVIEW EACH OF THE PROVISIONS OF THIS AGREEMENT AND TO CONSULT
WITH COUNSEL OF HIS OR HER CHOICE, AND THAT HE OR SHE FULLY UNDERSTANDS EACH OF
THE PROVISIONS OF THIS AGREEMENT.
IN WITNESS WHEREOF, the Company and the Associate have each caused this
Agreement to be executed and delivered as of the date first shown above.
THE COMPANY:
NORRELL CORPORATION
By:
------------------------------------------------------
Title:
---------------------------------------------------
THE ASSOCIATE:
- ---------------------------------------------------------
(Signature)
- ---------------------------------------------------------
(Print or type name here)
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<PAGE> 6
EXHIBIT A
Effective as of _______________, 199___.
The Area shall be that territory located within a ____________________
(__) mile radius of each of the following offices of the Company:
THE COMPANY:
NORRELL CORPORATION
By:
--------------------------------------
Title:
-----------------------------------
THE ASSOCIATE:
-----------------------------------------
(Signature)
-----------------------------------------
(Print or type name here)
<PAGE> 7
EXHIBIT B
Effective as of _______________, 199___.
The Area shall be that territory located within a ____________________
(__) mile radius of each of the following offices of the Company:
THE COMPANY:
NORRELL CORPORATION
By:
--------------------------------------
Title:
-----------------------------------
THE ASSOCIATE:
-----------------------------------------
(Signature)
-----------------------------------------
(Print or type name here)
<PAGE> 8
EXHIBIT C
Effective as of _______________, 199___.
THE COMPANY:
NORRELL CORPORATION
By:
--------------------------------------
Title:
-----------------------------------
THE ASSOCIATE:
-----------------------------------------
(Signature)
-----------------------------------------
(Print or type name here)
<PAGE> 1
EXHIBIT 10.30
PREFERRED VENDOR AGREEMENT
THIS PREFERRED VENDOR AGREEMENT made as of this 14th day of May, 1993, by
and between Norrell Services, Inc., a Georgia corporation ("Norrell"), and
United Parcel Service General Services Company, a Delaware corporation ("UPS").
W I T N E S S E T H:
WHEREAS, UPS has a continuing need for supplemental personnel; and
WHEREAS, Norrell is a leading provider of such personnel to businesses in
the United States and Canada;
NOW, THEREFORE, in consideration of the mutual promises herein contained,
the parties hereto agree as follows:
1. Services Provided. Norrell will provide to UPS the services described
in Exhibit A attached hereto and made a part hereof (the "Services") as UPS
shall require, pursuant to the terms and conditions of this Agreement. The
parties may, from time to time, amend Exhibit A in a writing signed by a duly
authorized representative of each party.
2. Term. This Agreement shall continue for a term of two (2) years after
the date first entered above, unless sooner terminated as set forth herein, and
will be automatically renewed for like additional terms unless either party
serves written notice of its intent to terminate the Agreement within thirty
(30) days prior to the expiration of any such term. Either party hereto may
terminate this Agreement with or without cause upon sixty (60) days written
notice to tile other party hereto. If UPS delivers notice to Norrell of its
intent to terminate, UPS shall include therein the reasons for such termination
and Norrell shall have thirty (30) days to rectify or modify its performance,
after which 30-day period UPS shall revoke or affirm its termination. The
provisions of this Agreement where the context or sense of this Agreement so
indicates shall survive any termination or cancellation of the Agreement.
3. Rates for Services. For the first year of the term of this Agreement,
the rates for the performance of the Services pursuant to this Agreement shall
not exceed those set forth on pages A5 through A10 of Exhibit A attached hereto
and made a part hereof. Thereafter the rates shall be as otherwise set forth in
Exhibit A. Any agreements negotiated locally by Norrell/UPS management will be
honored subject to the approval of Norrell's Vice President of National
Accounts.
<PAGE> 2
4. Invoices. Norrell shall submit to each UPS District office a weekly
invoice for the services of its personnel which shall indicate the number of
hours, rate per hour, name of employee and department worked during the
previous Monday through Sunday billing period. Invoices submitted hereunder
shall be due and payable upon receipt.
5. Reports. Norrell is prepared to provide UPS monthly and quarterly
reports (for its field locations as well as corporate headquarters), which
contain the number of hours worked by Norrell employees as well as the
aggregate billing to UPS by Norrell with respect to each of the job
classifications set forth on Exhibit A. Preparation and delivery of these
reports as well as additional billing information will be mutually agreed upon
by UPS and Norrell field locations
6. Buyer Satisfaction. Norrell agrees that the Services will be performed
to the satisfaction of UPS and agrees to allow UPS a reasonable period of time
to determine if the Services provided by Norrell were performed in a
satisfactory manner. If UPS determines within a reasonable period of time that
the Services provided by a Norrell employee are not satisfactory, and Norrell
is so notified, UPS will not be charged for such Services performed and Norrell
will provide corrective Services and, if necessary or requested, replacement
personnel upon notification from UPS or within a mutually agreed upon period of
time.
7. Laws and Regulations. Norrell agrees that it will comply with all laws
and regulations applicable to Norrell's employees, including the Fair Labor
Standards Act, Title Vll of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act of 1967, the Rehabilitation Act of 1973, the Immigration
Reform and Control Act of 1986, and the Americans with Disabilities Act of 1990.
8. Hiring of Norrell Employees by UPS. UPS agrees that utilization of any
Norrell employee by UPS within six months of the last use of such Norrell
employee through Norrell shall only be through Norrell. If UPS desires to hire
any Norrell employee on a permanent basis, UPS will notify Norrell, in writing.
The employee whom UPS desires to hire shall remain on Norrell's payroll for
four (4) weeks. UPS shall then be free to hire that individual without further
obligation to Norrell.
9. Independent Contractor. Norrell shall act at all times as an
independent contractor, and nothing contained herein shall be construed to
create the relationship of principal and agent, or employer and employee,
between Norrell and UPS. The Norrell employees assigned to perform the Services
for UPS are solely the employees of Norrell, and any subcontractor's employees
assigned to perform the Services for UPS are solely the employees of that
subcontractor.
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10. Norrell Employees. Norrell shall recruit, interview, test, select,
hire, and train the persons who shall provide the Services hereunder. UPS agrees
that the costs of any pre-assignment screening required by UPS which is not
routinely performed by Norrell as a part of its regular hiring procedures shall
be paid or reimbursed by UPS. Examples of non-routine screening are drug
testing, credit checks, and criminal backgrounds. Norrell shall have sole
responsibility to counsel, discipline, review, evaluate, set the pay rates of,
and terminate its employees assigned to UPS. Norrell assumes full responsibility
for all contributions, taxes and assessments with respect to its employees under
all applicable federal, state and local laws (including withholding from wages
of employees where required). Norrell further agrees that it will comply with
all other applicable federal, state or local laws or regulations applicable to
Norrell as an employer regarding compensation, hours of work or other conditions
of employment.
11. Indemnification. Norrell shall indemnify and hold harmless UPS, its
agents and employees from and against any and all claims, losses, actions,
damages, expenses, and all other liabilities, including but not limited to
attorneys' fees, arising out of or resulting from Norrell's negligent
performance of or failure to perform the work hereunder to the extent any such
claim, loss, action, damage, expense or other liability is attributable to
bodily injury to or death of any person or to damage to or destruction of any
property, whether belonging to UPS or to another, provided, however, that
Norrell shall not indemnify or hold harmless UPS to the extent any such claims,
losses, actions, damages, expenses or other liabilities are caused by the
negligent acts or omissions of UPS, its agents, employees or contractors. UPS
shall give reasonable notice to Norrell of any such claim, loss, action,
damage, expense or other liability.
12. Insurance. Norrell shall maintain at its expense: (a) Workers'
Compensation and Employer's Liability Insurance, (b) Commercial General
Liability Insurance, and (c) a Fidelity Bond. If said insurance policy is to be
canceled or changed by insured or insurer so as to affect the coverage required
by this contract, at least ten (10) days prior written notice of such
cancellation or change shall be sent to UPS at the address to which invoices
are to be sent by Norrell.
13. Notices. All notices which it may be necessary or proper for either
UPS or Norrell to give or deliver to the other shall be sent and shall be
deemed given when sent by registered or certified mail, postage prepaid and
return receipt requested, and if given by UPS to Norrell shall be addressed to:
Norrell Services, Inc.
3535 Piedmont Road, N.E.
Atlanta, GA 30305
Attn: Jeff Harlow - National Accounts
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<PAGE> 4
and if given by Norrell to UPS, shall be addressed to:
United Parcel Service, Inc.
400 Perimeter Center - Terraces North
Atlanta, GA 30346
Attn: Joseph Schneider- Vice President
14. Assignment. The rights and obligations of the parties hereunder shall
not be assigned without the prior written consent of the other party, except
that Norrell may assign its rights and obligations hereunder to any affiliate
of Norrell without the prior written consent of the UPS. Otherwise, this
contract shall be binding upon and shall inure to the benefit of the parties
hereto, and their respective successors and assigns.
15. Amendments. This Agreement, and the provisions hereof, may be altered,
amended, modified or superseded only in a writing executed by both of the
parties hereto.
16. Enforcement, Waiver. No waiver of or failure to exercise any option,
right or privilege under the terms of this Agreement by either of the parties
hereto on any occasion or occasions shall be construed to be a waiver of the
same or of any other option, right or privilege on any other occasion.
17. Entire Agreement. This Agreement, together with the Exhibits
referenced herein, shall constitute the entire Agreement between the parties
with respect to the subject matter and supersedes all previous Agreements
between UPS and Norrell relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first written
above.
NORRELL SERVICES, INC. UNITED PARCEL SERVICE, INC.
By: By:
---------------------------- ---------------------------
Jeff Harlow Joseph Schneider
Vice President, Vice President
International Accounts
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<PAGE> 1
EXHIBIT 10.32
U.S $95,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of October 21, 1996
among
NORRELL CORPORATION,
as the Company,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
as the Agent for the Lenders
and
SUNTRUST BANK, ATLANTA
as the Co-Agent for the Lenders
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.2. Use of Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.3. Cross-References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.4. Accounting and Financial Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.1.1. Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.1.2. Commitment to Issue Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.1.3. Lenders Not Permitted or Required To Make
Committed Loans or Issue or Participate
in Letters of Credit Under Certain
Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.2. Reduction of Commitment Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.3. Committed Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.4. Continuation and Conversion Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.5. Bid Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.6 Procedure for Bid Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.7. Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.8. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.9. Extension of Commitment Termination
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.2. Interest Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.2.1. Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.2.2. Post-Maturity Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.2.3. Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.3. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.3.1. Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.3.2. Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.3.3. Letter of Credit Face Amount Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.3.4. Other Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(a) Administrative Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(b) Drawing Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.3.5. Amendment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
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ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1. Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.2. Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.3. Reimbursement of Drawings under Letters of Credit . . . . . . . . . . . 37
SECTION 4.4. General Provisions as to Letters of Credit . . . . . . . . . . . . . . 37
(a) Limitation on Issuer's Duty to Issue . . . . . . . . . . . . . 37
(b) Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . 37
(c) Participations by Lenders . . . . . . . . . . . . . . . . . . 37
(d) Funding of Letter of Credit Drawings . . . . . . . . . . . . . 37
(e) Company's Obligations Absolute . . . . . . . . . . . . . . . . 38
(f) Lender Obligations Absolute . . . . . . . . . . . . . . . . . 39
(g) Reimbursement Default by Lenders . . . . . . . . . . . . . . . 39
(h) Limitation of Liability With Respect To Letters of
Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.5. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 4.6. Payments on Demand . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE V
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
SECTION 5.1. Eurodollar Rate Lending Unlawful . . . . . . . . . . . . . . . . . . . 41
SECTION 5.2. Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.3. Increased Eurodollar Rate Loan Costs, etc. . . . . . . . . . . . . . . 42
SECTION 5.4. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.5. Increased Capital Costs . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.6. Payments, Computations, etc. . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.7. Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.8. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.9. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.10. Replacement Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Effectiveness . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.1.1. Resolutions, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.1.2. Delivery of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.1.3. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
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SECTION 6.1.4. Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.2. All Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 6.2.1. Compliance with Warranties, No Default, etc.. . . . . . . . . . . . . . 47
SECTION 6.2.2. Credit Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 6.2.3. Satisfactory Legal Form . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Organization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 7.2. Due Authorization, Non-Contravention, etc. . . . . . . . . . . . . . . 49
SECTION 7.3. Government Approval, Regulation, etc. . . . . . . . . . . . . . . . . . 49
SECTION 7.4. Validity, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.5. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.6. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.7. Litigation, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.9. Ownership of Properties . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.11. Pension and Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.12. Environmental Warranties . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 7.13. Regulations G, U and X . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 7.14. Accuracy of Information . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE VIII
COVENANTS
SECTION 8.1. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.1.1. Financial Information, Reports, Notices, etc. . . . . . . . . . . . . . 52
SECTION 8.1.2. Compliance with Laws, etc. . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.1.3. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.1.4. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.1.5. Environmental Covenant . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 8.1.6 Additional Documentation . . . . . . . . . . . . . . . . . . . . . . . 55
(a) Resolutions, etc., of Tascor Incorporated . . . . . . . . . . 56
(b) Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . 56
SECTION 8.2. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 8.2.1. Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 8.2.2. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 8.2.3. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 8.2.4. Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(a) Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . 59
(b) Funded Debt Ratio . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
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(c) Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . 60
(d) Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . 60
(e) Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.2.5. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.2.6. Restricted Payments, etc. . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 8.2.7. Consolidation, Merger, etc. . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 8.2.8. Asset Dispositions, etc. . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 8.2.9. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. Listing of Events of Default . . . . . . . . . . . . . . . . . . . . . 67
SECTION 9.1.1. Non-Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 9.1.2. Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations . . . . . . . . . 67
SECTION 9.1.4. Non-Performance of Other Covenants and Obligations . . . . . . . . . . 68
SECTION 9.1.5. Default on Other Indebtedness . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.1.6. Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.1.7. Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 9.1.8. Control of the Company . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9.1.9. Bankruptcy, Insolvency, etc. . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9.1.10. Impairment of Security, etc. . . . . . . . . . . . . . . . . . . . . . 69
SECTION 9.2. Action if Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 9.3. Action if Other Event of Default . . . . . . . . . . . . . . . . . . . 70
ARTICLE X
THE AGENT
SECTION 10.1. Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.2. Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.3. Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 10.4. Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.5. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.6. Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10.7. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.8. Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . 73
SECTION 10.9. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.10. Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10.11. Co-Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
</TABLE>
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 11.3. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 11.4. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 11.7. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.8. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.9. Governing Law; Entire Agreement . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.10. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes . . . . . . . . . . . . . . . . . . . 80
SECTION 11.11.1. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 11.11.2. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 11.12. Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 11.13. Forum Selection and Consent to
Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Schedules:
SCHEDULE I Disclosure Schedule
SCHEDULE II Lenders' Addresses; Domestic Offices;
Eurodollar Offices
Exhibits:
EXHIBIT A-1 Form of Committed Loan Note
EXHIBIT A-2 Form of Bid Loan Note
EXHIBIT B Form of Borrowing Request
EXHIBIT C Form of Continuation/Conversion Notice
EXHIBIT D Form of Guaranty
EXHIBIT E Form of Joinder Agreement
EXHIBIT F Form of Lender Assignment Agreement
EXHIBIT G Form of Competitive Bid Request
EXHIBIT H Form of Competitive Bid Offer
EXHIBIT I Form of Opinion of Counsel to the Company
EXHIBIT J Form of Compliance Certificate
EXHIBIT K Form of Borrowing Base Certificate
</TABLE>
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<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 21,
1996, among NORRELL CORPORATION, a Georgia corporation (the "Company"), the
various financial institutions as are or may become parties hereto
(collectively, the "Lenders"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as agent (the "Agent") for the Lenders, and SUNTRUST BANK, ATLANTA
(formerly known as Trust Company Bank), as co-agent (the "Co-Agent") for the
Lenders.
W I T N E S S E T H:
WHEREAS, the Company is engaged directly and through its various
Subsidiaries in various businesses including but not limited to providing
temporary workers, contract programmers, call center staffing, management
services, and healthcare staffing services to or on behalf of other companies;
and
WHEREAS, the Company, the Lenders, the Agent and the Co-Agent are
parties to a Credit Agreement, dated as of August 31, 1994 (as heretofore
amended, supplemented or otherwise modified, the "Existing Agreement"),
pursuant to which the Lenders have agreed to make revolving loans to the
Company and the Issuer (as defined therein) has agreed to issue letters of
credit for the account of the Company;
WHEREAS, the Company has requested that the Lenders, the Agent and the
Co-Agent amend the Existing Agreement in various respects and, for convenience
of reference, the parties have agreed to amend and restate the Existing
Agreement in its entirety to reflect such amendments;
WHEREAS, the proceeds of the Loans hereunder will be used for general
corporate purposes including but not limited to acquisitions, joint ventures
and other transactions, working capital purposes and to repay certain existing
Indebtedness of the Company and its Subsidiaries;
NOW, THEREFORE, as of the Effective Date, the Existing Agreement is
hereby amended and restated as follows:
<PAGE> 8
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Absolute Rate" is defined in subsection 2.6(b)(ii)(D).
"Absolute Rate Auction" means a solicitation of Competitive
Bids setting forth Absolute Rates pursuant to Section 2.6.
"Absolute Rate Bid Loan" means a Bid Loan that bears interest
at a rate determined with reference to the Absolute Rate.
"Accounts" means all accounts, general intangibles (including,
without limitation, all payments due under all franchise, license and
agency agreements, whether designated as royalties, license or
franchise fees, liquidation fees or otherwise), chattel paper,
instruments and documents as such terms are defined under the Uniform
Commercial Code, now owned or hereafter acquired by the Company or any
Subsidiary, or in which the Company or any Subsidiary now has or
hereafter acquires any rights, and the proceeds of any of the
foregoing, but shall not include indebtedness due to or arising out of
claims in tort or indebtedness evidenced by a promissory note or a
negotiable instrument, except to the extent that any such note or
instrument is required to be delivered to the Agent or Co-Agent
pursuant to any provision of this Agreement.
"Acquisition" means any transaction, or any series of related
transactions, by which the Company or any of its Subsidiaries (i)
acquires any going business or all or substantially all of the assets
of any Person whether through purchase of assets, merger or otherwise,
or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a
majority (in number of votes) of the securities of a corporation which
have ordinary voting power for the election of directors, managers,
trustees or others performing similar functions.
"Affiliate" means any Person that directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with, the Company. Any Person that beneficially
owns or holds (i) 25% or more of any class of the voting stock of the
Company or (ii) 25% or more of the
2
<PAGE> 9
voting stock (or in the case of a Person that is not a corporation,
25% or more of the equity interest) of which is beneficially owned or
held by the Company or a Subsidiary shall be rebuttably presumed to be
an Affiliate, unless the Company can prove otherwise. 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 stock, by contract or
otherwise. No Person shall be deemed an Affiliate solely by reason of
entering into a franchise or agency agreement with the Company or any
Subsidiary.
"Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor
Agent pursuant to Section 10.9.
"Agent-Related Persons" means BofA and any successor agent
arising under Section 10.9, together with their respective affiliates.
"Agreement" means, on any date, this Amended and Restated
Credit Agreement as originally in effect on the Effective Date and as
thereafter from time to time amended, supplemented, amended and
restated, or otherwise modified and in effect on such date.
"Applicable Margin" means, with respect to the interest rate
applicable to each Committed Loan, the Facility Fee or Letter of
Credit Fee, the amount (expressed as a percentage rate per annum)
shown below:
(a) if the Company's Funded Debt Ratio is greater than
3.25 to 1:
<TABLE>
<CAPTION>
Type of Rate or Fee Applicable Margin
------------------- -----------------
<S> <C>
Eurodollar - Based Rate 1.000%
Reference Rate - Based Rate .000%
Facility Fee .250%
Letter of Credit Fee 1.000%
</TABLE>
(b) if the Company's Funded Debt Ratio is greater than 3.0 to
1.0 but less than or equal to 3.25 to 1.0:
<TABLE>
<CAPTION>
Type of Rate or Fee Applicable Margin
------------------- -----------------
<S> <C>
Eurodollar - Based Rate .800%
Reference Rate - Based Rate .000%
Facility Fee .200%
Letter of Credit Fee .800%
</TABLE>
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<PAGE> 10
(c) if the Company's Funded Debt Ratio is greater than 2.5 to
1.0 but less than or equal to 3.0 to 1.0:
<TABLE>
<CAPTION>
Type of Rate or Fee Applicable Margin
------------------- -----------------
<S> <C>
Eurodollar - Based Rate .550%
Reference Rate - Based Rate -.250%
Facility Fee .200%
Letter of Credit Fee .550%
</TABLE>
(d) if the Company's Funded Debt Ratio is greater than
1.6 to 1.0 but less than or equal to 2.5 to 1.0:
<TABLE>
<CAPTION>
Type of Rate or Fee Applicable Margin
------------------- -----------------
<S> <C>
Eurodollar - Based Rate .350%
Reference Rate - Based Rate -.500%
Facility Fee .150%
Letter of Credit Fee .350%
</TABLE>
(e) if the Company's Funded Debt Ratio is less than or
equal to 1.6 to 1.0:
<TABLE>
<CAPTION>
Type of Rate or Fee Applicable Margin
------------------- -----------------
<S> <C>
Eurodollar - Based Rate .250%
Reference Rate - Based Rate -.500%
Facility Fee .100%
Letter of Credit Fee .250%
</TABLE>
Any increase or decrease in the Applicable Margin resulting
from a change in the Funded Debt Ratio shall become effective as of
the first day of the Fiscal Quarter immediately following the date the
financial statements described in Sections 8.1.1(a) and (b) are
delivered; provided, however, that any change in the Applicable Margin
resulting from a change in the Funded Debt Ratio as of the last day of
the fourth Fiscal Quarter of any Fiscal Year shall become effective as
of the first day of the second Fiscal Quarter of the following Fiscal
Year; and provided, further, that if such financial statements are not
delivered during such preceding Fiscal Quarter, the Applicable Margin
shall be the amounts defined in clause (a) above until so delivered.
"Assignee Lender" is defined in Section 11.11.1.
"Attorney Costs" means and includes all fees and disbursements
of any law firm or other external counsel, and, without duplication,
the allocated cost of internal legal services and all disbursements of
internal counsel.
4
<PAGE> 11
"Authorized Officer" means, relative to any Obligor, those of
its officers whose signatures and incumbency shall have been certified
to the Agent and the Lenders pursuant to Section 6.1.1.
"BAI" means Bank of America Illinois, a bank organized under
the laws of the State of Illinois.
"Bid Borrowing" means a Borrowing hereunder consisting of one
or more Bid Loans made to the Company on the same day by one or more
Lenders.
"Bid Loan" means a Loan by a Lender to the Company under
Section 2.5, which may be a Eurodollar Rate Bid Loan or an Absolute
Rate Bid Loan.
"Bid Loan Note" means a promissory note of the Company payable
to the order of any Lender, in the form of Exhibit A-2 (as such
promissory note may be amended, endorsed or otherwise modified from
time to time), evidencing the aggregate Indebtedness of the Company to
such Lender resulting from outstanding Bid Loans made by such Lender,
and also means all other promissory notes accepted from time to time
in substitution therefor or renewal thereof.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans of
the same Type made to the Company on the same day by the Lenders under
Article II, and may be a Committed Borrowing or a Bid Borrowing and,
other than in the case of Reference Rate Committed Loans, having the
same Interest Period.
"Borrowing Base" means the product of multiplying the Company's
consolidated net Accounts (i.e. gross Accounts less allowance for
doubtful Accounts and Accounts originated outside the United States of
America, all determined in accordance with GAAP) by .75.
"Borrowing Request" means a loan request and certificate duly
executed by an Authorized Officer of the Company, substantially in the
form of Exhibit B.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a
legal holiday on which banks are authorized or required to be closed
in San Francisco, California, Chicago, Illinois and Atlanta, Georgia;
and
5
<PAGE> 12
(b) relative to the making, continuing, prepaying or
repaying of any Eurodollar Rate Loans, any day on which dealings in
Dollars are carried on in the eurodollar interbank market.
"Capital Expenditures" means, for any period, the aggregate
expenditures of the Company and its Subsidiaries for fixed or capital
assets made during such period which, in accordance with GAAP, would
be classified as capital expenditures (including the aggregate amount
of all Capitalized Lease Liabilities incurred during such period and
the aggregate expenditures of the Company for real property
acquisitions) and includes, in any event, the aggregate expenditures
of the Company and its Subsidiaries made during such period for
development of financial and operating systems to the extent such
expenditures are capitalized on the consolidated balance sheet of the
Company and its Subsidiaries as at the end of such period.
"Capitalized Lease" means any lease the obligation for Rentals
with respect to which is required to be capitalized on a balance sheet
of the lessee in accordance with GAAP.
"Capitalized Lease Liabilities" means all monetary obligations
of the Company or any of its Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, would be classified as
capitalized leases, and, for purposes of this Agreement and each other
Loan Document, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP.
"Capitalized Rentals" means, as of the date of any
determination, the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases under which the Company or any
Subsidiary is a lessee would be reflected as a liability on a
consolidated balance sheet of the Company and its Subsidiaries.
"Change in Control" means either (a) a person or "group"
(within the meaning of the Securities Exchange Act of 1934, as
amended), other than Guy W. Millner, any Person controlled by him or
any blind trust for his benefit acquiring or having beneficial
ownership (it being understood that a tender of shares or other equity
interests shall not be deemed acquired or giving beneficial ownership
until such shares or other equity interests have been accepted for
payment) of securities (including options), having a majority of the
ordinary voting power of the Company or (b) a majority of the
directors of the Company not being either the current directors of the
Company or directors designated or approved by such directors.
6
<PAGE> 13
"Co-Agent" means SunTrust Bank, Atlanta, as co-agent.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commitment" means, relative to any Lender, such Lender's
obligation to make Committed Loans pursuant to Section 2.1.1 and to
issue (in the case of an Issuer) or participate in (in the case of all
Lenders) Letters of Credit pursuant to Section 2.1.1.
"Commitment Amount" means, on any date, $95,000,000, as such
amount may be reduced from time to time pursuant to Section 2.2.
"Commitment Availability" means, on any date, the sum of
(a) the then Commitment Amount,
minus
(b) the sum of
(i) the outstanding principal amount of all
Loans on such date,
plus
(ii) the Letter of Credit Outstandings on
such date.
"Commitment Termination Date" means the earliest of
(a) September 30, 1999 (or such later date to
which the Commitment Termination Date shall be extended
pursuant to Section 2.9);
(b) the date on which the Commitment Amount is
terminated in full or reduced to zero pursuant to Section 2.2;
and
(c) the date on which any Commitment Termination
Event occurs.
Upon the occurrence of any event described in clause (b) or (c), the
Commitments shall terminate automatically and without any further
action.
"Commitment Termination Event" means
(a) the occurrence of any Default described in
clause (a), (b), (c) or (d) of Section 9.1.9 with respect
7
<PAGE> 14
to the Company or any Significant Subsidiary; or
(b) the occurrence and continuance of any other Event of Default
and either
(i) the declaration of the Loans to be due
and payable pursuant to Section 9.3, or
(ii) in the absence of such declaration, the
giving of notice by the Agent, acting at the direction
of the Majority Lenders, to the Company that the
Commitments have been terminated.
"Committed Borrowing" means a Borrowing hereunder consisting
of Committed Loans made on the same day by the Lenders ratably
according to their respective Percentages and, in the case of
Eurodollar Rate Committed Loans, having the same Interest Periods.
"Committed Loan" means a Loan by a Lender to the Company under
Section 2.1.1, and may be a Eurodollar Rate Committed Loan or a
Reference Rate Committed Loan (each, a "Type" of Committed Loan).
"Committed Loan Note" means a promissory note of the Company
payable to the order of any Lender, in the form of Exhibit A-1 (as
such promissory note may be amended, endorsed or otherwise modified
from time to time), evidencing the aggregate Indebtedness of the
Company to such Lender resulting from outstanding Committed Loans, and
also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"Competitive Bid" means an offer by a Lender to make a Bid
Loan in accordance with subsection 2.6(b).
"Competitive Bid Request" is defined in subsection 2.6(a).
"Company" is defined in the preamble.
"Consolidated Net Income" for any period means the gross
revenues of the Company and its Subsidiaries for such period less all
expenses and other proper charges (including taxes on income),
determined on a consolidated basis in) accordance with GAAP
consistently applied and after eliminating earnings or losses
attributable to outstanding Minority Interests, but excluding in any
event:
(a) any gains or losses on the sale or other
disposition of investments or of fixed or capital assets,
8
<PAGE> 15
and any taxes on such excluded gains and any tax deductions
or tax credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Subsidiary
accrued prior to the date it became a Subsidiary;
(d) net earnings and losses of any corporation
(other than a Subsidiary), substantially all the assets of
which have been acquired in any manner, that were realized by
such other corporation prior to the date of such acquisition;
(e) net earnings and losses of any corporation
(other than a Subsidiary) with which the Company or a
Subsidiary shall have consolidated or that shall have merged
into or with the Company or a Subsidiary prior to the date of
such consolidation or merger;
(f) net earnings and losses of any business
entity (other than a Subsidiary) in which the Company or any
Subsidiary has an ownership interest unless such net earnings
shall have actually been received by the Company or such
Subsidiary in the form of cash distributions;
(g) any portion of the net earnings of any
Subsidiary that for any reason is unavailable for payment of
dividends to the Company or any other Subsidiary;
(h) earnings resulting from any reappraisal,
reevaluation or write-up of assets;
(i) any deferred or other credit representing any
excess of the equity in any Subsidiary at the date of
acquisition thereof over the amount invested in such
Subsidiary;
(j) any gain arising from the acquisition of any
securities of the Company or any Subsidiary; and
(k) any reversal of any contingency reserve,
except to the extent that provision for such contingency
reserve shall have been made from income arising during such
period.
"Consolidated Net Worth" means, as of the date of any
determination thereof, the aggregate amount of capital stock, paid-in
capital and retained earnings of the Company and its Subsidiaries
(exclusive of any treasury stock or charges or
9
<PAGE> 16
credits to retained earnings arising by virtue of any appraisal or
reevaluation of assets), determined in accordance with GAAP.
Consolidated Total Liabilities" means such liabilities of the
Company and its Subsidiaries on a consolidated basis as shall be
determined in accordance with GAAP to constitute total liabilities.
"Contingent Liability" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise
becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to
supply funds to, or otherwise to invest in, a debtor, or otherwise to
assure a creditor against loss) the indebtedness, obligation or any
other liability of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of
dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Contingent Liability
shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount (or maximum principal amount, if
larger) of the debt, obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of
continuation or conversion and certificate duly executed by an
Authorized Officer of the Company, substantially in the form of
Exhibit C.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or
businesses (whether or not incorporated) under common control which,
together with the Company, are treated as a single employer under
Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.
"Credit Extension" means and includes
(a) the advancing of any Committed Loans by the
Lenders in connection with a Committed Borrowing,
(b) the advancing of any Bid Loan by any Lender in
connection with a Bid Borrowing, and
(c) any issuance or extension by an Issuer of a
Letter of Credit.
"Current Ratio" means the ratio of
(a) consolidated current assets of the Company and
10
<PAGE> 17
its Subsidiaries
(b) consolidated current liabilities of the Company
and its Subsidiaries.
"Date of Issuance" means, with respect to any Letter of
Credit, the date upon which such Letter of Credit is issued by the
Issuer pursuant to the terms hereof.
"Default" means any Event of Default or any condition,
occurrence or event which, after notice or lapse of time or both,
would constitute an Event of Default.
"Disbursement Date" is defined in Section 4.4.
"Disclosure Schedule" means the Disclosure Schedule attached
hereto as Schedule I, as it may be amended, supplemented or otherwise
modified from time to time by the Company with the written consent of
the Agent and the Majority Lenders.
"Dollar" and the sign "$" mean lawful money of the United
States.
"Domestic Office" means, relative to any Lender, the office of
such Lender designated as such in Schedule II or designated in the
Lender Assignment Agreement or such other office of a Lender (or any
successor or assign of such Lender) within the United States as may be
designated from time to time by notice from such Lender, successor or
assign, as the case may be, to each other Person party hereto.
"Draft" means a draft presented for drawing against a Letter
of Credit in accordance with the terms thereof.
"Drawing" means the payment made by the Issuer upon
presentation of a Draft.
"Effective Date" means the first date upon which all of the
conditions precedent set forth in Section 6.1 have been fulfilled (or
waived by all of the Lenders).
"Environmental Laws" means all applicable federal, state or
local statutes, laws, ordinances, codes, rules, regulations and
guidelines (including consent decrees and administrative orders)
relating to public health and safety and protection of the
environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import,
together with the regulations thereunder, in each case
11
<PAGE> 18
as in effect from time to time. References to sections of ERISA also
refer to any successor sections.
"Eurodollar Rate" means, with respect to each Interest Period
for Eurodollar Rate Loans, the rate per annum at which Dollar deposits
in immediately available funds are offered to the Agent's Eurodollar
Reference Office two Business Days prior to the beginning of such
Interest Period by prime banks in the interbank eurodollar market as at
or about 12:00 noon (New York City time) for delivery on the first day
of such Interest Period, for a period equal to the Interest Period and
in an amount equal to the aggregate principal amount of the Eurodollar
Rate Loans to be made by the Lenders on the first day of such Interest
Period. "Eurodollar Reference Office" means the office of the Agent
located in San Francisco, California, or such other office of the Agent
through which the Agent at any date of determination determines the
Eurodollar Rate. If, for any reason, the Agent is unable to determine
a Eurodollar Rate with respect to any Interest Period pursuant to the
first sentence of this definition, then "Eurodollar Rate" shall mean,
with respect to such Interest Period, (a) the arithmetic mean (rounded
to the nearest one-hundredth of one percent) of the offered rates for
deposits in Dollars for a period equal to such Interest Period quoted
on the second Business Day prior to the first day of such Interest
Period, as such rates appear on the display designated as page "LIBO"
on the Reuters Monitor Money Rates Service (or such other page as may
replace the "LIBO" page on that service for the purpose of displaying
London interbank offered rates of major banks) ("Reuters Screen LIBO
Page") as of 11:00 a.m. (London time) on such date, if at least two
such offered rates appear on the Reuters Screen LIBO Page or (b) if, as
of 11:00 a.m. (London time) on any such date fewer than two such rates
appear on the Reuters Screen LIBO Page, the rate for deposits in
Dollars for a period equal to such Interest Period quoted on the second
Business Day prior to the first day of such Interest Period, as such
rate appears on the display designated as page "3750" on the Telerate
Service (or such other page as may replace page "3750" on the Telerate
Service or such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for
Dollar deposits) as of 11:00 a.m. (London time) on such date; in each
case as determined by the Agent and notified to the Company and the
Lenders on such second prior Business Day.
"Eurodollar Rate Auction" means a solicitation of Competitive
Bids setting forth a Eurodollar Rate Bid Margin pursuant to Section
2.6.
12
<PAGE> 19
"Eurodollar Rate Bid Loan" means any Bid Loan that bears
interest at a fixed rate of interest determined by reference to the
Eurodollar Rate.
"Eurodollar Rate Bid Margin" is defined in subsection
2.6(b)(ii)(C).
"Eurodollar Rate Committed Loan" means a Committed Loan
bearing interest, at all times during an Interest Period applicable to
such Loan, at a fixed rate of interest determined by reference to the
Eurodollar Rate.
"Eurodollar Rate Loan" means any Eurodollar Rate Bid Loan or
any Eurodollar Rate Committed Loan.
"Eurodollar Office" means, relative to any Lender, the office
of such Lender designated as such in Schedule II or designated in the
Lender Assignment Agreement or such other office of a Lender (or any
successor or assign of such Lender) as designated from time to time by
notice from such Lender, successor or assign, as the case may be, to
the Company and the Agent, whether or not outside the United States,
which shall be making or maintaining Eurodollar Rate Loans of such
Lender hereunder.
"Event of Default" is defined in Section 9.1.
"Existing Agreement" is defined in the second recital hereto.
"Facility Fee" means the fee described in the first sentence of
Section 3.3.1.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the arithmetic
mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (Atlanta,
Georgia time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by the Agent.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar
months ending on the last Sunday of October;
13
<PAGE> 20
references to a Fiscal Year with a number corresponding to any
calendar year (e.g. the "1996 Fiscal Year") refer to the Fiscal Year
ending on the last Sunday of October occurring during such calendar
year.
"Fixed Charges" for any period means on a consolidated basis
the sum of (a) all Rentals (including all Rentals on Capitalized
Leases) payable during such period by the Company and its Subsidiaries
and (b) all Interest Charges on all Indebtedness (other than
Capitalized Rentals) of the Company and its Subsidiaries.
"Foreign Lender" means a Lender that is organized under the
laws of any jurisdiction other than the United States or a State or a
political subdivision thereof.
"F.R.S. Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Funded Debt" of any Person means the following: (a) all
Indebtedness for borrowed money, (b) all Capitalized Rentals, (c) all
reimbursement obligations (whether current or contingent) with respect
to letters of credit issued for the account of such Person, and (d)
all Contingent Liabilities with respect to Funded Debt of others.
"Consolidated", when used as a prefix to any Funded Debt, shall mean
the aggregate amount of all such Funded Debt of the Company and its
Subsidiaries on a consolidated basis eliminating intercompany items.
"GAAP" means generally accepted accounting principles as in
effect from time to time.
"Guarantors" means Norrell Services, Inc., Tascor Incorporated,
Norrell Temporary Services, Inc., Norrell Asset Management Company,
Norrell Enterprises Corporation, Norrell Finance Company and such other
Significant Subsidiaries of the Company as may from time to time become
parties to the Guaranty in accordance with Section 8.2.5(a) or Section
8.2.7.
"Guaranty" means the Amended and Restated Guaranty executed and
delivered by the Guarantors pursuant to Section 6.1.4, substantially in
the form of Exhibit D, as amended, supplemented, restated or otherwise
modified from time to time.
"herein", "hereof", "hereto", "hereunder" and similar terms
contained in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document, as the case may be, as a whole
and not to any particular Section, paragraph or provision of this
Agreement or such other Loan
14
<PAGE> 21
Document.
"Impermissible Qualification" means, relative to the opinion
or certification of any independent public accountant as to any
financial statement of the Company and its Subsidiaries, any
qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar
nature;
(b) which relates to the limited scope of
examination of matters relevant to such financial statement; or
(c) which relates to the treatment or
classification of any item in such financial statement and
which, as a condition to its removal, would require an
adjustment to such item the effect of which would be to cause
the Company to be in default of any of its obligations under
Section 8.2.4.
"including" means including without limiting the generality of
any description preceding such term, and, for purposes of this
Agreement and each other Loan Document, the parties hereto agree that
the rule of ejusdem generis shall not be applicable to limit a general
statement, which is followed by or referable to an enumeration of
specific matters, to matters similar to the matters specifically
mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed
money and all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(b) all obligations, contingent or otherwise,
relative to the face amount of all letters of credit, whether
or not drawn, and banker's acceptances issued for the account
of such Person;
(c) all obligations of such Person as lessee
under leases which have been or should be, in accordance with
GAAP, recorded as Capitalized Lease Liabilities;
(d) whether or not to included as liabilities in
accordance with GAAP, all obligations of such Person to pay
the deferred purchase price of property or services, and
indebtedness (excluding prepaid interest thereon) secured by a
Lien on property owned or being purchased by
15
<PAGE> 22
such Person (including indebtedness arising under conditional
sales or other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is
limited in recourse; and
(e) all Contingent Liabilities of such Person in
respect of any of the foregoing;
but not including (i) Indebtedness of that specific joint
venture between Ernst & Young and the Company currently known
as Enserve, Inc. or its successor, (ii) non-recourse
Indebtedness of Norhab Associates or (iii) Indebtedness of a
Subsidiary as general partner in a partnership if said
Subsidiary has no assets other than said partnership interest.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Interest Charges" for any period means all interest and all
amortization of debt discount and expense on any particular
Indebtedness for which such calculations are being made.
"Interest Period" means, (a) relative to any Eurodollar Rate
Loans, the period beginning on (and including) the date on which such
Eurodollar Rate Loan is made or continued as, or converted into, a
Eurodollar Rate Loan and ending on (but excluding) the day which
numerically corresponds to such date one, two, three or six months
thereafter (or, if such month has no numerically corresponding day, on
the last Business Day of such month), in each case as selected by the
Company in its Borrowing Request, Conversion/Continuation Notice or
Competitive Bid Request, as the case may be, and (b) relative to any
Absolute Rate Bid Loan, a period of not less than 5 Business Days and
not more than 180 days as selected by the Company in the applicable
Competitive Bid Request; provided, however, that
(i) the Company shall not be permitted to
select Interest Periods for Committed Loans and Bid Loans to
be in effect at any one time which have expiration dates
occurring on more than ten different dates;
(ii) if such Interest Period would otherwise end
on a day which is not a Business Day, such Interest Period
shall end on the next following Business Day (unless, if such
Interest Period applies to Eurodollar Rate Loans, such next
following Business Day is the first Business Day of a calendar
month, in which case such Interest
16
<PAGE> 23
Period shall end on the Business Day next preceding such
numerically corresponding day); and
(iii) no Interest Period may end later than the
date set forth in clause (a) of the definition of "Commitment
Termination Date".
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to
any other Person (excluding commission, travel and similar
advances to officers and employees made in the ordinary course
of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such
Person in any other Person.
The amount of any Investment shall be the original principal or
capital amount thereof less all returns of principal or equity thereon
(and without adjustment by reason of the financial condition of such
other Person) and shall, if made by the transfer or exchange of
property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such
property.
"Issuer" means any affiliate, unit or agency of SunTrust Bank,
Atlanta (formerly known as Trust Company Bank), or any other Lender
which has agreed to issue one or more Letters of Credit at the request
of the Company and on notice to Agent (which shall notify the Lenders
from time to time of the identity of such other Issuer).
"Joinder Agreement" means a joinder agreement to be made by
each Person that becomes a Subsidiary pursuant to Section 8.2.5(a),
substantially in the form of Exhibit E.
"Lender Affiliate" means any Person that directly or indirectly
through one or more intermediaries controls, or is controlled by, or is
under common control with, a Lender or BofA, as the case may be. Any
Person that beneficially owns or holds (i) 51% or more of any class of
the voting stock of a Lender or of BofA, as the case may be, or (ii)
51% or more of the voting stock (or in the case of a Person that is not
a corporation, 51% or more of the equity interest) of which is
beneficially owned or held by a Lender, a Subsidiary of a Lender, BofA
or a Subsidiary of BofA shall be rebuttably presumed to be a Lender
Affiliate, unless such Lender or BofA, as the case may be, can prove
otherwise. The term "control" means the possession, directly or
indirectly, of the power to
17
<PAGE> 24
direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting stock, by contract or
otherwise.
"Lender Assignment Agreement" means a Lender Assignment
Agreement substantially in the form of Exhibit F.
"Lenders" is defined in the preamble.
"Letter of Credit" is defined in Section 4.1.
"Letter of Credit Application" means, with respect to any
Letter of Credit, the application described in Article IV.
"Letter of Credit Fee" means the fee described in Section
3.3.3.
"Letter of Credit Obligation" means, with respect to any
Letter of Credit, the sum of the undrawn face amount of such Letter of
Credit, plus the outstanding Reimbursement Obligations in respect
thereof and "Letter of Credit Obligations" means the sum of all such
obligations in respect of all Letters of Credit.
"Letter of Credit Outstandings" means, at any time, an amount
equal to the sum of
(a) the aggregate Stated Amount at such time of all
Letters of Credit then outstanding and undrawn (as such
aggregate Stated Amount shall be adjusted, from time to time,
as a result of drawings, the issuance of Letters of Credit, or
otherwise),
plus
(b) the then aggregate amount of all unpaid and
outstanding Reimbursement Obligations,
minus
(c) all amounts then held as cash collateral for
the amounts referred to in clauses (a) and (b) above in
accordance with Section 3.1(a)(i) or (ii).
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in property to
secure payment of a debt or performance of an obligation, or other
priority or preferential arrangement of any kind or nature whatsoever.
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"Loan" means an extension of credit by a Lender to the Company
under Article II, and may be a Committed Loan or a Bid Loan.
"Loan Document" means this Agreement, the Notes, the Guaranty,
each Joinder Agreement and each other agreement, document or
instrument delivered in connection with this Agreement and the Notes.
"Majority Lenders" means, (a) at any time prior to the
Commitment Termination Date, Lenders whose Percentages aggregate at
least 51%, and (b) otherwise, Lenders then holding at least 51% of the
then aggregate unpaid principal amount of the Loans.
"Minority Interests" means any shares of stock of any class of
a Subsidiary that are not owned by the Company and/or one or more of
its Subsidiaries.
"Monthly Payment Date" means the last day of each calendar
month, or if any such day is not a Business Day, the next succeeding
Business Day.
"Moody's" means Moody's Investors Service, Inc.
"Net Income Available for Fixed Charges" for any period means
the sum of (i) Consolidated Net Income during such period plus (to the
extent deducted in determining Consolidated Net Income), (ii) all
provisions for any Federal, state or other income taxes made by the
Company and its Subsidiaries during such period, (iii) depreciation
and amortization during such period and (iv) Fixed Charges during such
period.
"Notes" means the Committed Loan Notes and the Bid Loan Notes.
"Obligations" means all obligations (monetary or otherwise) of
the Company and each other Obligor arising under or in connection with
this Agreement, the Notes and each other Loan Document.
"Obligor" means the Company or any other Person (other than
the Agent, the Co-Agent or any Lender) obligated under, or otherwise a
party to, any Loan Document.
"Organizational Document" means, relative to any Obligor, its
certificate of incorporation, its by-laws and all shareholder
agreements, voting trusts and similar arrangements applicable to any of
its authorized shares of capital stock.
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"Participant" is defined in Section 11.11.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined
in section 3(2) of ERISA, which is subject to Title IV of ERISA (other
than a multiemployer plan as defined in section 4001(a)(3) of ERISA),
and to which the Company or any corporation, trade or business that
is, along with the Company, a member of a Controlled Group, may have
liability, including any liability by reason of having been a
substantial employer within the meaning of section 4063 of ERISA at
any time during the preceding five years, or by reason of being deemed
to be a contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set
forth opposite its signature hereto or set forth in the Lender
Assignment Agreement, as such percentage may be adjusted from time to
time pursuant to Lender Assignment Agreement(s) executed by such
Lender and its Assignee Lender(s) and delivered pursuant to Section
11.11.
"Person" means any natural person, corporation, limited
liability company, partnership, firm, association, trust, government,
governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Quarterly Payment Date" means the last day of each March,
June, September, and December or, if any such day is not a Business
Day, the next succeeding Business Day.
"Reference Rate" means, for any day, the higher of: (a) 0.50%
per annum above the latest Federal Funds Rate; and (b) the rate of
interest in effect for such day as publicly announced from time to
time by BofA in San Francisco, California, as its "reference rate."
(The "reference rate" is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA shall take
effect at the opening of business on the day specified in the public
announcement of such change.
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"Reference Rate Loan" means a Loan bearing interest at a
fluctuating rate determined by reference to the Reference Rate.
"Reimbursement Obligation" is defined in Section 4.5.
"Rentals" means and includes (without duplication) all fixed
rents (including as such all payments which the lessee is obligated to
make to the lessor on termination of the lease or surrender of the
property) payable or guaranteed by the Company or a Subsidiary, as
lessee or sublessee under a lease of real or personal property or as
guarantor of any such lease, but shall be exclusive of any amounts
required to be paid by the Company or a Subsidiary (whether or not
designated as rents or additional rents) on account of maintenance,
repairs, insurance, taxes and similar charges. Fixed rents under any
so-called, "percentage leases" shall be computed solely on the basis
of the minimum rents, if any, required to be paid by the lessee
regardless of sales volume or gross revenues.
"Significant Subsidiary" means a Subsidiary of the Company
which either accounted for at least 10% of the Company's consolidated
revenue in the most recent Fiscal Year or accounted for at least 10%
of the Company's consolidated assets as of the end of such Fiscal
Year.
"Standard and Poor's" means Standard & Poor's Ratings
Services, a Division of The McGraw-Hill Companies, Inc.
"Stated Amount" of each Letter of Credit means the "Stated
Amount" as defined therein.
"Subordinated Debt" means all unsecured Indebtedness of the
Company for money borrowed which is subordinated, subject to the
written approval of and upon terms satisfactory to the Majority
Lenders, in right of payment to the payment in full in cash of all
Obligations.
"Subsidiary" means, with respect to any Person, any
corporation of which more than 50% of the outstanding capital stock
having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency) is
at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or
more other Subsidiaries of such Person.
"Taxes" is defined in Section 5.6.
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"Type" is defined in the definition of "Committed Loan."
"Uniform Commercial Code" means the Uniform Commercial Code as
in effect from time to time in any applicable jurisdiction.
"United States" or "U.S." means the United States of America,
its fifty States and the District of Columbia.
"Welfare Plan" means a "welfare plan", as such term is defined
in section 3(1) of ERISA.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or
the context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, Competitive Bid
Request, Guaranty and Joinder Agreement.
SECTION 1.3. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Loan Document to any Article,
Section, Schedule or Exhibit are references to such Article or Section of this
Agreement or such other Loan Document, as the case may be, and, unless
otherwise specified, references in any Article, Section or definition to any
clause or subsection are references to such clause or subsection of such
Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder (including under Section 8.2.4) shall be made, and all
financial statements required to be delivered hereunder or thereunder shall be
prepared in accordance with GAAP.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the
conditions of this Agreement (including Article V), each Lender severally
agrees as follows:
SECTION 2.1.1. Commitment. From time to time on any Business Day
occurring prior to the Commitment Termination Date, each Lender will make
Committed Loans to the Company equal to such Lender's Percentage of the
aggregate amount of the Borrowing of Committed Loans requested by the Company
to be made on such day pursuant to
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the applicable Borrowing Request. On the terms and subject to the conditions
hereof, the Company may from time to time borrow, prepay and reborrow Committed
Loans. All "Loans" (as defined in the Existing Agreement) outstanding on the
Effective Date will be deemed to be outstanding Committed Loans hereunder on
such date.
SECTION 2.1.2. Commitment to Issue Letters of Credit. From time to
time on any Business Day, each Issuer will issue, and each Lender will
participate in, the Letters of Credit, in accordance with Article IV.
SECTION 2.1.3. Lenders Not Permitted or Required To Make Committed
Loans or Issue or Participate in Letters of Credit Under Certain Circumstances.
No Lender shall be permitted or required to
(a) make any Committed Loan if, after giving effect
thereto,
(i) the aggregate outstanding principal amount
of all Loans of all Lenders, together with all Letter of
Credit Outstandings, would exceed the lesser of the Commitment
Amount or the Borrowing Base, or
(ii) the aggregate outstanding principal amount
of all Committed Loans of such Lender, together with its
Percentage of all Letter of Credit Outstandings, would exceed
such Lender's Percentage of the lesser of the Commitment
Amount or the Borrowing Base; or
(b) issue (in the case of any Issuer) or participate in
(in the case of each Lender) any Letter of Credit if, after giving
effect thereto
(i) all Letter of Credit Outstandings together
with the aggregate outstanding principal amount of all Loans
of all Lenders would exceed the lesser of the Commitment
Amount or the Borrowing Base, or
(ii) such Lender's Percentage of all Letter of
Credit Outstandings together with the aggregate outstanding
principal amount of all Committed Loans of such Lender would
exceed such Lender's Percentage of the lesser of the
Commitment Amount or Borrowing Base, or
(iii) all Letter of Credit Outstandings would exceed
$30,000,000.
SECTION 2.2. Reduction of Commitment Amounts. The Company may,
from time to time on any Business Day, voluntarily reduce the amount of the
Commitment Amount; provided, however, that all such reductions shall require at
least five Business Days' prior notice
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to the Agent and be permanent, and any partial reduction of any Commitment
Amount shall be in a minimum amount of $500,000 and in an integral multiple of
$100,000.
SECTION 2.3. Committed Borrowing Procedure.
(a) The Company shall deliver to the Agent a Borrowing
Request prior to 12:00 noon (Atlanta, Georgia time) on the requested
date of the making of such Borrowing if it is to be a Borrowing for a
Reference Rate Loan, and at least three Business Days before the
requested date of the making of such Borrowing if it is to be a
Borrowing for a Eurodollar Rate Committed Loan (the first day of such
period being the date such Notice is received). Each Borrowing
Request shall be signed by an Authorized Officer of the Company
designated to give such notices by its Board of Directors or chief
financial officer and the Company shall notify the Agent in writing of
the names of such officers and shall provide the Agent with specimen
signatures of such officers. The Agent and the Lenders shall be
entitled to rely conclusively on such officers' authority to request a
Borrowing on behalf of the Company until the Agent receives from the
Company written notice to the contrary. The Agent and the Lenders
shall have no duty to verify the authenticity of the signatures
appearing on any Borrowing Request. Any Borrowing Request, when
given, shall be irrevocable. Any Borrowing Request received prior to
12:00 noon (Atlanta, Georgia time) on any Business Day shall be
treated as having been received on such Business Day. Notices
received subsequent to 12:00 noon (Atlanta, Georgia time) shall be
treated as having been received on the following Business Day.
(b) Each Borrowing Request shall specify:
(i) the requested Business Day of the Committed
Borrowing,
(ii) the amount of the Committed Borrowing
requested to be made, such amount to be in the minimum amount
of $100,000 for any Reference Rate Loan or $500,000 for any
Eurodollar Rate Committed Loan, or any larger integral
multiple of $100,000,
(iii) whether such Committed Borrowing shall be
made as a Reference Rate Loan or a Eurodollar Rate Committed
Loan, and
(iv) in the case of a Eurodollar Rate Committed
Loan, the duration of the Interest Period applicable thereto;
provided that, the Company may not select an Interest Period
in respect of the principal portion of
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any Committed Borrowing for a Eurodollar Rate Committed Loan
which extends beyond the Commitment Termination Date.
Upon receipt of any Borrowing Request hereunder, the Agent
shall notify each Lender of the content thereof, (A) in the
case of a same-day Borrowing for a Reference Rate Loan, by
1:00 p.m. (Atlanta, Georgia time) on the date that such
Borrowing Request is deemed to be received by the Agent
pursuant to Section 2.3(a) and (B) in the case of any other
Borrowing, by the Agent's close of business the date that such
Borrowing Request is deemed to be received by the Agent
pursuant to Section 2.3(a). Not later than 2:00 p.m.
(Atlanta, Georgia time) on the date of the relevant Borrowing,
each Lender shall pay its Percentage of such Borrowing in
federal funds or other funds immediately available in San
Francisco, California, to the Agent at its address specified
in or pursuant to Section 11.2.
SECTION 2.4. Continuation and Conversion Elections. By delivering
a Continuation/Conversion Notice to the Agent on or before 12:00 noon, Atlanta,
Georgia time, on a Business Day, the Company may from time to time irrevocably
elect, on not less than three nor more than five Business Days' notice that
all, or any portion in an aggregate minimum amount of $100,000 for any
Reference Rate Committed Loan or $500,000 for any Eurodollar Rate Committed
Loan, and an integral multiple of $100,000 of any Committed Loans be, converted
into Committed Loans of the other Type, and in the case of Eurodollar Rate
Committed Loans, continued as such (it being agreed that in the absence of
delivery of a Continuation/Conversion Notice with respect to any Eurodollar
Rate Committed Loan at least three Business Days before the last day of the
then current Interest Period with respect thereto, such Eurodollar Rate
Committed Loan shall, on such last day, automatically convert to a Reference
Rate Committed Loan); provided, however, that (a) each such conversion or
continuation shall be pro rated among the designated outstanding Committed
Loans of all Lenders, and (b) no portion of the outstanding principal amount of
any Committed Loans may be continued as, or be converted into, a Eurodollar
Rate Committed Loan when any Default has occurred and is continuing.
SECTION 2.5. Bid Borrowings. In addition to Committed Borrowings
pursuant to Section 2.1, each Lender severally agrees that the Company may, as
set forth in Section 2.6, from time to time request the Lenders prior to the
Commitment Termination Date to submit offers to make Bid Loans to the Company;
provided, however, that the Lenders may, but shall have no obligation to,
submit such offers and the Company may, but shall have no obligation to, accept
any such offers; and provided, further, that
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at no time shall (a) the outstanding aggregate principal amount of all Bid
Loans made by all Lenders, plus the outstanding aggregate principal amount of
all Committed Loans made by all Lenders and the aggregate of all Letter of
Credit Outstandings exceed the lesser of the Committed Amount or the Borrowing
Base; or (b) the outstanding aggregate principal amount of all Bid Loans made
by all Lenders exceed $45,000,000.
SECTION 2.6 Procedure for Bid Borrowings.
(a) When the Company wishes to request the Lenders to submit
offers to make Bid Loans hereunder, it shall transmit to each Lender
by telephone call followed promptly by facsimile transmission a notice
in substantially the form of Exhibit G (a "Competitive Bid Request")
so as to be received no later than 10:00 a.m. (Atlanta, Georgia time)
(x) three (3) Business Days prior to the date of a proposed Bid
Borrowing in the case of a Eurodollar Rate Auction, or (y) two
Business Days prior to the date of a proposed Bid Borrowing in the
case of an Absolute Rate Auction, specifying:
(i) the date of such Bid Borrowing, which shall be a
Business Day;
(ii) the aggregate amount of such Bid Borrowing,
which shall be a minimum amount of $500,000 or in multiples of
$100,000 in excess thereof;
(iii) whether the Competitive Bids requested are to
be for Eurodollar Rate Bid Loans or Absolute Rate Bid Loans or
both; and
(iv) the duration of the Interest Period applicable
thereto, subject to the provisions of the definition of
"Interest Period" herein.
Subject to Section 2.6(b), the Company may not request Competitive
Bids for more than three Interest Periods in a single Competitive Bid
Request.
(b) (i) Each Lender may at its discretion submit a
Competitive Bid containing an offer or offers to make Bid Loans in
response to any Invitation for Competitive Bids. Each Competitive Bid
must comply with the requirements of this Section 2.6(b) and must be
submitted to the Company by facsimile transmission at the Company's
office for notices set forth in or pursuant to Section 11.2 not later
than (1) 10:00 a.m. (Atlanta, Georgia time) two (2) Business Days
prior to the proposed date of Borrowing, in the case of a Eurodollar
Rate Auction or (2) 10:00 a.m. (Atlanta, Georgia time) on the proposed
date of Borrowing, in the case of an
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Absolute Rate Auction.
(ii) Each Competitive Bid shall be in substantially
the form of Exhibit H, specifying therein:
(A) the proposed date of Borrowing;
(B) the principal amount of each Bid Loan for which
such Competitive Bid is being made, which principal amount (x)
may be equal to, greater than or less than the Commitment of
the quoting Lender, (y) must be $500,000 or in multiples of
$100,000 in excess thereof, and (z) may not exceed the
principal amount of Bid Loans for which Competitive Bids were
requested;
(C) in case the Company elects a Eurodollar Rate
Auction, the margin above or below the Eurodollar Rate (the
"Eurodollar Rate Bid Margin") offered for each such Bid Loan,
expressed as a percentage (rounded to the nearest 1/16th of
1%) to be added to or subtracted from the applicable
Eurodollar Rate and the Interest Period applicable thereto;
(D) in case the Company elects an Absolute Rate
Auction, the rate of interest per annum (rounded upward to the
nearest 1/100th of 1%) (the "Absolute Rate") offered for each
such Bid Loan; and
(E) the identity of the quoting Lender.
A Competitive Bid may contain up to three separate offers by
the quoting Lender with respect to each Interest Period
specified in the related Competitive Bid Request.
(iii) Any Competitive Bid shall be disregarded if
it:
(A) is not substantially in conformity with
Exhibit H or does not specify all of the information
required by subsection (b)(ii);
(B) contains qualifying, conditional or
similar language;
(C) proposes terms other than or in addition
to those set forth in the applicable Competitive Bid
Request; or
(D) arrives after the time set forth in
subsection (b)(i).
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(iv) Subject only to the provisions of Sections
5.1, 5.2 and 6.2, any Competitive Bid shall be irrevocable
except with the written consent of the Agent given on the
written instructions of the Company.
(c) Not later than 11:00 a.m. (Atlanta, Georgia time) two (2)
Business Days prior to the proposed date of Borrowing, in the case of a
Eurodollar Rate Auction, or 11:00 a.m. (Atlanta, Georgia time) on the
proposed date of Borrowing, in the case of an Absolute Rate Auction,
the Company shall notify each Lender that has submitted a Competitive
Bid pursuant to subsection 2.6(b) of its acceptance or non-acceptance
of the Competitive Bids so submitted to it. The Company shall be under
no obligation to accept any Competitive Bid and may choose to reject
all Competitive Bids. In the case of acceptance, such notice shall
specify the aggregate principal amount of Competitive Bids for each
Interest Period that is accepted and the account(s) to which the
proceeds of the applicable Bid Loans are to be transferred. The
Company may accept any Competitive Bid in whole or in part; provided
that:
(i) the aggregate principal amount of each Bid
Borrowing may not exceed the applicable amount set forth in
the related Competitive Bid Request;
(ii) the principal amount of each Bid Borrowing
must be $500,000 or in any multiple of $100,000 in excess
thereof;
(iii) acceptance of offers may only be made on the
basis of ascending Eurodollar Rate Bid Margins or Absolute
Rates within each Interest Period, as the case may be;
(iv) the Company may not accept any offer that
is described in subsection 2.6(b)(iii) or that otherwise fails
to comply with the requirements of this Agreement; and
(v) if offers are made by two or more Lenders
with the same Eurodollar Rate Bid Margins or Absolute Rates,
as the case may be, for a greater aggregate principal amount
than the amount in respect of which such offers are accepted
for the related Interest Period, the principal amount of Bid
Loans in respect of which such offers are accepted shall be
allocated by the Company among such Lenders as nearly as
possible (in such multiples, not less than $100,000, as the
Company may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determination by the
Company of the amounts of Bid Loans shall be conclusive
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in the absence of manifest error.
(d) (i) The Company will promptly notify the Agent of
each Competitive Bid that has been accepted and of the amount and
Interest Period of the Bid Loan or Bid Loans to be made by each Lender
whose Competitive Bid has been accepted on the date of the Bid
Borrowing.
(ii) Each Lender whose Competitive Bid has been
accepted shall make the amounts of such Bid Loans available to
the Company in accordance with the instructions of the Company
contained in its acceptance of such Competitive Bid by 2:00
p.m. (Atlanta, Georgia time) on such date of Bid Borrowing, in
immediately available funds.
(iii) Promptly following each Bid Borrowing, the
Company shall notify each Lender of the ranges of bids
submitted and the highest and lowest Bids accepted for each
Interest Period requested by the Company and the aggregate
amount borrowed pursuant to such Bid Borrowing.
(e) If, on or prior to the proposed date of Borrowing, the
Commitments have not been terminated and if, on such proposed date of
Borrowing all applicable conditions to funding referenced in Sections
5.1, 5.2 and 6.2 are satisfied, the Lender or Lenders whose Competitive
Bids the Company has accepted will fund each Bid Loan so accepted.
Nothing in this Section 2.6 shall be construed as a right of first
offer in favor of the Lenders or to otherwise limit the ability of the
Company to request and accept credit facilities from any Person
(including any of the Lenders), provided that no Default or Event of
Default would otherwise arise or exist as a result of the Company's
executing, delivering or performing under such credit facilities.
(f) Each Lender may, if it so elects, cause any Bid Loan
to be made by a Lender Affiliate thereof. Such Lender will be deemed
to be acting as agent for any of its Lender Affiliates making such Bid
Loans.
(g) Notwithstanding anything to the contrary contained
herein, each Lender may, if it so elects, create a bankers' acceptance
for the account of the Company in lieu of making an Absolute Rate Bid
Loan. If any Lender makes such an election with respect to any such
bankers' acceptance, such bankers' acceptance shall be deemed to be an
Absolute Rate Bid Loan (a "Deemed Bid Loan") for all purposes of this
Agreement and the other Loan Documents; provided, however, that (i)
the obligations of the Company with respect to such bankers'
acceptance may be subject to an acceptance financing agreement
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mutually agreed upon by the applicable Lender and the Company; (ii)
the Absolute Rate with respect to any such Deemed Bid Loan shall be an
"all-in" rate quoted by the applicable Lender with respect to the
relevant bankers' acceptance; (iii) the principal amount of such
Deemed Bid Loan shall be deemed to be the discounted amount (i.e., the
amount actually funded by the applicable Lender) of such bankers'
acceptance; and (iv) the interest on such Deemed Bid Loan shall be
deemed to be an amount equal to (A) the face amount of such bankers'
acceptance less (B) the discounted amount of such bankers' acceptance.
SECTION 2.7. Funding. Each Lender may, if it so elects, fulfill
its obligation to make, continue or convert Eurodollar Rate Loans hereunder by
causing one of its foreign branches or Lender Affiliates (or an international
banking facility created by such Lender) to make or maintain such Eurodollar
Rate Loan; provided, however, that such Eurodollar Rate Loan shall nonetheless
be deemed to have been made and to be held by such Lender, and the obligation of
the Company to repay such Eurodollar Rate Loan shall nevertheless be to such
Lender for the account of such foreign branch, Lender Affiliate or international
banking facility. In addition, the Company hereby consents and agrees that, for
purposes of any determination to be made for purposes of Section 5.1, 5.2, 5.3
or 5.4, it shall be conclusively assumed that each Lender elected to fund all
Eurodollar Rate Loans by purchasing, as the case may be, Dollar certificates of
deposit in the U.S. or Dollar deposits in its Eurodollar Office's interbank
eurodollar market.
SECTION 2.8. Notes. (a) Each Lender's Committed Loans shall be
evidenced by a Committed Loan Note payable to the order of such Lender in a
maximum principal amount equal to such Lender's Percentage of the original
applicable Commitment Amount. The Company hereby irrevocably authorizes each
Lender to make (or cause to be made) appropriate notations on the grid attached
to such Lender's Committed Loan Note (or on any continuation of such grid),
which notations, if made, shall evidence, inter alia, the date of, the
outstanding principal of, and the interest rate and Interest Period applicable
to the Committed Loans evidenced thereby. Such notations shall be conclusive
and binding on the Company absent manifest error; provided, however, that
neither the failure of any Lender to make any such notations nor any error in
any such notations shall limit or otherwise affect any Obligations of the
Company or any other Obligor.
(b) Each Lender's Bid Loans shall be evidenced by a Bid Loan
Note payable to the order of such Lender in a maximum principal amount
equal to $45,000,000. The Company hereby irrevocably authorizes each
Lender to make (or cause to be made) appropriate notations on the grid
attached to such Lender's Bid Loan Note (or on any continuation of
such grid),
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which notations, if made, shall evidence, inter alia, the date of, the
outstanding principal of, and the interest rate and Interest Period
applicable to the Bid Loans evidenced thereby. Such notations shall
be conclusive and binding on the Company absent manifest error;
provided, however, that neither the failure of any Lender to make any
such notations nor any error in any such notations shall limit or
otherwise affect any Obligations of the Company or any other Obligor.
SECTION 2.9. Extension of Commitment Termination Date. At least
30 but not more than 60 days before September 30, 1997 and each anniversary
thereof, the Company may, by delivery of a written request to the Agent,
request that the Lenders extend the Commitment Termination Date for one year.
Upon receipt of such notification from the Company, the Lenders may, in their
sole discretion, agree to extend for one year the Commitment Termination Date.
No such extension shall be effective without the consent of all the Lenders,
and nothing in this Section shall commit any Lender to agree to any extension
of the Commitment Termination Date, or limit the complete discretion of the
Lenders in responding to any such extension request. Within 30 days of its
receipt of any extension request from the Company, each Lender will notify the
Agent as to its decision to extend the Commitment Termination Date and the
Agent shall then notify the Company as to such decision. If any Lender shall
not so notify the Agent within the time period specified above, such Lender
shall be deemed not to have consented to such request.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. (a) The Company shall
repay in full the unpaid principal amount of each Committed Loan upon the
Commitment Termination Date therefor. Prior thereto, the Company
(i) may, from time to time on any Business Day,
make a voluntary prepayment, in whole or in part, of the
outstanding principal amount of any Committed Loans; provided,
however, that
(A) any such prepayment shall be made
pro rata among Committed Loans of the same Type and,
if applicable, having the same Interest Period of
all Lenders;
(B) all such voluntary prepayments shall
require at least three but no more than five
Business Days' prior written notice to the Agent;
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and
(C) all such voluntary partial
prepayments shall be in an aggregate minimum amount
of $100,000 with respect to Reference Rate Loans or
$500,000 with respect to Eurodollar Rate Committed
Loans and an integral multiple of $100,000;
(ii) shall, on each date when any reduction in
the Commitment Amount shall become effective, make a mandatory
prepayment (which shall be applied (or held for application,
as the case may be) by the Lenders first to the payment of the
aggregate unpaid principal amount of those Committed Loans
then outstanding, and then to the payment of the then
outstanding Letter of Credit Outstandings equal to the excess,
if any, of the aggregate, outstanding principal amount of all
Loans and Letter of Credit Outstandings over the Commitment
Amount as so reduced, with any such repayment of its Letter of
Credit Outstanding to be either applied to such Letter of
Credit Outstanding or held as cash collateral in a special
account for such purpose maintained with, and under the sole
dominion and control of, the Agent on behalf of the Lenders;
(iii) shall, if at any time the sum of the
outstanding principal amount of all Loans on such date plus
the Letter of Credit Outstandings on such date, exceeds the
Borrowing Base, make a mandatory prepayment within five
Business Days after becoming aware of said excess and if such
excess shall be continuing (which shall be applied (or held
for application, as the case may be) by the Lenders first to
the payment of the aggregate unpaid principal amount of those
Committed Loans then outstanding, and then to the payment of
the then outstanding Letter of Credit Outstandings) equal to
the excess, if any, of the aggregate, outstanding principal
amount of all Loans and Letter of Credit Outstandings over the
Borrowing Base, with any such repayment of its Letter of
Credit Outstanding to be either applied to such Letter of
Credit Outstanding or held as cash collateral in a special
account for such purpose maintained with, and under the sole
dominion and control of, the Agent on behalf of the Lenders;
and
(iv) shall, immediately upon any acceleration of
the Commitment Termination Date of any Loans pursuant to
Section 9.2 or Section 9.3, repay all Loans, unless, pursuant
to Section 9.3, only a portion of all Loans is so accelerated.
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(b) The Company shall repay each Bid Loan on the last day
of the Interest Period with respect thereto. Prior thereto, the
Company may, from time to time, make a voluntary prepayment, in whole
or in part, of the outstanding principal amount of any Bid Loans;
provided, however, that all such voluntary prepayments shall (i)
require at least three but no more than five Business Days' prior
written notice to the applicable Lender and the Agent and (ii) be in
an aggregate minimum amount of $500,000 and integral multiples of
$100,000 in excess thereof.
(c) Each prepayment of any Loans made pursuant to this
Section shall be without premium or penalty, except as may be required
by Section 5.4. No voluntary prepayment of principal of any Loans
shall cause a reduction in the Commitment Amount.
SECTION 3.2. Interest Provisions. Interest on the outstanding
principal amount of Loans shall accrue and be payable in accordance with this
Section 3.2.
SECTION 3.2.1. Rates. (a) Pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice, the Company may elect that
Committed Loans comprising a Committed Borrowing accrue interest at a rate per
annum:
(i) on that portion maintained from time to time
as a Reference Rate Loan, equal to the sum of the Reference
Rate from time to time in effect plus the Applicable Margin;
(ii) on that portion maintained as a Eurodollar
Rate Committed Loan, during each Interest Period applicable
thereto, equal to the sum of the Eurodollar Rate for such
Interest Period plus the Applicable Margin;
All Eurodollar Rate Committed Loans shall bear interest from and
including the first day of the applicable Interest Period to (but not
including) the last day of such Interest Period at the interest rate
determined as applicable to such Eurodollar Rate Loan.
(b) Each Bid Loan shall bear interest on the outstanding
principal amount thereof from the relevant borrowing date at a rate
per annum equal to the Eurodollar Rate plus (or minus) the Eurodollar
Rate Bid Margin, or at the Absolute Rate, as the case may be.
SECTION 3.2.2. Post-Maturity Rates. After the date any principal
amount of any Loan is due and payable (whether on the Commitment Termination
Date, upon acceleration or otherwise), or after any other monetary Obligation
of the Company shall have
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become due and payable, the Company shall pay, but only to the extent permitted
by law, interest (after as well as before judgment) on such amounts at a rate
per annum equal to the Reference Rate plus a margin of 2.0%.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall
be payable, without duplication:
(a) on the Commitment Termination Date;
(b) on the date of any optional or required payment or
prepayment, in whole or in part, of principal outstanding on such
Loan;
(c) with respect to Reference Rate Loans, on each Monthly
Payment Date occurring after the Effective Date;
(d) with respect to Eurodollar Rate Committed Loans, on
the last day of each applicable Interest Period (and, if such Interest
Period shall exceed three months, on the day that is three months
after the commencement of such Interest Period);
(e) with respect to any Reference Rate Loans converted
into Eurodollar Rate Committed Loans on a day when interest would not
otherwise have been payable pursuant to clause (c), on the date of
such conversion;
(f) with respect to each Bid Loan, on the last day of the
Interest Period therefor and such intervening dates prior to such last
day as may be specified by the Company and agreed to by the applicable
Lender in the applicable Competitive Bid; and
(g) on that portion of any Loans the Commitment
Termination Date of which is accelerated pursuant to Section 9.2 or
Section 9.3, immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Commitment Termination Date, upon acceleration or
otherwise) shall be payable upon demand.
SECTION 3.3. Fees. The Company agrees to pay the fees set forth in
this Section 3.3.
SECTION 3.3.1. Facility Fee. The Company agrees to pay to the Agent
for the account of each Lender, for the period (including any portion thereof
when any of its Commitments are suspended by reason of the Company's inability
to satisfy any condition of Article VI) commencing on the Effective Date and
continuing through the final Commitment Termination Date, a facility fee (the
"Facility Fee") at
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the rate equal to the Applicable Margin per annum on such Lender's Percentage
of the Commitment Amount, without regard to usage of the Commitments. The
Facility Fee shall be payable by the Company in arrears on each Quarterly
Payment Date, commencing with the first such day following the Effective Date
and on each Commitment Termination Date. In addition, on the first Quarterly
Payment Date to occur after the Effective Date, the Company shall pay to the
Agent for the account of each Lender all commitment fees accrued and unpaid
under the Existing Agreement as of the Effective Date (calculated for the
period from and including the last Quarterly Payment Date to but excluding the
Effective Date).
SECTION 3.3.2. Agent's Fee. The Company agrees to pay to the Agent
for its own account, a non-refundable fee in an amount and at such times as
agreed to by the Agent and the Company.
SECTION 3.3.3. Letter of Credit Face Amount Fee. After the date of
issuance of any Letter of Credit, the Company shall pay to the Co-Agent for the
account of the Lenders, quarterly in arrears, payable on each Quarterly Payment
Date thereafter, commencing October 31, 1994, so long as any Letter of Credit
shall remain outstanding, a non-refundable letter of credit fee (the "Letter of
Credit Fee") on each Letter of Credit, computed at the Applicable Margin for
the Letter of Credit, calculated based on the face amount and the number of
days in the term of such Letter of Credit falling within the immediately
preceding Fiscal Quarter, to be distributed to the Lenders pro rata, based on
their respective Percentages.
SECTION 3.3.4. Other Letter of Credit Fees.
(a) Administrative Fees. The Company shall pay to the
Issuer upon the issuance, transfer or amendment of each Letter of
Credit the Issuer's usual charge for issuing similar letters of
credit.
(b) Drawing Fees. The Company shall pay to the Issuer,
upon each Drawing by a beneficiary under any Letter of Credit, the sum
of $250 or such higher amount as, at the time of such drawing, shall
be the Issuer's usual charge for drawings on similar letters of
credit.
SECTION 3.3.5. Amendment Fee. The Company shall pay to the Agent
for the account of the Lenders a fee in the amount of $20,000 on the Effective
Date, to be distributed to the Lenders pro rata, based on their respective
Percentages.
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ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1. Issuance. The Issuer, upon the terms and subject to
the conditions, and in reliance upon the representations and warranties set
forth in this Agreement, shall issue from time to time one or more Letters of
Credit for the account of the Company in an amount, subject to Section 2.1, as
the Company shall request in a Letter of Credit Application. Each Lender shall
participate in each such Letter of Credit in its Percentage. The Issuer shall
issue Letters of Credit upon receipt, at least two Business Days prior to the
requested Date of Issuance of (i) a properly completed and duly executed Letter
of Credit Application and (ii) such other documents and materials as may be
required thereunder. The Letter of Credit Application shall contain a
certificate, executed by the duly authorized officers of the Company, as to the
matters set forth in clauses (b)(i) and (b)(ii) of Section 2.3 (the word
"Borrowing" replaced by "Letter of Credit") and naming the beneficiary of such
Letter of Credit and the purpose therefor. The Issuer will promptly (i) upon
receipt thereof forward to the Lenders and the Agent copies of each Letter of
Credit Application and (ii) upon issuance thereof, forward to the Lenders and
the Agent copies of each Letter of Credit. The Issuer shall confirm with the
Agent that the issuance of the proposed Letter of Credit would not cause the
Company to be in violation of the provisions of Section 2.l.3(b). Prior to
issuing any Letter of Credit, the Issuer shall confirm with the Agent that,
after issuing such Letter of Credit, the conditions specified in Section 2.3
and Article VI have been met. All letters of credit issued by the Issuer
pursuant to the Existing Agreement and outstanding on the Effective Date shall
be deemed to have been issued pursuant to this Agreement.
SECTION 4.2. Terms. Each Letter of Credit shall (i) have an
expiry date not later than the earlier of one year after the Date of Issuance
thereof or the Commitment Termination Date, (ii) be issued for an ordinary
course business purpose, (iii) be in the face amount of $50,000 or any larger
integral multiple of $100, and (iv) shall have such additional terms and
provisions as the Agent and Issuer shall deem appropriate in connection with
the particular circumstances under which such Letter of Credit is being issued;
provided, however, in the event the Company shall request a Letter of Credit
with an expiry date later than the Commitment Termination Date, the Issuer
shall promptly notify the Agent and the Lender of the proposed expiry date,
face amount and purpose thereof and the Issuer shall issue such Letter of
Credit upon receipt of written approval of the Agent and the Lenders; provided,
further, however, in no event shall the issuance of any Letter of Credit
described in the preceding provision be deemed to constitute an extension of
the Commitment Termination Date for any purpose of this Agreement.
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Letters of Credit will not be issued to provide credit support or liquidity
support for any security or borrowing.
SECTION 4.3. Reimbursement of Drawings under Letters of Credit.
The Company shall pay to the Agent for the account of the Lenders at the place
and in the manner specified in Section 5.6, the amount to be paid in respect of
each Drawing under, or refunding of, a Letter of Credit on the date of such
Drawing or refunding. Each Drawing under, in whole or in part, a Letter of
Credit shall bear interest at the rate applicable to Reference Rate Loans from
and including the due date thereof to and including the second Business Day
following such due date (counting the due date as the first day); and,
thereafter shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to the Reference Rate plus 2.0% per annum; provided, that
the Company, by compliance with Section 6.2, may direct that any Drawing be
paid, in whole or in part, from the proceeds of a Borrowing.
SECTION 4.4. General Provisions as to Letters of Credit.
(a) Limitation on Issuer's Duty to Issue. The Issuer
shall have no obligation to issue any Letter of Credit if the
aggregate undrawn face amount of Letters of Credit outstanding, after
giving effect to the issuance of such Letter of Credit, would exceed
any limit imposed on the Issuer by, or if the issuance of such Letter
of Credit would otherwise cause a violation of, law to which the
Issuer is subject.
(b) Acceleration. Each Letter of Credit shall provide by
its terms that, upon the exercise by the Issuer or the Lenders of any
of their rights pursuant to Section 9.3, the full face amount of such
Letter of Credit shall be deemed to be drawn upon notice from the
Issuer to the beneficiary thereof.
(c) Participations by Lenders. Simultaneously with the
issuance by the Issuer of any Letter of Credit, each Lender shall be
deemed to have irrevocably and unconditionally assumed and received
from the Issuer, without recourse or warranty, an undivided interest
and participation in such Letter of Credit (including without
limitation, all obligations of the Company with respect thereto) and
any security therefor or guaranty pertaining thereto, in the
proportion of such Lender's Percentage.
(d) Funding of Letter of Credit Drawings. Upon receipt
of a Draft, the Issuer shall, as soon as practicable thereafter,
notify the Agent and the Company of the day of the proposed Drawing in
respect thereof, the amount of such Drawing and each Lender's
Percentage of such Drawing. Not
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later than 2:00 p.m. (Atlanta, Georgia time) on the date of any
Drawing under a Letter of Credit, each Lender shall pay its
proportionate share of such Drawing, less its proportionate share of
any amount that the Agent has notified such Lender that it or the
Issuer has received from the Company or any Guarantor in respect of
such Drawing, in federal funds or other funds immediately available in
San Francisco, California, to the Agent at its address specified in or
pursuant to Section 11.2. The Agent will provide each Lender with
prompt notice of its receipt of any such payment. Upon receipt of the
amounts specified in the second preceding sentence, the Agent shall
immediately remit such account to the Issuer. Upon receipt of the
such funds from the Agent, the Issuer will make the amount of such
Drawing available to the beneficiary of such Letter of Credit in
accordance with the terms of such Letter of Credit.
(e) Company's Obligations Absolute. The obligation of
the Company to reimburse the Issuer and the Lenders for each Drawing
under a Letter of Credit shall be irrevocable, shall not be subject to
any qualification or exception whatsoever and shall be binding in
accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of
this Agreement;
(ii) the existence of any claim, set-off,
defense or right which the Company or any Guarantor may have
at any time against a beneficiary of any Letter of Credit or
any transferee of any Letter of Credit (or any Person for whom
any such transferee may be acting), the Agent, the Issuer, any
Lender, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions;
(iii) any Draft, certificate or any other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of this
Agreement;
(v) any failure of the Issuer to provide notice
to the Company of any Drawing under any Letter of Credit; or
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(vi) the occurrence or continuance of any
Default.
(f) Lender Obligations Absolute. The obligation of each
Lender to pay to the Issuer its proportionate share of each Drawing
under a Letter of Credit shall be irrevocable, shall not be subject to
any qualification or exception whatsoever and shall be binding in
accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of
this Agreement;
(ii) the existence of any claim, set-off,
defense or right which the Company or any Guarantor or any
Lender may have at any time against a beneficiary of any
Letter of Credit or any transferee of any Letter of Credit (or
any Person for whom any such transferee may be acting), the
Agent, the Issuer, any Lender, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated
transactions;
(iii) any Draft, certificate or any other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of this
Agreement;
(v) any failure of the Issuer to provide notice
to the Lenders of any Drawing under any Letter of Credit; or
(vi) the occurrence or continuance of any Default.
(g) Reimbursement Default by Lenders. If any Lender
shall fail to pay the amount of its participation in a Drawing on a
date such amount is due in accordance with subsection (d) above, the
Issuer shall be deemed to have advanced funds on behalf of such
Lender. Each such advance shall be secured by such Lender's
participation interest, the Issuer shall be subrogated to such
Lender's rights hereunder in respect thereof, and such advance may be
repaid by application by the Issuer of any payment which such Lender
is otherwise entitled to receive under this Agreement. Any amount not
paid by such Lender to the Issuer hereunder shall bear interest for
each day from the date such payment was due until such payment shall
be made in full at a rate per annum equal to the highest
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rate then payable by the Company on any obligation then outstanding
under this Agreement.
(h) Limitation of Liability With Respect To Letters of
Credit. (i) As among the Company, the Guarantors, the Agent, the
Issuer and the Lenders, the Company and the Guarantors assume all
risks of the acts and omissions of, or misuse of each Letter of Credit
by the beneficiaries of such Letter of Credit. Without limiting the
foregoing, the Agent, the Issuer and the Lenders shall not be
responsible (except to the extent that any of the following result
from the bad faith or willful misconduct of the Issuer):
(A) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any Draft, demand,
application or other documents submitted by any party in
connection with any Letter of Credit or the application for
the issuance of any Letter of Credit, even if such document
should in fact prove to be in any and all respects invalid,
insufficient, inaccurate, fraudulent or forged;
(B) for the validity, genuineness or sufficiency
of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part
which may prove to be invalid or ineffective for any reason;
(C) for failure of the beneficiary of a Letter of
Credit to comply fully with the conditions required in order
to draw upon such Letter of Credit;
(D) for errors, omissions, interruptions or
delays in transmission or delivery of any messages by mail,
cable, telegraph, telex or otherwise, whether or not they be
in cipher;
(E) for errors in interpretations of technical
terms;
(F) for any loss or delay in the transmission or
otherwise of any document requiring to make a Drawing under
any Letter of Credit or with respect to the proceeds thereof;
(G) for the misapplication by the beneficiary of
a Letter of Credit or of the proceeds of any Drawing under
such Letter of Credit; or
(H) for any consequences arising from causes
beyond
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the control of the Agent, the Issuer and the Lenders,
including, without limitation, any act or omission, rightfully
or wrongfully of any present or future governmental authority.
None of the above circumstances shall affect, impair or prevent
the vesting of any of the Issuer's rights or powers under this
Section.
(ii) In furtherance and extension, and not in limitation,
of the specified provisions set forth above, any action taken or
omitted by the Issuer under or any connection with any Letter of
Credit or any related documents, if taken or omitted in good faith,
shall not expose the Issuer, the Agent or the Lenders to any liability
to the Company or the Guarantors or relieve the Company or the
Guarantors of any of their obligations hereunder.
SECTION 4.5. Indemnification.
The Company hereby agrees to protect, indemnify, pay and save the
Agent, the Issuer and each Lender harmless from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) arising from the claims of third parties against
the Agent, the Issuer or a Lender as a consequence, direct or indirect, of (A)
the issuance of any Letter of Credit other than as a result of the Issuer's
gross negligence or willful misconduct, as determined by a court of competent
jurisdiction, or (B) the failure of the Issuer to honor a Drawing under such
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future, de jure or de facto, government or
governmental authority.
SECTION 4.6. Payments on Demand. All amounts payable by the
Company under Sections 3.3.4 and 4.5 shall constitute Obligations which shall
be payable two Business Days after demand. In such demand, the demanding party
shall set forth the amounts payable hereunder in reasonable detail, as well as
the method of determining such amounts and the date such payment is due. From
the date payment is due and until so paid, all such amounts shall bear interest
payable on demand at the Reference Rate, to the extent owed to (or previously
paid by) the Agent or any Lender, plus 2% per annum.
ARTICLE V
CERTAIN EURODOLLAR RATE AND OTHER PROVISIONS
SECTION 5.1. Eurodollar Rate Lending Unlawful. If any Lender
shall determine (which determination shall, upon notice thereof to the Company
and the Lenders, be conclusive and binding on the Company) that the
introduction of or any change in or in the
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interpretation of any law makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for such Lender to make,
continue or maintain any Loan as, or to convert any Loan into, a Eurodollar
Rate Loan, the obligations of all Lenders to make, continue, maintain or
convert into any such Loans (including any Eurodollar Rate Bid Loan as to which
the Company has accepted a Competitive Bid, but as to which the borrowing date
has not yet arrived) shall, upon such determination, forthwith be suspended
until such Lender shall notify the Agent that the circumstances causing such
suspension no longer exist, and all Eurodollar Rate Committed Loans of such
Lender shall automatically convert into Reference Rate Loans at the end of the
then current Interest Periods with respect thereto or sooner, if required by
such law or assertion.
SECTION 5.2. Inability to Determine Rates. If the Agent
determines that for any reason adequate and reasonable means do not exist for
determining the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Rate Loan, or the Majority Lenders determine that the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan does not adequately and fairly reflect the cost to such
Lenders of funding such Loan (and so notify the Agent), then, upon notice from
the Agent to the Company and all the Lenders, the obligations of all Lenders
under Article II to make or continue any Loans as, or to convert any Loans
into, Eurodollar Rate Loans shall forthwith be suspended until the Agent shall
notify the Company and the Lenders that the circumstances causing such
suspension no longer exist.
SECTION 5.3. Increased Eurodollar Rate Loan Costs, etc. The
Company agrees to reimburse each Lender for any increase in the cost to such
Lender of, or any reduction in the amount of any sum receivable by such Lender
in respect of, making, continuing or maintaining (or of its obligation to make,
continue or maintain) any Loans as, or of converting (or of its obligation to
convert) any Loans into, Eurodollar Rate Loans. Such Lender shall promptly
notify the Agent and the Company in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons therefor and the
additional amount required fully to compensate such Lender for such increased
cost or reduced amount. Such additional amounts shall be payable by the
Company directly to such Lender within five days of its receipt of such notice,
and such notice shall, in the absence of manifest error, be conclusive and
binding on the Company. The Company shall not be obligated to reimburse any
Lender under this Section unless the Company shall have received notice of such
costs within 30 days after the later of (i) incurrence of such costs or (ii)
the retroactive application of any law, rule or regulation causing such
incurrence.
SECTION 5.4. Funding Losses. In the event any Lender shall
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incur any loss or expense (including any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to make, continue or maintain any portion of the principal amount of any
Loan as, or to convert any portion of the principal amount of any Loan into, a
Eurodollar Rate Loan but not including any loss of profit) as a result of
(a) any conversion or repayment or prepayment of the
principal amount of any Eurodollar Rate Committed Loan on a date other
than the scheduled last day of the Interest Period applicable thereto,
whether pursuant to Section 3.1 or otherwise;
(b) any Committed Loan not being made as a Eurodollar Rate
Loan in accordance with the Borrowing Request therefor; or
(c) any Committed Loan not being continued as, or
converted into, a Eurodollar Rate Committed Loan in accordance with
the Continuation/Conversion Notice therefor; or
(d) any payment of a Bid Loan on a day that is not the
last day of the Interest Period applicable thereto,
then, upon the written notice of such Lender to the Company (with a copy to the
Agent), the Company shall, within five days of its receipt thereof, pay
directly to such Lender such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or expense. Such written
notice (which shall include calculations in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Company.
SECTION 5.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, or reinterpretation of,
any law or regulation, directive, guideline, decision or request (whether or
not having the force of law) of any court, central bank, regulator or other
governmental authority after the date hereof affects or would affect the amount
of capital required or expected to be maintained by any Lender or any Person
controlling such Lender, and such Lender determines (in its sole and absolute
discretion) that the rate of return on its or such controlling Person's capital
as a consequence of its Commitments, issuance of or participation in Letters of
Credit or the Loans made by such Lender is reduced to a level below that which
such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon notice from
time to time by such Lender to the Company, the Company shall immediately pay
directly to such Lender additional amounts sufficient to compensate such Lender
or such controlling Person for such reduction in rate of return reasonably
allocable to the Loans or the Commitments. A statement of such Lender as to
any such
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additional amount or amounts (including calculations thereof in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the Company. In determining such amount, such Lender may use any method of
averaging and attribution that it (in its sole and absolute discretion) shall
deem applicable. The Company shall not be obligated to reimburse any Lender
under this Section unless the Company shall have received notice of such costs
within 30 days after the later of (i) incurrence of such costs or (ii) the
retroactive application for any law, rule or regulation causing such
incurrence.
SECTION 5.6. Payments, Computations, etc. Unless otherwise
expressly provided, all payments by the Company pursuant to this Agreement, the
Notes or any other Loan Document shall be made by the Company to the Agent for
the pro rata account of the Lenders entitled to receive such payment; provided,
however, that all payments in respect of Bid Loans shall be made directly to
the applicable Lender. All such payments required to be made to the Agent or
any Lender shall be made, without setoff, deduction or counterclaim, not later
than 12:00 noon, Atlanta, Georgia time, on the date due, in same day or
immediately available funds, to such account as the Agent or such Lender, as
the case may be, shall specify from time to time by notice to the Company.
Funds received after that time shall be deemed to have been received by the
Agent or such Lender, as the case may be, on the next succeeding Business Day.
The Agent shall promptly remit in same day funds to each Lender its share, if
any, of such payments received by the Agent for the account of such Lender.
All interest and fees shall be computed on the basis of the actual number of
days (including the first day but excluding the last day) occurring during the
period for which such interest or fee is payable over a year comprised of 360
days. Whenever any payment to be made shall otherwise be due on a day which is
not a Business Day, such payment shall (except as otherwise required by clause
(iii) of proviso to the definition of the term "Interest Period" with respect
to Eurodollar Rate Loans) be made on the next succeeding Business Day and such
extension of time shall be included in computing interest and fees, if any, in
connection with such payment.
SECTION 5.7. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan (other than pursuant to the terms
of Sections 5.3, and 5.5) or Letter of Credit in excess of its pro rata share
of payments then or therewith obtained by all Lenders, such Lender shall
purchase from the other Lenders such participations in Loans made by them
and/or Letters of Credit as shall be necessary to cause such purchasing Lender
to share the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Lender, the purchase
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shall be rescinded and each Lender which has sold a participation to the
purchasing Lender shall repay to the purchasing Lender the purchase price to
the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of
(a) the amount of such selling Lender's required
repayment to the purchasing Lender
to
(b) the total amount so recovered from the purchasing
Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Company agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section may,
to the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 5.8) with respect to such participation as fully
as if such Lender were the direct creditor of the Company in the amount of such
participation. If under any applicable bankruptcy, insolvency or other similar
law, any Lender receives a secured claim in lieu of a setoff to which this
Section applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the rights
of the Lenders entitled under this Section to share in the benefits of any
recovery on such secured claim. Any Lender having outstanding both Committed
Loans and Bid Loans at any time a right of set-off is exercised by such Lender
shall apply the proceeds of such set-off first to such Lender's Committed
Loans, until its Committed Loans are reduced to zero, and thereafter to its Bid
Loans.
SECTION 5.8. Setoff. Each Lender shall, upon the occurrence of
any Default described in clause (a), (b), (c) or (d) of Section 9.1.9 with
respect to the Company or any Significant Subsidiary or, with the consent of
the Majority Lenders, upon the occurrence of any other Event of Default, have
the right to appropriate and apply to the payment of the Obligations owing to
it (whether or not then due), and (as security for such Obligations) the
Company hereby grants to each Lender a continuing security interest in, any and
all balances, credits, deposits, accounts or moneys of the Company then or
thereafter maintained with or otherwise held by such Lender provided, however,
that any such appropriation and application shall be subject to the provisions
of Section 5.7. Each Lender agrees promptly to notify the Company and the
Agent after any such setoff and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of each Lender under this Section are
in addition to other rights and remedies (including
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other rights of setoff under applicable law or otherwise) which such Lender may
have.
SECTION 5.9. Use of Proceeds. The Company shall apply the
proceeds of each Borrowing in accordance with the fourth recital.
SECTION 5.10. Replacement Lenders. The Company may, in its sole
discretion, on ten Business Days' prior written notice to the Agent and a
Lender which shall have requested reimbursement for costs pursuant to Section
5.3 or 5.5 or given a notice under Section 5.1, cause such Lender to (and such
Lender shall) assign, pursuant to Section 11.11.1, all of its rights and
obligations under this Agreement to another Person which is willing to become a
Lender and is reasonably acceptable to the Agent for a purchase price equal to
the outstanding principal amount of the Loans payable to such Lender plus any
accrued but unpaid interest on such Loans, any accrued but unpaid fees with
respect to such Lender's Commitment and any other amount payable to such Lender
under this Agreement; provided, that any expenses or other amounts which would
be owing to such Lender pursuant to any indemnification provision hereto
(including, if applicable, Section 5.4) shall be payable by the Company as if
the Company had prepaid the Lender rather than the Lender having assigned its
interest hereunder.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Effectiveness. This Agreement shall
become effective upon the satisfaction of each of the conditions precedent set
forth in this Section 6.1.
SECTION 6.1.1. Resolutions, etc. The Agent shall have received from
each Obligor (other than Tascor Incorporated) a certificate, dated the
Effective Date, of its Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full
force and effect authorizing the execution, delivery and performance
of this Agreement, the Notes and each other Loan Document to be
executed by it; and
(b) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement, the Notes
and each other Loan Document executed by it, upon which certificate
each Lender may conclusively rely until it shall have received a
further certificate of the Secretary of such Obligor canceling or
amending such prior certificate.
SECTION 6.1.2. Delivery of Notes. The Agent shall have
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received, for the account of each Lender, its Notes duly executed and delivered
by the Company.
SECTION 6.1.3. Guaranty. The Agent shall have received the
Guaranty, dated the Effective Date, duly executed by each of the Guarantors.
SECTION 6.1.4. Opinions of Counsel. The Agent shall have received
an opinion, dated the Effective Date and addressed to the Agent and all
Lenders, from counsel to the Obligors, substantially in the form of Exhibit I.
SECTION 6.2. All Credit Extensions. The obligation of each Lender
to make any Credit Extension (including the initial Credit Extension) shall be
subject to the satisfaction of each of the conditions precedent set forth in
this Section 6.2.
SECTION 6.2.1. Compliance with Warranties, No Default, etc. Both
before and after giving effect to any Credit Extension (but, if any Default of
the nature referred to in Section 9.1.5 shall have occurred with respect to any
other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds of any borrowing) the following statements shall be
true and correct
(a) the representations and warranties set forth in
Article VII (excluding, however, those contained in Section 7.7) shall
be true and correct with the same effect as if then made (unless
stated to relate solely to an early date, in which case such
representations and warranties shall be true and correct as of such
earlier date);
(b) except as disclosed by the Company to the Agent and
the Lenders pursuant to Section 7.7
(i) no litigation, arbitration or governmental
investigation or proceeding shall be pending or, to the
knowledge of the Company, threatened in writing against the
Company or any of its Subsidiaries which is reasonably likely
to materially adversely affect the Company's consolidated
business or operations, or which purports to affect the
validity or enforceability of the Agreement; and
(ii) no development shall have occurred in any
litigation, arbitration or governmental investigation or
proceeding disclosed pursuant to Section 7.7 which in the
reasonable opinion of management, based on facts known to such
management is likely to substantially affect the operation of
the business.
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(c) no Default shall have then occurred and be
continuing, and neither the Company, any other Obligor, nor any of its
Subsidiaries are in material violation of any law or governmental
regulation or court order or decree, the violation of which is
reasonably likely to materially adversely affect the Company's
consolidated financial condition, operations, assets, business,
properties or prospects.
SECTION 6.2.2. Credit Request. The Agent shall have received a
Borrowing Request or Letter of Credit Application, as the case may be, for such
Credit Extension or, in the case of a Bid Loan, the Lenders shall have received
the Competitive Bid Request for such Bid Loan. Each of the delivery of a
Borrowing Request, Letter of Credit Application or Competitive Bid Request and
the acceptance by the Company of the proceeds of the Borrowing or the issuance
of the Letter of Credit, as applicable, shall constitute a representation and
warranty by the Company that on the date of such Borrowing (both immediately
before and after giving effect to such Borrowing and the application of the
proceeds thereof) or the issuance of the Letter of Credit, as applicable, the
statements made in Section 6.2.1 are true and correct.
SECTION 6.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of the Company or any of its
Subsidiaries or any other Obligors prior to the initial Loan hereunder shall be
satisfactory in form and substance to the Agent and its counsel.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans and issue Letters of Credit hereunder, the Company
represents and warrants unto the Agent and each Lender as set forth in this
Article VII.
SECTION 7.1. Organization, etc. The Company and each of its
Subsidiaries is a corporation validly organized and existing and in good
standing under the laws of the State of its incorporation, is duly qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction where the nature of its business requires such qualification and
the failure to so qualify would have a material adverse effect on the
consolidated financial condition, operations, assets, business, properties or
prospects of the Company and its Subsidiaries, and has full power and authority
and holds all requisite governmental licenses, permits and other approvals to
enter into and perform its Obligations under this Agreement, the Notes and each
other Loan Document to which it is a
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party and to own and hold under lease its property and to conduct its business
substantially as currently conducted by it.
SECTION 7.2. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by the Company of this Agreement, the Notes
and each other Loan Document executed or to be executed by it, and the
execution, delivery and performance by each other Obligor of each Loan Document
executed or to be executed by it, are within the Company's and each such
Obligor's corporate powers, have been duly authorized by all necessary corporate
action, and do not
(a) contravene the Company's or any such Obligor's
Organizational Documents;
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on or
affecting the Company or any such Obligor; or
(c) result in, or require the creation or imposition of,
any Lien on any of any Obligor's properties.
SECTION 7.3. Government Approval, Regulation, etc. No
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body or other Person is required for
the due execution, delivery or performance by the Company or any other Obligor
of this Agreement, the Notes or any other Loan Document to which it is a party,
all of which have been duly obtained or made and are in full force and effect.
Neither the Company nor any of its Subsidiaries is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or a
"holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 7.4. Validity, etc. This Agreement constitutes, and the
Notes and each other Loan Document executed by the Company will, on the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of the Company enforceable in accordance with their respective
terms; and each Loan Document executed pursuant hereto by each other Obligor
will, on the due execution and delivery thereof by such Obligor, be the legal,
valid and binding obligation of such Obligor enforceable in accordance with its
terms subject to bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally.
SECTION 7.5. Financial Information. The audited balance sheet of
the Company and its Subsidiaries as at October 29, 1995, and the related
statements of earnings and cash flow of the Company and its Subsidiaries, and
the unaudited balance sheet of the
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Company and its Subsidiaries as at July 28, 1996, and the related statements of
earnings and cash flow of the Company and its Subsidiaries, copies of which
have been furnished to the Agent and each Lender, have been prepared in
accordance with GAAP consistently applied, and present fairly the consolidated
financial condition of the corporations covered thereby as at the dates thereof
and the results of their operations for the periods then ended.
SECTION 7.6. No Material Adverse Change. Since July 28, 1996,
there has been no material adverse change in the consolidated financial
condition, operations, assets, business, properties or prospects of the Company
and its Subsidiaries.
SECTION 7.7. Litigation, etc. There is no pending or, to the
knowledge of the Company, threatened in writing litigation, action, or
proceeding affecting the Company or any of its Subsidiaries, or any of their
respective properties, businesses, assets or revenues, which in the reasonable
opinion of management based on facts known to such management, is reasonably
likely to materially adversely affect the financial condition, operations,
assets, business, properties or prospects of the Company or any Subsidiary or
which purports to affect the legality, validity or enforceability of this
Agreement, the Notes or any other Loan Document, except as disclosed in Item
7.7 ("Litigation") of the Disclosure Schedule. Until the delivery of the
updated Item 7.7 of the Disclosure Schedule required pursuant to subsection
8.1.6(b), the Company hereby represents and warrants that there have been no
changes to Item 7.7 of the Disclosure Schedule (as defined in the Existing
Agreement) as in effect immediately prior to the Effective Date which would
have a material adverse effect on the consolidated financial condition,
operations, assets, business, properties or prospects of the Company and its
Subsidiaries.
SECTION 7.8. Subsidiaries. The Company has no Subsidiaries, except
those Subsidiaries
(a) which are identified in Item 7.8 ("Existing
Subsidiaries") of the Disclosure Schedule; or
(b) which are permitted to have been acquired in
accordance with Section 8.2.5 or Section 8.2.7.
SECTION 7.9. Ownership of Properties. The Company and each of its
Subsidiaries owns good and marketable title to all of its properties and
assets, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trademarks, trade names, service marks and copyrights),
free and clear of all Liens, charges or claims (including infringement claims
with respect to patents, trademarks, copyrights and the like) except as
permitted pursuant to Section 8.2.3.
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SECTION 7.10. Taxes. The Company and each of its Subsidiaries has
filed all tax returns and reports required by law to have been filed by it and
has paid all taxes and governmental charges thereby shown to be owing, except
any such taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books or any such taxes or charges which would
not be reasonably likely to have a material adverse effect on the consolidated
financial condition, operations, assets, business, properties or prospects of
the Company and its Subsidiaries.
SECTION 7.11. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and delivery
of this Agreement and prior to the date of any Borrowing hereunder, no steps
have been taken to terminate any Pension Plan, where the termination would be
reasonably likely to have a material adverse effect on the consolidated
financial condition, operations, assets, business, properties or prospects of
the Company and its Subsidiaries, and no contribution failure has occurred with
respect to any Pension Plan sufficient to give rise to a Lien under section
302(f) of ERISA. No condition exists or event or transaction has occurred with
respect to any Pension Plan which might result in the incurrence by the Company
or any member of the Controlled Group of any material liability, fine or
penalty. Except as disclosed in Item 7.11 ("Employee Benefit Plans") of the
Disclosure Schedule, neither the Company nor any member of the Controlled Group
has any contingent liability with respect to any postretirement benefit under a
Welfare Plan, other than liability for continuation coverage described in Part
6 of Title I of ERISA or any liability which would not be reasonably likely to
have a material adverse effect on the consolidated financial condition,
operations, assets, business, properties or prospects of the Company and its
Subsidiaries.
SECTION 7.12. Environmental Warranties. Except as set forth in
Item 7.12 ("Environmental Matters") of the Disclosure Schedule as of the
Effective Date:
(a) all facilities and property (including, underlying
groundwater) owned or leased by the Company or any of its Subsidiaries
have been, and continue to be, owned or leased by the Company and its
Subsidiaries in material compliance with all environmental laws which
would be reasonably likely to have a material adverse effect on the
consolidated financial condition, operations, assets, business,
properties or prospects of the Company and its Subsidiaries;
(b) no conditions exist at, on or under any property now
or previously owned or leased by the Company and no action has been
taken by the Company which would give rise to any
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liability under any Environmental Law which would be reasonably likely
to have a material adverse effect on the consolidated financial
condition, operations, assets, business, properties or prospects of
the Company and its Subsidiaries.
SECTION 7.13. Regulations G, U and X. The Company is not engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds of any Loans will be used for a purpose which
violates, or would be inconsistent with, F.R.S. Board Regulation G, U or X.
Less than 25% of the assets of the Company and its Subsidiaries consists of
margin stock. Terms for which meanings are provided in F.R.S. Board Regulation
G, U or X or any regulations substituted therefor, as from time to time in
effect, are used in this Section with such meanings.
SECTION 7.14. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of the Company in
writing to the Agent or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such factual
information hereafter furnished by or on behalf of the Company to the Agent or
any Lender will be, true and accurate in every material respect on the date as
of which such information is dated or certified and as of the date of execution
and delivery of this Agreement by the Agent and such Lender, and such
information is not, or shall not be, as the case may be, as of the date thereof
incomplete by omitting to state any material fact necessary to make such
information not misleading. No representation that any plan or projection shall
prove to be accurate shall have been deemed to have been made pursuant to this
Section.
ARTICLE VIII
COVENANTS
SECTION 8.1. Affirmative Covenants. The Company agrees with the
Agent and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Company will perform the
obligations set forth in this Section 8.1.
SECTION 8.1.1. Financial Information, Reports, Notices, etc. The
Company will furnish, or will cause to be furnished, to each Lender and the
Agent copies of the following financial statements, reports, notices and
information:
(a) as soon as available and in any event within 50 days
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after the end of each of the first three Fiscal Quarters of each
Fiscal Year of the Company, a consolidated balance sheet of the
Company and its Subsidiaries as of the end of such Fiscal Quarter and
consolidated statements of earnings and cash flow of the Company and
its Subsidiaries for such Fiscal Quarter and for the period commencing
at the end of the previous Fiscal Year and ending with the end of such
Fiscal Quarter, certified by an Authorized Officer of the Company;
(b) as soon as available and in any event within 95 days
after the end of each Fiscal Year of the Company, a copy of the annual
audit report for such Fiscal Year for the Company and its Subsidiaries,
including therein a consolidated balance sheet of the Company and its
Subsidiaries as of the end of such Fiscal Year and consolidated
statements of earnings and cash flow of the Company and its
Subsidiaries for such Fiscal Year, in each case certified (without any
Impermissible Qualification) by Arthur Andersen & Co. or other
independent public accountants acceptable to the Agent and the Majority
Lenders, together with a statement to the effect that, in making the
examination necessary for the signing of such annual report by such
accountants, they have not become aware of any Default that has
occurred and is continuing, or, if they have become aware of such
Default, describing such Default and the steps, if any, being taken to
cure it;
(c) at the same time as the financial statements referred
to in Section 8.1.1(a) and (b) are delivered to the Agent, a
certificate substantially in the form of Exhibit J, executed by the
chief financial officer or treasurer of the Company, showing (in
reasonable detail and with appropriate calculations and computations
in all respects satisfactory to the Agent) compliance with all
covenants, including the financial covenants set forth in Section
8.2.4;
(d) as soon as available and in any event within 50 days
after the end of each of the first three Fiscal Quarters of each
Fiscal Year and within 95 days after the end of each Fiscal Year, a
Borrowing Base Certificate substantially in the form of Exhibit K,
executed by the chief financial officer or treasurer of the Company,
showing the Borrowing Base for such Fiscal Quarter or Fiscal Year;
(e) promptly after the occurrence of each Default, a
statement of the chief financial officer or treasurer of the Company
setting forth details of such Default and the action which the Company
has taken and proposes to take with respect thereto;
(f) promptly after (i) the occurrence of any materially
adverse development with respect to any litigation, action or
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proceeding described in Section 7.7 or (ii) the commencement of any
litigation, action, proceeding of the type described in Section 7.7,
notice thereof and if requested by a Lender copies of all
documentation relating thereto;
(g) promptly after the sending or filing thereof, copies
of all reports which the Company sends to any of its securityholders
as such, and all reports and registration statements which the Company
or any of its Subsidiaries files with the Securities and Exchange
Commission or any national securities exchange, including but not
limited to, the annual report, Forms 10K and 10Q, and the proxy
statement of the Company;
(h) immediately upon becoming aware of the institution of
any steps by the Company or any other Person to terminate any Pension
Plan, or the failure to make a required contribution to any Pension
Plan if such failure is sufficient to give rise to a Lien under Section
302(f) of ERISA, or the taking of any action with respect to a Pension
Plan which could result in the requirement that the Company furnish a
bond or other security to the PBGC or such Pension Plan, or the
occurrence of any event with respect to any Pension Plan which could
result in the incurrence by the Company of any material liability, fine
or penalty, or any material increase in the contingent liability of the
Company with respect to any post-retirement Welfare Plan benefit,
notice thereof and copies of all documentation relating thereto;
(i) within 95 days after the end of each Fiscal Year, the
financial plan of the Company for the following Fiscal Year; and
(j) such other information respecting the condition or
operations, financial or otherwise, of the Company or any of its
Subsidiaries as any Lender through the Agent may from time to time
reasonably request.
SECTION 8.1.2. Compliance with Laws, etc. The Company will, and
will cause each of its Subsidiaries to, comply in all material respects with
all applicable laws, rules, regulations and orders, such compliance to include
(without limitation):
(a) the maintenance and preservation of its corporate
existence and qualification as a foreign corporation; and
(b) the payment, before the same become delinquent, of
all taxes, assessments and governmental charges imposed upon it or
upon its property except to the extent being diligently contested in
good faith by appropriate proceedings and for which adequate reserves
in accordance with GAAP shall have
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been set aside on its books;
to the extent that noncompliance therewith would be reasonably likely to have a
materially adverse effect on the consolidated financial condition, operations,
assets, business, properties or prospects of the Company and its Subsidiaries.
SECTION 8.1.3. Insurance. The Company will maintain, and will cause
each Subsidiary to maintain, insurance coverage by financially sound and
reputable insurers in such forms and amounts and against such risks as are
customary for corporations of established reputation engaged in the same or a
similar business and owning and operating similar properties; provided, that
the Company and its Subsidiaries may maintain a system or systems of
self-insurance provided that such self-insurance is in accord with the
customary practices of reputable corporations similarly situated and adequate
reserves are maintained in connection with such self-insurance.
SECTION 8.1.4. Books and Records. The Company will, and will cause
each of its Subsidiaries to, keep books and records which accurately reflect
all of its business affairs and transactions and permit the Agent and each
Lender or any of their respective representatives, at reasonable times and
intervals, to visit all of its offices, to discuss its financial matters with
its officers and independent public accountant (and the Company hereby
authorizes such independent public accountant to discuss the Company's
financial matters with each Lender or its representatives whether or not any
representative of the Company is present) and to examine (and, after Default at
the expense of the Company, photocopy extracts from) any of its books or other
corporate records. The Company shall pay any fees of such independent public
accountant incurred in connection with the Agent's or any Lender's exercise of
its rights pursuant to this Section after the occurrence of, and during the
continuance of, an Event of Default.
SECTION 8.1.5. Environmental Covenant. The Company will, and will
cause each of its Subsidiaries to (a) use and operate all of its facilities and
properties in material compliance with all Environmental Laws, keep all
necessary permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material compliance
therewith to the extent that any non-compliance or failure to keep in effect
would be reasonably likely to have a material adverse effect on the consolidated
financial condition, operations, assets, business, properties or prospects of
the Company and its Subsidiaries.
SECTION 8.1.6 Additional Documentation. As soon as available, but
in no event later than 30 days after the Effective Date, the Company will
deliver to the Agent (with copies for each
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Lender) the following:
(a) Resolutions, etc., of Tascor Incorporated. A
Certificate from the Secretary or Assistant Secretary of Tascor
Incorporated as to
(i) resolutions of such Obligor's Board of
Directors then in full force and effect authorizing or
ratifying the execution, delivery and performance of the
Guaranty; and
(ii) the incumbency and signatures of those of
such Obligor's officers authorized to act with respect to the
Guaranty.
(b) Disclosure Schedule. An update of Item 7.7
("Litigation") of the Disclosure Schedule, to be accurate as of the
date of delivery.
SECTION 8.2. Negative Covenants. The Company agrees with the
Agent and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Company will perform the
obligations set forth in this Section 8.2.
SECTION 8.2.1. Business Activities. The Company will not, and will
not permit any of its Subsidiaries to, engage in any business activity, except
those described in the first recital and such activities as may be incidental
or related thereto.
SECTION 8.2.2. Indebtedness. The Company will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness in respect of the Loans, Reimbursement
Obligations and other Obligations;
(b) Indebtedness existing as of the Effective Date which
is identified in Item 8.2.2(b) ("Ongoing Indebtedness") of the
Disclosure Schedule;
(c) unsecured Indebtedness incurred in the ordinary
course of business (including open accounts extended by suppliers on
normal trade terms in connection with purchases of goods and services,
but excluding Indebtedness incurred through the borrowing of money or
Contingent Liabilities);
(d) Indebtedness in respect of Capitalized Lease
Liabilities;
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(e) Indebtedness of the Company's Subsidiaries owing to
the Company or another Subsidiary and unsecured Indebtedness of the
Company owing to its Subsidiaries;
(f) Subordinated Debt;
(g) Secured Indebtedness within the limitations set forth
in Section 8.2.3;
(h) other unsecured Indebtedness of the Company and its
Subsidiaries in an aggregate amount not to exceed $40,000,000; and
(i) guaranties of the obligations of officers, directors
or employees of the Company or any Affiliate, which are limited in the
stated maximum dollar exposure, in favor of financial institutions
extending loans to such officers, directors and employees in
connection with financing their purchase of the capital stock of the
Company.
provided, however, that no Indebtedness otherwise permitted by clause (d), (e),
(f), (h), or (i) shall be permitted if, after giving effect to the incurrence
thereof, any Default shall have occurred and be continuing.
SECTION 8.2.3. Liens. The Company will not, and will not permit any
of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon
any of its property, revenues or assets. whether now owned or hereafter
acquired, except:
(a) Liens granted prior to the Effective Date to secure
payment of Indebtedness of the type permitted and described in clause
(b) of Section 8.2.2;
(b) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter payable
without penalty or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(c) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of business
for sums not overdue or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books;
(d) Liens incurred in the ordinary course of business in
connection with workers' compensation, unemployment insurance or other
forms of governmental insurance or benefits, or to
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secure performance of tenders, statutory obligations, leases and
contracts (other than for borrowed money) entered into in the ordinary
course of business or to secure obligations on surety or appeal bonds;
(e) Liens granted to secure payment of Indebtedness of
the type permitted and described in clause (d) of Section 8.2.2;
(f) judgment Liens in existence less than 15 days after
the entry thereof or with respect to which execution has been stayed
or the payment of which is covered in full (subject to a customary
deductible) by insurance maintained with responsible insurance
companies;
(g) Liens in favor of General Electric Capital
Corporation on the termination costs specified in that certain Service
Contract, dated September 21, 1993, between Tascor Incorporated and
United Parcel Service General Services Company;
(h) minor survey exceptions or minor encumbrances,
easements or reservations, or rights of others for rights-of-way,
utilities and other similar purposes, or zoning or other restrictions
of record as to the use of real properties which customarily exist on
properties of corporations engaged in similar activities and similarly
situated and which do not in any event materially impair their use in
the operation of the business of the Company and its Subsidiaries or
materially impair the value of such property (determined on the basis
of the book value of such property);
(i) Liens securing Indebtedness of a Subsidiary to the
Company or to another Subsidiary;
(j) Liens existing on fixed assets of any business entity
then owning such fixed assets or equipment at the time such entity
becomes a Subsidiary, provided, that (i) the Lien shall attach solely
to the fixed assets or equipment of such Subsidiary, and (ii) all
Indebtedness secured by such Liens shall have been assumed by the
Company or such Subsidiary within the applicable limitations provided
in Sections 8.2.2 and 8.2.4(b);
(k) Liens incurred after the date hereof given to secure
the payment of the purchase price incurred in connection with the
acquisition of fixed assets or equipment useful and intended to be
used in carrying on the business of the Company or a Subsidiary,
including Liens existing on such fixed assets or equipment at the time
of acquisition thereof or at the time of acquisition by the Company or
a Subsidiary of any business
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entity then owning such fixed assets or equipment, whether or not such
existing Liens were given to secure the payment of the purchase price
of fixed assets or equipment to which they attach so long as they were
not incurred, extended or renewed in contemplation of such
acquisition, provided, that (i) the Lien shall attach solely to the
property acquired or purchased, (ii) at the time of acquisition of
such fixed assets, the aggregate amount remaining unpaid on all
Indebtedness secured by Liens on such fixed assets whether or not
assumed by the Company or a Subsidiary shall not exceed an amount
equal to 100% of the lesser of the total purchase price or fair market
value at the time of acquisition of such fixed assets (as determined
in good faith by the Board of Directors of the Company), (iii) all
such Indebtedness shall have been incurred within the applicable
limitations provided in Sections 8.2.2 and 8.2.4(b), and (iv) all such
Indebtedness shall be payable in equal monthly, quarterly, semiannual
or annual installments of principal and interest not callable at the
lender's option for reasons unrelated to the creditworthiness of the
Company or such Subsidiary, the destruction of the collateral for such
Indebtedness or other events customarily included as events of default
in such financings;
(l) Liens in favor of any Person on termination costs,
substantially similar to those specified in the contract described in
Section 8.2.3(g), up to a maximum aggregate amount of $5,000,000; and
(m) Liens in favor of a lessor leasing equipment to the
Company or any Subsidiary arising in connection with such lessor's
financing of the Company's or such Subsidiary's purchase/put of such
previously leased equipment at the end of the lease term or otherwise,
such Indebtedness not to exceed in the aggregate $10,000,000 during
the term of this Agreement and in compliance with the restrictions in
Section 8.2.2. (The Agent and the Lenders acknowledge that the lessor
may file protective Uniform Commercial Code financing statements in
connection with such transaction.)
SECTION 8.2.4. Financial Condition.
(a) Consolidated Net Worth. From August 31, 1994, the
Company will at all times keep and maintain a Consolidated Net Worth
of not less than $47,000,000; provided, that commencing November 1,
1995 and for each Fiscal Year thereafter, the amount of the Company's
Consolidated Net Worth shall be an amount not less than the sum of (i)
the Company's Consolidated Net Worth for the immediately prior Fiscal
Year required pursuant to this Section 8.2.4, plus (ii) an amount
equal to 60% of the Company's Consolidated Net Income (if positive)
for
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such prior Fiscal Year; provided, further, however, the Company's
Consolidated Net Worth shall be increased in each fiscal year by the
amount of proceeds (less reasonable and customary expenses) from
August 31, 1994 received by the Company from the public sale of any
original issue capital stock of the Company in such Fiscal Year.
(b) Funded Debt Ratio. The Company will not permit the
ratio of the sum of (i) Consolidated Funded Debt, plus (ii) Letter of
Credit Obligations (to the extent not included in Funded Debt) to the
sum of Net Income Available for Fixed Charges minus Rentals for the
four consecutive Fiscal Quarters determined as of the last day of the
Fiscal Quarter immediately preceding the date of determination
hereunder to be greater than 3.5 to 1.0.
(c) Fixed Charge Coverage Ratio. The Company will not
permit the ratio of the sum of Net Income Available for Fixed Charges
less Capital Expenditures to Fixed Charges to be less than 1.5:1 for
the immediately preceding four consecutive Fiscal Quarters (determined
as of the last day of the Fiscal Quarter immediately preceding the
date of determination hereunder).
(d) Leverage Ratio. The Company will not permit the
ratio of Consolidated Total Liabilities to Consolidated Net Worth to
exceed 3.0 to 1.0 at any time.
(e) Current Ratio. The Company will not permit the
Current Ratio to be less than 1.20:1.
SECTION 8.2.5. Investments. The Company will not, and will not
permit any of its Subsidiaries to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Investments by the Company and its Subsidiaries in
and to Subsidiaries, including any Investment in a Person which, after
giving effect to such Investment, or within 180 days thereafter, will
become a Subsidiary; provided, however, if any such Person becomes a
Significant Subsidiary, then within 90 days thereafter, it shall
execute and deliver to the Agent (i) a Joinder Agreement (with
sufficient copies for each Lender) and (ii) documents of the type
referred to in Section 6.1.1;
(b) Investments in commercial paper, notes, bonds and
preferred stock issued by a corporation that, at the time of
acquisition of such securities by the Company or any Subsidiary, has
outstanding senior securities rated the equivalent of "A-2" or "P-2"
or better by Standard & Poor's, Moody's or another nationally
recognized credit rating agency
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of similar standing; provided, that the Company and any Subsidiary may
invest in obligations generally described in this subsection (b) of or
issued by any Lender;
(c) Investments in tax exempt obligations and taxable
municipal obligations which at the time of acquisition by the Company
or any Subsidiary are rated the equivalent of "A" or better by
Standard & Poor's, Moody's or another nationally recognized credit
rating agency of similar standing;
(d) Investments in direct obligations of the United
States of America, or any agency thereof, maturing in twelve months or
less from the date of acquisition thereof or any repurchase agreement
in respect of the foregoing issued by a member bank of the Federal
Reserve System whose long term debt securities are rated as described
in subsection (b) above;
(e) Investments in certificates of deposit maturing
within one year from the date of origin, issued by a bank or trust
company organized under the laws of the United States or any state
thereof, having capital, surplus and undivided profits aggregating at
least $50,000,000;
(f) (i) loans to officers or directors of the Company in
an aggregate amount not exceeding $5,000,000, or (ii) loans or
advances in the usual and ordinary course of business to officers,
directors and employees for expenses (including moving expenses
related to a transfer) incidental to carrying on the business of the
Company or any Subsidiary, or (iii) loans made directly by the Company
to, or guaranties of loans or advances made by financial institutions
to, officers, directors or employees of the Company or any Affiliate
secured by the capital stock of the Company and the proceeds of which
are used to purchase capital stock of the Company, or (iv) notes from
officers, directors or employees of the Company or any Affiliate
acquired after default by such employee, director or employee upon the
loans described in clause (iii) and previously guaranteed by the
Company in compliance with this subsection (f);
(g) accounts in the ordinary course of business of the
Company and its Subsidiaries;
(h) Investments made by the Company in connection with
the acquisition of an office complex which includes the Company's
headquarters; and
(i) other Investments (in addition to those permitted by
the foregoing provisions of this Section 8.2.5); provided, that the
aggregate amount of all such other Investments at any time owned by
the Company and its Subsidiaries shall not
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exceed an amount equal to 30% of Consolidated Net Worth.
In valuing any Investments for the purpose of applying the limitations
set forth in this Section 8.2.5, such Investments shall be taken at the
original cost thereof, without allowance for any subsequent writeoffs or
appreciation or depreciation therein, but less any amount repaid or recovered
on account of capital or principal.
For purposes of this Section 8.2.5, at any time when a corporation
becomes a Subsidiary, all Investments of such corporation at such time shall be
deemed to have been made by such corporation, as a Subsidiary, at such time.
SECTION 8.2.6. Restricted Payments, etc. On and at all times after
the Effective Date:
(a) the Company will not declare or pay any dividends,
either in cash or property, on any shares of its capital stock of any
class (except dividends or other distributions payable solely in
shares of common stock of the Company); and
(b) the Company will not directly or indirectly, or
through any Subsidiary, purchase, redeem or retire any shares of its
capital stock of any class or any warrants, rights or options to
purchase or acquire any shares of its capital stock except (i) the
redemption of stock prior to the date hereof in connection with the
Stock Redemption Agreement between Norrell Corporation and the
ServiceMaster Company Limited Partnership dated February 11, 1994,
(ii) the transfer of stock pursuant to the cancellation of the Common
Stock Purchase Agreement by and between Norrell Corporation and
International Business Machines Corporation dated May 4, 1992 at a
cost to the Company not in excess of $19.75 per share for 580,947
shares, and (iii) redemptions or purchases from Norrell Associates not
in excess of $2,500,000 in any Fiscal Year; and
(c) the Company will not, and will not permit any of its
Subsidiaries to
(1) make any payment or prepayment of principal
of, or make any payment of interest on, any Subordinated Debt
on any day other than the stated, scheduled date for such
payment or prepayment set forth in the documents and
instruments memorializing such Subordinated Debt, or which
would violate the subordination provisions of such
Subordinated Debt; or
(2) redeem, purchase or defease, any Subordinated
Debt; and
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(d) the Company will not make any other payment or
distribution, either directly or indirectly or through any subsidiary,
in respect of its capital stock or Subordinated Debt;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights, or options, and all such
other distributions being herein collectively called "Restricted Payments");
provided, that the Company may make Restricted Payments if after giving effect
to any such Restricted Payment (i) the aggregate amount (not including any
redemptions or purchases specifically permitted under clause (b) above) of such
Restricted Payments made since November 1, 1993, does not exceed 40% of the
Company's Consolidated Net Income for the period since November 1, 1993 and
(ii) no Default or Event of Default shall exist and be continuing at the time
of such Restricted Payment or after giving effect thereto. The Company will
not declare any dividend which constitutes a Restricted Payment payable more
than 60 days after the date of declaration thereof.
For the purposes of this Section, the amount of any Restricted Payment
declared, paid or distributed in property of the Company shall be deemed to be
the greater of the book value or fair market value (as determined in good faith
by the Board of Directors of the Company) of such property at the time of the
making of the Restricted Payment in question.
SECTION 8.2.7. Consolidation, Merger, etc. The Company will not,
and will not permit any of its Subsidiaries to, liquidate or dissolve,
consolidate with, or merge into or with, any other corporation, or purchase or
otherwise acquire all or substantially all of the stock or assets of any Person
(or of any division thereof) except
(a) any such Subsidiary may liquidate or dissolve
voluntarily into, and may merge with and into, the Company or any
other Subsidiary, and the assets or stock of any Subsidiary may be
purchased or otherwise acquired by the Company or any other
Subsidiary; and
(b) so long as no Default has occurred and is continuing
or would occur after giving effect thereto, the Company or any of its
Subsidiaries may purchase all or substantially all of the assets of
any Person, the stock of any Person, or acquire such Person by merger,
provided that (i) prior to making any Significant Acquisition (as
defined below), the Company shall have delivered to the Agent and the
Lenders the most recent audited financial statements of the target of
such Acquisition (or, if no such audited financial statements exist,
the most recent unaudited financial statements of such target prepared
in accordance with GAAP); (ii) prior to making any Significant
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Acquisition, the Company shall have provided to the Agent and the
Lenders pro forma financial statements of the Company and its
Subsidiaries giving effect to such Acquisition; (iii) at the time of
any Significant Acquisition, the Company shall have furnished to the
Agent and the Lenders a certificate of the chief financial officer of
the Company showing pro forma compliance with the covenants set forth
in Section 8.2.4 after giving effect to such Acquisition and stating
that after giving effect to such Acquisition, no Default shall have
occurred and be continuing; and (iv) without the consent of all the
Lenders, neither the Company nor any Subsidiary shall make any
Acquisition unless it has been consented to by the Board of Directors
of the Person that is the target thereof; and provided, further, that
within 90 days after the consummation of any Acquisition, if the
Person so acquired is a Significant Subsidiary, such Person shall
execute and deliver to the Agent (i) a Joinder Agreement (with
sufficient copies for each Lender) and (ii) documents of the type
referred to in Section 6.1.1. For purposes of this Section 8.2.7(b),
a "Significant Acquisition" means (x) in the case of a purchase of
assets or stock, an Acquisition in which the aggregate consideration
paid is in excess of $5,000,000 and (y) in the case of an Acquisition
by merger, an Acquisition in which the aggregate book value of the
assets of the target of such Acquisition exceeds $5,000,000.
SECTION 8.2.8. Asset Dispositions, etc. (a) The Company will not,
and will not permit any of its Subsidiaries to, sell, transfer, lease,
contribute or otherwise convey, or grant options, warrants or other rights with
respect to, all or any substantial part of its assets (including account
receivable and capital stock of Subsidiaries) to any Person, (i) unless such
sale, transfer, lease, contribution or conveyance is in the ordinary course of
its business; (ii) except for any sale or other disposition of assets no longer
used or useful in the conduct of its business; (iii) except for sales or other
dispositions of assets in arm's length transactions which sales or other
dispositions in any Fiscal Year do not involve assets recorded on the books of
the Company in excess of $5,000,000; and (iv) sales, transfers, leases,
contributions and conveyances between the Company and any Subsidiary or between
Subsidiaries.
(b) Notwithstanding the foregoing the Company may sell
Accounts of the Company or the Subsidiaries, or any undivided interest
or other interest therein, for cash in arm's-length transactions, at a
purchase price determined by the Company's Board of Directors in good
faith to be not less than the fair value of the Accounts or interest
in Accounts sold, which satisfy each of the following conditions:
(i) The purchaser shall have no recourse to the
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Company or its Subsidiaries arising out of uncollectibility of the
Accounts so sold; provided, that the foregoing provisions shall not
apply to, and the Company and/or Subsidiaries may provide the
purchaser of such Accounts or interest in Accounts with, warranties
and indemnifications as to the following matters:
(A) the due organization and qualification and
the corporate power of the Company and/or
Subsidiaries to sell such Accounts;
(B) the fact that the sale of such Accounts by
the Company and/or Subsidiaries has been duly
authorized, is valid and does not contravene any
other agreement;
(C) the accuracy of information with respect to
the form, amount and terms of such Accounts and the
obligors thereunder;
(D) the title of the Company or the Subsidiaries,
as applicable;
(E) the due perfection and priority of the
purchaser's interest in such Accounts and related
collateral;
(F) the validity and enforceability of such
Accounts, free of defenses or claims;
(G) the absence of a current payment default with
respect to such Accounts;
(H) compliance with the provisions of the
purchase agreement governing the selection of the
Accounts to be sold;
(I) compliance of such Accounts with all
applicable laws; and
(J) other matters for which warranties and
indemnifications are customary in private
transactions of this type.
(ii) Neither the Company nor any Subsidiary
shall have any ongoing obligations to the purchaser under any
purchase agreement, other than obligations to sell Accounts
and obligations relating to (A) the collection of such
Accounts, remittance of collections and other administrative
functions, (B) ordinary rebates, refunds and adjustments, (C)
regular adjustments of the purchase
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price of such Accounts, or payments of fees, or both, to
reflect changes in the cost of financing of the Company and/or
Subsidiaries, (D) payment of customary commitment fees and
costs and expenses relating to the sale of such Accounts, (E)
payment of taxes (including penalties and interest thereon)
which may be asserted in respect of the sale of such Accounts
or the transactions which are the subject of such Accounts
(excluding taxes based on or measured by profits or income,
imposed by the federal government or the state (or political
subdivisions thereof) where the principal office of the
purchaser is located), together with the reasonable costs and
expenses of defending any claims in respect of any such taxes,
(F) protection of the purchaser's rights in respect of such
Accounts, and (G) other matters for which warranties and
indemnifications are customary in private transactions of this
type.
(iii) There shall be no hold back of any part of
the purchase price of the Accounts or interest in Accounts to
be sold under any purchase agreement in excess of the greater
of (A) 15% of the aggregate purchase price, (B) five times the
historical ratio of losses and liquidations with respect to
the Accounts (or the Accounts so sold or in which an interest
is sold) and (C) five times the largest aggregate unpaid
balance of Accounts owed by any one obligor and its
affiliates. If such purchase agreement permits a hold back,
such purchase agreement may permit the purchaser to charge a
hold back for matters with respect to which the Company and/or
Subsidiary may not provide warranties or indemnifications
pursuant to clause (i) above or have ongoing obligations
pursuant to clause (ii) above.
(iv) The selection of Accounts shall be either
on a random basis or on such other basis as shall result in a
selection of Accounts reasonably representative of the
Accounts in the pool from which they are selected.
(v) At the time of each such sale of Accounts,
no event shall have occurred and be continuing or would result
from such sale which constitutes a Default.
(vi) The Company and/or Subsidiary shall have
provided the Agent with twenty (20) Business Days' prior
written notice of its intent to enter a transaction described
in this Section 8.2.8(b).
(vii) The Agent shall have received an opinion of
counsel satisfactory to it (on which the Agent, Co-Agent and
the Lenders shall be entitled to rely) to the effect
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that such transaction constitutes a sale of such Accounts to
such purchaser by the Company and/or Subsidiaries and,
therefore, such would not be the property of the Company and/or
Subsidiaries in the event of a filing of an application for
relief by or against the Company and/or Subsidiaries under any
laws relating to bankruptcy or insolvency, or the purchaser of
such Account agrees that it shall not institute against, or
join any other Person in instituting against, the Company
and/or Subsidiaries any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar
law, for one year and one day after the Commitment Termination
Date.
SECTION 8.2.9. Transactions with Affiliates. The Company will not,
and will not permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist any arrangement or contract with any of its other Affiliates
unless such arrangement or contract is fair and equitable to the Company or
such Subsidiary and is an arrangement or contract of the kind which would be
entered into by a prudent Person in the position of the Company or such
Subsidiary with a Person which is not one of its Affiliates.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. Listing of Events of Default. Each of the following
events or occurrences described in this Section 9.1 shall constitute an "Event
of Default".
SECTION 9.1.1. Non-Payment of Obligations. (a) The Company shall
default in the payment or prepayment when due of any principal of any Loan; or
(b) the Company shall default in the payment when due of any Reimbursement
Obligation, any interest on any Loan, any fee or any other Obligation (and such
default shall continue unremedied for a period of five days).
SECTION 9.1.2. Breach of Warranty. Any representation or warranty
of the Company or any other Obligor made or deemed to be made hereunder or in
any other Loan Document executed by it or any other writing or certificate
furnished by or on behalf of the Company or any other Obligor to the Agent or
any Lender for the purposes of or in connection with this Agreement or any such
other Loan Document (including any certificates delivered pursuant to Article
VI) is or shall be incorrect when made in any material respect.
SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations.
The Company shall default in the due performance and
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observance of any of its obligations under Section 8.2.
SECTION 9.1.4. Non-Performance of Other Covenants and Obligations.
The Company shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document executed by it, and
such default shall continue unremedied for a period of 30 days after notice
thereof shall have been given to the Company by the Agent or any Lender.
SECTION 9.1.5. Default on Other Indebtedness. A default shall occur
in the payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 9.1.1) of the Company or any of its Subsidiaries having a
principal amount, individually or in the aggregate, in excess of $1,000,000, or
a default shall occur in the performance or observance of any obligation or
condition with respect to such Indebtedness if the effect of such default is to
accelerate the maturity of any such Indebtedness or such default shall continue
unremedied for any applicable period of time sufficient to permit the holder or
holders of such Indebtedness, or any trustee or agent for such holders, to
cause such Indebtedness to become due and payable prior to its expressed
maturity.
SECTION 9.1.6. Judgments. Any judgment or order for the payment of
money in excess of $500,000 shall be rendered against the Company or any of its
Subsidiaries and either
(a) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order; or
(b) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect.
SECTION 9.1.7. Pension Plans. Any of the following events shall
occur with respect to any Pension Plan:
(a) the institution of any steps by the Company, any
member of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, the Company or any
such member could be required to make a contribution to such Pension
Plan, or could reasonably expect to incur a liability or obligation to
such Pension Plan, in excess of $5,000,000; or
(b) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under Section 302(f) of
ERISA.
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SECTION 9.1.8. Control of the Company. Any Change in Control shall
occur.
SECTION 9.1.9. Bankruptcy, Insolvency, etc. The Company or any of
its Significant Subsidiaries shall
(a) become insolvent or generally fail to pay, or admit
in writing its inability or unwillingness to pay, debts as they become
due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other custodian
for the Company or any of its Significant Subsidiaries or any other
Obligor or any property of any thereof, or make a general assignment
for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Company or any of
its Subsidiaries or for a substantial part of the property of any
thereof, and such trustee, receiver, sequestrator or other custodian
shall not be discharged within 30 days, provided that the Company and
each Significant Subsidiary hereby expressly authorizes the Agent and
each Lender to appear in any court conducting any relevant proceeding
during such 30-day period to preserve, protect and defend their rights
under the Loan Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of the Company or any
of its Significant Subsidiaries, and, if any such case or proceeding
is not commenced by the Company or such Subsidiary, such case or
proceeding shall be consented to or acquiesced in by the Company or
such Significant Subsidiary or shall result in the entry of an order
for relief or shall remain for 60 days undismissed, provided that the
Company and each Significant Subsidiary hereby expressly authorizes
the Agent and each Lender to appear in any court conducting any such
case or proceeding during such 60-day period to preserve, protect and
defend their rights under the Loan Documents; or
(e) take any corporate action authorizing, or in
furtherance of, any of the foregoing.
SECTION 9.1.10. Impairment of Security, etc. (a) Any Loan Document
shall (except in accordance with its terms), in whole or in part, terminate,
cease to be effective or cease to be the legally valid, binding and enforceable
obligation of any Obligor
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party thereto; or (b) the Company, any other Obligor or any other party shall,
directly or indirectly, contest in any manner such effectiveness, validity,
binding nature or enforceability.
SECTION 9.2. Action if Bankruptcy. If any Event of Default
described in clause (a), (b), (c) or (d) of Section 9.1.9 shall occur with
respect to the Company, the Commitments (if not theretofore terminated) shall
automatically terminate and the outstanding principal amount of all outstanding
Loans and all other Obligations shall automatically be and become immediately
due and payable, without notice or demand.
SECTION 9.3. Action if Other Event of Default. If any Event of
Default (other than any Event of Default described in clause (a), (b), (c) or
(d) of Section 9.1.9 with respect to the Company) shall occur for any reason,
whether voluntary or involuntary, and be continuing, the Agent, upon the
direction of the Majority Lenders, shall (a) by notice to the Company declare
all or any portion of the outstanding principal amount of the Loans, the
Reimbursement Obligations and other Obligations to be due and payable and/or
the Commitments (if not theretofore terminated) to be terminated, whereupon the
full unpaid amount of such Loans, the Reimbursement Obligations and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Commitments shall terminate, and (b) (i) by
notice to the beneficiaries of outstanding Letters of Credit, accelerate the
Drawings under such Letters of Credit and/or (ii) by notice to the Company
require the Company to deposit with the Agent into a collateral account an
amount equal to the aggregate undrawn face amount of outstanding Letters of
Credit.
ARTICLE X
THE AGENT
SECTION 10.1. Appointment and Authorization. (a) Each Lender
hereby irrevocably (subject to Section 10.9) appoints the Agent and the
Co-Agent and designates and authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
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into this Agreement or any other Loan Document or otherwise exist against the
Agent. Without limiting the generality of the foregoing sentence, the use of
the term "agent" in this Agreement with reference to the Agent is not intended
to connote any fiduciary or other implied (or express) obligations arising
under agency doctrine of any applicable law. Instead, such term is used merely
as a matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.
(b) The Issuer shall act on behalf of the Lenders with
respect to any Letters of Credit issued by it and the documents
associated therewith until such time and except for so long as the
Agent may agree at the request of the Majority Lenders to act for such
Issuer with respect thereto; provided, however, that the Issuer shall
have all of the benefits and immunities (i) provided to the Agent in
this Article X with respect to any acts taken or omissions suffered by
the Issuer in connection with Letters of Credit issued by it or
proposed to be issued by it and the application and agreements for
letters of credit pertaining to the Letters of Credit as fully as if
the term "Agent," as used in this Article X, included the Issuer with
respect to such acts or omissions, and (ii) as additionally provided
in this Agreement with respect to the Issuer.
SECTION 10.2. Delegation of Duties. The Agent may execute any of
its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Agent shall not
be responsible for the negligence or misconduct of any agent or attorney
in-fact that it selects with reasonable care.
SECTION 10.3. Liability of Agent. None of the Agent-Related
Persons shall (i) be liable to any Lender for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner to any
of the Lenders for any recital, statement, representation or warranty made by
any of the Company or any Subsidiary or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document, or for any failure
of the Company or any other party to any Loan Document other than the Agent to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under
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any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Company or any of the Company's Subsidiaries or Affiliates.
SECTION 10.4. Reliance by Agent. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile, telex,
written statement or other document believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to the Company),
independent accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document not expressly delegated to the Agent under
a Loan Document unless it shall first receive such advice or concurrence of the
Majority Lenders as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Majority Lenders and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
SECTION 10.5. Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Lenders, unless the
Agent shall have received written notice from a Lender or the Company referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with Article IX; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of the Lenders.
SECTION 10.6. Credit Decision. Each Lender acknowledges that none
of the Agent-Related Persons has made any representation or warranty to it, and
that no act by the Agent hereafter taken, including any review of the affairs
of the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender
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represents to the Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Company
hereunder. Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company.
Except for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Company which may come into the possession
of any of the Agent-Related Persons.
SECTION 10.7. Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify upon demand
the Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that
no Lender shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities (as defined in Section 11.4) resulting
from such Person's gross negligence or willful misconduct. Without limitation
of the foregoing, each Lender shall reimburse the Agent upon demand for its
ratable share of any costs or out-of-pocket expenses (including Attorney Costs)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that the
Agent is not reimbursed for such expenses by or on behalf of the Company. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
SECTION 10.8. Agent in Individual Capacity. BofA and SunTrust
Bank, Atlanta, and their respective Lender Affiliates may make loans to, issue
letters of credit for the account of, accept
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deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Company and its Subsidiaries and Affiliates as though BofA were not the Agent
and SunTrust Bank, Atlanta, were not the Co-Agent hereunder and without notice
to or consent (except as otherwise required hereby) of the Lenders. The
Lenders acknowledge that, pursuant to such activities, BofA and SunTrust Bank,
Atlanta or their respective Lender Affiliates may receive information regarding
the Company or its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such Subsidiary) and
acknowledge that the Agent shall be under no obligation to provide such
information to them. With respect to its Loans, BAI shall have the same rights
and powers under this Agreement as any other Lender and may exercise the same
as though BofA were not the Agent, and the terms "Lender" and "Lenders" include
BAI in its individual capacity.
SECTION 10.9. Successor Agent. The Agent may, and at the request
of the Majority Lenders shall, resign as Agent upon 30 days' prior written
notice to the Lenders and the Company. If the Agent resigns under this
Agreement, the Majority Lenders shall appoint from among the Lenders a
successor agent for the Lenders which successor agent shall be approved by the
Company. If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with the
Lenders and the Company, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such successor
agent shall succeed to all the rights, powers and duties of the retiring Agent
and the term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
X and Sections 11.3 and 11.4 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is 30 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
perform all of the duties of the Agent hereunder until such time, if any, as
the Majority Lenders appoint a successor agent as provided for above.
Notwithstanding the foregoing, however, BofA may not be removed as the Agent at
the request of the Majority Lenders, if BofA or any of its Lender Affiliates is
an Issuer, unless BofA or any Lender Affiliate of BofA acting as Issuer shall
also be simultaneously replaced as Issuer, pursuant to documentation in form
and substance reasonably satisfactory to BofA and any such Lender Affiliate.
SECTION 10.10. Withholding Tax. (a) If any Lender is a Foreign
Lender and such Lender claims exemption from, or a reduction of, U.S.
withholding tax under Section 1441 or 1442 of
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the Code, such Lender agrees with and in favor of the Agent and the Company, to
deliver to the Agent and the Company:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Form 1001 before the payment of any interest in
the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under
this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year of
such Lender and in each succeeding taxable year of such Lender during
which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Lender agrees to promptly notify the Agent and the Company of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form
1001 and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of the Company to
such Lender, such Lender agrees to notify the Agent of the percentage
amount in which it is no longer the beneficial owner of Obligations of
the Company to such Lender. To the extent of such percentage amount,
the Agent will treat such Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
Obligations of the Company to such Lender, such Lender agrees to
undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest
payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such
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reduction. If the forms or other documentation required by subsection
(a) of this Section are not delivered to the Agent, then the Company
and the Agent may withhold from any interest payment to such Lender
not providing such forms or other documentation an amount equivalent
to the applicable withholding tax.
(e) If the IRS or any other governmental authority of the
United States or other jurisdiction asserts a claim that the Agent did
not properly withhold tax from amounts paid to or for the account of
any Foreign Lender (because the appropriate form was not delivered,
was not properly executed, or because such Lender failed to notify the
Agent of a change in circumstances which rendered the exemption from,
or reduction of, withholding tax ineffective, or for any other reason)
such Lender shall indemnify the Company and the Agent fully for all
amounts paid, directly or indirectly, by the Agent or the Company as
tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the Agent
or the Company under this Section, together with all costs and
expenses (including Attorney Costs). The obligation of the Lenders
under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent. Nothing in this Section
10.10 shall require the Company to pay any additional interest as a
result of any withholding requirement.
SECTION 10.11. Co-Agent. The Co-Agent shall have no
responsibilities, duties or obligations under this Agreement or any other Loan
Document except in its capacity as a Lender or an Issuer.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
consented to by the Company and the Majority Lenders; provided, however, that
no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular
action be taken by all the Lenders or by the Majority Lenders shall be
effective unless consented to by each Lender;
(b) modify this Section 11.1, change the definition of
"Majority Lenders", increase any Commitment Amount or the
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Percentage of any Lender, reduce any fees described in Article III, or
extend any Commitment Termination Date shall be made without the
consent of each Lender and each holder of a Note;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on any
Loan (or reduce the principal amount of or rate of interest on any
Loan) shall be made without the consent of the holder of the Note
evidencing such Loan;
(d) release the Guaranty shall be effective without the
consent of each Lender and each holder of a Note;
(e) affect adversely the interests, rights or obligations
of the Issuer qua the Issuer shall be made without the consent of the
Issuer; or
(f) affect adversely the interests, rights or obligations
of the Agent qua the Agent shall be made without consent of the Agent.
No failure or delay on the part of the Agent or the Co-Agent, any Lender or the
holder of any Note in exercising any power or right under this Agreement or any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power or right preclude any other or further
exercise thereof or the exercise of any other power or right. No notice to or
demand on the Company in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the Agent or the
Co-Agent, any Lender or the holder of any Note under this Agreement or any
other Loan Document shall, except as may be otherwise stated in such waiver or
approval, be applicable to subsequent transactions. No waiver or approval
hereunder shall require any similar or dissimilar waiver or approval thereafter
to be granted hereunder.
SECTION 11.2. Notices. All notices and other communications
provided to any party hereto under this Agreement or any other Loan Document
shall be in writing or by facsimile and addressed, delivered or transmitted to
such party at its address or facsimile number as follows:
The Company: Norrell Corporation
3535 Piedmont Road, N.E.
Atlanta, Georgia 30305
Facsimile No.: (404) 240-3416
Attention: Madison F. Cole, Jr.
The Lenders: Their respective addresses set forth
in Schedule II
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The Agent: All Notices Pursuant to Articles II,
III, IV and V:
Bank of America National Trust
and Savings Association
1455 Market Street - 12th Floor
San Francisco, California 94103
Facsimile: (415) 436-2700
Attention: Agency Administrative
Services #5596
All Other Notices:
Bank of America National Trust
and Savings Association
1230 Peachtree Street, N.E.
Suite 3800
Atlanta, Georgia 30309
Facsimile: (404) 249-6938
Attention: Michael J. McKenney
or as set forth in the Lender Assignment Agreement or at such other address or
facsimile number as may be designated by such party in a notice to the other
parties. All such notices and other communications shall, (a) if mailed and
properly addressed with postage prepaid, be deemed received 72 hours after such
communication is deposited in the mails, (b) if properly addressed and sent by
courier service for overnight deliver, be deemed received one Business Day
after delivery to the courier service for overnight delivery, and (c) if
properly addressed and transmitted by facsimile, be deemed given when
transmitted.
SECTION 11.3. Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby
are consummated, pay or reimburse BofA (including in its capacity as
Agent) within 30 Business Days after demand for all costs and expenses
incurred by BofA (including in its capacity as Agent) in connection
with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to
(in each case, whether or not consummated), this Agreement, any Loan
Document and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated
hereby and thereby, including reasonable Attorney Costs incurred by
BofA (including in its capacity as Agent) with respect thereto; and
(b) pay or reimburse the Agent and each Lender within 30
Business Days after demand for all costs and expenses (including
Attorney Costs) incurred by them in connection with
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the enforcement of any rights or remedies under this Agreement or any
other Loan Document during the existence of an Event of Default or
after acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including in any
insolvency proceeding or appellate proceeding).
SECTION 11.4. Indemnity. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify and hold the
Agent-Related Persons, and each Lender and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Lender) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this Agreement
or any document contemplated by or referred to herein, or the transactions
contemplated hereby, or any action taken or omitted by any such Person under or
in connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided, that the Company shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting from the
gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
SECTION 11.5. Survival. The obligations of the Company under
Sections 4.5, 5.3, 5.4, 5.5, 5.6, 11.3 and 11.4, and the obligations of the
Lenders under Section 10.7, shall in each case survive any termination of this
Agreement, the payment in full of all Obligations and the termination of all
Commitments. The representations and warranties made by each Obligor in this
Agreement and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 11.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
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SECTION 11.7. Headings. The various headings of this Agreement and
of each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
SECTION 11.8. Execution in Counterparts. This Agreement may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement.
SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. This
Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersede any prior agreements, written or oral, with respect
thereto.
SECTION 11.10. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that:
(a) the Company may not assign or transfer its rights or
obligations hereunder without the prior written consent of the Agent
and all Lenders; and
(b) the rights of sale, assignment and transfer of the
Lenders are subject to Section 11.11.
SECTION 11.11. Sale and Transfer of Loans and Notes; Participations
in Loans and Notes. Each Lender may assign, or sell participations in, its
Loans and Commitments to one or more other Persons in accordance with this
Section 11.11.
SECTION 11.11.1. Assignments. Any Lender,
(a) with the written consents of the Company and the
Agent (which consents shall not be unreasonably delayed or withheld
and which consent, in the case of the Company, shall be deemed to have
been given in the absence of a written notice delivered by the Company
to the Agent, on or before the fifth Business Day after receipt by the
Company of such Lender's request for consent, stating, in reasonable
detail, the reasons why the Company proposes to withhold such consent)
may at any time assign and delegate to one or more commercial banks or
other financial institutions, and
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(b) with notice to the Company and the Agent, but without
the consent of the Company or the Agent, may assign and delegate to
any of its Lender Affiliates
(each Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred to
as an "Assignee Lender"), all or any fraction of such Lender's total Loans,
participation interests in Letters of Credit and Commitments (which assignment
and delegation shall be of a constant, and not a varying, percentage of all the
assigning Lender's Loans, participation interests in Letters of Credit and
Commitments) in a minimum aggregate amount of $10,000,000; provided, however,
that any such Assignee Lender will comply, if applicable, with the provisions
contained in the last sentence of Section 5.6 and further, provided, however,
that, the Company, the Agent and the Co-Agent shall be entitled to continue to
deal solely and directly with such Lender in connection with the interests so
assigned and delegated to an Assignee Lender until
(c) written notice of such assignment and delegation,
together with payment instructions, addresses and related information
with respect to such Assignee Lender, shall have been given to the
Company and the Agent by such Lender and such Assignee Lender,
(d) such Assignee Lender shall have executed and
delivered to the Company and the Agent a Lender Assignment Agreement,
accepted by the Agent, and
(e) the processing fees described below shall have been
paid.
From and after the date that the Agent accepts such Lender Assignment Agreement,
(x) the Assignee Lender thereunder shall be deemed automatically to have become
a party hereto and to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee Lender in connection with such Lender
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan Documents.
Within five Business Days after its receipt of notice that the Agent has
received an executed Lender Assignment Agreement, the Company shall execute and
deliver to the Agent (for delivery to the relevant Assignee Lender) new Notes
evidencing such Assignee Lender's assigned Loans and Commitments and, if the
assignor Lender has retained Loans and Commitments hereunder, a replacement
Committed Loan Note in the principal amount of the Commitment retained by the
assignor Lender hereunder (such Committed Loan Note to be in
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exchange for, but not in payment of, the Committed Loan Note then held by such
assignor Lender). Such Committed Loan Note shall be dated the date of the
predecessor Committed Loan Note. The assignor Lender shall mark the predecessor
Committed Loan Note exchanged and deliver it to the Company. Accrued interest on
that part of the Loans transferred to the Assignee Lender, and accrued fees,
shall be paid as provided in the Lender Assignment Agreement. Accrued interest
on that part of the Loans, if any, retained by the assignor Lender shall be paid
to the assignor Lender. Accrued interest and accrued fees shall be paid at the
same time or times provided in the predecessor Notes and in this Agreement. Such
assignor Lender or such Assignee Lender must also pay a processing fee to the
Agent upon delivery of any Lender Assignment Agreement in the amount of $5,000.
Any attempted assignment and delegation not made in accordance with this Section
11.11.1 shall be null and void.
SECTION 11.11.2. Participations. Any Lender may at any time sell to
one or more commercial banks or other Persons (each of such commercial banks
and other Persons being herein called a "Participant") participating interests
(or a sub-participating interest, in the case of a Lender's participating
interest in a Letter of Credit) in any of the Loans, Commitments, or other
interests of such Lender hereunder; provided, however, that
(a) no participation or sub-participation contemplated in
this Section 11.11 shall relieve such Lender from its Commitments or
its other obligations hereunder or under any other Loan Document.
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations,
(c) the Company and the Agent and the Co-Agent shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and
each of the other Loan Documents,
(d) no Participant, unless such Participant is a Lender
Affiliate of such Lender, or is itself a Lender, shall be entitled to
require such Lender to take or refrain from taking any action hereunder
or under any other Loan Document, except that such Lender may agree
with any Participant that such Lender will not, without such
Participant's consent, take any actions of the type described in clause
(b) or (c) of Section 11.1, and
(e) the Company shall not be required to pay any amount
under Section 5.6 that is greater than the amount which it would have
been required to pay had no participating interest been sold.
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The Company acknowledges and agrees that each Participant, for purposes of
Sections 5.3, 5.4, 5.5, 5.7, 5.8, 11.3 and 11.4, shall be considered a Lender;
provided, however, the Company shall have no greater obligation to make
payments to any such Participant under any such Section than it would have had
to have made to the Lender from which the Participant had purchased the
participation.
SECTION 11.12. Other Transactions.Nothing contained herein shall
preclude the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Company or any of its Affiliates in which the Company or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 11.13. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE
LENDERS OR THE COMPANY MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE STATE
OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS.THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.THE COMPANY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE
PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.THE
COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.TO THE
EXTENT THAT THE COMPANY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE COMPANY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
83
<PAGE> 90
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
NORRELL CORPORATION
By /s/ Madison F. Cole, Jr.
------------------------------------------
Title: Vice President & Treasurer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By /s/ Michael J. McKenney
------------------------------------------
Title: Vice President
SUNTRUST BANK, ATLANTA, as Co-Agent
By /s/ Kevin S. MacDonald
------------------------------------------
Title: Assistant Vice President
S-1
<PAGE> 91
<TABLE>
<CAPTION>
The Lenders:
Percentage:
<S> <C>
45% BANK OF AMERICA ILLINOIS
By /s/ Michael J. McKenney
------------------------------------------
Title: Vice President
27.5% SUNTRUST BANK, ATLANTA
By /s/ Kevin S. MacDonald
------------------------------------------
Title: Assistant Vice President
27.5% FIRST UNION NATIONAL BANK OF
GEORGIA
By /s/ Mayla M. Thom
------------------------------------------
Title: Vice President
</TABLE>
S-2
<PAGE> 1
EXHIBIT 10.33
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of December 26, 1996
(this "Amendment"), amends the Amended and Restated Credit Agreement, dated as
of October 21, 1996 (as heretofore amended, supplemented or otherwise modified,
the "Credit Agreement"), among NORRELL CORPORATION, a Georgia corporation (the
"Company"), the various financial institutions parties thereto (collectively,
the "Lenders"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent
for the Lenders (in such capacity, the "Agent") and SUNTRUST BANK, ATLANTA, as
co-agent for the Lenders (in such capacity, the "Co-Agent").
W I T N E S S E T H :
WHEREAS, the Company, Bank of America Illinois, SunTrust Bank, Atlanta,
First Union National Bank of Georgia (collectively, the "Existing Lenders"), the
Agent and the Co-Agent are parties to the Credit Agreement, which provides for,
among other things, a committed revolving credit facility of $95,000,000 and a
provision for competitive bid loans in an aggregate principal amount not to
exceed $45,000,000 at any one time outstanding;
WHEREAS, in connection with the acquisition by the Company of 100% of
the issued and outstanding capital and preferred stock and all vested and
unvested stock rights of Comtex Information Systems, Inc. (the "Acquisition"),
the Company has requested that the Commitment Amount (as defined in the Credit
Agreement) be increased to $150,000,000 and that the Credit Agreement be
amended in certain other respects;
WHEREAS, Wachovia Bank of Georgia, N.A. and The Sakura Bank, Limited
(collectively, the "New Lenders") have been invited to become Lenders under the
Credit Agreement, as amended hereby;
WHEREAS, the Existing Lenders are willing to increase the Commitment
Amount and the New Lenders are willing to become parties to the Credit
Agreement, as amended hereby, all on the terms and subject to the conditions
set forth herein;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:
<PAGE> 2
A. DEFINED TERMS
Unless otherwise defined herein, capitalized terms used herein shall
have the respective meanings assigned thereto in the Credit Agreement.
B. AMENDMENTS
1. Amendment of Title Page. The title page of the Credit
Agreement is hereby amended by deleting the amount "$95,000,000" appearing
thereon.
2. Amendments of Section 1.1 (Defined Terms). Section 1.1 of the
Credit Agreement is hereby amended by deleting therefrom the definitions of
"Applicable Margin", "Borrowing Base", "Commitment Amount", and "Percentage" in
their entirety and substituting therefor the following:
"'Applicable Margin' means, with respect to the interest rate
applicable to each Committed Loan, the Facility Fee or Letter of
Credit Fee, the amount (expressed as a percentage rate per annum)
shown below:
(a) if the Company's Funded Debt Ratio is greater than 3.25 to
1:
<TABLE>
<CAPTION>
Type of Rate or Fee Applicable Margin
------------------- -----------------
<S> <C>
Eurodollar - Based Rate 1.000%
Reference Rate - Based Rate .000%
Facility Fee .250%
Letter of Credit Fee 1.000%
</TABLE>
(b) if the Company's Funded Debt Ratio is greater than 3.0 to
1.0 but less than or equal to 3.25 to 1.0:
<TABLE>
<CAPTION>
Type of Rate or Fee Applicable Margin
------------------- ----------------
<S> <C>
Eurodollar - Based Rate .675%
Reference Rate - Based Rate .000%
Facility Fee .200%
Letter of Credit Fee .675%
</TABLE>
(c) if the Company's Funded Debt Ratio is greater than 2.6 to
1.0 but less than or equal to 3.0 to 1.0:
<TABLE>
<CAPTION>
Type of Rate or Fee Applicable Margin
------------------- -----------------
<S> <C>
Eurodollar - Based Rate .500%
Reference Rate - Based Rate -.250%
Facility Fee .150%
Letter of Credit Fee .500%
</TABLE>
-2-
<PAGE> 3
(d) if the Company's Funded Debt Ratio is greater than
1.6 to 1.0 but less than or equal to 2.6 to 1.0:
<TABLE>
<CAPTION>
Type of Rate or Fee Applicable Margin
------------------- -----------------
<S> <C>
Eurodollar - Based Rate .325%
Reference Rate - Based Rate -.500%
Facility Fee .125%
Letter of Credit Fee .325%
</TABLE>
(e) if the Company's Funded Debt Ratio is less than or
equal to 1.6 to 1.0:
<TABLE>
<CAPTION>
Type of Rate or Fee Applicable Margin
------------------- -----------------
<S> <C>
Eurodollar - Based Rate .200%
Reference Rate - Based Rate -.500%
Facility Fee .100%
Letter of Credit Fee .200%
</TABLE>
Any increase or decrease in the Applicable Margin resulting
from a change in the Funded Debt Ratio shall become effective as of
the first day of the Fiscal Quarter immediately following the date the
financial statements described in Sections 8.1.1(a) and (b) are
delivered; provided, however, that any change in the Applicable Margin
resulting from a change in the Funded Debt Ratio as of the last day of
the fourth Fiscal Quarter of any Fiscal Year shall become effective as
of the first day of the second Fiscal Quarter of the following Fiscal
Year; and provided, further, that if such financial statements are not
delivered during such preceding Fiscal Quarter, the Applicable Margin
shall be the amounts defined in clause (a) above until so delivered."
"'Borrowing Base' means the product of multiplying the
Company's consolidated net Accounts (i.e. gross Accounts less
allowance for doubtful Accounts and Accounts originated outside the
United States of America, all determined in accordance with GAAP) by
(a) 1.0625 from the Closing Date through February 1, 1998, (b) .935
from February 2, 1998 through January 31, 1999, and (c) .85
thereafter."
"'Commitment Amount' means, on any date, $150,000,000, as such
amount may be reduced from time to time pursuant to Section 2.2."
"'Percentage' means, relative to any Lender, the percentage
set forth opposite its name on Schedule III or set forth in the Lender
Assignment Agreement, as such percentage may be adjusted from time to
time pursuant to Lender Assignment Agreement(s) executed by such
Lender and its Assignee Lender(s) and delivered pursuant to Section
11.11.";
-3-
<PAGE> 4
3. Amendment of Section 2.5 (Bid Borrowings). Section 2.5 of the
Credit Agreement is hereby amended by deleting from clause (b) of the proviso
thereto the amount "$45,000,000" and substituting therefor the amount
"$50,000,000".
4. Amendment of Section 2.8 (Notes). Section 2.8 of the Credit
Agreement is hereby amended by deleting from the first sentence of subsection
(b) thereof the amount "$45,000,000" and substituting therefor the amount
"$50,000,000".
5. Amendments of Section 8.2.2 (Indebtedness). Section 8.2.2 of
the Credit Agreement is hereby amended by deleting subsection (h) thereof in
its entirety and substituting therefor the following:
"(h) other unsecured Indebtedness of the Company and its
Subsidiaries in an aggregate amount not to exceed $50,000,000."
6. Amendment of Section 8.2.4(a) (Consolidated Net Worth).
Section 8.2.4(a) of the Credit Agreement is hereby amended by deleting such
Section in its entirety and substituting therefor the following:
"(a) Consolidated Net Worth. The Company will at all
times maintain a Consolidated Net Worth of not less than $47,000,000;
provided, that commencing January 28, 1996, and as of the last day of
each Fiscal Quarter thereafter (each, a 'Measurement Date'), the
amount of the Company's Consolidated Net Worth shall be an amount not
less than the sum of (i) $47,000,000, plus (ii) an amount equal to 60%
of the Company's cumulative Consolidated Net Income for the period
from November 1, 1995 through such Measurement Date (without deduction
for any negative Consolidated Net Income for any Fiscal Quarter
included in such period), plus (iii) the amount of proceeds (less
reasonable and customary expenses) from the public sale of any
original issue capital stock of the Company received by the Company
during the period from August 31, 1994 through such Measurement Date."
7. Amendment of Section 8.2.4(b) (Funded Debt Ratio). Section
8.2.4(b) of the Credit Agreement is hereby amended by adding at the end thereof
the following new sentence:
"For purposes of calculating compliance with this subsection (b), any
Person that has become a Subsidiary during the period of four
consecutive Fiscal Quarters included in the calculation shall be
treated as if it had been a Subsidiary as of the first day of such
period."
8. Amendment of Section 8.2.4(c) (Fixed Charge Coverage Ratio).
Section 8.2.4(c) of the Credit Agreement is hereby amended by adding at the end
thereof the following new sentence:
-4-
<PAGE> 5
"For purposes of calculating compliance with this subsection (c), any
Person that has become a Subsidiary during the period of four
consecutive Fiscal Quarters included in the calculation shall be
treated as if it had been a Subsidiary as of the first day of such
period."
9. Amendment of Section 8.2.7 (Consolidation, Merger, etc.).
Section 8.2.7 of the Credit Agreement is hereby amended by inserting the words
"or the Treasurer" after the words "chief financial officer" in clause (iii) of
the first proviso to subsection (b) thereof.
10. Addition of Schedule. The Schedules to the Credit Agreement
are hereby amended by adding immediately after Schedule II thereto a new
Schedule III in the form of Annex I hereto.
11. Amendment of Exhibit A-1 (Form of Committed Loan Note).
Exhibit A-1 to the Credit Agreement is hereby amended by deleting such Exhibit
in its entirety and substituting therefor a new Exhibit A-1 in the form of
Annex II hereto.
12. Amendment of Exhibit A-2 (Form of Bid Loan Note). Exhibit A-2
to the Credit Agreement is hereby amended by deleting such Exhibit in its
entirety and substituting therefor a new Exhibit A-2 in the form of Annex III
hereto.
13. Amendment of Exhibit K (Form of Borrowing Base Certificate).
Exhibit K to the Credit Agreement is hereby amended by deleting such Exhibit in
its entirety and substituting therefor a new Exhibit K in the form of Annex IV
hereto.
C. CONDITIONS PRECEDENT
This Amendment shall become effective as of the date first above
written upon receipt by the Agent of the following documents, all in form and
substance satisfactory to the Agent:
1. Amendment. Counterparts of the this Amendment, duly executed
by the Company and all of the Lenders (including the New Lenders).
2. Notes. A Committed Loan Note in the form of Annex II hereto
and a Bid Loan Note in the form of Annex III hereto (collectively, the "New
Notes") for the account of each Lender (including each New Lender), in each
case dated the date hereof and duly executed and delivered by the Company.
3. Legal Opinion. An opinion, dated the date hereof and addressed
to the Agent and all Lenders (including the New Lenders), from counsel to the
Company, (a) confirming that, after giving effect to this Amendment, the
opinions contained in the legal opinion delivered by such counsel on the
Effective Date (the "October 1996 Opinion") remain in full force and effect;
provided that all references in the October 1996 Opinion to the "Credit
-5-
<PAGE> 6
Agreement" and the "Notes" shall be deemed to mean the Credit Agreement, as
amended hereby (the "Amended Agreement") and the New Notes, respectively, and
(b) permitting the New Lenders to rely on the October 1996 Opinion as if the
New Lenders had been party to the Credit Agreement as of the Effective Date and
such Opinion had been delivered directly to them as of such Date.
4. Resolutions, etc. A certificate, dated the date hereof, of
the Secretary or Assistant Secretary of the Company as to
(a) resolutions of its Board of Directors then in full
force and effect authorizing the execution and delivery of this
Amendment and the New Notes and the performance of the Amended
Agreement and the New Notes; and
(b) the incumbency and signatures of those of its
officers authorized to act with respect to the Agreement, the Notes
and each other Loan Document executed by it (including, without
limitation, this Amendment and the New Notes) upon which certificate
each Lender may conclusively rely until it shall have received a
further certificate of the Secretary or Assistant Secretary of the
Company canceling or amending such prior certificate.
5. Compliance with Section 8.2.7. The Company shall have
complied with the requirements set forth in clauses (i) through (iv) of the
first proviso to Section 8.2.7(b) of the Credit Agreement with respect to the
Acquisition (provided that the certificate referred to in clause (iii) thereof
may be signed by either the chief financial officer or the Treasurer of the
Company).
6. Officer's Certificate. A certificate, dated the date hereof,
of the chief financial officer or Treasurer of the Company stating that as of
the date hereof (both before and after giving effect to this Amendment)
(a) the representations and warranties of the Company set
forth in Article VII of the Credit Agreement are true and correct as
if made on the date hereof (unless stated to relate solely to an
earlier date, in which case such representations and warranties shall
be true and correct as of such earlier date); and
(b) no Default has occurred and is continuing.
7. Guarantor Consents. Consents of the Guarantors in the form of
Schedule 1 hereto.
8. Amendment Fee. An amendment fee in immediately available
funds in the aggregate amount of $40,000 for the account of the Lenders, to be
allocated in equal amounts among the Lenders.
-6-
<PAGE> 7
D. REPRESENTATIONS AND WARRANTIES
To induce the Agent, the Co-Agent and the Lenders to enter into this
Amendment, the Company hereby represents to the Agent, the Co-Agent and the
Lenders that the representations and warranties of the Company contained in
Article VII of the Credit Agreement are true and correct as of the date hereof
as though made on and as of such date (unless stated to relate solely to an
earlier date, in which case such representations and warranties shall be true
and correct as of such earlier date); provided, however, that each reference
therein to "this Agreement" shall be deemed to be a reference to the Amended
Agreement and each reference therein to "the Notes" shall be deemed to be a
reference to the New Notes.
E. THE NEW LENDERS
Each New Lender hereby acknowledges and confirms that it has received
a copy of the Credit Agreement, including the Schedules and Exhibits thereto,
together with copies of the documents which were required to be delivered under
the Credit Agreement as a condition to the Effective Date thereunder. Each New
Lender further confirms and agrees that in becoming a Lender and in making its
Commitments and Loans and purchasing participation interests in Letters of
Credit under the Credit Agreement, such actions have and will be made without
recourse to, or representation or warranty by, the Agent or the Co-Agent. The
parties hereby acknowledge and agree that effective upon the date hereof, each
New Lender shall be deemed automatically to have become a party to the Amended
Agreement and, to the extent of its Percentage as set forth on Annex I hereto,
shall have the rights and obligations of a Lender under the Amended Agreement
and the other Loan Documents.
F. MISCELLANEOUS
1. This Amendment shall be deemed to be an amendment to the
Credit Agreement, and the Credit Agreement, as amended hereby, shall remain in
full force and effect and is hereby ratified, approved and confirmed in each
and every respect. After the effectiveness of this Amendment in accordance
with its terms, all references to the Credit Agreement in the Loan Documents or
in any other document, instrument, agreement or writing shall be deemed to
refer to the Credit Agreement as amended hereby.
2. Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Amendment
or affecting the validity or enforceability of such provision in any other
jurisdiction.
3. The various headings of this Amendment are inserted for
convenience only and shall not affect the meaning or interpretation of this
Amendment or any provisions hereof.
-7-
<PAGE> 8
4. This Amendment may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same agreement.
5. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
6. This Amendment shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-8-
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized as of the
day and year first above written.
NORRELL CORPORATION
By: /s/
--------------------------
Title: V.P. Treasurer
------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Agent
By: /s/ Michael J. McKenney
---------------------------
Title: Vice President
------------------------
SUNTRUST BANK, ATLANTA
as Co-Agent
By: /s/ Kevin
---------------------------
Title: V.P.
------------------------
BANK OF AMERICA ILLINOIS,
as Lender
By: /s/ Michael J. McKenney
---------------------------
Title: Vice President
------------------------
SUNTRUST BANK, ATLANTA
as Lender
By: /s/ Kevin
---------------------------
Title: V.P.
------------------------
FIRST UNION NATIONAL BANK OF
GEORGIA, as Lender
By: /s/ Mayla M. Thom
---------------------------
Title: Vice President
------------------------
-9-
<PAGE> 10
WACHOVIA BANK OF GEORGIA, N.A., as
Lender
By: /s/
---------------------------------
Title: Senior Vice President
------------------------------
THE SAKURA BANK, LIMITED, as Lender
By: /s/
---------------------------------
Title: Vice President & Sr. Manager
------------------------------
-10-
<PAGE> 11
SCHEDULE 1
to Amendment
AGREEMENT AND CONSENT
The undersigned Guarantors hereby agree and consent to the terms and
provisions of the foregoing First Amendment to Credit Agreement, and agree that
the Guaranty executed by the undersigned Guarantors shall remain in full force
and effect notwithstanding the provisions of the foregoing First Amendment to
Credit Agreement.
Dated: As of December 26, 1996
NORRELL SERVICES, INC.,
TASCOR INCORPORATED
By: /s/
-------------------------------
Title: Vice President &
Treasurer
NORRELL TEMPORARY SERVICES, INC.,
NORRELL ASSET MANAGEMENT COMPANY,
NORRELL ENTERPRISES CORPORATION,
NORRELL FINANCE COMPANY
By: /s/
-------------------------------
Title: Assistant Treasurer
<PAGE> 12
ANNEX I
to Amendment
------------
SCHEDULE III
------------
<TABLE>
<CAPTION>
Percentages
-----------
Lender Percentage
- ------ ----------
<S> <C>
Bank of America Illinois 30.000000000%
SunTrust Bank, Atlanta 23.333333334%
First Union National Bank of Georgia 23.333333334%
Wachovia Bank of Georgia, N.A. 16.666666666%
The Sakura Bank, Limited 06.666666666%
</TABLE>
<PAGE> 13
ANNEX II
to Amendment
------------
EXHIBIT A-1
-----------
FORM OF
COMMITTED LOAN NOTE
$____________________ December 26, 1996
FOR VALUE RECEIVED, the undersigned, NORRELL CORPORATION, a Georgia
corporation (the "Company"), promises to pay to the order
of________________________________(the "Lender") on the Commitment Termination
Date the principal sum of _____________________ DOLLARS ($________________)
or, if less, the aggregate unpaid principal amount of all Committed Loans shown
on the schedule attached hereto (and any continuation thereof) made by the
Lender pursuant to that certain Amended and Restated Credit Agreement, dated as
of October 21, 1996 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Company, Bank
of America National Trust and Savings Association, as Agent, and SunTrust Bank,
Atlanta, as Co-Agent, and the various financial institutions (including the
Lender) that are, or may from time to time become, parties thereto.
The Company also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful
money of the United States of America in same day or immediately available
funds to the account designated by the Agent pursuant to the Credit Agreement.
This Note is one of the Committed Loan Notes referred to in, and
evidences Indebtedness incurred under the Credit Agreement, to which reference
is made for a statement of the terms and conditions on which the Company is
permitted and required to make prepayments and repayments of principal of the
Indebtedness evidenced by this Note and on which such Indebtedness may be
declared to be, or may become, immediately due and payable. Unless otherwise
defined, terms used herein have the meanings provided in the Credit Agreement.
<PAGE> 14
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
[This Note is issued in substitution for, but not in payment,
satisfaction, cancellation or novation of, that certain Note, dated October 21,
1996, in the principal amount of $___________, payable by the Company to the
order of the Lender, which was issued pursuant to the Credit Agreement.](1)
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
NORRELL CORPORATION
By:
-------------------------------
Title:
------------------------
- ----------------------------
(1) To be included only in Committed Loan Notes issued to Bank of America
Illinois, First Union National Bank of Georgia and SunTrust Bank,
Atlanta
2
<PAGE> 15
<TABLE>
<CAPTION>
COMMITTED LOANS AND PRINCIPAL PAYMENTS
===============================================================================================================================
AMOUNT OF INTEREST AMOUNT OF PRINCIPAL UNPAID PRINCIPAL
LOAN MADE PERIOD REPAID BALANCE
------------- (IF APPLICABLE) ------------------ ----------------
EURO- EURO- EURO-
REFERENCE DOLLAR REFERENCE DOLLAR REFERENCE DOLLAR NOTATION
DATE RATE RATE RATE RATE RATE RATE TOTAL MADE BY
---- ---- ---- ---- ---- ---- ---- ----- -------
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
===============================================================================================================================
</TABLE>
<PAGE> 16
ANNEX III
to Amendment
------------
EXHIBIT A-2
-----------
FORM OF
BID LOAN NOTE
$50,000,000 December 26, 1996
FOR VALUE RECEIVED, the undersigned, NORRELL CORPORATION, a Georgia
corporation (the "Company"), promises to pay to the order of___________________
(the "Lender") the principal amount of each Bid Loan made by the Lender to the
Company pursuant to that certain Amended and Restated Credit Agreement, dated
as of October 21, 1996 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Company, Bank of
America National Trust and Savings Association, as Agent and SunTrust Bank,
Atlanta, as Co-Agent, and the various financial institutions (including the
Lender) that are, or may from time to time become, parties thereto.
The Company also promises to pay interest on the unpaid principal
amount of each Bid Loan from time to time, at the rates per annum and on the
dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money
of the United States of America in same day or immediately available funds to
the Domestic Office of the Lender specified pursuant to the Credit Agreement.
This Note is one of the Bid Loan Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a statement of the terms and conditions on which the Company is required
to make repayments of principal of the Indebtedness evidenced by this Note and
on which such Indebtedness may be declared to be immediately due and payable.
Unless otherwise defined, terms used herein have the meanings provided in the
Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
(This Note is issued in substitution for, but not in payment,
satisfaction, cancellation or novation of, that certain Note, dated October 21,
1996, in the principal amount of $45,000,000, payable by the Company to the
order of the Lender, which was issued
<PAGE> 17
pursuant to the Credit Agreement.](1)
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
NORRELL CORPORATION
By:
--------------------------------
Title:
-------------------------
- ---------------------------
(1) To be included only in Bid Loan Notes issued to Bank of America
Illinois, First Union National Bank of Georgia and SunTrust Bank,
Atlanta
2
<PAGE> 18
<TABLE>
<CAPTION>
BID LOANS AND PRINCIPAL PAYMENTS
===============================================================================================================================
AMOUNT OF INTEREST AMOUNT OF PRINCIPAL UNPAID PRINCIPAL
BID LOAN MADE PERIOD REPAID BALANCE
------------- ------------------ ----------------
EURO- EURO- EURO-
ABSOLUTE DOLLAR ABSOLUTE DOLLAR ABSOLUTE DOLLAR NOTATION
DATE RATE RATE RATE RATE RATE RATE TOTAL MADE BY
---- ---- ---- ---- ---- ---- ---- ----- -------
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
===============================================================================================================================
</TABLE>
<PAGE> 19
ANNEX IV
to Amendment
------------
EXHIBIT K
---------
BORROWING BASE CERTIFICATE
The undersigned, being the [Treasurer] (Chief Financial Officer] of NORRELL
CORPORATION, a Georgia corporation (the "Company"), hereby executes and
delivers this Certificate on behalf of the Company to the Agent, Co-Agent and
the Lenders (each as defined in the Amended and Restated Credit Agreement,
dated as of October 21, 1996, by and among the Company, the several Lenders
listed on the signature pages thereof, Bank of America National Trust and
Savings Association, as Agent for said Lenders, and SunTrust Bank, Atlanta, as
Co-Agent for said Lenders (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement")). Capitalized terms used herein and not
defined herein shall have the meanings specified for such terms in the Credit
Agreement.
The undersigned hereby certifies to the Lenders, the Co-Agent and the Agent
that:
1. He is the (Treasurer] (Chief Financial Officer] of the Company and,
in such capacity, is authorized to execute and deliver this Certificate for and
on behalf of the Company.
2. As of the date hereof, the sun of the outstanding Loans and Letter of
Credit Obligations equals $______________.
3. As of the date hereof, the Company's consolidated net receivables
(gross receivables less allowance for doubtful accounts and receivables
originated outside the United States of America determined in accordance with
generally accepted accounting principles) are $__________ ("Net Receivables").
4. Net Receivables x _______ (1) = $__________________.
5. Excess of Item (4) over Item (2) $_____________. A deficit requires
an immediate payment.
This Certificate made and delivered this ________ day of _____________, 199_.
----------------------------------
Name:
Title: [Treasurer]
[Chief Financial Officer)
- ---------------------------
(1) Multiply Net Receivables by (a) 1.0625 for the period from the
Closing Date through February 1, 1998; (b) .935 for the period
from February 2, 1998 through January 31, 1999; and (c) .85
thereafter
<PAGE> 1
EXHIBIT 10.40
================================================================================
STOCKHOLDERS AGREEMENT
AMONG
NORRELL CORPORATION,
THE CROSS COUNTRY GROUP, LLC
AND
NORCROSS INC.
Dated August 15, 1996
<PAGE> 2
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (as amended from time to time, this
"Agreement"), is made and entered into as of August 15, 1996 (the "Effective
Date"), by and among Norcross Inc., a Delaware corporation (the "Company"),
Norrell Corporation, a Georgia corporation ("Norrell"), and The Cross Country
Group, LLC, a Massachusetts limited liability company ("CCG").
RECITALS
A. As of the Effective Date, the Initial Stockholders together own, or
will own, all of the issued and outstanding shares of Common Stock;
B. As of the Effective Date, Norrell owns, or will own, all of the issued
and outstanding shares of Preferred Stock; and
C. The Initial Stockholders believe it is in the Stockholders' and the
Company's best interests to enter into certain agreements associated with the
ownership of the Shares and to make certain other agreements as set forth in
this Agreement.
In consideration of the covenants contained in this Agreement, the above
recitals, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 "AAA" shall have the meaning set forth in Section 8.1
1.2 "Acquired Initial Stockholder" shall have the meaning set forth in
Section 15.1(a).
1.3 "Additional Contributions" shall have the meaning set forth in Section
3.2(a).
1.4 "Additional Stockholders" shall mean any Stockholder other than CCG or
Norrell.
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1.5 "Affected Shares" shall have the meaning set forth in Section 10.1 and
10.2(a).
1.6 "Affiliate" of a specified Person at a specified time shall mean a
Person that, at that time, directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with,
that Person, "control" being defined as the ability, through ownership of voting
equity interests of an entity or otherwise, to control the management and
business decisions of the entity.
1.7 "Board of Directors" shall mean the board of directors of the
Company.
1.8 "CCG" shall have the meaning set forth in the Preamble.
1.9 "Call Option" shall have the meaning set forth in Section 15.1(b).
1.10 "Capital Calls" shall have the meaning set forth in Section 3.2(a).
1.11 "Certificate of Incorporation" shall mean the Certificate of
Incorporation of the Company filed with the Delaware Secretary of State, as the
same may be properly amended from time to time.
1.12 "Change of Control Notice" shall have the meaning set forth in Section
15.1(a).
1.13 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
1.14 "Common Stock" shall mean the Company's $.01 par value per share
common stock, described in more detail in the Company's Certificate of
Incorporation. References in this Agreement to a Stockholder's percentage
ownership of the Common Stock shall be deemed to refer to the percentage of all
issued and outstanding Common Stock owned by the Stockholder.
1.15 "Common Stock Call shall have the meaning set forth in Section
3.2(a).
1.16 "Common Stock Purchase Price" shall have the meaning set forth in
Section 3.1.
1.17 "Company" shall have the meaning set forth in the Preamble.
1.18 "Company Customer" shall have the meaning set forth in Section
7.3(a).
1.19 "Competitive Position" shall have the meaning set forth in Section
7.2.
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<PAGE> 4
1.20 "Confidential Information" shall have the meaning set forth in
Section 7.1.
1.21 "Contributed Amount" shall have the meaning set forth in Section
3.3(a).
1.22 "Contributed Preferred Amount" shall have the meaning set forth in
Section 3.3(b).
1.23 "Contributing Stockholder" shall have the meaning set forth in
Section 3.3(a).
1.24 "DGCL" shall mean the General Corporation Law of the State of
Delaware, as amended from time to time.
1.25 "Defaulted Amount" shall have the meaning set forth in Section
3.3(a).
1.26 "Defaulted Preferred Amount" shall have the meaning set forth in
Section 3.3(b).
1.27 "Defaulting Stockholder" shall have the meaning set forth in Section
3.3(a).
1.28 "Designated Value" shall have the meaning set forth in Section
15.1(c).
1.29 "Direct Competitor" shall mean a Person whose principal business is,
or who derives in excess of ten percent (10%) of its consolidated revenues
from, supplying Outsourced Teleservices (which do not fall within the
definition of Excluded Business).
1.30 "Direct Transferee" shall mean any Person to whom an Initial
Stockholder directly conveys any Shares.
1.31 "Director" shall mean a member of the Board of Directors.
1.32 "Dispute" shall have the meaning set forth in Section 8.1.
1.33 "Dispute Notice" shall have the meaning set forth in Section 8.3
1.34 "Effective Date" shall have the meaning set forth in the Preamble.
1.35 "Exercise Notice" shall have the meaning set forth in Section
15.1(b).
1.36 "Excluded Business" shall have the meaning set forth in Section
2.4(b).
1.37 "Excluded Disputes" shall have the meaning set forth in Section 8.1.
1.38 "Initial Contributions" shall have the meaning set forth in Section
3.1.
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<PAGE> 5
1.39 "Initial Stockholders" shall mean, collectively, Norrell and its
Affiliates and CCG and its Affiliates.
1.40 "Initial Term" shall have the meaning set forth in Section 14.1.
1.41 "IPO Registration Statement" shall have the meaning set forth in
section 4.2.
1.42 "Laws" shall mean collectively statutes, common law and any
regulation, directive, order or ruling by a governmental body or delegate that
is generally regarded as having the force of law.
1.43 "Minority Stockholder" shall have the meaning set forth in Section
4.4(a).
1.44 "Negotiator" shall have the meaning set forth in Section 8.3(a).
1.45 "New Issuance" shall have the meaning set forth in Section 9.1(a).
1.46 "1933 Act" shall have the meaning set forth in Section 17.1.
1.47 "Non-Defaulting Stockholder" shall have the meaning set forth in
Section 3.3(a).
1.48 "Nonoffering Initial Stockholder" shall have the meaning set forth in
Section 10.1.
1.49 "Norrell" shall mean Norrell Corporation, a Georgia corporation.
1.50 "Notice of Call" shall have the meaning set forth in Section 3.2(b).
1.51 "Offer Notice" shall have the meanings set forth in Section 10.1 and
Section 10.2.
1.52 "Offer Termination Date" shall have the meaning set forth in Section
10.1.
1.53 "Offering Initial Stockholder" shall have the meaning set forth in
Section 10.1.
1.54 "Offering Stockholder" shall have the meaning set forth in Section
10.2(a).
1.55 "Outsourced Teleservices" shall have the meaning set forth in Section
2.4(a).
1.56 "Oversubscribed Contribution" shall have the meaning set forth in
Section 3.3(a).
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<PAGE> 6
1.57 "Parties" shall mean, collectively, Norrell, CCG, the Company and any
other Person that becomes a party to this Agreement.
1.58 "Permitted Business" shall have the meaning set forth in Section
2.4(a).
1.59 "Person" shall mean an individual, a corporation, a partnership
(general or limited), a limited liability company, an association, a joint-stock
company, a business trust, a trust, an estate or other organization.
1.60 "Pledge" shall have the meaning set forth in Section 10.3.
1.61 "Preferred Stock" shall refer to the Company's Seven Percent (7%)
Non-Voting Preferred Stock, described in more detail in the Company's
Certificate of Incorporation. References in this Agreement to a Stockholder's
percentage ownership of the Preferred Stock shall be deemed to refer to the
percentage of all issued and outstanding Preferred Stock owned by the
Stockholder.
1.62 "Preferred Stock Call" shall have the meaning set forth in Section
3.2(a).
1.63 "Preferred Stock Purchase Price" shall have the meaning set forth in
Section 3.1.
1.64 "Pro-Rata" when used to describe an allocation of rights or
liabilities among Stockholders, shall mean in the proportion that such
Stockholder's Common Stock bears to all Common Stock.
1.65 "Protected Percentage" shall have the meaning set forth in Section
9.1(a).
1.66 "Purchasing Initial Stockholder" shall have the meaning set forth in
Section 9.2(a).
1.67 "Put Option" shall have the meaning set forth in Section 15.2(b).
1.68 "Referee" shall have the meaning set forth in Section 8.3(b) and
15.1(c)(ii).
1.69 "Registration Statement" shall have the meaning set forth in Section
17.1.
1.70 "Regulations" shall mean the regulations of the Department of Treasury
promulgated under the Code.
1.71 "Remaining Initial Stockholder" shall have the meaning set forth in
Section 15.1(a).
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1.72 "Restricted Employee" shall have the meaning set forth in Section
7.3(b).
1.73 "SEC" shall have the meaning set forth in Section 17.1.
1.74 "Selling Initial Stockholder" shall have the meaning set forth in
Section 9.2(a).
1.75 "Share Transfer" shall have the meaning set forth in Section 10.1.
1.76 "Shares" shall mean shares of Common Stock and Preferred Stock that
are issued and outstanding and owned by the Stockholders.
1.77 "Stockholders" shall mean, collectively, CCG, Norrell and the
Additional Stockholders.
1.78 "Term" shall have the meaning set forth in Section 14.1.
1.79 "Term Sheet" shall have the meaning set forth in Section 8.3(b).
1.80 "Third Party Purchasers" shall have the meaning set forth in Sections
10.1 and 10.2(d).
1.81 "Trade Secret" or "Trade Secrets" shall have the meaning set forth in
Section 7.1.
ARTICLE II
BUSINESS OF THE COMPANY; ADDRESSES AND AGENT
2.1 The Company. The Company shall be incorporated as a Delaware
corporation under the name "Norcross Inc." All business of the Company shall be
conducted under such name or under any other name adopted by the Board of
Directors (to the extent permitted by applicable Law).
2.2 Registered Office and Agent. The Company's registered office shall
be located at 1209 Orange Street, Wilmington, Delaware, 19801. The name of its
registered agent is CT Corporation.
2.3 Principal Office. The principal office of the Company shall be
located in Boston, Massachusetts or at such other location as determined by the
Board of Directors.
2.4 Business of the Company.
(a) The Company shall engage only in the business of furnishing or
managing of inbound or outbound teleservices on behalf of third-party customers
by the
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<PAGE> 8
provision of labor for such purposes while simultaneously providing: (i)
teleservice equipment and/or systems, (ii) facilities at which such services
shall be performed; and/or (iii) management and administration of such
equipment, systems or facilities (such business, together with any additional
services or products necessary and incidental to the provision of the services
described in (i), (ii) and (iii) being referred to as either "Outsourced
Teleservices" or the "Permitted Business"). The Permitted Business shall not
include and the Company, without the consent of the Initial Stockholders (which
consent may be withheld by an Initial Stockholder in its sole and unfettered
discretion, without regard to any fiduciary or quasi-fiduciary duties of the
Initial Stockholder to the Company), may not pursue any Excluded Business. The
Company shall have the authority to do all things necessary or appropriate in
conjunction with the Permitted Business subject to any limitations in this
Agreement, the Company's other governance documents and Law.
(b) Notwithstanding the foregoing provisions of this Section 2.4, the
following types of Outsourced Teleservices business opportunities are not
subject to the referral covenants of Section 3.7(a) and the Company may not
pursue the following business or the specific products or services referenced
in the description of the business (collectively, the "Excluded Business"):
(i) any Outsourced Teleservices being provided by either Initial
Stockholder to a customer as of the Effective Date, provided that this
restriction shall only prohibit provision of services or products (or offering
or soliciting to do so) by the Company at the same sites where the Stockholder
was providing those services or products to the customer or at any additional
location if such services or products are being provided by the Stockholder to
the customer under the same contract or a successor contract as a result of a
rebidding of the original contract;
(ii) any Outsourced Teleservices business of either Initial Stockholder
where the teleservices are incidental to an otherwise excluded product, service
or industry described in clause (iii), (iv), (v), (vi) or (vii);
(iii) any Outsourced Teleservices business between either Norrell or CCG
and an Affiliate of Norrell or CCG, respectively, where the general business of
the Affiliate is not Outsourced Teleservices;
(iv) any Outsourced Teleservices business, regardless of industry, with
respect to the following products or services: roadside or travelers
assistance, homeowners and appliance assistance, address change notification,
real estate and move-related services and claim reporting services; provided,
however, that CCG may permit the Company to provide Outsourced Teleservices
with respect to any one or more of these products or services on a contract by
contract basis, in which case the Company's permission will be limited to the
contracts specifically approved by CCG unless CCG expressly permits the Company
to provide Outsourced Teleservices with respect to any of these restricted
products
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<PAGE> 9
or services without limitation to a particular contract, in which case
such Outsourced Teleservices shall be within the definition of "Permitted
Business" from that point forward;
(v) any Outsourced Teleservices business with respect to any
teleservices product or service within the automotive, real estate and
insurance industries; provided, however, that CCG may permit the Company to
provide Outsourced Teleservices within these industries on a contract by
contract basis, in which case the Company's permission will be limited to the
contracts specifically approved by CCG unless CCG expressly permits the
Company to provide Outsourced Teleservices products or services within the
automotive, insurance or real estate industry without limitation to a
particular contract, in which case such Outsourced Teleservices shall be
within the definition of "Permitted Business" from that point forward;
(vi) any Outsourced Teleservices business where the only services
provided are staffing services (as opposed to, for example, furnishing or
managing equipment or systems);
(vii) any reservation center, federal government, or catalogue, mail
order or direct sales Outsourced Teleservices business; provided, however, that
Norrell may permit the Company to provide these restricted types of Outsourced
Teleservices on a contract by contract basis, in which case the Company's
permission will be limited to the contracts specifically approved by Norrell
unless Norrell expressly permits the Company to provide any of these restricted
types of Outsourced Teleservices without limitation to a particular contract,
in which case such permitted Outsourced Teleservices shall be within the
definition of "Permitted Business" from that point forward;
(viii) any relationship between Norrell with respect to United Parcel
Services, International Business Machine Corporation, Cinergy Inc., or Thompson
Consumer Electronics Corporation (as to its Indianapolis locations); and
(ix) any business opportunity or relationship that does not otherwise
fall within the definition of "Outsourced Teleservices."
ARTICLE III
INITIAL CONTRIBUTIONS; ADDITIONAL CONTRIBUTIONS;
CONTRIBUTIONS IN KIND
3.1 Initial Contributions. The per-Share purchase price for all Shares
purchased pursuant to this Article III shall be $100 for Common Stock and
$1,000 for Preferred Stock (respectively, the "Common Stock Purchase Price" and
the "Preferred Stock Purchase Price"). Within thirty (30) days after the
Effective Date, the Initial Stockholders shall
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purchase Shares for an aggregate purchase price of Two Million Dollars
($2,000,000), which purchase obligation shall be allocated between the two
Initial Stockholders as follows:
COMMON STOCK
<TABLE>
<CAPTION>
Amount
Committed Number
Stockholder to be Paid of Shares
----------- ---------- ---------
<S> <C> <C> <C>
Norrell $ 918,000 9,180
CCG $ 882,000 8,820
----------
Total $1,800,000 18,000
========== ======
</TABLE>
PREFERRED STOCK
<TABLE>
<CAPTION>
Amount
Committed Number
Stockholder to be Paid of Shares
----------- ---------- ---------
<S> <C> <C> <C>
Norrell $200,000 200
Total $200,000 200
======== ===
</TABLE>
The amounts committed to be paid by the Initial Stockholders under this Section
3.1 are sometimes referred to hereinafter collectively as the "Initial
Contributions."
3.2 Additional Contributions.
(a) If the Board of Directors from time to time determines that,
taking into account all of the Company's existing resources and its future
business prospects, the Company's existing funds are not adequate for it to
conduct its business in the manner intended by the Board of Directors (for
example, such funds are not adequate for the Company to pay (i) the operating
costs of the Company, (ii) all capital needs of the Company or (iii) all other
costs and expenses necessary or appropriate in order for the Company to take
any actions which the Company is permitted or required to take hereunder),
then the Board of Directors may make capital calls ("Capital Calls") requiring
then existing Stockholders to contribute to the Company such sums as the Board
of Directors determines are needed by the Company ("Additional Contributions").
Each Capital Call shall be in the form of a notice to Stockholders in accordance
with Section 3.2(b), and, except as otherwise provided in this Agreement, shall
consist of a call for the purchase of additional Shares of
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Common Stock (a "Common Stock Call") on a Pro-Rata basis, representing ninety
percent (90%) of the Additional Contribution subject to the Capital Call, and
Preferred Stock (a "Preferred Stock Call"), representing the remaining ten
percent (10%) of the Additional Contribution subject to the Capital Call.
Notwithstanding anything to the contrary in this Agreement, the rights of the
Board of Directors under this Article III to make further Capital Calls shall
terminate immediately upon the earliest to occur of (A) upon the effectiveness
of an IPO Registration Statement (as defined in Section 4.2), or (B) the total
contribution of $18,000,000 through Capital Calls, or (C) the date that is ten
(10) years after the Effective Date. For example, if the Board of Directors
calls for and the Initial Stockholders pay the maximum amount of Additional
Contributions, the Initial Stockholders shall own the following amounts of
Common Stock and Preferred Stock:
COMMON STOCK
<TABLE>
<CAPTION>
Amount
Committed Number
Stockholder to be Paid of Shares
----------- ---------- ---------
<S> <C> <C> <C>
Norrell $ 9,180,000 91,800
CCG $ 8,820,000 88,200
----------- =======
Total $18,000,000 180,000
=========== =======
</TABLE>
PREFERRED STOCK
<TABLE>
<CAPTION>
Amount
Committed Number
Stockholder to be Paid of Shares
----------- ---------- ---------
<S> <C> <C> <C>
Norrell $2,000,000 2,000
Total $2,000,000 2,000
========== =====
</TABLE>
(b) If the Board of Directors determines to make a Capital Call, it shall
notify the Stockholders of such decision in writing (the "Notice of Call"),
which notice shall set forth the amount required to be contributed, the terms
and conditions of the contribution and the deadline for making the contribution,
which must be at least sixty (60) days after the date of the Notice of Call. The
Stockholders shall endeavor to make the Additional Contribution as soon as
possible but in any event no later than the deadline specified in the Notice of
Call.
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(c) Norrell shall be the only Party subject to Preferred Stock Calls.
Notwithstanding anything to the contrary in this Agreement, once Capital Calls
have totalled Four Million Dollars ($4,000,000), before the Board of Directors
can issue an additional Common Stock Call, the next One Million Four Hundred
Thousand Dollars ($1,400,000) of Capital Calls shall be exclusively Preferred
Stock Calls, after which there shall be no further Preferred Stock Calls.
Notwithstanding anything to the contrary in this Agreement, Norrell shall be
subject to Preferred Stock Calls only for as long as it owns more than fifty
percent (50%) of the Common Stock.
3.3 Defaults With Respect to Capital Calls.
(a) If any Stockholder (the "Defaulting Stockholder") for any reason
fails to deliver to the Company all or any part of its Pro-Rata portion of a
required Initial or Additional Contribution (with such portion not being
contributed being referred to herein as the "Defaulted Amount") within the
applicable time period, each of the other Stockholders (the "Non-Defaulting
Stockholders") shall have the right, but not the obligation, within at least two
(2) business days after receiving notice from the Company of the default, to
contribute to the Company all or any portion of the Defaulted Amount (the
"Contributed Amount"), subject to the contingencies described below, which are
applicable in the event the amount such Non-Defaulting Stockholders wish to
contribute exceed the Defaulted Amount (an "Oversubscribed Contribution"). Any
Non-Defaulting Stockholders who contribute to the Company all or a portion of
the Defaulted Amount pursuant to this Section 3.3 are be referred to as a
"Contributing Stockholder." In the event of an Oversubscribed Contribution,
each Contributing Stockholder's contribution shall be limited to the
Contributing Stockholder's Pro-Rata portion of the entire Defaulted Amount plus
the Contributing Stockholder's Pro-Rata portion of the balance of the Defaulted
Amount not being contributed by other Stockholders; provided, however, that in
determining a Contributing Stockholder's Pro-Rata portion of the Defaulted
Amount, the Defaulting Stockholder shall be deemed to own no Shares. In
exchange for the Contributed Amount, the Contributing Stockholders shall each be
entitled to (i) receive from the Company that number of shares of Common Stock
issued at the Common Stock Purchase Price represented by its portion of the
Contributed Amount, and (ii) receive directly from the Defaulting Stockholder,
and the Defaulting Stockholder shall be obligated to transfer to each
Contributing Stockholder, that number of shares of Common Stock equal to
one-half (1/2) of the number of shares of Common Stock to be issued to it in
accordance with clause (i) of this sentence.
(b) If Norrell for any reason fails to deliver to the Company all or
any portion of funds subject to a Preferred Stock Capital Call within the
required time period (with such portion not being contributed being referred to
herein as the "Defaulted Preferred Amount"), then CCG shall have the right, but
not the obligation, to contribute to the Company all or any portion of the
Defaulted Preferred Amount (the "Contributed Preferred Amount") and CCG shall
receive from the Company in exchange therefor, at CCG's
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election, either (i) the number of shares of Preferred Stock issuable for the
Contributed Preferred Amount at the Preferred Stock Purchase Price, or (ii) that
number of shares of Common Stock issuable for the Contributed Preferred Amount
at the Common Stock Purchase Price. Regardless of whether CCG elects to receive
Common Stock pursuant to (ii) or Preferred Stock pursuant to (i) of the
preceding sentence, CCG shall also receive directly from Norrell, and Norrell
shall be obligated to transfer to CCG, that number of shares of Common Stock
owned by Norrell equal to five (5) times the number of shares of Preferred Stock
represented by the Contributed Preferred Amount.
3.4 Disputes. Any Referee resolving a dispute as to the appropriateness
of a Capital Call shall consider both (i) whether the Board of Directors acted
in accordance with the standard set forth in Section 3.2(a), and (ii) any other
relevant factors, including the reasonable interests of the Stockholders.
3.5 Collection of Amounts Required to be Contributed. In the event any
Stockholder shall fail to make any capital contribution that is required
hereunder and the other Stockholders do not tender to the Company the entire
amount of the default, then the Company shall be entitled to pursue the
collection of the unpaid balance of the Defaulted Amount, plus interest at the
rate of eighteen (18) percent per annum, and the defaulting Stockholder shall
be liable to the Company for any and all such amounts plus the costs of
collection, including court costs and attorneys' fees.
3.6 Limitation of Liability. Except as is specifically required by the
DGCL, no Stockholder shall be personally liable to any third party for or in
connection with any obligation, act or omission of the Company. No Stockholder
shall be responsible for any loss of any other Stockholder other than for
losses occasioned by a breach of this Agreement. The members of the Board of
Directors shall not be liable for the return of the capital contributions of
the Stockholders or any portion thereof.
3.7 Other Contributions to the Company.
(a) Each Initial Stockholder agrees to refer to the Company any
Outsourced Teleservices business opportunities that the Initial Stockholder
develops or that are presented to it while the Initial Stockholder owns ten
percent (10%) or more of the Common Stock, which opportunities the Board of
Directors can accept or decline. Provided that (i) the Board of Directors votes
to decline a business opportunity referred to it by an Initial Stockholder
pursuant to the requirements of the first sentence of this paragraph (a), and
(ii) the Director(s) nominated by the referring Initial Stockholder voted to
accept such business opportunity, the Initial Stockholder referring the business
opportunity shall be entitled to pursue the business opportunity itself, as long
as it does so on terms and conditions that are no more favorable than the terms
and conditions that would have been applicable to the Company had the Company
accepted the business opportunity. This Agreement does not
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restrict either Initial Stockholder from pursuing any Outsourced Teleservices
business opportunity that is within the definition of Excluded Business.
(b) If either Initial Stockholder ceases to own ten percent (10%) or
more of the Shares, the referral obligations set forth in paragraph (a) shall no
longer apply to that Initial Stockholder, but the foregoing referral obligations
will again apply if the Initial Stockholder's Share ownership again rises to ten
percent (10%) or more.
(c) Each Initial Stockholder, as long as it owns in excess of ten
percent (10%) of the Common Stock, shall provide the Company with the products,
services and rights set forth on Schedule 3.7, for use by the Company in the
Permitted Business (to the extent such products, services and rights can legally
be provided to the Company without material cost or hardship to the transferring
party). In return for these contributions, the Company shall pay each
contributing Initial Stockholder: for any contributed tangible assets an amount
equal to the net book value for the contributed asset (not to exceed fair market
value); for any contributed intangible assets an amount equal to the incremental
cost of providing such item to the Company; and for any other services provided
by an Initial Stockholder (except for those administrative services to be
provided by Norrell in accordance with Section 3.7(d)) to the Company an amount
equal to the cost of such services (not to exceed fair market value) as long as
the Initial Stockholders agree on such administrative services costs before they
are incurred.
(d) Norrell shall initially provide to the Company and the Company
shall acquire from Norrell "back office" administrative assistance that is
available directly from Norrell, including functions such as tax, accounting,
risk management and legal services. In return for such services, Norrell shall
be entitled to five percent (5%) of the difference between the revenues of the
Company for the period of time Norrell is providing the services and the amount
of any subcontract fees paid or payable to Norrell (excluding those fees
described in this Section 3.7(d)) during such period (provided further that
except as otherwise provided in the last sentence of this paragraph (d) Norrell
shall not receive any additional amounts as expenses, or third party
reimbursements for providing such services). After providing Norrell with at
least six (6) months prior notice of its intent to do so, the Company may elect
to obtain some or all of these administrative services from CCG or third
parties, if the Company determines that it would be in its best interests to do
so. Norrell will obtain the approval of the Board of Directors before
subcontracting with any third party for the provision of back office
administrative assistance, which approval may not be unreasonably withheld or
delayed.
(e) To the extent the Company needs any service or product that either
Initial Stockholder is in the business of providing to its customers (e.g.
temporary staffing, in the case of Norrell), the Company agrees to acquire such
service or product from the Initial Stockholder at a price that is as favorable
to the Company as the most favorable price provided by the Initial Stockholder
to any other customer or client for a comparable service
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<PAGE> 15
or product in a comparable market (provided that the price charged to the
Company shall never be greater than the Initial Stockholder's average gross
margin for such services). Notwithstanding the foregoing, the Company shall not
be obligated to acquire any service or product from an Initial Stockholder if
the Company is willing and able to provide such service or product internally or
if the Company's Board of Directors reasonably and in good faith concludes that
the overall quality of the service or product is unacceptable or the price is
not reasonable. In no event shall a Stockholder be required to provide any such
service or product.
(f) Stockholders may be required by lenders of the Company to guarantee
certain loans or other financial obligations of the Company provided that the
amount of any such guarantee will be limited and allocated among the
Stockholders Pro-Rata. The amount guaranteed by any Stockholder will be
credited towards the Stockholder's share of the $20,000,000 aggregate capital
contribution limit; provided, however, that if within the ten-year period
following the Effective Date the Company's loan or financial obligation is
discharged or if the Stockholder's guarantee is otherwise released without
having been called by the lender, then the credit against the capital
contribution limit shall immediately cease to exist and the Stockholder's
obligations with respect to that capital contribution limit shall be as
otherwise set forth in this Agreement. In the event that an Initial Stockholder
intends to exercise any registration rights it may have with respect to any
Common Stock, such Initial Stockholder may require all Stockholders (but not
less than all) to replace any or all guarantees with Additional Capital
Contributions to be made in accordance with Article III.
ARTICLE IV
MANAGEMENT OF COMPANY
4.1 Board of Directors. The business and affairs of the Company shall be
managed by the Board of Directors except for those rights granted directly to
the any Stockholders in this Agreement. The rights and responsibilities of the
Board of Directors are generally set forth in the Company's Bylaws, as
supplemented by provisions in this Agreement. To the extent possible, with
respect to any issue involving the Board of Directors, the Bylaws should be
interpreted in a manner that is consistent with this Agreement and any
inconsistency should be resolved in favor of this Agreement.
4.2 Composition of Board of Directors. The Bylaws shall provide that
until the effective date of the first SEC registration statement filed under
the 1933 Act covering an initial public offering of the Company's Common Stock,
whether for the sale of Shares of Common Stock by the Company or by any
Stockholder (an "IPO Registration Statement") the Board of Directors shall
consist of an even number of members unless otherwise agreed to by Stockholders
owning at least seventy-six percent (76%) of the Common Stock. As long as both
Initial Stockholders own at least ten percent (10%) of the Common Stock, the
member of the Board of Directors serving as Chairman of the Board shall each
year alternate
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between an individual nominated by Norrell and an individual nominated by CCG
with the initial Chairman of the Board to be nominated by CCG.
4.3 Nomination of Directors if Either Initial Stockholder Owns More than
10% of the Common Stock. As long as either Initial Stockholder owns more than
ten percent (10%) of the Common Stock, (a) until the effectiveness of an IPO
Registration Statement, then that Initial Stockholder shall be entitled to and
shall nominate one-half of the members of the Board of Directors, and (b) from
and after the filing of the IPO Registration Statement that Initial Stockholder
shall be entitled to nominate one-half of the members of the Board of Directors
if there shall be an even number of directors, or one-half of one less than the
number of members of the entire Board of Directors, if there is an odd number
of Directors (with the final director being selected by agreement of the
Initial Stockholders).
4.4 Nomination of Directors if Either Initial Stockholder Owns More than
75% of the Common Stock. If, at any time and from time to time, either Initial
Stockholder owns more than seventy-five percent (75%) of the Common Stock,
then, for as long as the Initial Stockholder owns more than seventy-five
percent (75%) of such Shares, the nomination rights described in Section 4.3
shall cease to apply and each candidate for the Board of Directors shall be
nominated by the Board of Directors or as otherwise provided in the Bylaws.
4.5 Nomination of Directors in Other Situations. In all situations other
than those expressly covered in Section 4.3 and 4.4 or in instances where
Sections 4.3 or 4.4 do not specify how all of the members of the Board of
Directors shall be nominated, each candidate for the Board of Directors shall
be nominated by the Board of Directors or as otherwise provided by the Bylaws.
4.6 Modification of Rights. Notwithstanding anything to the contrary in
this Agreement, in the event that an Initial Stockholder's ownership of Common
Stock drops below twenty-five percent (25%), that Initial Stockholder shall
have the right, if it expressly so elects and notifies the other Initial
Stockholder and the Company of this election within five (5) days after its
ownership drops below 25% (and, from time to time thereafter, within five (5)
days after any further sale(s) of its Shares of Common Stock after which its
ownership remains below 25% but above 10%), to waive its rights under Section
4.3 to nominate fifty percent of the members of the Board of Directors (which
rights otherwise would apply as long as the Initial Stockholder owned more than
ten percent (10%) of the Common Stock), and in return for such election, to the
extent that the Initial Stockholder's ownership interest remains below
twenty-five percent: (a) the Initial Stockholder shall no longer be bound by
the referral obligations set forth in Section 3.7(a), (b) and (c); (b) the
non-competition covenant in Section 7.2 shall not be applicable to such Initial
Stockholder; and (c) the twenty-four month and twelve month non-solicitation
covenants set forth in Sections 7.3(a) and (b), respectively, shall commence.
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ARTICLE V
REIMBURSEMENT OF INITIAL STOCKHOLDER EXPENSES
5.1 Reimbursement of Expenses. Each Initial Stockholder shall be
reimbursed for all reasonable out-of-pocket expenses directly incurred on behalf
of the Company and approved by the Board of Directors, including, without
limitation, any organizational, incorporation and pre-subscription expenses
incurred on behalf of the Company that have been so approved by the Board of
Directors; provided, however, that each Initial Stockholder shall pay all of its
legal expenses, including but not limited to the expenses and fees associated
with drafting and negotiating this Agreement.
ARTICLE VI
DISTRIBUTIONS OF CASH
6.1 Cash Flow. The Board of Directors, in the exercise of its discretion,
shall determine whether the financial condition and financing agreements and
commitments of the Company will permit the distribution of any monies of the
Company; provided however, that the Board of Directors, in making such
determination, may provide for the retention of a reasonable cash reserve
(taking into consideration the availability in the future of other assets or
income of the Company), as determined by the Board of Directors, in an amount at
least equivalent to the sums determined by it in its discretion as necessary to
be retained for future contemplated capital expenditures, expenses and
obligations of the Company. The Board of Directors shall make a determination
at least as of the end of each calendar year as to whether or not there are
funds available for distribution.
6.2 Distribution of Cash Flow. All funds so determined by the Board of
Directors to be available for distribution shall be distributed as follows:
(a) First, to repay the currently due and payable portions of any
working or operating capital loan or advance (including principal and interest)
made by any Stockholder to the Company;
(b) Second, to discharge any accrued dividend, redemption or other
payment obligation (and any past obligation that the Company was unable to
meet) with respect to any outstanding Preferred Stock;
(c) Third, to repay the currently due and payable portions of any loan
(including principal and interest) made by a Stockholder to the Company other
than the loans described in (a) above; and
(d) Fourth, to the Stockholders as dividends in accordance with the
DGCL.
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6.3 Limitations on Distribution. No distribution shall be made to
Stockholders if prohibited by the DGCL.
ARTICLE VII
CONFIDENTIALITY AND RESTRICTIVE COVENANTS
7.1 Confidentiality Covenant. Ancillary to and in consideration of
each Stockholder's right to own its Shares, each Stockholder agrees that
Stockholder will not, other than directly for the benefit of or at the
direction of or with the express, prior written approval of the Company,
directly or indirectly, alone or in conjunction with one or more Persons,
redistribute, market, publish, disclose or divulge to any other person or
entity (except for disclosures by a Stockholder to prospective investors or
underwriters who execute a confidentiality agreement in form and substance
acceptable to the Company), or use or modify for use, directly or indirectly in
any way for any person or entity: (i) any "Confidential Information" (as
defined below) during the period of time that Stockholder owns Shares and for
twenty four (24) months after it ceases to own any Shares; and (ii) any "Trade
Secrets" (as defined below) at any time (during or after the period which it
owns Shares) during which such information or data shall continue to constitute
a "Trade Secret." Stockholder agrees to cooperate with any reasonable
confidentiality requirements of the Company. As used in this Article VII,
"Trade Secrets" shall have the meaning given that term under Delaware law and
"Confidential Information" shall mean all valuable, proprietary and confidential
information belonging to or pertaining to the Company or a Customer that does
not constitute a Trade Secret of the Company. With respect to any information
associated with any product, service or rights contributed to the Company by an
Initial Stockholder pursuant to Section 3.7(c) that meets the above definition
of Trade Secret or Confidential Information, for purposes of this Article VII,
shall be deemed to be the Trade Secret or Confidential Information of the
Company, but the Initial Stockholder making the contribution shall retain all
rights associated therewith (subject to the rights granted to the Company).
7.2 Limitation On Competition. Ancillary to and in consideration of
each Stockholder's right to own its Shares, each Stockholder agrees that such
Stockholder, as long as it owns at least ten percent (10%) of the Common Stock,
will not, other than with the express, prior written approval of the Company,
directly or indirectly, alone or in conjunction with one or more Persons,
engage in Outsourced Teleservices (except to the extent such activities are
within the definition of "Excluded Business") or enter into a "Competitive
Position" (as defined later below) (provided, however, that an Initial
Stockholder's providing, on an arm's length basis, to a Direct Competitor any
services or products that fall within the definition of "Excluded Business"
shall not, by itself, mean that such Initial Stockholder has a "Competitive
Position" with a Direct Competitor). For purposes of this Agreement, a
"Competitive Position" is an employment, directorship,
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partnership, advisory, agency, or control relationship, that is initiated
anywhere in the continental United States, between a Stockholder and a Direct
Competitor.
7.3 Limitation On Soliciting Customers Or Personnel. Ancillary to and in
consideration of each Stockholder's right to own its Shares, each Stockholder
agrees that it will not, other than with the express, prior written approval of
the Company, directly or indirectly, alone or in conjunction with one or more
Persons:
(a) during the period of time such Stockholder owns at least ten
percent (10%) of the Common Stock and for twenty-four (24) months after the last
date that such Stockholder owns at least ten percent (10%) of the Common Stock
provide (or offer or solicit to provide) any Person that was a customer of the
Company at any point within twelve (12) months prior to the date the Stockholder
ceases owning at least ten percent (10%) of the Common Stock or the Preferred
Stock (a "Company Customer") with any services or products in competition with
those the Company was providing to the Company Customer, provided that this
restriction shall only prohibit the provision of services or products (or
offering or soliciting to do so) by the Stockholder at the same sites where the
Company was providing those services or products to the Company Customer or at
any additional location if such services or products are being provided by the
Company to the Company Customer under the same contract or a successor contract
as a result of a rebidding of the original contract;
(b) during the period of time such Stockholder owns at least ten
percent (10%) of the shares of Common Stock or Preferred Stock and for twelve
(12) months after the last date that such Stockholder owns at least ten percent
(10%) of the shares of Common Stock or Preferred Stock (i) solicit any
management level employee, director or advisor of the Company located anywhere
in the continental United States (a "Restricted Employee") to leave the
employment of the Company or otherwise sever a contractual, directorship,
advisory, partnership relationship with the Company or (ii) hire or engage any
such management level employee, director or advisor of the Company, provided,
however, that, notwithstanding the foregoing, any employee who had previously
been employed by an Initial Stockholder prior to being employed by the Company
may return to the employ of such Initial Stockholder with the prior written
approval of the Company's Board of Directors.
ARTICLE VIII
DISPUTE RESOLUTION
8.1 Dispute Resolution. Any disputes arising under or in conjunction with
this Agreement or any Party's performance or non-performance of its obligations
under this Agreement, other than the "Excluded Disputes" described in Section
8.4 below, or any stalemate or tie vote by the Board of Directors (each of the
foregoing being herein referred to as a "Dispute") shall be resolved in
accordance with the dispute resolution provisions set
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forth in this Article VIII. The Parties agree to use reasonable and good faith
efforts to resolve any Dispute informally. If the Parties are unable to resolve
the Dispute informally within a reasonable period of time, the Dispute may be
settled in accordance with the following provisions.
8.2 Disputes Among Directors. If, at the time of any Dispute on the Board
of Directors, there is (are) serving on the Board of Directors, individuals who
were not nominated by either Initial Stockholder, at the request of any Director
the Dispute shall be submitted to a committee of the Board of Directors
consisting of all such individuals, which committee shall be empowered to
recommend a final resolution to the Board of Directors. The Board of Directors
shall in good faith consider any proposed resolution offered by the independent
director(s). If the independent director(s) are unable to propose a resolution
of the Dispute that is acceptable to the Board of Directors involved in the
Dispute, or if there are no independent directors then in office, the Dispute
may be settled in accordance with the provisions of Section 8.3, if and only if
(a) an IPO Registration Statement has not yet become effective, and (b) the
matter has been considered and remained the subject of a tie vote at two
consecutive meetings of the Board of Directors when all directors were in
attendance.
8.3 Dispute Resolutions. If a Dispute of the Board of Directors cannot
be resolved in accordance with Section 8.2, then either Initial Stockholder may
remove the matter from consideration by the Board of Directors in accordance
with the Bylaws and submitted to the dispute resolution provisions of this
Section 8.3. In addition, if the issue or Dispute does not involve an action
proposed to be taken by the Board of Directors, the parties to the dispute
shall resolve the matter in accordance with this Section 8.3 promptly upon the
occurrence thereof. Any Dispute may be submitted to dispute resolution by any
Stockholder empowered hereunder by its giving written notice of its intention
to do so (the "Dispute Notice") to the Initial Stockholders, the Company (if
the matter has been voted on by the Board of Directors or otherwise is an issue
arising between the Company and one or more Stockholders) and all other
Stockholders who are parties to this Agreement and whose interests are directly
involved. The Dispute Notice shall identify the nature of the Dispute, and the
individual empowered to negotiate any resolution on behalf of the party sending
the Dispute Notice.
(a) Each party receiving a Dispute Notice shall, within twenty (20)
days following receipt of the Dispute Notice, also appoint an individual
empowered to negotiate the issue (the "Negotiator"), and shall notify the
Stockholder issuing the Dispute Notice of the identity of its Negotiator by
that date. The failure by any such Party to appoint a Negotiator as required
hereby shall constitute a waiver of that Party's right to do so, and the
remaining individual(s) shall act as the resolution panel hereunder.
(b) Each Negotiator, within fifteen (15) days after his appointment,
shall determine his position on the Dispute and present a Term Sheet containing
all of the Terms
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of his proposed resolution (a "Term Sheet"). If after exchange of the Term
Sheets the Negotiators cannot reach a conclusion within five (5) days, then by
that date the Negotiators shall agree upon a referee (the "Referee") whose
responsibility shall be, within fifteen (15) days after his appointment, to
review the Term Sheets submitted by the Negotiators (and all available written
evidence supporting the Term Sheet) and select the Term Sheet with the terms to
be the one that the Referee believes most closely represents the appropriate
resolution of the Dispute to be the solution to be taken. The Term Sheet so
selected by the Referee shall be reported by the Referee to each of the parties
as the resolution of the Dispute by written notice within twenty (20) days of
the Referee's appointment.
The Referee's determination shall consist of the following elements: (i)
findings of fact; (ii) rulings of law (if any are required); and (iii) the
remedy, which shall consist of selection of the Term Sheet described and an
order that it be implemented. The findings of fact and the rulings of law
shall be stated with sufficient particularity and precision so that both
parties and a reviewing court may reasonably comprehend the basis for the
remedy. The Referee shall apply the same substantive law that a Massachusetts
court would apply in deciding the same issues. The Referee's resolution of the
Dispute shall be binding upon the parties, provided, however, that any party may
seek review on the following grounds: (i) that the Referee's determination was
clearly erroneous under Law; or (ii) that there was no substantive evidence to
support the Referee's findings.
(c) If the Negotiators cannot agree on the identity of the Referee, the
Washington, D.C. office of the American Arbitration Association shall be
requested to nominate three individuals to serve as Referees pursuant to the
rules and regulations of such Association. If within three days of the receipt
of that listing, the parties cannot agree on which of the three shall serve as
Referee, the Referee shall be selected by such Association in accordance with
its rules then pertaining.
(d) Each Stockholder shall be solely responsible for paying the expenses
of its Negotiators. Upon receipt of the Referee's award, all parties shall
promptly execute any instruments, and take any action, including the execution
of consent votes and other agreements as are reasonably required by the
proponent of the Term Sheet selected by the Referee, to fully effectuate and
adopt the position set forth on that Term Sheet.
8.4 Excluded Disputes. The Parties may but shall not be obligated to
resolve the following matters in accordance with the dispute resolution
provisions of this Article VIII: (a) claims for injunctive or other equitable
relief; (b) disputes relating to acquisitions by the Company of another entity;
(c) disputes involving matters that under this Agreement or Law are to be
decided by Stockholders acting as stockholders in their individual interests in
the first instance; (d) disputes relating to Capital Calls in excess of an
aggregate of $20,000,000; (e) disputes arising under Sections 10.1 or 10.2 as
to whether the Company should be a purchaser of Shares or Article XV if the
issue is a determination of price established by a Referee thereunder, (f)
decisions by the Board of Directors under Section 7.3(b) regarding
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approvals of employees returning to an Initial Stockholder, or (g) disputes
arising among the Board of Directors after the effective date of an IPO
Registration Statement.
ARTICLE IX
MISCELLANEOUS INITIAL STOCKHOLDER RIGHTS
9.1 Rights to Maintain Proportionate Ownership.
(a) The Company grants each Initial Stockholder a continuing option,
in the event that the Company issues new shares of Common Stock (including, but
not limited to, the issuance of Common Stock in an initial public offering) to a
Person other than in response to a Capital Call (any such issuance being
referred to as a "New Issuance"), to purchase additional shares of Common Stock
to prevent any dilution of the Initial Stockholder's percentage ownership of all
issued and outstanding Common Stock prior to the New Issuance (the Initial
Stockholder's "Protected Percentage"), subject to the terms and conditions of
this Section 9.1. In the event of a New Issuance resulting from an Initial
Stockholder's exercise of demand registration rights under Article XVII at a
time when the Initial Stockholders collectively own at least eighty percent
(80%) of the Common Stock, then if each Initial Stockholder wishes to exercise
its rights under this Section 9.1, the Initial Stockholder exercising demand
registration rights shall be entitled to acquire under this Section 9.1 only
that number of Shares equal to its Pro-Rata portion of the New Issuance, but the
other Initial Stockholder shall be entitled to acquire not only its Pro-Rata
portion of the New Issuance but also its Pro-Rata portion of the Shares issued
under this Section 9.1 to the Initial Stockholder exercising demand registration
rights.
(b) The purchase price and other terms applicable to any exercise by
an Initial Stockholder of its purchase option under this Section 9.1 shall be
the same as those applicable to the Party or Parties acquiring the Common Stock
in connection with the New Issuance.
(c) The Company shall notify each Initial Stockholder in writing
whenever the Board of Directors approves a New Issuance and such notice shall
state the number of Shares proposed to be issued and the purchase price and
other terms and conditions associated with the New Issuance. The Initial
Stockholder's purchase option must be exercised, if at all, by a written notice
from the Initial Stockholder to the Company not later than thirty (30) days
after it has received the written notice of the New Issuance from the Company.
If an Initial Stockholder duly notifies the Company of its exercise of its
purchase option under this Section 9.1, the Company and the Initial Stockholder
must consummate the closing of the purchase no later than the later to occur of
(i) thirty (30) days after the receipt by the Company of notice from the Initial
Stockholder that it is exercising its purchase option, or (ii) fifteen (15) days
after the consummation of the New Issuance giving rise to the purchase option.
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(d) Notwithstanding the foregoing, an Initial Stockholder shall be
entitled to exercise the purchase option under this Section 9.1 with respect to
a New Issuance proceeding, or which is an issuance registered on, an IPO
Registration Statement and in any event only if (i) the Initial Stockholders
collectively own, immediately prior to the New Issuance, at least fifty percent
(50%) of the Common Stock, and (ii) such Initial Stockholder then owns at least
ten percent (10%) of the Common Stock.
9.2 Purchase Rights of Initial Stockholders.
(a) This Section 9.2 gives an Initial Stockholder (for purposes of
this Section 9.2, the "Purchasing Initial Stockholder") the right to purchase a
certain amount of Common Stock from the other Initial Stockholder (the "Selling
Initial Stockholder") in the event that the Selling Initial Stockholder desires
to sell Common Stock to a third party.
(b) If at any time, and from time to time, when the Selling Initial
Stockholder owns fifty one percent (51%) of all Common Stock and the Purchasing
Initial Stockholder owns at least forty-eight percent (48%) of all Common Stock,
the Selling Initial Stockholder desires to sell any Common Stock to a third
party, the Selling Initial Stockholder shall first notify the Purchasing Initial
Stockholder in writing of this intention, informing the Purchasing Initial
Stockholder of the terms and conditions of the proposed sale, including the
purchase price. This notice shall constitute an offer from the Selling Initial
Stockholder to the Purchasing Initial Stockholder to sell the Purchasing Initial
Stockholder an amount of Common Stock that is equal to two percent (2%) of all
Common Stock. The Purchasing Initial Stockholder shall have fifteen (15) days
from the date it receives the notice from the Selling Initial Stockholder to
notify the Selling Initial Stockholder that it wishes to accept this offer if it
intends to do so. If it elects to make this purchase and duly notifies the
Selling Initial Stockholder, the Purchasing Initial Stockholder shall have
thirty (30) days from the date of its notice electing to exercise this purchase
right to consummate the purchase of the two percent interest of Common Stock at
a purchase price that is equal to the Selling Initial Stockholder's capital cost
associated with the purchase Common Stock together with interest (at the Prime
Rate published in the Wall Street Journal) beginning as of the date the Selling
Initial Stockholder acquired the Common Stock.
(c) If at any time, and from time to time, when the Selling Initial
Stockholder owns fifty one percent (51%) of all Common Stock and the Purchasing
Initial Stockholder owns less than forty-eight percent (48%) but more than ten
percent (10%) of all Common Stock, the Selling Initial Stockholder desires to
sell to a third party any Common Stock, the Selling Initial Stockholder shall
first notify the Purchasing Initial Stockholder in writing of this intention,
informing the Purchasing Initial Stockholder of the terms and conditions of the
proposed sale, including the purchase price. This notice shall constitute an
offer from the Selling Initial Stockholder to the Purchasing Initial Stockholder
to sell the Purchasing Initial Stockholder an amount of Common Stock that is
equal to one percent (1%) of all Common Stock. The Purchasing Initial
Stockholder shall have fifteen (15) days from the date it
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receives the notice from the Selling Initial Stockholder to notify the Selling
Initial Stockholder that it wishes to accept this offer if it intends to do so.
If it elects to make this purchase and duly notifies the Selling Initial
Stockholder, the Purchasing Initial Stockholder shall have thirty (30) days from
the date of its notice electing to exercise this purchase right to consummate
the purchase of the one percent interest of Common Stock at a purchase price
that is equal to the greater of (i) the per share purchase price to be charged
to the third party or (ii) the Selling Initial Stockholder's capital cost
associated with the purchase Common Stock together interest (at the Prime Rate
published in the Wall Street Journal) beginning as of the date the Selling
Initial Stockholder acquired the Common Stock.
9.3 Certain Rights to Sell Shares. Notwithstanding anything to the
contrary in this Agreement, neither Initial Stockholder may sell or transfer
any of its Shares to a third party during the one year period beginning as of
the Effective Date without the prior written consent of the other Initial
Stockholder. At any point after the one year anniversary of the Effective
Date, either Initial Stockholder (a) may sell all or a portion of its Shares in
a public offering with each Initial Stockholder sharing in the overall costs
(other than internal costs) in proportion to its participation in the offering,
or (b) may negotiate a sale of all or a portion of its Shares to the other
Initial Stockholder. At any point after the second anniversary of the
Effective Date, either Initial Stockholder may sell all or a portion of its
Shares to a third party, subject to the provisions of Article X.
9.4 Bar on Sale of Shares To Company Competitor. Every Stockholder shall
be prohibited, unless such prohibition is waived by the Board of Directors and
both Initial Stockholders, from selling any Shares to a Direct Competitor.
ARTICLE X
RIGHT OF FIRST OFFER PROVISIONS
10.1 Right of First Offer Applicable to Initial Stockholders and the
Company. Except as otherwise specifically set forth in this Agreement, any
Initial Stockholder (the "Offering Initial Stockholder") that desires to offer
to sell all or any of the Initial Stockholder's Shares to a third party (a
"Share Transfer") shall not complete any such sale without first offering to
sell such Shares (the "Affected Shares") by simultaneous written notice to both
the other Initial Stockholder (the "Nonoffering Initial Stockholder") and the
Company (for purposes of this Section 10.1 only, an "Offer Notice"). For
purposes of this Article X, the right of first offer provisions shall not apply
to a sale of Shares by a Stockholder to an Affiliate of that Stockholder. The
Nonoffering Initial Stockholder shall have twenty (20) business days to
determine whether it wishes to purchase all but not less than all of the
Affected Shares at the prices and on the terms presented in the Offer Notice. If
the Nonoffering Initial Stockholder declines to purchase the Affected Shares in
accordance with the Offer Notice, then the Company shall have the right to
purchase all, but not less
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than all, of such Shares, as long as it does so by the "Offer Termination Date,"
which shall be the date that is five (5) business days after the earlier of the
date the Nonoffering Initial Stockholder declines to purchase such Affected
Shares or the date such purchase right lapses unexercised. If either the
Nonoffering Initial Stockholder or the Company wishes to purchase the Affected
Shares, it must consummate the purchase within thirty (30) days after it
provides notice to the Offering Initial Stockholder of its purchase decision. If
the Company declines or fails to timely purchase the Affected Shares in
accordance with the Offer Notice, then the Offering Initial Stockholder shall be
free to sell the Affected Shares to any one or more third parties ("Third Party
Purchasers") at any price equal to or greater than, and on terms equal to or
less favorable than those presented in the Offer Notice, provided that the
Offering Initial Stockholder must close the Share Transfer within one hundred
eighty (180) days after the Offer Termination Date. Notwithstanding the
foregoing, if the Nonoffering Stockholder or the Company gives notice of its
decision to purchase, and then fails to close such purchase (other than due to
the fault of the Offering Stockholder), no restrictions hereunder shall
thereafter apply to those Shares.
10.2 Right of First Offer Applicable to Other Stockholders.
(a) Except as otherwise set forth in Section 10.2(e) or elsewhere in
this Agreement, any Stockholder other than an Initial Stockholder (an "Offering
Stockholder") that desires to offer to sell any of its Shares (the "Affected
Shares") shall first notify each of the Initial Stockholders and the Company of
its intentions to sell and the terms and conditions of the proposed sale. This
notice (for purposes of this Section 10.2 only, an "Offer Notice") shall
constitute an offer by the Offering Stockholder to sell (i) to each Initial
Stockholder all (but not less than all) of the Initial Stockholder's Pro-Rata
portion of the Affected Shares, and (ii) in the event that one or both of the
Initial Stockholders do not elect to purchase the Shares, to the Company those
Affected Shares not purchased by the Initial Stockholders at the price and on
the terms specified in the Offer Notice.
(b) If an Initial Stockholder wishes to exercise its right to purchase
its Pro-Rata portion of the Affected Shares, it shall notify the Offering
Stockholder and the Company of this intention within twenty (20) business days
of its receipt of the Offer Notice. An Initial Stockholder that desires to
purchase its Pro-Rata portion of the Affected Shares, and that duly notifies the
Offering Stockholder and the Company of this fact, shall consummate the purchase
of such sale within thirty (30) business days after the date of its notice to
the Offering Stockholder and the Company that it wishes to purchase the Shares
upon the terms of the Offer Notice.
(c) If one or both of the Initial Stockholders do not elect to purchase
its Pro-Rata portion of the Affected Shares pursuant to paragraph (b) above,
then the Company shall have the right to purchase all (but not less than all) of
the non-purchased Shares, and if it intends to exercise this right, the Company
shall notify the Offering Stockholder of this intention within five (5) business
days of the date that the Company's purchase right arises.
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The Company shall consummate the purchase of such Shares on the last day for
timely consummation of an Initial Stockholder's purchase if there is to be one;
otherwise, within thirty (30) business days after the date of its notice to the
Offering Stockholder that it wishes to make the purchase at the price and on the
terms specified in the Offer Notice.
(d) The Offering Stockholder shall be free to sell any Affected Shares not
purchased by the Initial Stockholders or the Company under (b) or (c) to any one
or more Third Party Purchasers at any price equal to or greater than or on terms
equal to or less favorable than those offered to the Initial Stockholders and
the Company, provided that the Offering Stockholder must close the sale within
one hundred eighty (180) days after the Company declines to purchase the
Affected Shares or the date that the Company is no longer able to elect to
purchase the Affected Shares, whichever is earlier to occur.
(e) Notwithstanding the foregoing, if the Offering Stockholder under this
Section 10.2 is a direct Transferee of either Initial Stockholder and that
Initial Stockholder still owns at least ten percent (10%) or more of all shares
of Common Stock, then the first offer right shall first be extended by the
Offering Stockholder to that Initial Stockholder alone (rather than to both
Initial Stockholders), and that Initial Stockholder shall have the
thirty-business day right to purchase all Affected Shares and if that Initial
Stockholder does not so purchase the Affected Shares, the right shall be
extended to the other Initial Stockholder, and then to the Company, with the
remaining provisions of this Section 10.2 remaining applicable. In the event
that the Initial Stockholder from which the Transferee directly acquired its
Shares no longer owns at least ten percent (10%) of all Shares, then the right
of first offer shall be extended to the other Initial Stockholder alone first,
and then to the other Initial Stockholder, and then to the Company.
10.3 Right to Pledge or Encumber Shares. Except as otherwise expressly
provided in this Agreement, no Stockholder may hypothecate, encumber, pledge or
grant any lien, security or other interest in or to any Shares (any of the
foregoing being referred to as a "Pledge") other than a Pledge in favor of the
Company. Any Pledge of any Shares made or entered into not in accordance with
the provisions of this Section 10.3 shall be null and void and of no force or
effect. Notwithstanding the foregoing, an Initial Stockholder may pledge its
Shares to a qualified lending institution, but only if the Stockholder and the
lending institution agree that the other Initial Stockholder shall have a right
of first refusal to purchase such Shares at the greater of their fair market
value or collateral value in the event that the lending institution's
foreclosure rights are triggered and only if the Pledge secures an amount that
is not greater than the total amount of capital contributions made by the
Stockholder to date.
25
<PAGE> 27
ARTICLE XI
ACCOUNTING AND RECORDS; NONSOLICITATION UPON TRANSFER
11.1 Accounting Period. The Company's accounting period shall be a fiscal
year ending on the Sunday closest to the end of October. The Company may, by
majority vote of the Board of Directors, provide for an audit of the books and
records of the Company to be made at the Company's expense.
11.2 Records to be Maintained.
(a) At its principal office, the Company shall maintain its records,
including:
(i) a copy of the Certificate of Incorporation and all
amendments thereto;
(ii) copies of records that would enable a Stockholder to
determine the relative voting rights of the Stockholders;
(iii) copies of the Company's federal, foreign, state and
local income tax returns and reports, if any, for the three most
recent years; and
(iv) any financial statements of the Company for the
three most recent years.
(b) A Stockholder may, at such Stockholder's own expense, inspect
and copy any Company record upon reasonable request during ordinary
business hours.
11.3 Reports to be Furnished. The Company will mail the following reports
to each Stockholder for as long as such Stockholder is a holder of any Shares in
the Company:
(a) As soon as practicable after the end of each fiscal year, and
in any event within 90 days thereafter, such financial statements of the
Company as of the end of such fiscal year prepared in accordance with
GAAP, as the Board of Directors shall decide.
(b) As soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company and
in any event within 45 days thereafter, such quarterly financial
information of the Company for such period as the Board of Directors
shall decide.
(c) As soon as practicable after the end of each fiscal month and
in any event within 30 days thereafter, such monthly financial
information of the Company for such period as the Board of Directors
shall decide.
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<PAGE> 28
(d) Within 30 days prior to the beginning of each fiscal year, an
Annual Budget, which shall be developed and approved by the Board of
Directors. The Annual Budget shall set forth full and complete
forecasted balance sheets, statements of operations and statements of
cash flows for such fiscal year and for each month within that year. The
Annual Budget shall also describe the marketing, production, research and
development, organization and staffing and financial strategies that
support the Annual Budget's forecasted figures.
ARTICLE XII
LEGEND ON STOCK CERTIFICATES
Each certificate representing Shares subject to this Agreement (excluding
any Shares issued or sold in a public offering), whether they be Shares
originally issued or issued or transferred pursuant to this Agreement, shall
bear on its face in conspicuous type the following legend and an appropriate
state and/or securities legend:
"The shares of stock represented by this certificate (and all
transfers or pledges hereof) are subject to the restrictions of and are
transferable only in compliance with the provisions of that certain
Stockholders Agreement dated as of August ___, 1996, by and among Norcross
Inc. (the "Company") and Norrell Corporation and The Cross Country Group
LLC, a copy of which is on file at the office of the Company. Any
attempted transfer or pledge hereof in violation of the terms of such
Stockholders' Agreement shall be null and void and may not be recognized
by the Company."
In the event that such legend cannot practicably be placed on the face of
such certificate, either alone or in connection with other legends required by
law or by agreement to be placed on the face of such certificate, the legend
shall be set out on the back of the certificate, and notice thereof shall be
given in conspicuous type on the front.
ARTICLE XIII
VOTING AGREEMENT
13.1 Election of Directors. The Stockholders hereby agree that, with
respect to any vote by them for the election of directors for the Company
(whether the vote shall be in writing, by consent or at a regular or special
meeting), the Stockholders shall at all times throughout the Term vote for, or
shall otherwise take such action as may be appropriate to cause the voting for,
the election of any individuals nominated by Norrell, CCG or any Additional
Stockholder pursuant to Section 4.3 or 4.4 provided such individuals meet any
requirements established by applicable law to serve on the Board of Directors.
27
<PAGE> 29
13.2 Other Voting Rights. The following actions require the approval of
the holders of not less than seventy-six percent (76%) of the outstanding Common
Stock: (a) any amendment to the Certificate of Incorporation or the Bylaws; (b)
the sale, exchange, lease or other transfer of all or substantially all of the
assets of the Company; (c) the dissolution of the Company pursuant to the DGCL;
(d) the merger of the Company pursuant to the DGCL; (e) the Company's incurring
of any indebtedness in excess of $5,000,000; and (f) any New Issuance other than
as provided in Article III of this Agreement or as the same may be issued
pursuant to Article XVII.
ARTICLE XIV
TERM
14.1 Normal Duration. This Agreement shall commence on the Effective Date
and shall, unless sooner terminated pursuant to Section 14.2, continue in full
force and effect as provided herein for an initial term (the "Initial Term") of
twenty-five (25) years thereafter. This Agreement shall be automatically
renewed for successive, additional twenty-five (25)-year periods after the
expiration of the Initial Term, unless any Party notifies the other Parties in
writing at least thirty (30) days prior to the expiration of the then current
twenty-year term that it does not wish to renew the Agreement in which case the
Agreement shall remain in effect for only those Stockholders that have not given
notice that they do not wish to renew.
14.2 Early Termination. This Agreement shall terminate on the occurrence
of any of the following events:
(a) the liquidation or dissolution of the Company;
(b) a single Stockholder becoming the owner of all of the outstanding
Shares;
(c) the execution of a written instrument to that effect by the Company
and all Stockholders of the Company who are then parties to this Agreement; or
(d) a good faith and reasonable decision by either Initial Stockholder
that, following at least twenty-four (24) consecutive months where the Company
is unprofitable (in accordance with GAAP standards), that the business of the
Company should be wound down and the Company ultimately liquidated, with the
termination of this Agreement not to be effective until the effective date of
such liquidation; provided that if the Company is wound down and liquidated
pursuant to this paragraph (d), then the Company shall (i) make no further
capital calls other than those reasonably necessary to enable the Company to
discharge existing contracts and wind its business down and (ii) liquidate the
business in the manner prescribed by the Board of Directors.
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<PAGE> 30
14.3 Effect of Termination. Upon the termination of this Agreement, all
Shares shall be relieved from the terms and provisions of this Agreement, and
any certificates evidencing such Shares shall be surrendered to the Company for
cancellation and issuance of a new certificate without the legend provided for
in Article XII.
ARTICLE XV
MISCELLANEOUS COVENANTS AND OBLIGATIONS OF THE PARTIES
15.1 Change of Control of Initial Stockholder.
(a) In the event of a proposed sale of a controlling equity interest
in either Initial Stockholder to a Direct Competitor or in the event of a
proposed merger of either Initial Stockholder with a Direct Competitor where the
Direct Competitor is the surviving entity in the merger (excluding a sale or a
merger of any entity after which such entity is no longer an Affiliate of an
Initial Stockholder) (such sale or merger being referred to hereafter as a
"Change of Control Transaction"), then the Initial Stockholder whose equity is
being sold to a Direct Competitor or that is merging with a Direct Competitor
(in either case, the "Acquired Initial Stockholder") shall promptly notify the
other Initial Stockholder (the "Remaining Initial Stockholder") of the details
of the Change of Control Transaction at least thirty (30) days prior to the
consummation of the Change of Control Transaction (the "Change of Control
Notice").
(b) The delivery of a Change of Control Notice to the Remaining
Initial Stockholder shall give the Remaining Initial Stockholder the right to:
(i) require the Acquired Initial Stockholder to sell all of the Acquired Initial
Stockholder's Shares to the Remaining Initial Stockholder (a "Call Option"); or
(ii) require the Acquired Initial Stockholder to purchase all of the Remaining
Initial Stockholder's Shares (a "Put Option")(the Put Option and the Call Option
being referred to collectively as the "Change of Control Options"). The
Remaining Initial Stockholder shall have ten (10) business days after receipt of
the Change of Control Notice to notify the Acquired Initial Stockholder whether
or not it intends to exercise its right to conduct a determination of the
Designated Value (as defined in (c) below) of the Shares subject to the Change
of Control Option is determined as provided below (the "Exercise Notice").
(c) Promptly after the Remaining Initial Stockholder's delivery of an
Exercise Notice to the Acquired Initial Stockholder the process for determining
the price to be paid for the Shares to be purchased from or sold to the Acquired
Initial Stockholder (the "Designated Value") shall commence. The "Designated
Value" of the Shares shall be equal to the product of (1) the value of the
Company as a going business and (2) the Pro-Rata Percentage of the Shares to be
transferred.
29
<PAGE> 31
(i) The Remaining Initial Stockholder's Exercise Notice shall
include the name of an appraiser chosen by the Remaining Initial Stockholder.
The Acquired Initial Stockholder shall, within ten (10) days following receipt
of the Exercise Notice, also appoint an appraiser, and shall notify the
Remaining Initial Stockholder of the identity of its appraiser also by that
date. The failure by either such Party to appoint an appraiser as required
hereby shall constitute a waiver of that Party's right to do so, and the
remaining appraiser shall act as a sole appraiser hereunder.
(ii) Each appraiser, within thirty (30) days after his appointment,
shall make his determination of the Designated Value. If the Designated Values
presented by the appraisers so appointed differ by less than $200,000, then the
final Designated Value shall be equal to the arithematic average of the two
values. If the values of the appraisers differ by $200,000 or more, then the
two appraisers shall agree upon a referee (the "Referee") whose responsibility
shall be, within twenty (20) days after his appointment, to review the
appraisals submitted by the two appraisers (and all written evidence available
in support of each such appraisal) and select one of the two values put forth by
the appraisers with the selected value to be the one that the Referee believes
most closely represents the true Designated Value. The value so selected by the
Referee shall be reported by the Referee by written notice to each of the
parties as the final Designated Value within twenty (20) days of the Referee's
appointment.
The Referee's award shall consist of the following elements: (i)
findings of fact; (ii) rulings of law (if any are required); and (iii) the
remedy, which shall consist of a finding of the Designated Value. The findings
of fact and the rulings of law shall be stated with sufficient particularity and
precision so that both parties and a reviewing court may reasonably comprehend
the basis for the remedy. The Referee shall apply the same substantive law that
a Massachusetts court would apply in deciding the same issues. The Referee's
determination of the Designated Value shall be binding upon the parties,
provided, however, that any party may seek review on the following grounds: (i)
that the Referee's determination was clearly erroneous under Law; or (ii) that
there was no substantive evidence to support the Referee's findings.
(iii) If the two appraisers cannot agree upon the identity of the
Referee, the American Arbitration Association shall be requested to nominate
three individuals to serve as Referees pursuant to the rules and regulations of
such Association. If within three days of the receipt of that listing, the
parties cannot agree on which of the three shall serve as Referee, the Referee
shall be selected by such Association in accordance with its pertinent rules.
(iv) Each Initial Stockholder shall be solely responsible for paying
the expenses of its appraiser.
30
<PAGE> 32
(d) Within five (5) days after the establishment of the final Designated
Value, the Remaining Initial Stockholder shall notify the Acquired Initial
Stockholder whether it will exercise a Call Option or a Put Option (the "Final
Notice"). The Acquired Initial Stockholder shall have five (5) days after
receiving the Final Notice to elect whether or not to terminate the Change of
Control Transaction or proceed with the Change of Control Transaction and allow
the Remaining Initial Stockholder to proceed with its Change of Control Option.
If the Acquired Initial Stockholder elects to proceed with the Change of Control
Transaction, the Put Option or the Call Option must be consummated within
fifteen (15) business days of the date the Acquired Initial Stockholder received
the Final Notice.
ARTICLE XVI
CERTAIN RIGHTS AND OBLIGATIONS OF TRANSFEREE
16.1 Condition Precedent. No sale or transfer of Shares under this
Agreement shall be effective until the Transferee has executed this Agreement
(excluding Transferees acquiring Shares acquired in an initial public offering
or otherwise on the open market).
16.2 Transferees Of Initial Stockholders. A Transferee of all of the
Shares of either Initial Stockholder shall be entitled to all of the rights and
shall be bound by all of the obligations associated with the Shares of the
transferring Initial Stockholder under this Agreement as if such Transferee
were an "Initial Stockholder," except that the Transferee shall not be bound by
the referral obligations set forth in Section 3.7(a). A Transferee of some but
not all of the Shares of either Initial Stockholder shall be entitled to all of
the rights and shall be bound by all of the obligations of the transferring
Initial Stockholder associated with the Shares of the Initial Stockholder under
this Agreement except that the Transferee shall not be bound by the referral
obligations set forth in Section 3.7(a) and the Transferee shall not be
entitled to receive offers as an "Initial Stockholder" for purposes of the
first offer provisions in Section 10.1 or 10.2.
ARTICLE XVII
REGISTRATION RIGHTS
17.1 Required Public Offering of Shares. If the Company has not
registered its Shares in an underwritten initial public offering within five
years after the Effective Date, then either Initial Stockholder may request in
writing that the Company file with the Securities and Exchange Commission (the
"SEC"), an IPO Registration Statement covering no less than Ten Million Dollars
($10,000,000) and no more than Fifty Million Dollars ($50,000,000) of Shares.
Upon receipt of any such request from an Initial Stockholder, the Company shall
promptly begin preparation of the Registration Statement and handling all
matters necessary and incidental thereto and shall use its reasonably diligent
efforts to cause the Registration Statement to become effective as soon as
possible after it is filed.
31
<PAGE> 33
17.2 Demand Registration Rights. Each Initial Stockholder shall have the
right at any point after the one-year anniversary of the Effective Date, which
right may be exercised up to two times, to request the Company to register under
the 1933 Act all or any portion of the Initial Stockholder's Shares (provided
that the Shares with which the Initial Stockholder's request applies must have a
Fair Market Value of not less than Five Million Dollars ($5,000,000)) for sale
in the manner specified in such notice. Following receipt of any such notice,
the Company shall use its best efforts to register under the 1933 Act for public
sale in accordance with the method of disposition specified in such notice from
the Initial Stockholder the number of Shares specified in such notice. Selling
Stockholders hereunder will bear all costs associated with exercise of their
rights hereunder.
17.3 Incidental Registration Rights. If the Company at any time after
registering its Shares in an underwritten initial public offering proposes to
register additional Shares under the 1933 Act for sale to the public, whether
for its own account or for the account of other Stockholders or both, each such
time it will give written notice to each Initial Stockholder of its intention to
do so. Upon the written request of either Initial Stockholder, received by the
Company within thirty (30) days after the giving of any such notice by the
Company, to register any of its Shares, the Company shall use its best efforts
to cause such Shares as to which registration shall have been so requested to be
included in the Shares to be covered by the registration statement proposed to
be filed by the Company.
17.4 Registration Rights Agreement. The Initial Stockholders and the
Company agree that the detailed terms and conditions associated with the
registration rights granted to them pursuant to Sections 17.1, 17.2, 17.3 and
17.5 will be set forth in a mutually acceptable definitive Registration Rights
Agreement consistent with this Article XVII to be executed by the Initial
Stockholders and the Company within sixty (60) days of the date they execute
this Agreement.
17.5 Standstill Agreement. If requested in writing by the underwriters
for the initial underwritten public offering of Shares of the Company, each
Stockholder shall agree not to sell publicly any Shares (other than Shares
being registered in such offering) without the consent of such underwriters for
a period of not more than six (6) months following the effective date of the
registration statement relating to such offering.
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
18.1 Representations and Warranties. Each Party represents and
warrants to the other Parties that such Party has full power, capacity and
authority to execute and deliver this Agreement and to perform such Party's
obligations under this Agreements. Each Party represents and warrants to the
other Parties that no performance by it of its obligations under this Agreement
will result in any conflict with, breach of, or default or acceleration under,
32
<PAGE> 34
any mortgage, agreement, lease, indenture, or other instrument, order, judgment
or decree to which such Party is a party or by which such Party's properties or
assets may be bound or affected or violate any Law.
18.2 Entire Agreement. This Agreement represents the entire Agreement
among all the Stockholders of the Company. This Agreement may be amended only
as provided elsewhere in this Agreement.
18.3 Application of Delaware Law. This Agreement, the application and
interpretation hereof shall be governed exclusively by its terms and the laws
of the State of Delaware.
18.4 Construction. Whenever the singular form is used in this Agreement,
and when required by the context, the same shall include the plural and vice
versa, and the masculine gender shall include the feminine and neuter genders
and vice versa.
18.5 Headings; References. The headings in this Agreement are inserted
for convenience only and are in no way intended to describe, interpret, define,
or limit the scope, extent or intent of the Company Agreement or any provision
hereof. Any reference in this Agreement to an "Article", "Section", "Schedule"
or "Exhibit" shall mean the specified Article or Section of, or Schedule or
Exhibit to, this Agreement.
18.6 Waivers. The failure of any party to seek redress for violation
of or to insist upon the strict performance of any covenant or condition of
this Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
18.7 Rights and Remedies Cumulative. Except as otherwise provided in
this Agreement, the rights and remedies provided by this Agreement are
cumulative and the use of any one right or remedy by any party shall not
preclude or waive the right not use any or all other remedies. Such rights and
remedies are given in addition to any other rights the parties may have by law,
statute, ordinance or otherwise.
18.8 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
18.9 Certification of Non-Foreign Status. In order to comply with Section
1445 of the Code and the applicable Regulations, in the event of the disposition
by the Company of a United States real property interest as defined in the Code
and Regulations, each Stockholder shall provide to the Company, an affidavit
stating, under penalties of perjury, (i) the Stockholder's address, (ii) United
States taxpayer identification number, and (iii) that the Stockholder is not a
foreign person as that term is defined in the Code and Regulations.
33
<PAGE> 35
Failure by any Stockholder to provide such affidavit by the date of such
disposition shall authorize the Stockholders to withhold ten percent (10%) of
each such Stockholder's distribution share of the amount realized by the Company
on the disposition.
18.10 Further Assurances. The Stockholders each agree to cooperate, and to
execute and deliver in a timely fashion any and all additional documents
necessary to effectuate the purposes of this Agreement.
18.11 Time. TIME IS OF THE ESSENCE OF THIS AGREEMENT, AND TO ANY PAYMENTS,
ALLOCATIONS AND DISTRIBUTIONS SPECIFIED UNDER THIS AGREEMENT.
18.12 Assignment of Rights. No Party may assign its rights or obligations
under this Agreement to any other Person without the prior written consent of
the Initial Stockholders except in compliance with this Agreement, provided,
further, that a Party may assign such rights or obligations to an Affiliate
provided it furnishes written notice of the assignment to the Company and the
Initial Stockholders within five (5) days after the effective time of the
assignment and provided further that the assigning Party shall retain full and
primary liability for the full and complete performance of any assigned
obligations under this Agreement.
IN WITNESS WHEREOF, the parties have caused this Stockholders Agreement to
be duly executed as of the Effective Date.
NORRELL CORPORATION
By: /S/
--------------------------------------------
Title: E.V.P.
-----------------------------------------
THE CROSS COUNTRY GROUP, LLC
By: /S/ Jeffrey ?
--------------------------------------------
Title: Manager
-----------------------------------------
NORCROSS INC.
By:
--------------------------------------------
Title:
-----------------------------------------
34
<PAGE> 36
SCHEDULE 3.7
TO
STOCKHOLDERS AGREEMENT AMONG
NORRELL CORPORATION,
THE CROSS COUNTRY GROUP, LLC
AND NORCROSS, INC.
Dated August 15, 1996
Assets to be Provided
By Norrell:
Such services and assets are available to, or within the control of,
Norrell that may be useful to the Company in the Permitted Business.
By CCG:
A non-exclusive license to use, but not sell, decompile, alter or
sub-license, proprietary call processing software, including but not
limited to help-desk software, to the extent that (i) such software may
be licensed to the Company without the consent of third party providers,
and/or (ii) any necessary consents from third-party providers are
obtained.
<PAGE> 1
EXHIBIT 10.41
NORRELL CORPORATION
401(K) RETIREMENT SAVINGS PLAN
(1994 RESTATEMENT)
<PAGE> 2
NORRELL CORPORATION
401(K) RETIREMENT SAVINGS PLAN
(1994 RESTATEMENT)
On this 30th day of December, 1994, Norrell Corporation, a corporation
duly organized and existing under the laws of the State of Georgia (the
"Controlling Company"), hereby amends and restates the Norrell Corporation
Horizon Plan (Pace and Strides), which shall hereinafter be called the Norrell
Corporation 401(k) Retirement Savings Plan (the "Plan").
STATEMENT OF PURPOSE
A. The Plan initially was adopted effective as of November 1,
1972, and was last restated on June 7, 1994.
B. The Plan, as set forth in this document, is intended and
should be construed as a restatement and continuation of the Plan as previously
in effect. This restatement of the Plan is intended to effect the merger of
the Tascor Retirement Savings Plan (the "Tascor Plan") with and into the Plan,
effective as of December 31, 1994.
C. This restatement of the Plan also is intended to bring the
Plan (and, to the extent necessary, the Tascor Plan) into compliance with the
requirements of the Tax Reform Act of 1986 and all current laws and regulations
enacted or issued prior to the adoption date of this restatement. Therefore,
except as specified in this restatement or as otherwise necessary to bring
<PAGE> 3
the Plan into legal compliance, this restatement shall be effective as of
January 1, 1994, and the terms of the prior restatement (as amended) shall
control through December 31, 1993.
D. The primary purpose of the Plan is to recognize the
contributions made to the Controlling Company and its participating affiliates
by employees and to reward those contributions by providing eligible employees
with an opportunity to accumulate savings for their future security.
D. The Controlling Company intends that the Plan be a profit
sharing plan qualified under Sections 401(a) and 401(k) of the Internal Revenue
Code of 1986, as amended.
STATEMENT OF AGREEMENT
To amend and restate the Plan with the purposes and goals as
hereinabove described, the Controlling Company hereby sets forth the terms and
provisions as follows:
-2-
<PAGE> 4
NORRELL CORPORATION
401(K) RETIREMENT SAVINGS PLAN
(1994 RESTATEMENT)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 ACP or Average Contribution Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 ACP Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Active Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Additional Discretionary Matching Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Additional Discretionary Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.8 ADP or Actual Deferral Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 ADP Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 Annual Addition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Basic Matching Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 Basic Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 Before Tax Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 Before Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.18 Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.19 Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 Company Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 Compensations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Benefit Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(b) Section 415 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Key Employee Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(d) Testing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.23 Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 Controlling Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 Covered Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 Deferral Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.27 Defined Benefit Minimum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.28 Defined Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.29 Defined Benefit Plan Fraction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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1.30 Defined Contribution Minimum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.31 Defined Contribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.32 Defined Contribution Plan Fraction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.33 Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.34 Disability or Disabled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.35 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.36 Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.37 Eligible Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.38 Eligible Retirement Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.39 Eligible Rollover Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.40 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.41 Employment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.42 Entry Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.43 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.44 Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.45 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Excluded Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Family Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Nonresident Aliens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) Determination of Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(f) Compliance with Code Section 414(q) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.46 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.47 Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.48 Investment Fund or Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.49 Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.50 Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.51 Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.52 Limitation Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.53 Management Services Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.54 Matching Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.55 Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.56 Maternity or Paternity Leave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.57 Maximum Deferral Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.58 Named Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.59 Non-Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.60 Normal Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.61 Norrell Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.62 Norrell Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.63 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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1.64 Participating Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.65 Permissive Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.66 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.67 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.68 Profit Sharing Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.69 Qualified Spousal Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.70 Related Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.71 Required Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.72 Rollover Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.73 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.74 Severance Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.75 Specified Matching Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.76 Spouse or Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.77 Staffing Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.78 Tascor Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.79 Temporary Services Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.80 Top-Heavy Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.81 Top-Heavy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.82 Trust or Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.83 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.84 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.85 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.86 Years of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Aggregation Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Counting Periods of Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Pre-Break Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(d) Post-Break Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Predecessor Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(f) Predecessor Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE II ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.1 Initial Eligibility Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) General Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Grandfathered Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(c) New Participating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2 Treatment of Interruptions of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Leave of Absence or Layoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Reemployment Before Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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(c) Reemployment After Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Reparticipation Upon Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.3 Change in Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Loss of Covered Employee Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Change to Covered Employee Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Change by Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.4 Limited Participant by Certain Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE III CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Deferral Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.3 Additional Discretionary Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.4 Form of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.5 Timing of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Matching, Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.6 Contingent Nature of Company Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.7 Restoration of Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.8 Pre-1995 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV ROLLOVERS CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.1 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Request by Covered Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Acceptance of Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V PARTICIPANTS' ACCOUNTS; CREDITING AND ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 Establishment of Participants' Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Allocation and Crediting of Before-Tax, Matching, Rollover
and Transfer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Allocation and Crediting of Additional Discretionary Matching
Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4 Allocation and Crediting of Investment Experience . . . . . . . . . . . . . . . . . . . . . . . . . 23
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(a) General Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(b) Per Capita Supplemental Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.5 Allocation of Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.6 Notice to Participants of Account Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.7 Good Faith Valuation Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.8 Errors and Omissions in Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI CONTRIBUTION AND SECTION 415 LIMITATIONS AND
NONDISCRIMINATION REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.1 Deductibility Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.2 Maximum Limitation on Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(a) Maximum Elective Deferrals Under Participating Company Plans . . . . . . . . . . . . . . . 26
(b) Return of Excess Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 26
(c) Return of Excess Elective Deferrals Provided by Other
Participating Company Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(d) Discretionary Return of Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . 27
(e) Return of Excess Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.3 Nondiscrimination Requirements for Before-Tax Contributions . . . . . . . . . . . . . . . . . . . . 27
(a) ADP Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Multiple Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Adjustments to Actual Deferral Percentages . . . . . . . . . . . . . . . . . . . . . . . . 28
6.4 Nondiscrimination Requirements for Matching Contributions . . . . . . . . . . . . . . . . . . . . . 29
(a) ACP Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Multiple Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Adjustments to Average Contribution Percentages . . . . . . . . . . . . . . . . . . . . . . 29
6.5 Multiple Use of Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Aggregate Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Multiple Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Correction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(d) Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.6 Order of Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.7 Code Section 415 Limitations on Maximum Contributions . . . . . . . . . . . . . . . . . . . . . . . 31
(a) General Limit on Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Combined Plan Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Correction of Excess Annual Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) Special Definitions Applicable to Code Section 415 Limitations . . . . . . . . . . . . . . 34
(e) Compliance with Code Section 415 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.8 Construction of Limitations and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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ARTICLE VII INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.1 Establishment of Trust Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.2 Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(a) Named Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(b) Other Investment Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) Reinvestment of Cash Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.3 Participant Direction of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(a) Investment of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(b) Investment of Existing Account Balances . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(c) Conditions Applicable to Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(d) Restrictions on Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(e) Sales and Purchases of Norrell Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4 Investment of Additional Discretionary Matching and Profit
Sharing Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.5 Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.6 Voting and Tender Offer Rights With Respect to Norrell Stock . . . . . . . . . . . . . . . . . . . . 39
(a) Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(b) Tender Offer Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(c) Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(d) Dissemination of Pertinent Information . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.7 Voting and Tender Offer Rights with Respect to Investment Funds
Other Than the Norrell Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.8 Fiduciary Responsibilities for Investment Directions . . . . . . . . . . . . . . . . . . . . . . . . 40
7.9 Appointment of Investment Manager; Authorization to Invest in
Collective Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Collective Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.10 Purchase of Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VIII VESTING IN ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.1 General Vesting Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(a)General Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(b)Special Schedule for Certain Tascor Plan Participants . . . . . . . . . . . . . . . . . . . . . . 42
8.2 Vesting Upon Attainment of Normal Retirement Age, Death or
Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
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8.3 Timing of Forfeitures and Vesting After Restoration . . . . . . . . . . . . . . . . . . . . . . . . 43
(a) Reemployment and Vesting Before any Distribution . . . . . . . . . . . . . . . . . . . . . 43
(b) Reemployment and Vesting After Distribution . . . . . . . . . . . . . . . . . . . . . . . . 43
8.4 Amendment to Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX PAYMENT OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.1 Benefit Payments Upon Termination of Service For Reasons Other Than
Death . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(a) General Rule Concerning Benefits Payable . . . . . . . . . . . . . . . . . . . . . . . . . 45
(b) Timing of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
(c) Restrictions on Distributions from Before-Tax Accounts . . . . . . . . . . . . . . . . . . 46
(d) Delay Upon Reemployment or Termination of Disability . . . . . . . . . . . . . . . . . . . 47
9.2 Death Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.3 Form of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(a) Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(b) Assets Distributed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(c) Distributions From the Norrell Stock Fund . . . . . . . . . . . . . . . . . . . . . . . . . 49
(d) Direct Rollover Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
9.4 Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(b) No Designation or Designee Dead or Missing . . . . . . . . . . . . . . . . . . . . . . . . 50
9.5 Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(a) Parameters of Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(b) Immediate and Heavy Financial Need . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(c) Necessary to Satisfy a Financial Need . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(d) Election to Withdraw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(e) Payment of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.6 Withdrawals After Age 592 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.7 Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.8 Unclaimed Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.9 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(a) Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(b) Review Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(c) Satisfaction of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.10 Explanation of Rollover Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
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ARTICLE X ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.1 Administrative Committee; Appointment and Term of Office . . . . . . . . . . . . . . . . . . . . . . 55
(a) Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(b) Removal; Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(c) Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.2 Organization of Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.3 Powers and Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.4 Records of Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(a) Notices and Directions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(b) Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.5 Reporting and Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.6 Construction of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.7 Assistants and Advisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(a) Engaging Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(b) Reliance on Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.8 Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(a) Funding Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(b) Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(c) Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.9 Direction of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.10 Bonding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.11 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XI ALLOCATION OF AUTHORITY AND RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.1 Controlling Company and Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(a) General Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(b) Allocation of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(c) Authority of Participating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.2 Administrative Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
11.3 Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.4 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.5 Limitations on Obligations of Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.6 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.7 Multiple Fiduciary Roles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
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ARTICLE XII AMENDMENT, TERMINATION AND ADOPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
12.2 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(a) Right to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(b) Vesting Upon Complete Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(c) Dissolution of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(d) Vesting Upon Partial Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
12.3 Adoption of the Plan by a Participating Company . . . . . . . . . . . . . . . . . . . . . . . . . . 63
(a) Procedures for Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(b) Single Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(c) Authority Under Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(d) Contributions to Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(e) Withdrawal from Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
12.4 Merger, Consolidation and Transfer of Assets or Liabilities . . . . . . . . . . . . . . . . . . . . 64
ARTICLE XIII TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.1 Top-Heavy Plan Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
13.2 Determination of Top-Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(a) Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(b) Special Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(c) Special Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
13.3 Top-Heavy Minimum Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(a) Multiple Defined Contribution Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(b) Defined Contribution and Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(c) Defined Contribution Minimum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(d) Defined Benefit Minimum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
13.4 Top-Heavy Minimum Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
13.5 Adjustments in Code Section 415 Limitations for Top-Heavy Plans . . . . . . . . . . . . . . . . . . 70
(a) Special Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(b) Exception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
13.6 Special Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
13.7 Construction of Limitations and Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
</TABLE>
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ARTICLE XIV MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
14.1 Nonalienation of Benefits and Spendthrift Clause . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(a) General Nonalienation Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(b) Exception for Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . 72
14.2 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
14.3 Construction, Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
14.4 No Contract of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
14.5 Legally Incompetent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
14.6 Heirs, Assigns and Personal Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
14.7 Title to Assets, Benefits Supported Only By Trust Fund . . . . . . . . . . . . . . . . . . . . . . . 73
14.8 Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
14.9 No Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
14.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
14.11 Exclusive Benefit; Refund of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
(a) Permitted Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
(b) Payment of Refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
(c) Limitation on Refund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
14.12 Special Effective Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
(a) Intent of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
(b) Effective Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
14.13 Predecessor Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
14.14 Plan Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SCHEDULE A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SCHEDULE B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SCHEDULE C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
</TABLE>
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ARTICLE I
DEFINITIONS
For purposes of the Plan, the following terms, when used with an
initial capital letter, shall have the meanings set forth below unless a
different meaning plainly is required by the context.
1.1 Account shall mean, with respect to a Participant or
Beneficiary, the amount of money or other property in the Trust Fund, as is
evidenced by the last balance posted in accordance with the terms of the Plan
to the account record established for such Participant or Beneficiary. The
Administrative Committee, as required by the terms of the Plan and otherwise as
it deems necessary or desirable in its sole discretion, may establish and
maintain separate subaccounts for each Participant and Beneficiary, provided
allocations are made to such subaccounts in the manner described in Article V
of the Plan. "Account" shall refer to the aggregate of all separate
subaccounts or to individual, separate subaccounts, as may be appropriate in
context.
1.2 ACP or Average Contribution Percentage shall mean, with
respect to a specified group of Participants for a Plan Year, the average of
the ratios (calculated separately for each Participant in such group and
rounded to the nearest 1/100th of a percent) of (i) the total of the amount of
Matching Contributions and, to the extent designated by the Administrative
Committee, the Before-Tax Contributions (excluding Before-Tax Contributions
counted for purposes of Section 6.3 and any Contributions returned to a
Participant or otherwise removed from his Account to correct excess Annual
Additions) actually paid to the Trustee on behalf of each such Participant for
such Plan Year, to (ii) such Participant's Compensation for such Plan Year.
If a Highly Compensated Employee participates in the Plan and one or more other
plans of any Affiliates to which matching or after-tax contributions are made
(other than a plan for which aggregation with the Plan is not permitted), the
matching and after-tax contributions made with respect to such Highly
Compensated Employee shall be aggregated for purposes of determining his ACP.
The ACP shall be rounded to the nearest 1/100th of a percent and shall be
calculated in a manner consistent with the terms of Code Section 401(m) and the
regulations promulgated thereunder (including, without limitation, the family
consolidation rules for certain Highly Compensated Employees). If a
Participant is eligible to participate in the Plan for all or a portion of a
Plan Year by reason of satisfying the eligibility requirements of Article II
but makes no Before-Tax Contributions which are taken into account (as
described above) for purposes of calculating his ACP, and if he receives no
allocations of Matching Contributions which are taken into account (as
described above) for purposes of calculating his ACP, such Participant's ACP
for such Plan Year shall be zero.
1.3 ACP Tests shall mean the nondiscrimination tests described in
Section 6.4.
1.4 Active Participant shall mean, for any Plan Year (or any
portion thereof), any Covered Employee who, pursuant to the terms of Article
II, has been admitted to, and not
<PAGE> 15
removed from, active participation in the Plan since the last date his
employment commenced or recommenced.
1.5 Additional Discretionary Matching Account shall mean the
separate subaccount established and maintained on behalf of a Participant or
his Beneficiary to reflect his interest in the Trust Fund attributable to
Additional Discretionary Matching Contributions.
1.6 Additional Discretionary Matching Contributions shall mean the
Additional Discretionary Matching Contributions made to the Plan by the
Participating Companies, all as pursuant to Section 3.3.
1.7 Administrative Committee shall mean the Benefits Advisory
Committee appointed by the Board, which shall act on behalf of the Controlling
Company to administer the Plan as provided in Article X. The Administrative
Committee shall be the plan administrator, as that term is defined in Code
Section 414(g); provided, the Controlling Company may act in lieu of the
Administrative Committee as it deems appropriate or desirable.
1.8 ADP or Actual Deferral Percentage shall mean, with respect to
a specified group of Participants for a Plan Year, the average of the ratios
(calculated separately for each Participant in such group and rounded to the
nearest 1/100th of a percent) of (i) the total of the amount of Before-Tax
Contributions (excluding Before-Tax Contributions, if any, designated by the
Administrative Committee to be taken into account under Section 6.4(c)(1) to
help satisfy the ACP Tests, or returned to a Participant to correct excess
Annual Additions) actually paid to the Trustee on behalf of each such
Participant for such Plan Year, to (ii) such Participant's Compensation for
such Plan Year. If a Highly Compensated Employee participates in the Plan and
one or more other plans of any Affiliates to which before-tax contributions
are made (other than a plan for which aggregation with the Plan is not
permitted), the before-tax contributions made with respect to such Highly
Compensated Employee shall be aggregated for purposes of determining his ADP.
The ADP shall be rounded to the nearest 1/100th of a percent and shall be
calculated in a manner consistent with the terms of Code Section 401(k) and the
regulations promulgated thereunder (including, without limitation, the family
consolidation rules for certain Highly Compensated Employees). If a
Participant is eligible to participate in the Plan for all or a portion of a
Plan Year by reason of satisfying the eligibility requirements of Article II
but makes no Before-Tax Contributions, such Participant's ADP for such Plan
Year shall be zero percent.
1.9 ADP Tests shall mean the nondiscrimination tests described in
Section 6.3.
1.10 Affiliate shall mean, as of any date and separately with
respect to the Controlling Company and each Related Company, (i) a
Participating Company, and (ii) any company, person or organization which, on
such date, (A) is a member of the same controlled group of corporations [within
the meaning of Code Section 414(b)] as is a Participating Company; (B) is a
trade or business (whether or not incorporated) which controls, is controlled
by or is under common control [within the meaning of Code Section 414(c)] with
a Participating Company; (C) is a member of an affiliated service group[as
defined in Code Section 414(m)] which includes a Participating
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Company; or (D) is required to be aggregated with a Participating Company
pursuant to regulations promulgated under Code Section 414(o); provided, solely
for purposes of Section 6.7, the term "Affiliate" as defined in this Section
shall be deemed to include corporations that would be Affiliates if the phrase
"more than 50 percent" were substituted for the phrase "at least 80 percent"
in each place the latter phrase appears in Code Section 1563(a)(1).
1.11 Annual Addition shall mean the sum of the amounts described in
Section 6.7(d)(1).
1.12 Basic Matching Account shall mean the separate subaccount
established and maintained on behalf of a Participant or his Beneficiary to
reflect his interest in the Trust Fund attributable to Basic Matching
Contributions.
1.13 Basic Matching Contributions shall mean the amounts paid by
each Participating Company to the Trust Fund as a match to Participants'
Before-Tax Contributions, all as pursuant to the terms of Section 3.2.
1.14 Before-Tax Account shall mean the separate subaccount
established and maintained on behalf of a Participant or his Beneficiary to
reflect his interest in the Trust Fund attributable to his Before-Tax
Contributions.
1.15 Before-Tax Contributions shall mean the amounts paid by each
Participating Company to the Trust Fund at the election of Participants, all as
pursuant to the terms of Section 3.1.
1.16 Beneficiary shall mean the person(s) designated in accordance
with Section 9.4 to receive any death benefits that may be payable under the
Plan upon the death of a Participant.
1.17 Board shall mean the board of directors of the Controlling
Company. A reference to the board of directors of any other Participating
Company shall specify it as such.
1.18 Break in Service shall mean, with respect to an Employee, a
period of 12 consecutive months beginning on a Severance Date or an anniversary
of such date, during which an Employee does not complete an Hour of Service. A
Break in Service shall be deemed to have commenced on the first day of the
12-month period for which it occurs.
For purposes of determining whether or not an Employee has incurred a
Break in Service, and solely for the purpose of avoiding a Break in Service, an
employee absent from work due to a Maternity or Paternity Leave shall not have
a Break in Service until the second anniversary of the first day of such
absence from employment, provided that the period between the first and second
anniversary of such first day of absence is not a period of severance for any
other purpose.
1.19 Business Day shall mean each day on which the Trustee
operates, and is open to the public for, its business.
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<PAGE> 17
1.20 Code shall mean the Internal Revenue Code of 1986, as amended,
and any succeeding federal tax provisions.
1.21 Company Contributions shall mean Before-Tax, Basic Matching
and Additional Discretionary Matching Contributions made by the Participating
Companies pursuant to the terms of the Plan.
1.22 Compensation shall have the meaning set forth in subsection
(a), (b), (c) or (d) hereof, whichever is applicable; provided, in no event
shall the annual compensation taken into account under the Plan for Plan Years
(or other applicable periods) beginning after December 31, 1988 exceed $200,000
($150,000 beginning after December 31, 1993) (both as adjusted by the Secretary
of the Treasury under Code Section 401(a)(17) for cost of living increases). In
determining the Compensation of a Participant for purposes of the Code Section
401(a)(17) maximum compensation limitation, the rules of Code Sectin 414(q)(6)
shall apply; provided, for purposes of applying said rules, the term "family"
shall include only the Spouse of the Participant and lineal descendants of the
Participant who have not attained age 19 before the close of the year.
(a) Benefit Compensation. For purposes of determining
the amount of Before-Tax Contributions in Section 3.1, the amount of Basic
Matching Contributions in Section 3.2 and the allocation of Additional
Discretionary Matching Contributions in Section 5.3, and for all other purposes
except those set forth in subsections (b), (c) and (d) hereof, "Compensation"
shall mean, for any Plan Year, the total of the amounts described in
subsections (1) and (2), minus the amount described in subsection (3):
(1) all of a Participant's wages, as defined in Code
Section 3401(a) for purposes of income tax withholding at the source,
that are reportable by the Affiliates for federal income tax purposes
on IRS Form W-2, but determined without regard to any rules that limit
the remuneration included in wages based on the nature or location of
the employment or the services performed [(such as the exception for
agricultural labor in Code Section 3401(a)(2)]; plus
(2) all before-tax, salary deferral or reduction
contributions made to the Plan and other Section401(k) and Section
125 plans of the Affiliates on behalf of a Participant for such Plan
Year [including any contributions made under Code Section 402 (e)(3),
Section 402(h)(1)(B) or Section 403(b)]; minus
(3) all amounts included in subsection (1) or (2)
that consist of either (i) reimbursements or other expense allowances,
fringe benefits (cash and noncash), moving expenses, deferred
compensation and welfare benefits (even if includable in gross
income), or (ii) any amounts paid or made available to a Participant
during the Plan Year while he is not an Active Participant.
(b) Section 415 Compensation. Solely for purposes of Section
6.1 (relating to maximum deductible contribution limitations under Code Section
404), Section 6.7 (relating to maximum contribution and benefit limitations
under Code Section 415) and Section 13.3 (relating to minimum Contributions
under
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<PAGE> 18
a Top-Heavy Plan), "Compensation" shall mean, with respect to a Participant
for a specified period, the amounts from all Affiliates referred to in
subsection (a)(1) hereof.
(c) Key Employee Compensation. Solely for purposes of
determining which Employees are Key Employees under Section 13.2 and which
Employees are Highly Compensated Employees under Section 1.45, for any
applicable Plan Year, "Compensation" shall mean the total of the amounts from
all Affiliates determined under subsections (a)(1) plus (a)(2) hereof.
(d) Testing Compensation. For purposes of performing
discrimination testing to ensure compliance with Code Section 401(a)(4),
Section 401(k) and Section 401(m), the definition of Compensation as set forth
in subsection (c) hereof generally shall be used; provided, on a plan
year-by-plan year basis, the Administrative Committee may elect to use the
definition of "Compensation" as set forth in subsection (b) hereof or any
other definition that satisfies the nondiscrimination requirements of Code
Section 414(s). Compensation for testing purposes shall be determined
separately with respect to (i) the Controlling Company and its Affiliates and
(ii) each Related Company and its Affiliates.
1.23 Contributions shall mean, individually or collectively, the
Before-Tax, Basic Matching, Additional Discretionary Matching and Rollover
Contributions permitted under the Plan.
1.24 Controlling Company shall mean Norrell Corporation, a Georgia
corporation with its principal office in Atlanta, Georgia, and its successors
which adopt the Plan.
1.25 Covered Employee shall mean an Employee other than:
(a) A Highly Compensated Employee;
(b) A Temporary Services Employee;
(c) A Management Services Employee or Staffing Employee
with respect to whom a client for which such Employee is performing services
has elected, pursuant to the terms of its formal services agreement with the
Participating Company, not to fund or have funded retirement benefits for such
Employee under the Plan;
(d) An Employee who is a "leased employee" within the
meaning of Code Section 414(n); or
(e) An Employee who is a member of a collective
bargaining unit, unless the terms of the collective bargaining agreement
between the Participating Company of the Employee and the bargaining unit
require that the Employee be eligible to participate in the Plan.
1.26 Deferral Election shall mean an election, on a form provided
by the Administrative Committee or in such other manner as the Administrative
Committee may prescribe, by an Active Participant directing the Participating
Company of which he is an
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<PAGE> 19
Employee to withhold a percentage of his current Compensation from his
paychecks and to contribute such withheld amounts to the Plan as Before-Tax
Contributions, all as provided in Section 3.1.
1.27 Defined Benefit Minimum shall mean the minimum benefit level
as described in Section 13.3(d).
1.28 Defined Benefit Plan shall mean a plan described in Section
6.7(d)(2).
1.29 Defined Benefit Plan Fraction shall mean the fraction
described in Section 6.7(d)(3).
1.30 Defined Contribution Minimum shall mean the minimum
contribution level as described in Section 13.3(c).
1.31 Defined Contribution Plan shall mean a plan described in
Section 6.7(d)(4).
1.32 Defined Contribution Plan Fraction shall mean the fraction
described in Section 6.7(d)(5).
1.33 Determination Date shall mean the date described in Section
13.2(b)(1).
1.34 Disability or Disabled shall mean that a Participant is, in
the opinion of the Administrative Committee, wholly prevented from performing
the duties assigned to such Participant by the Participating Company employing
such Participant, by reason of a medically-determinable physical or mental
impairment which can be expected to result in death or to be of long-continued
and indefinite duration. In making such determination, the Administrative
Committee, in its sole discretion, may require such medical proof as it deems
necessary, including the certificate of one or more licensed physicians
selected by the Administrative Committee. The decision of the Administrative
Committee as to Disability shall be final and binding.
1.35 Effective Date shall mean January 1, 1994, the date that this
restatement of the Plan generally shall be effective; provided, any effective
date specified herein for any provision or otherwise necessary to bring the
Plan into legal compliance, if different from the Effective Date, shall
control. (The Plan initially was adopted effective as of November 1, 1972.)
The effective date of participation in the Plan for each Participating Company
shall be the date approved by the Board and the Participating Company and set
forth with respect to the Participating Company in the records of the
Controlling Company and/or the Plan.
1.36 Elective Deferrals shall mean, with respect to a Participant
for any calendar year, the total amount of his Before-Tax Contributions plus
such other amounts as shall be determined pursuant to the terms of Code
Section 402(g)(3).
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1.37 Eligible Participant shall mean, for any Plan Year, any Active
Participant (other than a Management Services or Staffing Employee) who was in
the active employ of an Affiliate on the last day of such Plan Year.
1.38 Eligible Retirement Plan shall mean a plan which is a defined
contribution plan, the terms of which permit the acceptance of rollover
distributions and which is either (i) an individual retirement account
described in Code Section 408(a), (ii) an individual retirement annuity
described in Code Section 408(b) (other than an endowment contract), (iii) a
qualified trust described in Code Section 401(a) and exempt from tax under
Code Section 501(a), or (iv) an annuity plan described in Code Section 403(a).
In the case of a distribution to the Surviving Spouse, Eligible Retirement Plan
shall mean the plan described in either clause (i) or (ii) hereof.
1.39 Eligible Rollover Distribution shall mean any distribution to
an employee of all or any portion of the balance to his credit in a qualified
trust (including any distribution to a Participant of all or any portion of his
Account); provided, an employee's "Eligible Rollover Distribution" shall not
include (i) any distribution which is one of a series of substantially equal
periodic payments made, not less frequently than annually, (A) for the life (or
life expectancy) of the employee or the joint lives (or joint life
expectancies) of the employee and his beneficiary, or (B) for a specified
period of 10 years or more, (ii) any distribution to the extent such
distribution is required under Code Section 401(a)(9), (iii) the portion of any
distribution that is not includable in gross income of the employee and (iv)
distributions which total less than $200 during the Plan Year.
1.40 Employee shall mean any individual who is employed by a
Participating Company (including officers, but excluding independent
contractors and directors who are not officers or otherwise employees) and
shall include leased employees of a Participating Company within the meaning of
Code Section 414(n). Notwithstanding the foregoing, if leased employees
constitute 20 percent or less of a Participating Company's nonhighly
compensated work force within the meaning of Code Section 414(n)(5)(C)(ii),
the term "Employee" shall not include those leased employees covered by a plan
described in Code Section 414(n)(5)(B).
1.41 Employment Date shall mean, with respect to any employee of an
Affiliate, the date on which he first completes an Hour of Service. In the
case of an employee of an Affiliate who incurs a Break in Service and is
reemployed, "Employment Date" shall mean: (i) with respect to service before
the Break in Service, the date determined pursuant to the preceding sentence;
and (ii) with respect to service after the Break in Service, the date on which
he or she first completes an Hour of Service after reemployment.
1.42 Entry Date shall mean the first day of each calendar month
during the period in which the Plan remains in effect.
1.43 ERISA shall mean the Employee Retirement Income Security Act
of 1974, as amended.
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1.44 Forfeiture shall mean, for any Plan Year, the dollar amount of
an Account of a former Employee that is removed from the Account during such
Plan Year.
1.45 Highly Compensated Employee shall mean an employee of an
Affiliate who is described in subsection (a) below, as modified by subsections
(b), (c) and (d) hereof. The determination of who is a Highly Compensated
Employee shall be made separately for (i) the Controlling Company and its
Affiliates, and (ii) each Related Company and its Affiliates.
(a) General Rule.
(1) An employee who, as of the first day of the
Plan Year, owns [or is considered as owning within the constructive
ownership rules of Code Section 318 as modified by Code Section 416(i)
(1)(B)(iii)] more than 5 percent of the outstanding stock of a
corporate Affiliate or stock possessing more than 5 percent of the
total combined voting power of all stock of a corporate Affiliate or
more than 5 percent of the capital or profits interest in a
noncorporate Affiliate; or
(2) An employee who, as of the first day of the
Plan Year, is reasonably expected to:
(A) receive Compensation from an
Affiliate during the Plan Year in excess of $75,000 [as adjusted by the
Internal Revenue Service under Code Section 414(q) (which references Code
Section 415(d) and the regulations promulgated thereunder for cost of living
increases]; or
(B) receive Compensation from an
Affiliate during the Plan Year in excess of $50,000 [as adjusted by the
Secretary of Treasury under Code Section 414(q) (which references Code Section
415(d) and the regulations promulgated thereunder for cost of living increases]
ad is within the group consisting of the most highly compensated 20 percent of
the employees of all Affiliates (determined as of the first day of the Plan
Year); or
(3) An employee who, as of the first day of the
Plan Year, is an officer of an Affiliate whose Compensation for the
Plan Year is reasonably expected to be greater than 50 percent of the
dollar limitation in effect under Code Section 415(b)(1)(A) for the
calendar year in which the Plan Year ends, where the term "officer"
means an administrative executive in regular and continual service
with an Affiliate; provided, in no event shall the number of officers
exceed the lesser of subsections (A) or (B) of this subsection (a)(3),
where:
(A) equals 50; and
(B) equals the greater of 3 employees or 10
percent of the number of employees [including leased employees as defined in
Code Section 414(n)] of any Affiliate.
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<PAGE> 22
If for any year no officer meets the requirements of this subsection
(a)(3), the highest paid officer for the Plan Year shall be considered a person
who satisfies the requirements of this subsection (a)(3); or
(4) An employee who becomes employed subsequent
to the first day of the Plan Year and (i) is described in subsection
(a)(1) hereof, (ii) whose compensation for the Plan Year is reasonably
expected to be greater than or equal to the projected compensation of
any employee who is a Highly Compensated Employee as of the first day
of the Plan Year pursuant to subsection (a)(2) hereof, or (iii) is an
officer of an Affiliate whose compensation for the Plan Year
reasonably is expected to be greater than or equal to any other
employee who is a Highly Compensated Employee as of the first day of
the Plan Year solely because that person is an officer of an
Affiliate.
(b) Excluded Employees. For purposes of subsections
(a)(2)(B) and (a)(3) hereof, the following may be excluded when determining the
most highly compensated 20 percent of the employees and the total number of
officers, respectively, of an Affiliate:
(1) employees who have not completed 6 months of
service;
(2) employees who normally work fewer than
17-1/2 hours per week;
(3) employees who normally work during not more
than 6 months during any Plan Year;
(4) employees who have not attained age 21; and
(5) employees who are included in a unit of
employees covered by an agreement which the Secretary of Labor finds
to be a collective bargaining agreement between employee
representatives and an Affiliate.
(c) Family Rules. For purposes of this Section, if any
employee is a member of the family of a 5 percent owner as defined in
subsection (a)(1) hereof or a member of the family of a Highly Compensated
Employee whose Compensation is such that he is among the ten Highly Compensated
Employees receiving the greatest amount of Compensation from all Affiliates
during the Plan Year, then (i) the employee shall not be considered a separate
employee, and (ii) any Compensation paid to the employee, and any applicable
contribution or benefit on behalf of the employee, shall be treated as if it
were paid to, or on behalf of, the 5 percent owner or the employee who is among
the ten Highly Compensated Employees receiving the greatest amount of
Compensation from all Affiliates during the Plan Year. For purposes of this
subsection (c), the term "family" means with respect to any employee, the
employee's spouse, lineal descendants or ascendants and the spouses of such
lineal descendants or ascendants.
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<PAGE> 23
(d) Nonresident Aliens. For purposes of this Section,
nonresident aliens who receive no earned income from an Affiliate which
constitutes income from sources within the United States [as described in Code
Section 414(q)(11)] shall not be treated as employees.
(e) Determination of Compensation. In determining the
compensation of any employee for purposes of subsection (a) hereof, the
employee's compensation for the Plan Year shall be projected under a reasonable
method established by the Controlling Company.
(f) Compliance with Code Section 414(q). The
determination of who is a Highly Compensated Employee, including all of the
parts of that definition, shall be made in accordance with Code Section 414(q)
and the regulations promulgated thereunder. The determination of who is a
Highly Compensated Employee shall be made pursuant to the "snapshot" method
described in Revenue Procedure 93-42.
1.46 Hour of Service shall mean an hour for which an individual is
paid, or entitled to payment, for the performance of duties for an Affiliate
during the any period of employment. The determination of hours of service
shall be consistent with the minimum requirements of Labor Regulation
Section 2530.200b-2.
1.47 Investment Committee shall mean the committee which shall act
on behalf of the Controlling Company with respect to making and effecting
investment decisions, all as provided in Article X. Unless the Controlling
Company specifies otherwise, the Administrative Committee shall serve as the
Investment Committee. The Controlling Company may act in lieu of the
Investment Committee as it deems appropriate or desirable.
1.48 Investment Fund or Funds shall mean one or all of the
investment funds established from time to time pursuant to the terms of
Section 7.2.
1.49 Investment Manager shall mean an "investment manager" within
the meaning of ERISA Section 3(38).
1.50 Key Employee shall mean a person described in Section
13.2(b)(2).
1.51 Leave of Absence shall mean an excused leave of absence
granted to an Employee by an Affiliate in accordance with applicable federal or
state law or the Affiliate's personnel policy. Among other things, Leave of
Absence shall be granted to an Employee:
(a) who leaves the service of an Affiliate, voluntarily
or involuntarily, to enter the Armed Forces of the United States; provided, (i)
the Employee is legally entitled to reemployment under the veteran's
reemployment rights provisions as codified at 38 USC Section 2021, et seq., its
predecessors and successors; and (ii) the Employee applies for and reenters
service with an Affiliate within the time, in the manner and under the
conditions prescribed by law; and
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<PAGE> 24
(b) under such other circumstances as the Administrative
Committee shall determine are fair, reasonable and equitable, as applied
uniformly among Employees under similar circumstances.
1.52 Limitation Year shall mean the 12-month period ending on each
December 31, which shall be the "limitation year" for purposes of Code Section
415 and the regulations promulgated thereunder.
1.53 Management Services Employee shall mean an Employee designated
as a "management services employee" under the Controlling Company's customary
employment classification practices. Management Services Employees generally
perform services for clients of a Participating Company on assignments which
have an expected duration of at least 1 year and in connection with which such
clients generally have requested that the Participating Company provide
benefits for such Employees.
1.54 Matching Accounts shall mean a Participant's Basic Matching
Account and Additional Discretionary Matching Account.
1.55 Matching Contributions shall mean Basic Matching Contributions
and Additional Discretionary Matching Contributions.
1.56 Maternity or Paternity Leave shall mean any period, beginning
on or after January 1, 1985, during which an Employee is absent from work as an
employee of an Affiliate (i) because of the pregnancy of such Employee; (ii)
because of the birth of a child of such Employee; (iii) because of the
placement of a child with such Employee in connection with the adoption of such
child by such Employee; or (iv) for purposes of such Employee caring for a
child immediately after the birth or placement of such child.
1.57 Maximum Deferral Amount shall mean $7,000, as adjusted from
time to time in accordance with Code Section 402(g)(5).
1.58 Named Fiduciary shall mean the Controlling Company, the Board,
the Trustee, the Administrative Committee and the Investment Committee.
1.59 Non-Key Employee shall mean the persons described in
Section 13.2(b)(3).
1.60 Normal Retirement Age shall mean age 62.
1.61 Norrell Stock shall mean the common stock, no par value, of
the Controlling Company.
1.62 Norrell Stock Fund shall mean the Investment Fund invested
primarily in Norrell Stock.
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1.63 Participant shall mean any person who has been admitted to,
and has not been removed from, participation in the Plan pursuant to the
provisions of Article II. "Participant" shall include Active Participants and
former Employees who have an Account under the Plan.
1.64 Participating Company shall mean all companies that have
adopted or hereafter may adopt the Plan for the benefit of their employees and
which continue to participate in the Plan, all as provided in Section 12.3.
1.65 Permissive Aggregation Group shall mean the group of plans
described in Section 13.2(b)(4).
1.66 Plan shall mean the Norrell Corporation 401(k) Retirement
Savings Plan as contained herein and all amendments thereto. The Plan is
intended to be a profit sharing plan qualified under Code Section Section
401(a) and 401(k).
1.67 Plan Year shall mean the 12-month period ending on each
December 31.
1.68 Profit Sharing Account shall mean the separate subaccount
established and maintained on behalf of a Participant or his Beneficiary to
reflect his interest in the Trust Fund attributable to Profit Sharing
Contributions paid to the Trust Fund by Participating Companies. No such
contributions shall be made to the Trust Fund for periods after December 31,
1994.
1.69 Qualified Spousal Waiver shall mean a written election
executed by a Spouse, delivered to the Administrative Committee and witnessed
by a notary public or a Plan representative, which consents to the payment of
all or a specified portion of a Participant's death benefit to a Beneficiary
other than such Spouse and which acknowledges that such Spouse has waived his
right to be the Participant's Beneficiary under the Plan. A Qualified Spousal
Waiver shall be valid only with respect to the Spouse who signs it and shall
apply only to the alternative Beneficiary designated therein, unless the
written election expressly permits other designations without further consent
of the Spouse. A Qualified Spousal Waiver shall be irrevocable unless revoked
by the Participant by way of (i) a written statement executed by the
Participant and delivered to the Administrative Committee or (ii) a written
revocation of the nonspouse Beneficiary designation to which such Spouse has
consented; provided, any such revocation must be received by the Administrative
Committee prior to the Participant's date of death.
1.70 Related Company shall mean, as of any date, any Participating
Company which is an Affiliate solely because the Controlling Company has
permitted it to become a Participating Company, but which is not (i) a member
of the same controlled group of corporations [within the meaning of Code
Section 414(b)], (ii) a member of a group of trades or businesses under common
control [within the meaning of Code Section 414(c)], (iii) a member of an
affiliated service group [within the meaning of Code Section 414(m)], or (iv)
required to be aggregated with a group [in accordance with Code Section
414(o)], which includes the Controlling Company.
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1.71 Required Aggregation Group shall mean the group of plans
described in Section 13.2(b)(5).
1.72 Rollover Account shall mean the separate subaccount
established and maintained on behalf of a Participant or his Beneficiary to
reflect his interest in the Trust Fund attributable to Rollover Contributions.
1.73 Rollover Contributions shall mean the amounts contributed to
the Trust Fund (and received and accepted by the Trustee) as "rollover"
contributions as defined in Code Section 402 and/or Eligible Rollover
Distributions. An amount shall be treated as a Rollover Contribution only to
the extent that its acceptance by the Trustee is permitted under the Code
(including the regulations and rulings promulgated thereunder).
1.74 Severance Date shall mean, with respect to an employee of an
Affiliate, the earliest of:
(i) the date employment with all Affiliates
terminates (such that he ceases to be credited with Hours of Service);
(ii) the first anniversary of the first date such
employee is absent from employment with all Affiliates (with or
without pay) for any reason other than his termination of employment,
Leave of Absence or Disability (for example, vacation or layoff); or
1.75 Specified Matching Compensation Percentage shall mean the
percentage of Compensation that is specified by the Board for the Plan Year for
purposes of determining the maximum amount of Matching Contributions for such
Plan Year.
1.76 Spouse or Surviving Spouse shall mean, with respect to a
Participant, the person who is treated as married to such Participant under the
laws of the state in which the Participant resides. The determination of a
Participant's Spouse or Surviving Spouse shall be made as of the earlier of the
date as of which benefit payments from the Plan to such Participant are made or
commence (as applicable) or the date of such Participant's death. In addition,
a Participant's former spouse shall be treated as his Spouse or Surviving
Spouse to the extent provided under a qualified domestic relations order, as
defined in Code Section 414(p).
1.77 Staffing Employee shall mean an Employee designated as a
"staffing employee" under the Controlling Company's customary employment
classification practices. Staffing Employees generally perform services for
clients of a Participating Company on assignments which have an expected
duration of at least 1 year and in connection with which such clients generally
have requested that the Participating Company provide benefits for such
Employees.
1.78 Tascor Plan shall mean the Tascor Retirement Savings Plan,
which shall be merged with and into the Plan effective as of December 31, 1994.
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1.79 Temporary Services Employee shall mean an Employee designated
as a "temporary services employee" under the Controlling Company's customary
employment classification practices. Temporary Services Employees generally
perform services for clients of a Participating Company on the basis of
assignments of relatively short duration.
1.80 Top-Heavy Group shall mean the group of plans described in
Section 13.2(b)(6).
1.81 Top-Heavy Plan shall mean a plan to which the conditions set
forth in Article XIII apply.
1.82 Trust or Trust Agreement shall mean the separate agreement
between the Controlling Company and the Trustee governing the creation of the
Trust Fund, and all amendments thereto.
1.83 Trustee shall mean the party or parties so designated from
time to time pursuant to the Trust Agreement.
1.84 Trust Fund shall mean the total amount of cash and other
property held by the Trustee (or any nominee thereof) at any time under the
Trust Agreement.
1.85 Valuation Date shall mean each Business Day; provided, the
value of an Account or the Trust Fund on a day other than a Business Day shall
be the value determined for the immediately preceding Business Day.
1.86 Years of Service shall mean, with respect to a Participant,
the number of whole 12-month periods of service commencing on the employee's
Employment Date and ending on his Severance Date, subject to the following
provisions:
(a) Aggregation Rule. In determining an employee's
number of whole 12-month periods of service for purposes of this Section,
nonsuccessive periods of service shall be aggregated (to the extent that any
portion of such service is not excluded pursuant to the terms of subsection (c)
or (d) hereof) on the basis of days of service, with 365 days (366 days in a
leap year) of service equal to one Year of Service. Periods of service of less
than 365 days (366 days in a leap year) shall be disregarded.
(b) Counting Periods of Severance. In determining an
employee's periods of service for purposes of this Section, the following
periods of severance shall be taken into account and treated as periods of
service:
(i) If an employee's employment with all
Affiliates terminates and the employee then performs an Hour of
Service within 12 months of his Severance Date, the period between his
Severance Date and his next, succeeding Employment Date shall be
treated as a period of service; and
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(ii) If an employee's employment with all
Affiliates terminates before the end of the initial 12-month period
that begins on the first date such employee is absent from employment
with all Affiliates for any reason other than termination of his
employment (for example, vacation, disability, Leave of Absence or
layoff), and if such employee then performs an Hour of Service before
the end of said initial 12-month period, the period from his initial
date of absence to his next succeeding Employment Date shall be
treated as a period of service.
(c) Pre-Break Service. Service shall include any period
of time prior to a Break in Service unless the employee was not vested in his
Account prior to the Break in Service and has incurred 5 or more consecutive
1-year Breaks in Service.
(d) Post-Break Service. If a former employee is rehired
after one or more consecutive 1-year Breaks in Service and completes 1 Year of
Service after his latest Employment Date, Years of Service after his latest
Employment Date shall count in vesting his Account that accrued before such
Break in Service, as long as the employee has not incurred 5 or more
consecutive 1-year Breaks in Service prior to such latest Employment Date.
(e) Predecessor Plan. To the extent required by Code
Section 414(a)(1) and not otherwise counted hereunder, if an Affiliate
maintains a plan that is or was the qualified retirement plan of a predecessor
employer, an Employee's periods of employment with such predecessor employer
shall be taken into account in determining his Years of Service.
(f) Predecessor Employer. To the extent determined by
the Administrative Committee, set forth on a schedule hereto and not otherwise
counted hereunder, an Employee's periods of employment with one or more
companies or enterprises acquired by or merged into, or all or a portion of the
assets or business of which are acquired by, an Affiliate shall be taken into
account in determining his Years of Service. For purposes hereof, acquisition
of all or a portion of a business of a company or enterprise shall include an
Affiliate's agreement to perform services for a client and to correspondingly
employ some or all of the individuals previously performing such services for,
as employees of, such client.
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ARTICLE II
ELIGIBILITY
2.1 Initial Eligibility Requirements.
(a) General Rule. Except as provided in subsections (b),
(c) and (d) hereof, every Covered Employee shall become an Active Participant
in the Plan on the Entry Date coinciding with or next following the first date
on which he has completed 1 Year of Service, provided he is a Covered Employee
on such Entry Date.
(b) Grandfathered Participants. Each Covered Employee who
is an Active Participant in the Plan on the day immediately preceding the
Effective Date shall continue as an Active Participant in accordance with the
terms of the Plan.
(c) New Participating Companies. For employees of
companies that become Participating Companies after the Effective Date, each
Covered Employee employed by a Participating Company on the date such
Participating Company first becomes a Participating Company shall become an
Active Participant as of such Participating Company's effective date under the
Plan, if, as of the Participating Company's effective date, the Covered
Employee has completed 1 Year of Service (calculated from the date he first
completes an Hour of Service with the new Participating Company or any other
Affiliate).
2.2 Treatment of Interruptions of Service.
(a) Leave of Absence or Layoff. If a Covered Employee
satisfies the eligibility requirements set forth in Section 2.1 but is on a
Leave of Absence or is laid off at the time he would have become an Active
Participant, he shall become an Active Participant on the date he subsequently
resumes the performance of duties as a Covered Employee in accordance with the
terms of his Leave of Absence or layoff, with such active participation being
retroactively effective (to the extent feasible) as of the Entry Date he would
have become an Active Participant but for his Leave of Absence or layoff.
(b) Reemployment Before Break in Service. If a Covered
Employee satisfies the eligibility requirements set forth in Section 2.1,
terminates employment with the Participating Company before the Entry Date on
which he otherwise would become an Active Participant, and then is reemployed
by the Participating Company prior to completing a Break in Service, he shall
become an Active Participant as of the later of (i) the Entry Date on which he
otherwise would have become an Active Participant if he had not terminated
employment or (ii) the date he is reemployed as a Covered Employee.
(c) Reemployment After Break in Service. If a Covered
Employee satisfies the eligibility requirements set forth in Section 2.1,
terminates employment with the Participating Company before the Entry Date on
which he otherwise would become an Active Participant, and
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then is reemployed as a Covered Employee by the Participating Company after
completing a Break in Service, he shall become an Active Participant as of the
Entry Date coinciding with or next following his completion of 1 Year of
Service (calculated from the date he first completes an Hour of Service
following his last Break in Service).
(d) Reparticipation Upon Reemployment. If an Active
Participant terminates employment with all Participating Companies, his active
participation in the Plan shall cease immediately, and he again shall become an
Active Participant as of the day he again becomes a Covered Employee. However,
regardless of whether he again becomes an Active Participant, he shall continue
to be a Participant until he no longer has an Account under the Plan.
2.3 Change in Status.
(a) Loss of Covered Employee Status. If a Covered
Employee (i) satisfies the eligibility requirements set forth in Section 2.1,
(ii) changes his employment status (but remains employed) so that he ceases to
be a Covered Employee before the Entry Date on which he otherwise would become
an Active Participant, and (iii) then again changes his employment status and
becomes a Covered Employee prior to completing a Break in Service, he shall
become an Active Participant as of the date he again becomes a Covered
Employee. If an Employee covered by this subsection does complete a Break in
Service prior to again becoming a Covered Employee, his entry to participation
in the Plan will be governed by Section 2.2(c).
(b) Change to Covered Employee Status. If an Employee
who first satisfies the eligibility requirements of Section 2.1 while he is
not a Covered Employee subsequently changes his employment status so that he
becomes a Covered Employee, he shall become an Active Participant on the Entry
Date coinciding with or next following the date of his change in status.
(c) Change by Participant. If an Active Participant
changes his status of employment (but remains employed) so that he is no longer
a Covered Employee, his active participation in the Plan shall cease
immediately, and he shall again become an Active Participant in the Plan as of
the day he again becomes a Covered Employee. However, regardless of whether he
again becomes an Active Participant, he shall continue to be a Participant
until he no longer has an Account under the Plan.
2.4 Limited Participation by Certain Employees.
Notwithstanding anything herein to the contrary, Management
Services Employees and Staffing Employees shall be eligible to make Rollover
Contributions and Before-Tax Contributions to the Plan but shall not be
eligible to receive allocations of Matching Contributions for any period in
which they are employed in such status, as provided in Section 1.37 and
Section 3.2.
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ARTICLE III
CONTRIBUTIONS
3.1 Before-Tax Contributions.
(a) Before-Tax Contributions. Each Participating Company
shall contribute to the Plan, on behalf of each Active Participant employed by
such Participating Company for each regular payroll period and for each other
payment of Compensation (such as cash bonuses) for which such Active
Participant has a Deferral Election in effect with such Participating Company,
a Before-Tax Contribution in an amount equal to the amount by which such Active
Participant's Compensation has been reduced for such period pursuant to his
Deferral Election. The amount of the Before-Tax Contribution shall be
determined in increments of 1 percent of such Active Participant's Compensation
for each payroll period or such other increment as the Administrative Committee
may permit. The Active Participant may elect to reduce his Compensation for
any period by a minimum of 1 percent and a maximum of 15 percent (or such other
minimum and maximum percentages and/or amounts, if any, established by the
Administrative Committee from time-to-time); provided, the maximum limitations
in Article VI shall apply.
(b) Deferral Elections. Each Active Participant who
desires that his Participating Company make a Before-Tax Contribution on his
behalf shall make a Deferral Election that shall provide for the reduction of
his Compensation for each regular payroll period ending or occurring while he
is an Active Participant employed by such Participating Company. The
Administrative Committee, in its sole discretion, may also prescribe such
nondiscriminatory terms and conditions governing the method of making such
election as it deems appropriate. Subject to any modifications, additions or
exceptions which the Administrative Committee, in its sole discretion, deems
necessary, appropriate or helpful, the following terms shall apply to Deferral
Elections:
(1) Effective Date. An Active Participant's
initial Deferral Election with a Participating Company shall be
effective for the first payroll period which ends after the Deferral
Election is made and after the effective date of such Deferral
Election. If an Active Participant fails to make a Deferral Election
in a timely manner, he shall be deemed to have elected a deferral of
zero percent. For purposes of this subsection, the "effective date"
of a Deferral Election shall mean: (A) for a Participant who
commences participation in the Plan on an Entry Date, that Entry Date;
and (B) for a Participant who commences or recommences participation
in the Plan on a date other than an Entry Date, the Entry Date next
following the Participant's commencement of participation in the Plan.
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(2) Term. Each Active Participant's Deferral
Election with a Participating Company shall remain in effect in
accordance with its original terms until the earlier of (A) the date
the Active Participant ceases to be a Covered Employee of all
Participating Companies, (B) the date the Active Participant revokes
such Deferral Election pursuant to the terms of subsection (c)(3)
hereof, or (C) the date the Active Participant or the Administrative
Committee modifies such Deferral Election pursuant to the terms of
subsection (c)(4) or (c)(5) hereof. If a Participant is transferred
from the employment of a Participating Company to the employment of
another Participating Company, his Deferral Election with the first
Participating Company will remain in effect and will apply to his
Compensation from the second Participating Company until the earlier
of (A), (B) or (C) of the preceding sentence.
(3) Revocation. An Active Participant's Deferral
Election shall terminate upon his ceasing to be a Covered Employee.
In addition, an Active Participant may revoke his Deferral Election
with a Participating Company by giving notice of revocation, on a form
provided by the Administrative Committee in such other manner as the
Administrative Committee may prescribe, and such revocation shall be
effective as soon as practicable after the date on which it is given.
An Active Participant who revokes a Deferral Election may enter into a
new Deferral Election, effective for the first payroll period which
both begins after the new Deferral Election is made and ends after any
Entry Date; provided, the Administrative Committee, in its sole
discretion, may specify a suspension period for all Participants who
voluntarily revoke their Deferral Election(s), such that any new
Deferral Election shall not be effective until a later Entry Date.
(4) Modification by Participant. Effective for
the first payroll period which both begins after a new Deferral
Election is made and ends after any Entry Date, an Active Participant
may modify his existing Deferral Election to increase or decrease the
percentage of his Before-Tax Contributions by making a new Deferral
Election.
(5) Modification by Administrative Committee.
Notwithstanding anything herein to the contrary, the Administrative
Committee may modify any Deferral Election of any Active Participant
at any time by decreasing the percentage of any Before-Tax
Contributions to any extent the Administrative Committee believes
necessary to comply with the limitations described in Article VI.
3.2 Basic Matching Contributions.
For each Active Participant (other than a Management Services
or Staffing Employee) on whose behalf a Participating Company has made, with
respect to a payroll period, any Before-Tax Contributions, such Participating
Company shall make, with respect to such payroll period, a Basic Matching
Contribution equal to such percentage of the amount of such Before-Tax
Contributions as the Administrative Committee, in its sole discretion, may
decide from time to time; provided, the total amount of the Basic Matching
Contribution which a
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Participating Company shall make for any Active Participant shall not exceed
an amount determined by multiplying such matching percentage by the portion of
such Participant's Before-Tax Contribution that does not exceed the Specified
Matching Compensation Percentage of such Active Participant's Compensation for
such payroll period (that is, the Basic Matching Contribution as determined by
the Administrative Committee will not be applied to the amount of a Before-Tax
Contribution that exceeds the Specified Matching Compensation Percentage of a
Participant's Compensation). Until the Administrative Committee determines
otherwise, the amount of Basic Matching Contributions shall be determined in
accordance with Schedule B hereto.
3.3 Additional Discretionary Matching Contributions.
The Participating Companies may, but shall not be required to,
make an Additional Discretionary Matching Contribution to the Plan with respect
to each Plan Year. Subject to the limitations set forth in Section 6.1,
Section 6.4 and Section 6.7, the amount of any such Discretionary Contribution
shall be determined at the discretion of the Board; provided, the Board may
delegate this authority to the Administrative Committee. If the Participating
Companies make an Additional Discretionary Matching Contribution to the Plan
for a Plan Year, each Participating Company shall contribute to the Plan for
such Plan Year the same percentage of the total Before-Tax Contributions
(calculated by taking into account only the amount of Before-Tax Contributions
for any Participant that is not in excess of the Specified Matching
Compensation Percentage of his Compensation for the Plan Year) that the
Participating Company defers for its Employees who are Eligible Participants
for such Plan Year.
3.4 Form of Contributions.
All Contributions shall be paid to the Trustee in the form of
cash or Norrell Stock or a combination thereof, as the Controlling Company or
Administrative Committee may determine from time to time.
3.5 Timing of Contributions.
(a) Before-Tax Contributions. Each Participating Company
that withholds Before-Tax Contributions from an Active Participant's paycheck
pursuant to a Deferral Election shall pay such Before-Tax Contributions to the
Trustee as of the earliest date (not to exceed 90 days from the date on which
such amounts otherwise would have been payable to such Active Participant in
cash) on which such Contributions can reasonably be segregated from the
Participating Company's general assets.
(b) Matching Contributions. Each Participating Company
shall pay its Matching Contributions to the Trustee (i) on or before the date
for filing its federal income tax return (including extensions thereof) for the
tax year to which such Matching Contributions relate, or (ii) on or before such
other date as shall be within the time allowed to permit the Participating
Company to properly deduct, for federal income tax purposes and for the tax
year
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of the Participating Company in which the obligation to make such Contributions
was incurred, the full amount of such Matching Contributions.
3.6 Contingent Nature of Company Contributions.
Notwithstanding Section 3.1 and subject to the terms of
Section 14.11, each Company Contribution made to the Plan by a Participating
Company is made expressly contingent upon the deductibility thereof for federal
income tax purposes for the taxable year of the Participating Company with
respect to which such Company Contribution is made.
3.7 Restoration of Forfeitures.
If a Participant has forfeited his nonvested Account in
accordance with Section 8.3, and such Participant subsequently is rehired as a
Covered Employee prior to the occurrence of 5 consecutive Breaks in Service, his
Account shall be credited with all of the benefits (unadjusted for gains or
losses) which were forfeited, as determined pursuant to the terms of Section
8.3.
3.8 Pre-1995 Employer Contributions.
Notwithstanding Section Section 3.2 and 3.3 hereof, which shall
be effective for Plan Years beginning on and after January 1, 1995, employer
contributions for the Plan Year ending December 31, 1994 shall be determined
and made in accordance with Schedule C hereto, which reflects the separate
provisions of the Plan and the Tascor Plan as in effect immediately prior to
the merger of such plans effective December 31, 1994.
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ARTICLE IV
ROLLOVER CONTRIBUTIONS
4.1 Rollover Contributions.
(a) Request by Covered Employee. A Covered Employee may
make a written request to the Administrative Committee that he be permitted to
contribute, or cause to be contributed, to the Trust Fund a Rollover
Contribution which is received by such Covered Employee or to which such
Covered Employee is entitled. Such written request shall contain information
concerning the type of property constituting the Rollover Contribution and a
statement and/or other documentation, satisfactory to the Administrative
Committee, that the property constitutes a Rollover Contribution. If a Covered
Employee who is not a Participant makes a Rollover Contribution, the time and
method of distribution of such Covered Employee's Rollover Account shall be
determined under the terms of the Plan as if such Covered Employee were a
Participant, but he shall not be considered a Participant under the Plan for
any other purpose.
(b) Acceptance of Rollover. Subject to the terms of the
Plan and the Code (including regulations and rulings promulgated thereunder),
the Administrative Committee, in its sole discretion, shall determine whether
(and if so, under what conditions and in what form) a Rollover Contribution
shall be accepted at any time by the Trustee. For example, the Administrative
Committee, in its sole discretion, may decide to allow Rollover Contributions
from Participants and/or direct Rollover Contributions from another qualified
retirement plan [as described in Code Section 401(a)(31)]. In the event the
Administrative Committee permits an Active Participant to make a Rollover
Contribution, the amount of the Rollover Contribution shall be transferred to
the Trustee and allocated as soon as practicable thereafter to a Rollover
Account for the Active Participant. Unless the Administrative Committee
permits otherwise, all Rollover Contributions shall be made in cash.
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ARTICLE V
PARTICIPANTS' ACCOUNTS; CREDITING AND ALLOCATIONS
5.1 Establishment of Participants' Accounts.
To the extent appropriate, the Administrative Committee shall
establish and maintain, on behalf of each Participant and Beneficiary, an
Account which shall be divided into segregated subaccounts. The subaccounts
shall include Before-Tax, Basic Matching, Additional Discretionary Matching,
Profit Sharing and Rollover Accounts and such other subaccounts as the
Administrative Committee shall deem appropriate or helpful. Each Account shall
be credited with Contributions allocated to such Account and generally shall be
credited with income on investments derived from the assets of such Accounts.
Notwithstanding anything herein to the contrary, while Contributions may be
allocated to a Participant's Account as of a particular date (as specified in
the Plan), such Contributions shall actually be added to a Participant's
Account and shall be credited with investment experience only from the date
such Contributions are received and credited to the Participant's Account by
the Trustee. Each Account of a Participant or Beneficiary shall be maintained
until the value thereof has been distributed to or on behalf of such
Participant or Beneficiary.
5.2 Allocation and Crediting of Before-Tax, Basic Matching and
Rollover Contributions.
As of each Valuation Date coinciding with or immediately
following the date on which Before-Tax, Basic Matching and Rollover
Contributions are received on behalf of an Active Participant, such
Contributions shall be allocated and credited directly to the appropriate
Before-Tax, Basic Matching and Rollover Accounts, respectively, of such Active
Participant.
5.3 Allocation and Crediting of Additional Discretionary Matching
Contributions.
As of the last day of each Plan Year for which the
Participating Companies make (or are deemed to have made) Additional
Discretionary Matching Contributions, each Eligible Participant for such Plan
Year shall have allocated and credited to his Additional Discretionary Matching
Account a portion of such Additional Discretionary Matching Contributions.
Such Contributions shall be allocated to the Additional Discretionary Matching
Account of each Eligible Participant in the same proportion that (i) such
Eligible Participant's Before-Tax Contributions of the Plan Year that do not
exceed the Specified Matching Compensation Percentage of his Compensation for
the Plan Year, bears to (ii) the total of all such Eligible Participants'
Before-Tax Contributions for the Plan Year (calculated by taking into account
for each such Eligible Participant only his Before-Tax Contributions that do
not exceed the Specified Matching Compensation Percentage of his Compensation
for such Plan Year).
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5.4 Allocation and Crediting of Investment Experience.
As of each Valuation Date, the Trustee shall determine the
fair market value of the Trust Fund which shall be the sum of the fair market
values of the Investment Funds. The Administrative Committee shall determine
the amount of the Accounts as follows:
(a) Determination of Earnings or Losses. As of each
Valuation Date, the investment earnings (or losses) of each Investment Fund
shall be the amount by which the sum determined in (1) exceeds (or is less
than) the sum determined in (2), where (1) and (2) are as follows:
(1) The sum of (A) the fair market value of such
Investment Fund as of such Valuation Date, plus (B) the amount of
distributions and withdrawals and any transfers to other Investment
Funds made since the immediately preceding Valuation Date from amounts
invested in the Investment Fund; and
(2) The sum of (A) the fair market value of the
Investment Fund as of the immediately preceding Valuation Date, plus
(B) Contributions deposited in and amounts transferred to such
Investment Fund since the immediately preceding Valuation Date.
(b) Formula For Allocation. To the extent directed by
the Administrative Committee, investment earnings initially shall be used to
restore a rehired Participant's Account as provided in Section 3.7 or to replace
abandoned Accounts as provided in Section 9.8. As of each Valuation Date and
prior to the allocations described in Section 5.2 and Section 5.3, each
Participant's Account shall be allocated and credited with a portion of such
earnings or debited with a portion of such losses of each Investment Fund, as
determined in accordance with subsection (a) hereof, in the proportion that
(i)(A) the amount credited to such Account that was invested in such Investment
Fund as of the immediately preceding Valuation Date, minus (B) any
distributions or withdrawals or transfers to other Investment Funds which were
made from such Account since such preceding Valuation Date and on or before
such current Valuation Date, plus (C) any amounts transferred to such
Investment Fund since the immediately preceding Valuation Date; bears to
(ii)(A) the total amount invested in such Investment Fund by all Participants
as of the immediately preceding Valuation Date, minus (B) any distributions or
withdrawals or transfers to other Investment Funds which were made since such
preceding Valuation Date and on or before such current Valuation Date, plus
(C) any amounts transferred to such Investment Fund since the immediately
preceding Valuation Date.
5.5 Allocation of Forfeitures.
To the extent Forfeitures for a Plan Year are not used to
restore a rehired Participant's Account as provided in Section 3.7 or to replace
abandoned Accounts as provided in Section 9.8, such Forfeitures shall be used to
reduce the Participating Companies' obligation to make Matching Contributions
pursuant to the terms of the Plan, and such Forfeitures shall be allocated
pursuant to the terms of Section 5.2 and Section 5.3, as applicable.
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5.6 Notice to Participants of Account Balances.
At least once for each Plan Year, the Administrative Committee
shall cause a written statement of a Participant's Account balance to be
distributed to the Participant.
5.7 Good Faith Valuation Binding.
In determining the value of the Trust Fund and the Accounts,
the Trustee and the Administrative Committee shall exercise their best
judgment, and all such determinations of value (in the absence of bad faith)
shall be binding upon all Participants and Beneficiaries.
5.8 Errors and Omissions in Accounts.
If an error or omission is discovered in the Account of a
Participant or Beneficiary, the Administrative Committee shall cause
appropriate, equitable adjustments to be made as of the Valuation Date
coinciding with or immediately following the discovery of such error or
omission.
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ARTICLE VI
CONTRIBUTION AND SECTION 415 LIMITATIONS
AND NONDISCRIMINATION REQUIREMENTS
6.1 Deductibility Limitations.
In no event shall the total Company Contribution amount for
any taxable year of a Participating Company exceed that amount which is
properly deductible for federal income tax purposes under the then appropriate
provisions of the Code. Generally, the maximum, tax-deductible Company
Contribution amount for any taxable year of a Participating Company shall be
equal to 15 percent of the total Compensation paid or accrued during such
taxable year to all Participants employed by the Participating Company;
provided, no Company Contribution amount shall be deductible if it shall cause
the Plan to exceed the applicable maximum allocation limitations under Code
Section 415, as described in Section 6.7. For purposes of this Section, a
Company Contribution may be deemed made by a Participating Company for a
taxable year if it is paid for such year to the Trustee on or before the date
of filing the Participating Company's federal income tax return (including
extensions thereof) for that year or on or before such other date as shall be
within the time allowed to permit proper deduction by the Participating
Company of the amount so contributed for federal income tax purposes for the
year in which the obligation to make such Company Contribution was incurred.
6.2 Maximum Limitation on Elective Deferrals.
(a) Maximum Elective Deferrals Under Participating
Company Plans. The aggregate amount of a Participant's Elective Deferrals made
for any calendar year under the Plan and any other plans, contracts or
arrangements with the Participating Companies shall not exceed the Maximum
Deferral Amount.
(b) Return of Excess Before-Tax Contributions. If the
aggregate amount of a Participant's Before-Tax Contributions made for any
calendar year by itself exceeds the Maximum Deferral Amount, the Participant
shall be deemed to have notified the Administrative Committee of such excess,
and the Administrative Committee shall cause the Trustee to distribute to such
Participant, on or before April 15 of the next succeeding calendar year, the
total of (i) the amount by which such Before-Tax Contributions exceed the
Maximum Deferral Amount, plus (ii) any earnings allocable thereto (including,
in the Administrative Committee's discretion, any gap income). In addition,
Matching Contributions made on behalf of the Participant which are attributable
to the distributed Before-Tax Contributions shall be forfeited.
(c) Return of Excess Elective Deferrals Provided by Other
Participating Company Arrangements. If after the reduction described in
subsection (b) hereof, a Participant's aggregate Elective Deferrals under
plans, contracts and arrangements with Participating Companies still exceed the
Maximum Deferral Amount, then, the Participant shall be deemed
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to have notified the Administrative Committee of such excess, and,
unless the Administrative Committee directs otherwise, such excess shall be
reduced by distributing to the Participant Elective Deferrals that were made
for the calendar year under such plans, contracts and/or arrangements with
Participating Companies other than the Plan. However, if the Administrative
Committee decides to make any such distributions from Before-Tax Contributions
made to the Plan, such distributions (including forfeiture of Matching
Contributions) shall be made in a manner similar to that described in
subsection (b) hereof.
(d) Discretionary Return of Elective Deferrals. If after
the reductions described in subsections (b) and (c) hereof, (i) a Participant's
aggregate Elective Deferrals made for any calendar year under the Plan and any
other plans, contracts or arrangements with Participating Companies and any
other employers still exceed the Maximum Deferral Amount, and (ii) such
Participant submits to the Administrative Committee, on or before the March 1
following the end of such calendar year, a written request that the
Administrative Committee distribute to such Participant all or a portion of his
remaining Before-Tax Contributions made for such calendar year, and any
earnings attributable thereto (including, in the Administrative Committee's
discretion, any gap income), then the Administrative Committee may, but shall
not be required to, cause the Trustee to distribute such amount to such
Participant on or before the following April 15. However, if the
Administrative Committee decides to make any such distributions from Before-Tax
Contributions made to the Plan, such distributions (including forfeiture of
Matching Contributions) shall be made in a manner similar to that described in
subsection (b) hereof.
(e) Return of Excess Annual Additions. Any Before-Tax
Contributions returned to a Participant to correct excess Annual Additions
shall be disregarded for purposes of determining whether the Maximum Deferral
Amount has been exceeded.
6.3 Nondiscrimination Requirements for Before-Tax Contributions.
(a) ADP Test. The annual allocation of the aggregate of
all Before-Tax Contributions shall satisfy at least one of the following ADP
Tests for each Plan Year:
(1) The ADP for the Highly Compensated Employees
who are Active Participants shall not exceed the product of (A) the
ADP for the Active Participants who are not Highly Compensated
Employees, multiplied by (B) 1.25; or
(2) The ADP for the Highly Compensated Employees
who are Active Participants shall not exceed the ADP for the Active
Participants who are not Highly Compensated Employees by more than 2
percentage points, nor shall it exceed the product of (A) the ADP of
the Active Participants who are not Highly Compensated Employees,
multiplied by (B) 2.
The ADP Tests described herein shall be performed separately with
respect to (a) the Controlling Company and its Affiliates, and (b) each Related
Company and its Affiliates.
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(b) Multiple Plans. If before-tax, matching and/or
supplemental contributions are made to one or more other plans [other than
employee stock ownership plans as described in Code Section 4975(e)(7)] which,
along with the Plan, are considered as a single plan for purposes of Code
Section 401(a)(4) or Section 410(b), such plans shall be treated as one plan
for purposes of this Section, and the before-tax and applicable matching and
supplemental contributions made to those other plans shall be combined with
the Before-Tax Contributions for purposes of performing the tests described in
subsection (a) hereof. In addition, the Administrative Committee may elect to
treat the Plan as a single plan along with the one or more other plans [other
than employee stock ownership plans as described in Code Section 4975(e)(7)]
to which before-tax, matching and/or supplemental contributions are made for
purposes of this Section; provided, the Plan and all of such other plans also
must be treated as a single plan for purposes of satisfying the requirements
of Code Section 401(a)(4) and Section 410(b) [other than the requirements of
Code Section 410(b)(2)(A)(ii)]. However, plans may be aggregated for purposes
of this subsection only if they have the same plan year.
(c) Adjustments to Actual Deferral Percentages. In the
event that the allocation of the Before-Tax Contributions for a Plan Year does
not satisfy one of the ADP Tests, by the last day of the Plan Year following
the Plan Year in which the annual allocation failed both of the ADP Tests, the
Administrative Committee may direct the Trustee to reduce the Before-Tax
Contributions taken into account with respect to Highly Compensated Employees
under such failed ADP Tests by an amount necessary to satisfy one of the ADP
Tests. Any amount by which Before-Tax Contributions are so reduced, plus any
earnings attributable thereto (including, in the Administrative Committee's
discretion, any gap income), shall be distributed to the Highly Compensated
Employees from whose Before-Tax Accounts such reductions shall have been made.
Such reductions in Before-Tax Contributions shall be made in accordance with,
and solely to the Accounts of those Highly Compensated Employees who are
affected by, the following procedure:
(A) First, the Before-Tax Contributions
of the Highly Compensated Employee(s) with the highest
ADP for such Plan Year shall be reduced by the lesser of (i)
the entire amount necessary to satisfy one of the ADP Tests,
or (ii) that part of the amount necessary to satisfy one of
the ADP Tests as shall cause the ADP of each such Highly
Compensated Employee to equal the ADP of each of the Highly
Compensated Employees with the next highest ADP for such Plan
Year. In addition, to the extent that a Highly Compensated
Employee's Before-Tax Contributions are reduced pursuant to
this Section, any Matching Contributions made on behalf of a
Highly Compensated Employee which are attributable to the
distributed Before-Tax Contributions shall be forfeited.
(B) Substantially identical steps shall
be followed for making further reductions in the Before-Tax
Contributions of each of the Highly Compensated Employees with
the next highest ADP for such Plan Year until one of the ADP
Tests has been satisfied.
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In reducing the Contributions of Highly Compensated Employees
in subsections (2)(A) and (B) hereof, the Administrative Committee
shall comply with the special "family member" rules contained in the
regulations under Code Section 401(m).
6.4 Nondiscrimination Requirements for Matching Contributions.
(a) ACP Test. The amount of the aggregate of all
Matching Contributions and, to the extent designated by the Administrative
Committee, Before-Tax Contributions made for each Plan Year, shall satisfy at
least one of the following ACP Tests:
(1) The ACP for the Highly Compensated Employees
who are Active Participants during the Plan Year shall not exceed the
product of (A) the ACP for the Active Participants who are not Highly
Compensated Employees during the Plan Year, multiplied by (B) 1.25; or
(2) The ACP for the Highly Compensated Employees
who are Active Participants during the Plan Year shall not exceed the
ACP for the Active Participants who are not Highly Compensated
Employees during the Plan Year by more than 2 percentage points, nor
shall it exceed the product of (A) the ACP of the Active Participants
who are not Highly Compensated Employees during the Plan Year,
multiplied by (B) 2.
The ACP Tests described herein shall be performed separately with
respect to (a) the Controlling Company and its Affiliates, and (b) each Related
Company and its Affiliates.
(b) Multiple Plans. If matching, after-tax, before-tax
and/or supplemental contributions are made to one or more other plans [other
than employee stock ownership plans as described in Code Section 4975(e)(7)]
which, along with the Plan, are considered as a single plan for purposes of Code
Section 401(a)(4) or Section 410(b), such plans shall be treated as one plan
for purposes of this Section, and the matching, after-tax, before-tax and
applicable supplemental contributions made to those other plans shall be
combined with the Matching and Before-Tax Contributions for purposes of
performing the tests described in subsection (a) hereof. In addition, the
Administrative Committee may elect to treat the Plan as a single plan along
with one or more other plans [other than employee stock ownership plans as
described in Code Section 4975(e)(7)] to which matching, after-tax, before-tax
and/or supplemental contributions are made for purposes of this Section;
provided, the Plan and all of such other plans also must be treated as a
single plan for purposes of satisfying the requirements of Code Section
401(a)(4) and Section 410(b) [other than the requirements of Code Section
410(b)(2)(A)(ii)]. However, plans may be aggregated for purposes of this
subsection only if they have the same plan year.
(c) Adjustments to Average Contribution Percentages. In
the event that the allocation of the Before-Tax and Matching Contributions for
a Plan Year, after the application of subsections (a) and (b) hereof, does not
satisfy one of the ACP Tests, by the last day of the Plan Year following the
Plan Year in which the annual allocation failed both of the ACP Tests, the
Administrative Committee may direct the Trustee to reduce the Matching
Contributions taken
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into account with respect to Highly Compensated Employees under such failed
ACP Tests by an amount necessary to satisfy one of the ACP Tests. Any amount
by which Matching Contributions are to be reduced, plus any earnings
attributable thereto (including, in the Administrative Committee's discretion,
any gap income), shall be forfeited and reallocated as Contributions as
described in Section 5.5 with respect to such Plan Year; provided, if the
Matching Contributions to be reduced are vested and therefore may not be
forfeited, those Matching Contributions (plus any earnings attributable
thereto) shall be distributed to the Highly Compensated Employees from whose
Matching Accounts such reductions have been made. Such reductions in
Contributions shall be made in accordance with, and solely to the Accounts of
those Highly Compensated Employees who are affected by, the following procedure:
(A) First, the Matching Contributions of
the Highly Compensated Employee(s) with the highest ACP
for such Plan Year shall be reduced by the lesser of (i) the
entire amount necessary to satisfy one of the ACP Tests, or
(ii) that part of the amount necessary to satisfy one of the
ACP Tests as shall cause the ACP of each such Highly
Compensated Employee to equal the ACP of each of the Highly
Compensated Employees with the next highest ACP(s) for such
Plan Year.
(B) The Administrative Committee shall
follow substantially identical steps for making further
reductions in the Contributions of each of the Highly
Compensated Employees with the next highest ACP for such Plan
Year until one of the ACP Tests has been satisfied.
In reducing the Contributions of Highly Compensated Employees in
subsections (2)(A) and (B) hereof, the Administrative Committee shall
comply with the special "family member" rules contained in the
regulations under Code Section 401(m).
6.5 Multiple Use of Tests.
(a) Aggregate Limitation. The sum of the ADP and the ACP
for a Plan Year for the entire group of eligible Highly Compensated Employees
who are Active Participants, following the application of Section Section
6.3(c) and 6.4(c) for such Plan Year, may not exceed the greater of (1) or (2)
below (or such other applicable limits as may be established under the Code,
regulations or otherwise):
(1) the sum of:
(A) 125 percent of the greater of (i)
the ADP of the group of non-Highly Compensated Employees
eligible under the Plan for the Plan Year, or (ii) the ACP of
the group of non-Highly Compensated Employees who are eligible
under the Plan for the Plan Year; plus
(B) the lesser of 2 plus or 2 times the
lesser of the amount determined in subsection (a)(1)(A)(i) or
(a)(1)(A)(ii) hereof; or
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(2) the sum of:
(A) 125 percent of the lesser of (i) the
actual deferral percentage of the group of non-Highly
Compensated Employees eligible under the Code Section 401(k)
arrangements for the Plan Year, or (ii) the ACP of the group
of non-Highly Compensated Employees who are eligible under the
Plan beginning with or within the plan year of the Code
Section 401(k) arrangement; plus
(B) the lesser of 2 plus or 2 times the
greater of the amount determined in subsection (a)(2)(A)(i)
or (a)(2)(A)(ii) hereof.
(b) Multiple Plans. If at least one Highly Compensated
Employee participates in another qualified retirement plan maintained by a
Participating Company which (i) permits before-tax contributions and/or
after-tax contributions or matching contributions, and (ii) is not aggregated
with the Plan for purposes of nondiscrimination testing, then the multiple use
aggregate limitations described in subsection (a) shall apply in testing the
Plan separately against each such other plan.
(c) Correction. If the maximum limitation of the
combination of the ADP and ACP, as described in subsection (a) hereof, is
exceeded, this excess shall be reduced or otherwise corrected by any method
permissible under Section 6.3 for satisfying the ADP Test or through any method
permitted under Section 6.4 to satisfy the ACP Test, or any combination
thereof. Any adjustment necessary to satisfy said maximum limitation shall be
made by adjusting the ADP's or the ACP's of Highly Compensated Employees.
(d) Application. This Section shall be operated and
interpreted in a manner consistent with regulations promulgated under Code
Section 401(m) and shall be applied separately with respect to (i) the
Controlling Company and its Affiliates and (ii) each Related Company and its
Affiliates.
6.6 Order of Application.
For any Plan Year in which adjustments shall be necessary or
otherwise made pursuant to the terms of Section Section 6.2, 6.3 and/or 6.4,
such adjustments shall be applied in the order prescribed by the Secretary of
Treasury in Treasury Regulations or other published authority.
6.7 Code Section 415 Limitations on Maximum Contributions.
(a) General Limit on Annual Additions. In no event shall
the Annual Addition to a Participant's Account for any Limitation Year, under
the Plan and any other Defined Contribution Plan maintained by an Affiliate,
exceed the lesser of:
(1) $30,000 [or, if greater, 25 percent of the
dollar limitation in effect under Code Section 415(b)(1)(A)]; or
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(2) 25 percent of such Participant's Compensation.
(b) Combined Plan Limitation. If an Employee is a
Participant in the Plan and any one or more Defined Benefit Plans, welfare
benefit funds [as defined in Code Section 419(d)] or individual medical
accounts [as defined in Code Section 415(l)(2)], maintained by an Affiliate,
the sum of his Defined Benefit Plan Fraction and his Defined Contribution Plan
Fraction shall not exceed 1.0 for any Limitation Year. (For purposes of this
subsection, any adjustments in the definition of "Compensation" permitted by
the Internal Revenue Service for purposes of determining this combined limit
are included herein by reference.) If any corrective adjustment in any
Participant's benefits is required to comply with this subsection, such
adjustment shall be made exclusively under the Defined Benefit Plans maintained
by the Affiliates. If an Employee is a Participant in the Plan and any one or
more other Defined Contribution Plans maintained by an Affiliate and a
corrective adjustment in such Participant's benefits is required to comply with
this subsection, such adjustment shall be made under the Plan.
(c) Correction of Excess Annual Additions. If, as a
result of a reasonable error in estimating a Participant's Compensation or
Elective Deferrals, or such other occurrences as the Internal Revenue Service
permits to trigger this subsection, the Annual Addition made on behalf of a
Participant exceeds the limitations set forth in this Section, the
Administrative Committee shall direct the Trustee to take the following
actions, specifying the amount of contributions involved:
(1) A Participant's Annual Addition first shall
be reduced by reducing his Before-Tax Contributions to the extent of any such
excess, up to the total amount of Before-Tax Contributions made on behalf of
such Participant, and the amount of the reduction (plus any investment earnings
thereon) shall be returned to such Participant. In addition, any Matching
Contributions (and earnings thereon) attributable to the returned Before-Tax
Contributions shall be forfeited and reallocated to the Matching Accounts of
Active Participants who otherwise are eligible for allocations of
Contributions, who are employed by the Participating Company or Companies
employing the Participant and who are not affected by such limitations, in the
same proportion as Matching Contributions otherwise are allocated to such
Accounts, disregarding the Compensation of those Active Participants whose
Annual Addition equals or exceeds the limitations hereunder.
(2) If the reallocation to the Accounts of other
Participants in the then current Limitation Year is impossible without causing
them or any of them to exceed the Annual Addition limitations described in this
Section, the amount that cannot be reallocated without exceeding such
limitations shall continue to be held in a suspense account and shall be
applied to reduce permissible Contributions in each successive year until such
amount is fully allocated; provided, so long as any suspense account is
maintained pursuant to this Section: (A) no Contributions shall be made to the
Plan which would be precluded by this Section; (B) investment gains and losses
of the Trust Fund shall not be allocated to such suspense account; and (C)
amounts in the suspense account shall be allocated in the same manner as
Contributions as of the earliest Valuation Date possible, until such suspense
account is exhausted.
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(d) Special Definitions Applicable to Code Section 415
Limitations.
(1) Annual Addition. For purposes of this
Section, the term "Annual Addition" for any Participant means the sum
for any Limitation Year of:
(A) contributions made by an Affiliate
on behalf of the Participant under all Defined Contribution
Plans;
(B) contributions made by the
Participant under all Defined Contribution Plans of an
Affiliate [excluding rollover contributions as defined in Code
Section 402(c)(4), 403(a)(4), 403(b)(8) and 408(d)(3) and
contributions of previously distributed benefits which result
in such a Plan's restoration of previously forfeited benefits
pursuant to Treasury Regulations Section 1.411(a)-7(d)];
provided, the Annual Additions limitation for Limitation Years
beginning before January 1, 1987 shall not be recomputed to
treat all after-tax Contributions as Annual Additions;
(C) forfeitures allocated to the
Participant under all Defined Contribution Plans of an
Affiliate;
(D) amounts allocated for the benefit of
the Participant after March 31, 1984, to an individual medical
account established under a pension or annuity plan maintained
by an Affiliate, as described in Code Section 415(l); and
(E) if the Participant was a key
employee [as defined in Code Section 419A(d)(3)] at any
time during the Plan Year during which or coincident with
which the Limitation Year ends or during any preceding Plan
Year, any amount paid or accrued after December 31, 1985 by an
Affiliate to a special account under a welfare benefit fund
[as defined in Code Section 419(e)] to provide post-retirement
medical or life insurance benefits to the Participant, as
described in Code Section 419A(d)(2).
Contributions do not fail to be Annual Additions merely because they
are (i) Before-Tax Contributions that exceed the Maximum Deferral
Amount, (ii) Before-Tax Contributions that cause the Plan to fail the
ADP Tests, or (iii) Matching Contributions that cause the Plan to fail
the ACP Tests, or merely because the Contributions described in
clauses (ii) and (iii) immediately above are corrected through
distribution or recharacterization; Contributions described in clause
(i) immediately above that are distributed in accordance with the
terms of Section 6.2 shall not be Annual Additions.
(2) Defined Benefit Plan. The term "Defined
Benefit Plan" shall mean any qualified retirement plan maintained by
an Affiliate which is not a Defined Contribution Plan.
(3) Defined Benefit Plan Fraction. The term
"Defined Benefit Plan
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Fraction" shall mean, with respect to a Participant for any Limitation
Year, a fraction, the numerator of which is his projected annual
benefit under all Defined Benefit Plans maintained by an Affiliate, as
determined as of the close of the Limitation Year, and the
denominator of which is the lesser of:
(A) 125 percent of the dollar limitation
in effect for such year under Code Section 415(b)(1)(A); or
(B) 140 percent of his average
compensation for his highest three consecutive plan years of
participation in such Defined Benefit Plans.
In appropriate cases, the Defined Benefit Plan Fraction will be
adjusted to reflect applicable transition rules provided by Code
Section 415 [inclusive of Code Section 415(b)] and the regulations
thereunder.
(4) Defined Contribution Plan. The term "Defined
Contribution Plan" shall mean any qualified retirement plan maintained
by an Affiliate which provides for an individual account for each
Participant and for benefits based solely on the amount contributed to
the Participant's account and any income, expenses, gains, losses and
forfeitures of accounts of other Participants, which may be allocated
to such Participant's account.
(5) Defined Contribution Plan Fraction. The term
"Defined Contribution Plan Fraction" shall mean, with respect
to a Participant for any Limitation Year, a fraction, the numerator of
which is the sum of the Annual Additions to his Accounts in this Plan
and to his accounts in any other Defined Contribution Plans required
to be aggregated with this Plan under Code Section 415(h), as of the
close of the Limitation Year, and the denominator of which is the sum
of the lesser of the following amounts determined separately for the
current Limitation Year and for each prior Limitation Year in which
the Participant was employed by an Affiliate:
(A) 125 percent of the dollar limitation
in effect under Code Section 415(c)(1)(A) as of the last day
of such Limitation Year; or
(B) 35 percent of the Participant's
Compensation from Affiliates for the Limitation Year.
In appropriate cases, the Defined Contribution Plan Fraction will be
adjusted to reflect applicable transition rules provided by Code
Section 415 and regulations thereunder.
(e) Compliance with Code Section 415. The limitations
in this Section are intended to comply with the provisions of Code Section 415
so that the maximum benefits permitted under plans of the Affiliates shall be
exactly equal to the maximum amounts allowed under Code Section 415 and the
regulations promulgated thereunder. The provisions of this Section generally
are effective as of the Effective Date, but to the extent the Code requires an
earlier or later effective date with
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respect to any portion(s) of this Section, such other effective date shall
apply. If there is any discrepancy between the provisions of this Section and
the provisions of Code Section 415 and the regulations promulgated thereunder,
such discrepancy shall be resolved in such a way as to give full effect to the
provisions of the Code.
6.8 Construction of Limitations and Requirements.
The descriptions of the limitations and requirements set forth
in this Article are intended to serve as statements of the minimum legal
requirements necessary for the Plan to remain qualified under the applicable
terms of the Code. The Participating Companies do not desire or intend, and
the terms of this Article shall not be construed, to impose any more
restrictions on the operation of the Plan than required by law. Therefore, the
terms of this Article and any related terms and definitions in the Plan shall
be interpreted and operated in a manner which imposes the least restrictions on
the Plan. For example, if use of a more liberal definition of "Compensation"
or a more liberal multiple use test is permissible at any time under the law,
then the more liberal provisions may be applied as if such provisions were
included in the Plan.
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ARTICLE VII
INVESTMENTS
7.1 Establishment of Trust Account.
All Contributions are to be paid over to the Trustee to be
held in the Trust Fund and invested in accordance with the terms of the Plan
and the Trust.
7.2 Investment Funds.
(a) Named Investment Funds. In accordance with
instructions from the Administrative Committee and the terms of the Plan and
the Trust, the Trustee shall establish and maintain for the investment of
assets of the Trust Fund, the following Investment Funds:
(i) Guaranteed Long-Term Account which generally
shall be invested in guaranteed investment contracts issued by
insurance companies.
(ii) Fidelity Asset Manager Fund which shall be
invested in both equity and fixed income securities.
(iii) Fidelity Advisor Growth Opportunities Fund
which shall be invested primarily in common stocks and securities
convertible into common stocks.
(iv) Twentieth Century Ultra Fund which shall be
invested in stocks of medium-sized companies.
(v) Warburg Pincus International Equity Fund
which shall be invested in equity securities of companies that have
their principal business activities and interests outside the United
States.
(vi) Norrell Stock Fund which shall be invested
exclusively in Norrell Stock.
(b) Other Investment Funds. At the proper direction of
the Investment Committee, the Trustee shall establish other Investment Funds
(or modify the investment mix of the Investment Funds), in addition to or in
lieu of the Investment Funds with the investment criteria described herein,
which may include, for example, other fixed income funds or one or more equity
funds. Such other Investment Funds shall be established without necessity of
amendment to the Plan and shall have the investment objectives prescribed by
the Investment Committee and to which the Trustee consents. Such other
Investment Funds also may be established and maintained for any limited
purpose(s) the Investment Committee may properly direct (for example, for the
investment of certain specified Accounts transferred from a prior plan).
Similarly, at the proper direction of the Investment Committee, the Trustee may
eliminate one or more of the then existing Investment Funds.
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(c) Reinvestment of Cash Earnings. Any investment
earnings received in the form of cash with respect to any Investment Fund (in
excess of the amounts necessary to make cash distributions or to pay Plan or
Trust expenses) shall be reinvested in such Investment Fund.
7.3 Participant Direction of Investments.
Each Participant or Beneficiary generally may direct the
manner in which his Before-Tax, Basic Matching and Rollover Contributions and
Accounts shall be invested in and among the Investment Funds described in
Section 7.2(a); provided, such investment directions shall be made in
accordance with the following terms:
(a) Investment of Contributions. Except as otherwise
provided in this Section, each Participant may elect, on a form provided by the
Administrative Committee, through an interactive telephone system or in such
other manner as the Administrative Committee may prescribe, the percentage of
his future Before-Tax, Basic Matching and Rollover Contributions that will be
invested in each Investment Fund. An initial election of a Participant shall
be made as of the Entry Date coinciding with or immediately following the date
the Participant commences or recommences participation in the Plan and shall
apply to all such specified Contributions credited to such Participant's
Account after such Entry Date. Such Participant may make subsequent elections
as of any Business Day, and such elections shall apply to all such
Contributions credited to such Participant's Accounts after such date; for
purposes hereof, Contributions and/or Forfeitures that are credited to a
Participant's or Beneficiary's Account shall be subject to the investment
election in effect on the date on which such amounts are actually received and
credited, regardless of any prior date "as of" which such Contributions may
have been allocated to his Account. Any election made pursuant to this
subsection with respect to future Contributions shall remain effective until
changed by the Participant. In the event a Participant never makes an
investment election or makes an incomplete or insufficient election in some
manner, the Trustee, based on proper directions from the Administrative
Committee, shall direct the investment of the Participant's future
Contributions.
(b) Investment of Existing Account Balances. Except as
otherwise provided in this Section, each Participant or Beneficiary may elect,
on a form provided by the Administrative Committee, through an interactive
telephone system or in such other manner as the Administrative Committee may
prescribe, the percentage of his existing Before-Tax, Basic Matching and
Rollover Accounts that will be invested in each Investment Fund. Such
Participant or Beneficiary may make such elections effective as of any Business
Day following his Entry Date into the Plan. Each such election shall remain in
effect until changed by such Participant or Beneficiary. In the event a
Participant fails to make an election for his existing Account pursuant to the
terms of this subsection (b) which is separate from any election he made for
his Contributions pursuant to the terms of subsection (a) hereof, or if a
Participant's or Beneficiary's investment election is incomplete or
insufficient in some manner, the Participant's or Beneficiary's existing
Account will continue to be invested in the same manner provided under the
terms of the most recent election affecting his Account.
(c) Conditions Applicable to Elections. Allocations of
investments in the various Investment Funds, as described in subsections (a)
and (b) hereof, shall be made in even multiples of 5 percent as directed by the
Participant or Beneficiary. A Participant or Beneficiary
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may make an election under subsection (a) and (b) on any Business Day and as
frequently as he desires. The Administrative Committee shall have complete
discretion to adopt and revise procedures to be followed in making such
investment elections. Such procedures may include, but are not limited to, the
process of the election, the permitted frequency of making elections, the
deadline for making elections and the effective date of such elections;
provided, elections must be permitted at least once every 3 months. Any
procedures adopted by the Administrative Committee that are inconsistent with
the deadlines or procedures specified in this Section shall supersede such
provisions of this Section without the necessity of a Plan amendment.
(d) Restrictions on Investments. To the extent any
investment or reinvestment restrictions apply with respect to any Investment
Funds (for example, restrictions on changes of investments between competing
funds), those restrictions may limit a Participant's or Beneficiary's ability
to direct investments hereunder.
(e) Sales and Purchases of Norrell Stock. Up to 100
percent of the Trust Account may be invested in Norrell Stock by investing in
the Norrell Stock Fund, as follows:
(i) To the extent that any cash amounts received
by or held in the Trust Fund are to be invested in the Norrell Stock
Fund, the Trustee, as properly directed by the Administrative
Committee, shall effect purchases of whole shares of Norrell Stock
pursuant to the schedule described in subsection (e)(iii) hereof. The
Trustee shall make such purchases in compliance with all applicable
securities laws and may purchase Norrell Stock (i) in the open market,
(ii) in privately negotiated transactions with holders of Norrell
Stock and/or the Controlling Company, and/or (iii) through the
exercise of stock rights, warrants or options. Alternatively, the
Trustee may acquire the requisite number of shares of Norrell Stock
from shares already acquired for other Participants' Accounts and made
available pursuant to the procedure described in subsection (e)(ii)(B)
hereof. The Trustee shall make all purchases of Norrell Stock at a
price or prices which, in the judgment of the Trustee, do not exceed
the fair market value of such Norrell Stock as of the date of the
purchase; with respect to Norrell Stock purchased on the open market,
the total cost to Participants will include acquisition costs.
(ii) To the extent that any shares of Norrell
Stock held in the Trust Fund are to be liquidated for purposes of
investing in one or more of the other Investment Funds, making
distributions and/or otherwise, the Trustee, in a manner consistent
with the terms of subsection (e)(i) hereof, shall either (A) sell, at
fair market value, the appropriate number of shares of Norrell Stock
to effect such election, or (B) retain such shares for credit to other
Participants' Accounts; any shares of Norrell Stock so retained shall
be deemed to have been sold at fair market value on the day the
election to sell is to be effective as described in subsection
(e)(iii) hereof.
(iii) If Norrell Stock is to be purchased or sold,
such purchases and sales shall be made as soon as administratively
practicable.
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7.4 Investment of Additional Discretionary Matching and Profit
Sharing Accounts.
Except as otherwise directed or permitted by the Investment
Committee, all Additional Discretionary Matching and Profit Sharing Accounts
shall at all times be invested in the Norrell Stock Fund.
7.5 Valuation.
As of each Valuation Date, the Trustee shall determine the
fair market value of each of the Investment Funds after first deducting any
expenses which have not been paid by the Participating Companies. All costs
and expenses incurred in connection with Plan investments and, unless paid by
the Participating Companies, all costs and expenses incurred in connection with
the general administration of the Plan and the Trust shall be allocated between
the Investment Funds in the proportion in which the amount invested in each
Investment Fund bears to the amount invested in all Investment Funds as of the
appropriate Valuation Date; provided, all costs and expenses directly
identifiable to one Investment Fund shall be allocated to that Investment Fund.
Notwithstanding the foregoing, for accounting and reporting purposes, the
Norrell Stock Fund and, as permitted by the Administrative Committee, any other
Investment Funds for which share accounting is available shall be accounted for
in terms of whole and fractional shares of stock or other measures of
Investment Fund ownership interests, as applicable, as well as in terms of the
fair market value of such stock or ownership interests.
7.6 Voting and Tender Offer Rights With Respect to Norrell Stock.
(a) Voting Rights. All shares of Norrell Stock held in
the Trust shall be voted by the Trustee in accordance with the proper direction
of the Administrative Committee.
(b) Tender Offer Rights. Each Participant or Beneficiary
shall have the right to direct the Trustee as to whether, in accordance with
the terms of any tender offer for shares of Norrell Stock, to tender the whole
shares of Norrell Stock in his Account, and the Trustee shall follow such
directions to the extent they are proper. To the extent possible, the Trustee
shall combine fractional shares of Norrell Stock in the Accounts of
Participants or Beneficiaries and shall tender such fractional shares of
Norrell Stock in the same proportion as the whole shares of such Norrell Stock
are tendered by the tendering Participants or Beneficiaries. Unless otherwise
required by ERISA, the Trustee shall not tender whole shares of Norrell Stock
credited to a Participant's or Beneficiary's Account for which it has received
no directions from such Participant or Beneficiary.
(c) Confidentiality. The Administrative Committee shall
establish procedures to protect the tender offer rights of the Participants and
Beneficiaries and to assure that the manner in which each Participant or
Beneficiary exercises his tender offer rights is confidential with respect to
the Administrative Committee and the management of the Company.
(d) Dissemination of Pertinent Information. The
Administrative Committee shall deliver, or cause to be delivered, to each
Participant or Beneficiary, all materials relating to any tender offer,
including the materials distributed by any tender offerer (that is, any
bidder). The Administrative Committee shall notify each Participant or
Beneficiary of each occasion for
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the exercise of tender offer rights within a reasonable time before such
rights are to be exercised, and such notification shall include all of the
relevant information that the Controlling Company distributes to shareholders
regarding the exercise of such rights.
7.7 Voting and Tender Offer Rights with Respect to Investment
Funds Other Than the Norrell Stock Fund.
Only if, to the extent and in the manner, permitted by the
Trust and/or any documents establishing or controlling any of the Investment
Funds other than the Norrell Stock Fund, shall Participants and Beneficiaries
be given the opportunity to vote and tender their interests in each such
Investment Funds. Otherwise, such interests shall be voted and/or tendered by
the Investment Manager or other fiduciary that controls such Investment Fund,
as may be provided in the controlling documents.
7.8 Fiduciary Responsibilities for Investment Directions.
All fiduciary responsibility with respect to the selection of
Investment Funds for the investment of a Participant's or Beneficiary's
Accounts shall be allocated to the Participant or Beneficiary who directs the
investment. Neither the Administrative Committee, the Investment Committee,
the Trustee, nor any Participating Company shall be accountable for any loss
sustained by reason of any action taken, or investment made, pursuant to an
investment direction.
7.9 Appointment of Investment Manager; Authorization to Invest in
Collective Trust.
(a) Investment Manager. Either the Controlling Company,
through action of the Board, or the Investment Committee may appoint any one or
more individuals or entities to serve as the Investment Manager or Managers of
the entire Trust or of all or any designated portion of a particular Investment
Fund or Investment Funds. The Investment Manager shall certify that it is
qualified to act as an "investment manager" within the meaning of Section
3(38) of ERISA and shall acknowledge in writing its fiduciary status with
respect to the assets placed under its control. The appointment of the
Investment Manager shall be effective upon the Trustee's receipt of a copy of
an appropriate Board or Investment Committee resolution (or such later
effective date as may be contained therein), and the appointment shall
continue in effect until receipt by the Trustee of a copy of a Board or
Investment Committee resolution removing or accepting the resignation of the
Investment Manager (or such later effective date as may be specified therein).
If an Investment Manager is appointed, the Investment Manager shall have the
power to manage, acquire and dispose of any and all assets of the Trust Fund,
as the case may be, which have been placed under its control, except to the
extent that such power is reserved to the Trustee by the Controlling Company.
If an Investment Manager is appointed, the Trustee shall be relieved of any and
all liability for the acts or omissions of the Investment Manager, and the
Trustee shall not be under any obligation to invest or otherwise manage any
assets which are subject to the management of the Investment Manager.
(b) Collective Trust. Either the Controlling Company,
through action of the Board, or the Investment Committee may designate that all
or any portion of the Trust Fund shall be invested in a collective trust fund,
in accordance with the provisions of Revenue Ruling
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81-100 or any successor ruling, which collective trust fund shall have been
specifically identified in the Trust and adopted thereby as part of the Plan.
The trustee of said collective trust shall be appointed as either a co-trustee
or Investment Manager of the Plan, effective upon the Trustee's receipt of a
copy of an appropriate Board or Investment Committee resolution (or such later
effective date as may be contained therein), and the investment in said
collective trust shall continue in effect until receipt by the Trustee of a
copy of a Board or Investment Committee resolution terminating said investment
(or such later effective date as may be contained therein). Said designation
or direction shall be in addition to the powers to invest in commingled funds
maintained by the Trustee provided for in the Trust.
7.10 Purchase of Life Insurance.
Life insurance contracts shall not be purchased.
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ARTICLE VIII
VESTING IN ACCOUNTS
8.1 General Vesting Rule.
(a) General Vesting Schedule. All Participants who first
complete an Hour of Service on or after the Effective Date shall at all times
be fully vested in their Before-Tax and Rollover Accounts. Except as provided
in subsection (b) below and Section Section 8.2 and 8.3, the Matching and
Profit Sharing Accounts of such a Participant shall vest in accordance with the
following vesting schedule, based on the total of the Participant's Years of
Service:
<TABLE>
<CAPTION>
Vested Percentage of
Years of Service Participant's Matching
Completed by Participant and Profit Sharing Account
------------------------ --------------------------
<S> <C>
Less than 3 Years None
3 Years or more 100%
</TABLE>
(b) Special Schedule for Certain Tascor Plan Participants.
Notwithstanding subsection (a) above, any Participant who, as of January 1,
1994, was within the class of Employees eligible to participate in the Tascor
Plan, shall become vested in his Matching and Profit Sharing Accounts in
accordance with the following vesting schedule:
<TABLE>
<CAPTION>
Vested Percentage of
Years of Service Participant's Matching
Completed by Participant and Profit Sharing Account
------------------------ --------------------------
<S> <C>
Less than 2 Years None
2 Years or more 100%
</TABLE>
8.2 Vesting Upon Attainment of Normal Retirement Age, Death or
Disability.
Notwithstanding Section 8.1, a Participant's Matching and
Profit Sharing Accounts shall become 100 percent vested and nonforfeitable
upon the occurrence of any of the following events:
(a) The Participant's attainment of Normal Retirement Age
while still employed as an employee of any Affiliate;
(b) The Participant's death while still employed as an
employee of any Affiliate; or
(c) The Participant's becoming Disabled while still
employed as an employee of any Affiliate.
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8.3 Timing of Forfeitures and Vesting after Restoration.
If a Participant who is not yet 100 percent vested in his
Matching and Profit Sharing Accounts separates from service with all
Affiliates, the nonvested amount in his Matching and Profit Sharing Accounts
shall be immediately forfeited and shall become available for allocation as a
Forfeiture (in accordance with the terms of Section 5.5) as of the end of the
Plan Year during which such separation occurs; provided, if a Participant has no
vested interest in his Account at the time he separates from service, he shall
be deemed to have received a cash-out distribution at the time he separates
from service, and the forfeiture provisions of this Section shall apply. If
such a Participant resumes employment with an Affiliate after he has incurred 5
or more consecutive Breaks in Service, such nonvested amount shall not be
restored. If such a Participant resumes employment with an Affiliate before he
has incurred 5 consecutive Breaks in Service, the nonvested amount shall be
restored as follows:
(a) Reemployment and Vesting Before any Distribution. If
by the date of reemployment such a Participant has not received any
distributions of his vested interest in his Account, or if he has no vested
interest in his Account, the nonvested amount of his Matching and Profit
Sharing Accounts shall be restored pursuant to the terms of Section 3.7 and
shall be credited to his Matching and Profit Sharing Accounts, respectively.
The Participant's Matching and Profit Sharing Accounts then shall be subject
to all of the vesting rules in this Article VIII as if no Forfeitures had
occurred.
(b) Reemployment And Vesting After Distribution. If by
the date of reemployment such a Participant has received a distribution of his
vested Account, then, notwithstanding the general rules set forth in Section
8.1, the nonvested amount of his Matching and Profit Sharing Accounts shall be
restored pursuant to the terms of Section 3.7, and the total amount of his
undistributed Matching and Profit Sharing Accounts (including the restored
amount) shall be credited to his Matching and Profit Sharing Accounts. The
vested interest of such Participant in such Matching and Profit Sharing
Accounts prior to the date such Participant (i) again separates from service
with all Affiliates, (ii) incurs 5 consecutive Breaks in Service (such that the
nonvested portion of his Matching and Profit Sharing Accounts is forfeited),
or (iii) becomes 100 percent vested pursuant to the terms of Section 8.1 or
Section 8.2 hereof (whichever is earliest), shall be determined pursuant to the
following formula:
X = P (AB + [R x D]) - (R x D),
where X is the vested interest at the relevant time (that is, the time at which
the vested percentage in such Matching and Profit Sharing Accounts cannot
increase); P is the vested percentage at the relevant time; AB is the balance
of his Matching and Profit Sharing Accounts at the relevant time; D is the
amount of the distribution; and R is the ratio of his Matching and Profit
Sharing Accounts balance at the relevant time to such Accounts' balance
immediately after the distribution.
8.4 Amendment to Vesting Schedule.
Notwithstanding anything herein to the contrary, in no event
shall the terms of any amendment to the Plan reduce the vested percentage that
any Participant has earned under
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the Plan. In the event that the Plan provides for Participants to vest in
their Accounts at a rate which is faster than that provided under any amendment
hereto (or in the event any other change is made that directly has an adverse
effect on Participants' vested percentage), any Participant who has 3 or more
years of vesting service [calculated in a manner consistent with Treasury
Regulation Section 1.411(a)-8T (or any successor section)] may elect to have his
vested percentage calculated under the schedule in the Plan before any such
change, and the Administrative Committee shall give each such Participant
notice of his rights to make such an election. The period during which the
election may be made shall commence with the date the amendment is adopted or
deemed to be made and shall end on the latest of: (1) 60 days after the
amendment is adopted; (2) 60 days after the amendment becomes effective; or (3)
60 days after the Participant is issued written notice of the amendment by a
Participating Company or Administrative Committee.
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ARTICLE IX
PAYMENT OF BENEFITS
9.1 Benefit Payments Upon Termination of Service For Reasons Other
Than Death.
(a) General Rule Concerning Benefits Payable. In
accordance with the terms of subsection (b) hereof and subject to the
restrictions set forth in subsections (c), (d) and (e) hereof, if a Participant
separates from service with all Affiliates for any reason other than death, he
(or his Beneficiary, if he dies after such separation from service) shall be
entitled to receive a distribution of the total of (i) the entire vested amount
credited to his Account, determined as of the Valuation Date on which the
distribution is processed, plus (ii) the vested amount of any Contributions
made on his behalf since such Valuation Date. For purposes of this subsection,
the "date on which the distribution is processed" refers to the date
established for such purpose by administrative practice, even if actual payment
and/or processing is made at a later date due to delays in the valuation,
administrative or any other procedure.
(b) Timing of Distribution.
(1) Except as provided in subsections (b)(2),
(b)(3) and (e) hereof, benefits payable to a Participant under this
Section shall be distributed as soon as administratively feasible
after such Participant separates from service with all Affiliates for
any reason other than death.
(2) Notwithstanding the foregoing, in the event
that (A) the value of the vested amount of the Participant's Account
exceeds (or at the time of any prior distribution exceeded) $3,500
and (B) the benefit distribution date described in subsection (b)(1)
hereof occurs prior to the Participant's Normal Retirement Age,
benefits shall not be distributed to such Participant at the time set
forth in subsection (b)(1) hereof without the Participant's written
consent, on a form provided by the Administrative Committee. Prior to
accepting such written consent, the Administrative Committee shall
provide to the Participant, no less than 30 days and no more than 90
days prior to the benefit distribution date described in subsection
(b)(1) hereof, a notice to such Participant describing the features
and forms of payment available and the Participant's right to defer
receipt of his distribution. With the Participant's written consent,
the distribution may commence less than 30 days after such notice is
given; provided, the Administrative Committee informs the Participant
that he has a right to a period of at least 30 days after receiving
the notice to consider to elect a distribution (or a form of
distribution, if applicable) and the Participant affirmatively elects
to receive a distribution after receiving the notice. If the
Participant does not consent in writing to the distribution of his
benefit at such time, his vested benefit shall be distributed as soon
as practicable after he files a written election with the
Administrative Committee requesting such payment. If a Participant
fails to file a written election specifying the time of payment to a
later time, then, unless he elects in writing to defer the payment of
his benefit to a later time (within the limits set forth in subsection
(b)(3) hereof), his vested benefit shall be distributed as
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<PAGE> 59
soon as administratively feasible after the end of the Plan Year in
which he attains Normal Retirement Age, but in no event later
than the 60th day after the end of the Plan Year in which he attains
Normal Retirement Age; provided, if the amount of payment required to
be made on such date cannot be ascertained by such date, payment shall
be made no later than 60 days after the earliest date on which such
payment can be ascertained under the Plan.
(3) Notwithstanding anything in the Plan to the
contrary, unless a participant elects in writing to defer the
payment of his benefit to the date described below, payment of a
Participant's benefit shall be made no later than 60 days after the
end of the Plan Year which includes the latest of (i) the date on
which the Participant attained Normal Retirement Age, (ii) the date
which is the 10th anniversary of the date he commenced participation
in the Plan, or (iii) the date he actually separates from service with
all Affiliates; provided, if the amount of the payment cannot be
ascertained by the date as of which payments are scheduled to be made
hereunder, payment shall be made no later than 60 days after the
earliest date on which such payment can be ascertained under the Plan;
and provided, further, the Participant's benefit payments shall be
made no later than the April 1 following the calendar year in which
the Participant attains age 702 without regard to whether he has
actually ceased employment as an employee of all Affiliates prior to
such date. All distributions will be made in accordance with Code
Section 401(a)(9), the regulations promulgated under Code Section
401(a)(9), including Treasury Regulation Section 1.401(a)(9)-2
(relating to incidental benefit limitations) and any other provisions
reflecting the requirements of Code Section 401(a)(9) and prescribed
by the Internal Revenue Service; and the terms of the Plan reflecting
the requirements of Code Section 401(a)(9) override the distribution
options (if any) in the Plan which are inconsistent with those
requirements.
(c) Restrictions on Distributions from Before-Tax
Accounts. Notwithstanding anything in the Plan to the contrary, amounts in a
Participant's Before-Tax Account shall not be distributable to such Participant
or, if applicable, his Beneficiary, earlier than the earliest of the following
to occur:
(1) The Participant's death, Disability or
separation from service of all Affiliates;
(2) The termination of the Plan without the
establishment or maintenance of a successor defined contribution plan
[other than an employee stock ownership plan as defined in Code
Section 4975(e)] at the time the Plan is terminated or within the
period ending 12 months after the final distribution of all assets in
all Before-Tax Accounts described above in this subsection (c);
provided, if fewer than 2 percent of the Employees who are or were
eligible under the Plan at the time of its termination are or were
eligible under another defined contribution plan at any time during
the 24 month period beginning 12 months before the time of
termination, such other plan shall not be a successor plan;
(3) The date of disposition by the Participating
Company employing such Participant of substantially all of its assets
[within the meaning of Code Section 409(d)(2)]
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that were used by such Participating Company in a trade or
business; provided, such Participant continues employment with the
corporation acquiring such assets. For the sale of "substantially
all" of the assets used in a trade or business to have occurred, at
least 85 percent of such assets must have been sold;
(4) The date of disposition by the Participating
Company employing such Participant of its interest in a subsidiary
[within the meaning of Code Section 409(d)(3)]; provided, such
Participant continues employment with such subsidiary;
(5) The attainment by such Participant of age
59-1/2; or
(6) The Participant's incurrence of a financial
hardship as described in Section 9.5;
provided, for an event described in subsections (c)(2), (c)(3) or (c)(4) to
constitute events permitting a distribution from the Before-Tax Account , such
distribution must be made on account of such event in the form of a lump-sum
distribution, as defined in Code Section 402(d)(4) (without regard to clauses
(i), (ii), (iii) and (iv) of subparagraph (A), or subparagraphs (B) and (F)
thereof); and provided, further, for the events described in subsections (c)(3)
or (c)(4) to constitute events permitting such a distribution, the
Participating Company must maintain the Plan after the disposition.
(d) Delay Upon Reemployment. If a Participant becomes
eligible to receive a benefit payment in accordance with the terms of
subsection (a) hereof and subsequently is reemployed by an Affiliate prior to
the time his entire Account has been distributed, the distribution to such
Participant shall be delayed or cease until such Participant again becomes
eligible to receive a distribution from the Plan pursuant to the terms of this
or any other Section of the Plan.
9.2 Death Benefits.
If a Participant dies before payment of his benefits from the
Plan is made, the Beneficiary or Beneficiaries designated by such Participant
in his latest beneficiary designation form filed with the Administrative
Committee in accordance with the terms of Section 9.4 shall be entitled to
receive a distribution of the total of (i) the entire vested amount credited
to such Participant's Account, determined as of the Valuation Date on which the
distribution is processed, plus (ii) any Contributions made on such
Participant's behalf since such Valuation Date. For purposes of this
subsection, the "date on which the distribution is processed" refers to the
date established for such purpose by administrative practice, even if actual
payment and/or processing is made at a later date due to delays in the
valuation, administrative or any other procedure. Benefits shall be
distributed to such Beneficiary or Beneficiaries as soon as administratively
feasible (and, if practicable, within 90 days) after the date of the
Participant's death (or, if later, after timing restrictions and requirements
under the Code are satisfied). As required by Code Section 401(a)(9), in no
event shall any such distribution be made later than 5 years after the date of
his death. Notwithstanding the foregoing, if the Participant dies before his
Normal Retirement Age and the Participant's Spouse is his Beneficiary, his
Spouse may instead elect (in a manner that satisfies the requirements of the
Retirement Equity Act of 1984) for
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payment to commence as of the first day of any calendar month following the
Participant's death. The Administrative Committee may direct the Trustee to
distribute a Participant's Account to a Beneficiary without the written consent
of such Beneficiary.
9.3 Form of Distribution.
(a) Method of Payment. The method pursuant to which a
Participant's benefits under the Plan shall be distributed shall be determined
as follows:
(1) Except as provided in subsections (a)(2) and
(a)(3) hereof, the payment of any distribution to a Participant or his
Beneficiary from the Plan shall be in the form selected by the
Participant or his Beneficiary, by written notice delivered to the
Administrative Committee, all in accordance with the terms of this
subsection (b)(1) and subsections (b)(4)-(b)(8) hereof. The
Participant may choose between (A) a single sum payment and (B) equal
installments (adjusted for investment earnings and losses between
payments), paid annually or quarterly, as he elects, over a term
certain.
(2) If the total vested amount of the
Participant's total Account is less than or equal to $3,500 at the
time the distribution of his Account commences (and did not exceed
$3,500 at the time of any prior distributions), payment of the vested
amount of his entire Account shall be made in the form of a single sum
payment, without the consent of the Participant.
(3) If a Participant designates more than one
Beneficiary to receive payment of his benefit upon his death, the
Participant and his Beneficiaries shall be deemed to have selected a
single sum payment as the form of benefit distribution; provided, such
single sum payment may be divided among multiple Beneficiaries, as
applicable.
(4) If a Participant dies before payment of his
benefits from the Plan is made or commenced, his benefit will be paid
to his Beneficiary in a single lump sum payment.
(5) If a Participant dies after payment of his
benefits from the Plan has begun under this subsection but before his
entire benefit has been distributed, his Beneficiary may elect to
receive the remainder of the deceased Participant's Account in the
form of a single sum payment or to continue to receive the same
installment payments which would have been paid to the deceased
Participant if he had survived.
(6) If a Beneficiary who has begun receiving
installment payments pursuant to the terms of subsection (a)(5) hereof
dies prior to the full payment thereof, the remaining vested amount of
the Account balance shall be distributed in a single sum to the
designated beneficiary of such Beneficiary or, if no such beneficiary
has been designated or survives, to the estate of such Beneficiary.
(7) If a distribution is to be made to a
Participant and/or his Spouse Beneficiary in the form of installments
payable over the life expectancy or joint life expectancy of such
persons, the life
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expectancy or joint life expectancy, as applicable, of such
persons shall be calculated at the time distributions commence and
shall not thereafter be recalculated, unless, for purposes of the
minimum distribution rules under Code Section 401(a)(9), the
Participant makes an irrevocable election prior to the time his
benefit payments are scheduled to begin, to have the life expectancy
or joint life expectancy, as applicable, recalculated annually.
Notwithstanding anything herein to the contrary, distributions from
the Plan must satisfy the requirements of Code Section 401(a)(9)(G).
This means that the incidental benefit rules as described in Treasury
Regulation Section 1.401(a)(9)-2 shall be satisfied.
(b) Assets Distributed. Except as provided in subsection
(c) hereof, any distribution to a Participant shall be made in the form of
cash. However, the Administrative Committee may direct the Trustee to purchase
an annuity (other than a life annuity), which shall be distributed to a
Participant in satisfaction of his election to receive payment in the form of
installments.
(c) Distributions from the Norrell Stock Fund. Subject
to the election of the Participant, a Participant's vested balance in the
Norrell Stock Fund may be distributed in the form of cash or in the form of
whole shares of Norrell Stock in the number of such shares allocated to such
Account as of the Valuation Date on which the Trustee processes such
distribution, with the value of fractional shares being distributed in cash.
The cash value of any whole or fractional shares of Norrell Stock shall be
determined as of the Valuation Date on which the Trustee processes the
distribution. Such election must be exercised in a timely manner as determined
by the Administrative Committee. In the absence of receipt of an election from
a Participant, his vested balance in the Norrell Stock Fund will be distributed
in whole shares with fractional shares in cash.
(d) Direct Rollover Distributions. If a Participant or
his Spouse who is his Beneficiary, or an alternate payee under a qualified
domestic relations order, who is the recipient of any Eligible Rollover
Distribution, elects to have such Eligible Rollover Distribution paid directly
to an Eligible Retirement Plan and specifies (in such form and at such time as
the Administrative Committee may prescribe) the Eligible Retirement Plan to
which such distribution is to be paid, such distribution shall be made in the
form of a direct trustee-to-trustee transfer to the specified Eligible
Retirement Plan; provided, such transfer shall be made only to the extent that
the Eligible Rollover Distribution would be included in gross income if not so
transferred [determined without regard to Code Section 402(c) and Section
403(a)(4)].
9.4 Beneficiary Designation.
(a) General. Participants shall designate and from time
to time may redesignate their Beneficiary or Beneficiaries in such form and
manner as the Administrative Committee may determine. A Participant shall be
deemed to have named his Spouse, if any, as his sole Beneficiary unless his
Spouse consents to the payment of all or a specified portion of the
Participant's death benefit to a Beneficiary other than or in addition to the
Spouse in a manner satisfying the requirements of a Qualified Spousal Waiver
and such other procedures as the Administrative Committee may establish.
Notwithstanding the foregoing, a married Participant may designate a nonspouse
Beneficiary without a Qualified Spousal Waiver if the
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Participant establishes to the satisfaction of the Administrative Committee
that a Qualified Spousal Waiver may not be obtained because his Spouse cannot
be located or such other permissible circumstances exist as the Secretary of
the Treasury may prescribe by regulation. If any Participant dies prior to
receiving his benefits under the Plan, his Account shall be changed to the name
of such deceased Participant's named or deemed Beneficiary or Beneficiaries.
(b) No Designation or Designee Dead or Missing. In the
event that:
(1) a Participant dies without designating a
Beneficiary;
(2) the Beneficiary designated by a Participant
is not surviving when a payment is to be made to such person under the
Plan, and no contingent Beneficiary has been designated; or
(3) the Beneficiary designated by a Participant
cannot be located by the Administrative Committee within 1 year from
the date benefits are to commence to such person;
then, in any of such events, the Beneficiary of such Participant with respect
to any benefits that remain payable under the Plan shall be the Participant's
Surviving Spouse, if any, and if not, then the estate of the Participant.
9.5 Hardship Withdrawals.
(a) Parameters of Hardship Withdrawals. A Participant
may make, on account of hardship prior to the time he separates from the
service of all Affiliates, a withdrawal from his Account in an amount up to,
but not exceeding, the total of his Before-Tax and Rollover Accounts (other
than investment earnings attributable to Before-Tax Contributions held in the
Before-Tax Account and earned after December 31, 1988). For purposes of this
subsection, a withdrawal will be on account of "hardship" if it is necessary to
satisfy an immediate and heavy financial need of the Participant. A withdrawal
based on financial hardship cannot exceed the amount necessary to meet the
immediate financial need created by the hardship and not reasonably available
from other resources of the Participant. The Administrative Committee shall
make its determination, as to whether a Participant has suffered an immediate
and heavy financial need and whether it is necessary to use a hardship
withdrawal from the Plan to satisfy that need, on the basis of all relevant
facts and circumstances.
(b) Immediate and Heavy Financial Need. For purposes of
the Plan, an immediate and heavy financial need exists if the withdrawal is on
account of (i) expenses for medical care described in Code Section 213(d)
previously incurred by the Participant, his Spouse or dependents, or necessary
to obtain such medical care for such persons, (ii) the purchase (excluding
mortgage payments) of a principal residence for the Participant, (iii) the
payment of tuition and related educational fees for the next 12 months of
post-secondary education for the Participant, his Spouse or dependents or (iv)
the need to prevent eviction of the Participant from his principal residence
or foreclosure on the mortgage of the Participant's principal residence.
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(c) Necessary to Satisfy a Financial Need. In determining
whether the withdrawal is necessary to relieve the Participant's immediate and
heavy financial need, the Administrative Committee shall rely upon the
Participant's reasonable representation that the need cannot be relieved: (i)
through reimbursement or compensation by insurance or otherwise; (ii) by
reasonable liquidation of the Participant's assets to the extent that
liquidation would not itself cause an immediate and heavy financial need; (iii)
by cessation of Before-Tax Contributions to the Plan; or (iv) by other
distributions or nontaxable (at the time of the loan) loans from plans
maintained by one or more Participating Companies or by borrowing from
commercial sources on reasonable commercial terms. In determining the amount
of a Participant's assets, the resources of his spouse and minor dependents are
considered to be reasonably available to the Participant unless they are held
for his child or children under an irrevocable trust or under the Uniform Gifts
to Minors Act. The amount of an immediate and heavy financial need may include
amounts necessary for the Participant to pay any federal, state or local taxes
which are reasonably anticipated to result from the hardship withdrawal.
(d) Election to Withdraw. All applications for hardship
withdrawals shall be in writing on a form provided by the Administrative
Committee and shall contain such information as the Administrative Committee
may reasonably request. The Administrative Committee may, in its sole
discretion, require that a Participant's spouse consent to the application for
a hardship withdrawal.
(e) Payment of Withdrawal. The amount of a hardship
withdrawal shall be paid to a Participant in a single-sum, cash payment as soon
as practicable after the Administrative Committee receives and approves a
properly completed withdrawal application. The amount of a Participant's
Hardship Distribution shall be charged against the eligible portion of the
Participant's Account in the following order:
(1) first his Rollover Account; then
(2) his Before-Tax Account.
As the hardship withdrawal is paid from each of the Accounts (exhausting each
such Account before beginning withdrawals from the next Account), the assets
shall be charged pro-rata against the Investment Funds in which such Accounts
shall be invested. For purposes of making a hardship withdrawal, a
Participant's Account shall be valued as of the Valuation Date on which the
Trustee processes the distribution.
(f) Limitation on Number of Hardship Withdrawals. A
Participant may not make more than 2 hardship withdrawals during any 12-month
period.
9.6 Withdrawals After Age 59 1/2.
A Participant who has attained age 59 1/2 and who is an
employee of an Affiliate may request a withdrawal of all or part of his
Account. A Participant may make only one such withdrawal during any 12-month
period. Subject to any rules and procedures established by the Administrative
Committee, any such request must be submitted in writing to the Administrative
Committee at least 30 days (or such shorter period as the Committee may allow)
before the
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withdrawal is desired. As soon as practicable after receipt of such request,
the Administrative Committee shall direct the Trustee to pay the requested
amount, and such amount shall be charged against the Participant's Account in
the following order:
(1) first his Rollover Account; then
(2) his Before-Tax Account; then
(3) his Profit Sharing Account; then
(4) his Basic Matching Account; and finally
(5) his Additional Discretionary Matching Account.
As the withdrawal is paid from each of the Accounts (exhausting each such
Account before beginning withdrawals from the next Account), the assets shall
be charged pro-rata against the Investment Funds in which such Accounts shall
be invested. For purposes of making such a withdrawal, a Participant's Account
shall be valued as of the Valuation Date on which the Trustee processes the
distribution.
9.7 Qualified Domestic Relations Orders.
In the event the Administrative Committee receives a domestic
relations order which it determines to be a qualified domestic relations order
[see Section 14.1(b)], the Plan shall pay such benefit to the prescribed
alternate payee(s) at such time and in such form, as shall be described in the
qualified domestic relations order and permitted under Section 14.1(b). If
the qualified domestic relations order requires immediate payment, the
specified benefit shall be paid to the alternate payee as soon as practicable
after the Administrative Committee determines that the order is qualified or,
if later, after timing restrictions and requirements under the Code are
satisfied. To the extent consistent with the qualified domestic relations
order, the amount of the payment to an alternate payee shall include earnings,
interest and other investment proceeds through (but not after) the Valuation
Date as of which the Trustee processes the distribution. If a Participant's
Account is partially paid or payable to an alternate payee, the Participant's
remaining portion of his Account shall be reduced accordingly and shall be
subject to the distribution provisions in this Article IX.
9.8 Unclaimed Benefits.
In the event a Participant becomes entitled to benefits under
the Plan other than death benefits and the Administrative Committee is unable
to locate such Participant (after sending a letter, return receipt requested,
to the Participant's last known address, and after such further diligent
efforts as the Administrative Committee in its sole discretion deems
appropriate) within 1 year from the date upon which he becomes so entitled, the
Administrative Committee shall direct that such benefits be paid to the
Beneficiary of such Participant; provided, if the distribution is payable upon
the termination of the Plan, the Administrative Committee shall not be required
to wait until the end of such 1-year period. If the Participant and the
Beneficiary cannot be located and fail to claim such benefits by the end of the
5th Plan Year following the
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Plan Year in which such Participant becomes entitled to such benefits, then the
full Account of the Participant shall be deemed abandoned, may be removed from
such Participant's Account, and may be used to offset Contributions or other
amounts payable by the Participant Companies to the Plan; provided, in the
event such Participant or Beneficiary is located or makes a claim subsequent to
the allocation of the abandoned Account, the amount of the abandoned Account
(unadjusted for any investment gains or losses from the time of abandonment)
shall be restored (from abandoned Accounts, Forfeitures, Trust earnings or
Contributions made by the Participating Companies) and paid to such Participant
or Beneficiary, as appropriate; and, provided further, the Administrative
Committee, in its sole discretion, may delay the deemed date of abandonment of
any such Account for a period longer than the prescribed 5 Plan Years if it
believes that it is in the best interest of the Plan to do so.
9.9 Claims.
(a) Procedure. Claims for benefits under the Plan may be
filed with the Administrative Committee on forms supplied by the Administrative
Committee. The Administrative Committee shall furnish to the claimant written
notice of the disposition of a claim within 90 days after the application
therefor is filed; provided, if special circumstances require an extension of
time for processing the claim, the Administrative Committee shall furnish
written notice of the extension to the claimant prior to the end of the initial
90-day period, and such extension shall not exceed one additional, consecutive
90-day period. In the event the claim is denied, the notice of the disposition
of the claim shall provide the specific reasons for the denial, cites of the
pertinent provisions of the Plan, and, where appropriate, an explanation as to
how the claimant can perfect the claim and/or submit the claim for review.
(b) Review Procedure. Any Participant or Beneficiary who
has been denied a benefit, or his duly authorized representative, shall be
entitled, upon request to the Administrative Committee, to appeal the denial of
his claim. To do so, the claimant must request further consideration of his
position. The claimant, or his duly authorized representative, may review
pertinent documents related to the Plan and in the Administrative Committee's
possession in order to prepare the appeal. The form containing the request for
review, together with a written statement of the claimant's position, must be
filed with the Administrative Committee no later than 60 days after receipt of
the written notification of denial of a claim provided for in subsection (a).
The Administrative Committee's decision shall be made within 60 days following
the filing of the request for review and shall be communicated in writing to
the claimant; provided, if special circumstances require an extension of time
for processing the appeal, the Administrative Committee shall furnish written
notice to the claimant prior to the end of the initial 60-day period, and such
extension shall not exceed one additional 60-day period. If unfavorable, the
notice of decision shall explain the reason or reasons for denial and indicate
the provisions of the Plan or other documents used to arrive at the decision.
(c) Satisfaction of Claims. Any payment to a Participant
or Beneficiary or to their legal representative or heirs at law, all in
accordance with the provisions of the Plan, shall to the extent thereof be in
full satisfaction of all claims hereunder against the Trustee, the
Administrative Committee and the Controlling Company, any of whom may require
such Participant, Beneficiary, legal representative or heirs at law, as a
condition to such payment, to execute a receipt and release therefor in such
form as shall be determined by the Trustee, the
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Administrative Committee or the Controlling Company, as the case may be. If
receipt and release shall be required but execution by such Participant,
Beneficiary, legal representative or heirs at law shall not be accomplished so
that the terms of Section 9.1(b), Section 9.2 and Section 9.3 may be
fulfilled, such benefits may be distributed or paid into any appropriate court
or to such other place as such court shall direct, for disposition in
accordance with the order of such court, and such distribution shall be deemed
to comply with the requirements of Section 9.1(b), Section 9.2 and Section 9.3.
9.10 Explanation of Rollover Distributions.
Within a reasonable period of time [as defined for purposes of
Code Section 402(f)] before making an Eligible Rollover Distribution from the
Plan to a Participant or Beneficiary, the Administrative Committee shall
provide such Participant or Beneficiary with a written explanation (i) of the
provisions under which the distributee may have the distribution directly
transferred to another Eligible Retirement Plan, (ii) of the provisions which
require the withholding of tax on the distribution if it is not directly
transferred to another Eligible Retirement Plan, (iii) of the provisions under
which the distribution will not be subject to tax if transferred to an Eligible
Retirement Plan within 60 days after the date on which the distributee receives
the distribution, and (iv) such other terms and provisions as may be required
under Code Section 402(f) and the regulations promulgated thereunder.
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ARTICLE X
ADMINISTRATION
10.1 Administrative Committee; Appointment and Term of Office.
(a) Appointment. The Administrative Committee shall
consist of not less than one member who shall be appointed by and serve at the
pleasure of the Board.
(b) Removal; Resignation. The Board shall have the right
to remove any member of the Administrative Committee at any time. A member may
resign at any time by written resignation to the Board. If a vacancy in the
Administrative Committee should occur, a successor may be appointed by the
Board.
(c) Certification. A written certification shall be
given to the Trustee by the Board of all members of the Administrative
Committee together with a specimen signature of each member. For all purposes
hereunder, the Trustee shall be conclusively entitled to rely upon such
certification until the Trustee is otherwise notified in writing.
10.2 Organization of Administrative Committee.
The Administrative Committee may elect a Chairman and a
Secretary from among its members. In addition to those powers set forth
elsewhere in the Plan, the Administrative Committee may appoint such agents,
who need not be members of such Administrative Committee, as it may deem
necessary for the effective performance of its duties and may delegate to such
agents such powers and duties, whether ministerial or discretionary, as the
Administrative Committee may deem expedient or appropriate. The compensation
of such agents who are not full-time Employees of a Participating Company shall
be fixed by the Administrative Committee within limits set by the Board and
shall be paid by the Controlling Company (to be divided equitably among the
Participating Companies) or from the Trust Fund as determined by the
Administrative Committee. The Administrative Committee shall act by majority
vote. Its members shall serve as such without compensation.
10.3 Powers and Responsibility.
The Administrative Committee shall fulfill the duties of
"administrator" as set forth in Section 3(16) of ERISA and shall have complete
control of the administration of the Plan hereunder, with all powers necessary
to enable it properly to carry out its duties as set forth in the Plan and the
Trust Agreement. The Administrative Committee shall have the following duties
and responsibilities:
(a) to construe the Plan and to determine all questions
that shall arise thereunder;
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(b) to have all powers elsewhere herein conferred upon
it;
(c) to decide all questions relating to the eligibility
of Employees to participate in the benefits of the Plan;
(d) to determine the benefits of the Plan to which any
Participant or Beneficiary may be entitled;
(e) to maintain and retain records relating to
Participants and Beneficiaries;
(f) to prepare and furnish to Participants all
information required under federal law or provisions of the Plan to be
furnished to them;
(g) to prepare and furnish to the Trustee sufficient
employee data and the amount of Contributions received from all sources so that
the Trustee may maintain separate accounts for Participants and Beneficiaries
and make required payments of benefits;
(h) to prepare and file or publish with the Secretary of
Labor, the Secretary of the Treasury, their delegates and all other appropriate
government officials all reports and other information required under law to be
so filed or published;
(i) to provide directions to the Trustee with respect to
methods of benefit payment, and all other matters where called for in the Plan
or requested by the Trustee;
(j) to engage assistants and professional advisers;
(k) to arrange for fiduciary bonding; and
(l) to provide procedures for determination of claims for
benefits;
all as further set forth herein.
10.4 Records of Administrative Committee.
(a) Notices and Directions. Any notice, direction,
order, request, certification or instruction of the Administrative Committee to
the Trustee shall be in writing and shall be signed by a member of the
Administrative Committee. The Trustee and every other person shall be entitled
to rely conclusively upon any and all such proper notices, directions, orders,
requests, certifications and instructions received from the Administrative
Committee and reasonably believed to be properly executed, and shall act and be
fully protected in acting in accordance with any such directions that are
proper.
(b) Records. All acts and determinations of the
Administrative Committee shall be duly recorded by its Secretary or under his
supervision, and all such records (including records necessary to demonstrate
compliance with the nondiscrimination requirements of the
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Code), together with such other documents as may be necessary for the
administration of the Plan, shall be preserved in the custody of such
Secretary.
10.5 Reporting and Disclosure.
The Administrative Committee shall keep all individual and
group records relating to Participants and Beneficiaries and all other records
necessary for the proper operation of the Plan. Such records shall be made
available to the Participating Companies and to each Participant and
Beneficiary for examination during normal business hours except that a
Participant or Beneficiary shall examine only such records as pertain
exclusively to the examining Participant or Beneficiary and the Plan and Trust
Agreement. The Administrative Committee shall prepare and shall file as
required by law or regulation all reports, forms, documents and other items
required by ERISA, the Code and every other relevant statute, each as amended,
and all regulations thereunder. This provision shall not be construed as
imposing upon the Administrative Committee the responsibility or authority for
the preparation, preservation, publication or filing of any document required
to be prepared, preserved or filed by the Trustee or by any other Named
Fiduciary to whom such responsibilities are delegated by law or by the Plan.
10.6 Construction of the Plan.
The Administrative Committee shall take such steps as are
considered necessary and appropriate to remedy any inequity that results from
incorrect information received or communicated in good faith or as the
consequence of an administrative error. The Administrative Committee, in its
sole and full discretion, shall interpret the Plan and shall determine the
questions arising in the administration, interpretation and application of the
Plan. The Administrative Committee shall endeavor to act, whether by general
rules or by particular decisions, so as not to discriminate in favor of or
against any person and so as to treat all persons in similar circumstances
uniformly. The Administrative Committee shall correct any defect, reconcile
any inconsistency or supply any omission with respect to the Plan.
10.7 Assistants and Advisors.
(a) Engaging Advisors. The Administrative Committee
shall have the right to hire, at the expense of the Controlling Company (to be
divided equitably among the Participating Companies), such professional
assistants and consultants as it, in its sole discretion, deems necessary or
advisable. To the extent that the costs for such assistants and advisors are
not so paid by the Controlling Company, they shall be paid at the direction of
the Administrative Committee from the Trust Fund as an expense of the Trust
Fund.
(b) Reliance on Advisors. The Administrative Committee
and the Participating Companies shall be entitled to rely upon all certificates
and reports made by an accountant, attorney or other professional adviser
selected pursuant to this Section; the Administrative Committee, the
Participating Companies, and the Trustee shall be fully protected in respect to
any action taken or suffered by them in good faith in reliance upon the advice
or opinion of any
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such accountant, attorney or other professional adviser; and any action so
taken or suffered shall be conclusive upon each of them and upon all other
persons interested in the Plan.
10.8 Investment Committee.
(a) Funding Policy. The Investment Committee is the
named fiduciary to act on behalf of the Controlling Company to establish and
carry out a funding policy consistent with the Plan objectives and with the
requirements of any applicable law. Such policy shall be in writing and shall
have due regard for the liquidity needs of the Trust. Such funding policy
shall also state the general investment objectives of the Trust and the
philosophy upon which maintenance of the Plan is based.
(b) Appointment. The Board shall determine the
membership of the Investment Committee, and the members shall serve at the
pleasure of the Board or until their resignation. Unless and until the Board
appoints the Investment Committee, the Administrative Committee shall serve as
the Investment Committee.
(c) Duties. The Investment Committee also shall carry
out the Controlling Company's responsibility and authority:
(1) To appoint one or more persons to serve as
investment manager with respect to all or part of the Plan assets,
including assets maintained under separate accounts of an insurance
company;
(2) To allocate the responsibility and authority
being carried out by the Investment Committee among the members of the
Committee;
(3) To take any action appropriate to ensure that
the Plan assets are invested for the exclusive purpose of providing
benefits to Participants and their Beneficiaries in accordance with
the Plan and defraying reasonable expenses of administering the Plan,
subject to the requirements of any applicable law; and
(4) To employ one or more persons to render
advice with respect to any responsibility or authority being carried
out by the Investment Committee. To the extent that the costs for
such assistants and advisors are not paid by the Controlling Company,
they shall be paid at the direction of the Investment Committee from
the Trust Fund as an expense of the Trust Fund.
10.9 Direction of Trustee.
The Investment Committee shall have the power to provide the
Trustee with general investment policy guidelines and directions to assist the
Trustee respecting investments made in compliance with, and pursuant to, the
terms of the Plan.
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10.10 Bonding.
The Administrative Committee shall arrange for fiduciary
bonding as is required by law, but no bonding in excess of the amount required
by law shall be required by the Plan.
10.11 Indemnification.
Each of the Administrative Committee and the Investment
Committee and each member of those Committees shall be indemnified by the
Participating Companies against judgment amounts, settlement amounts (other
than amounts paid in settlement to which the Participating Companies do not
consent) and expenses, reasonably incurred by the Committee or him in
connection with any action to which the Committee or he may be a party (by
reason of his service as a member of a Committee) except in relation to matters
as to which the Committee or he shall be adjudged in such action to be
personally guilty of gross negligence or willful misconduct in the performance
of its or his duties. The foregoing right to indemnification shall be in
addition to such other rights as such Committee or each Committee member may
enjoy as a matter of law or by reason of insurance coverage of any kind.
Rights granted hereunder shall be in addition to and not in lieu of any rights
to indemnification to which such Committee or each Committee member may be
entitled pursuant to the by-laws of the Controlling Company. Service on the
Administrative or Investment Committee shall be deemed in partial fulfillment
of a Committee member's function as an Employee, officer and/or director of the
Controlling Company or any Participating Company, if he serves in such other
capacity as well.
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ARTICLE XI
ALLOCATION OF AUTHORITY AND RESPONSIBILITIES
11.1 Controlling Company and Board.
(a) General Responsibilities. The Controlling Company,
as Plan sponsor, and the Board each shall serve as a Named Fiduciary having the
following (and only the following) authority and responsibilities:
(1) To appoint the Trustee, the Administrative
Committee and the Investment Committee and to monitor each of their
performances;
(2) To communicate such information to the
Trustee, the Administrative Committee and the Investment Committee as
each needs for the proper performance of its duties; and
(3) To provide channels and mechanisms through
which the Administrative Committee and/or the Trustee can communicate
with Participants and Beneficiaries.
In addition, the Controlling Company shall perform such duties as are imposed
by law or by regulation and shall serve as Plan Administrator in the absence of
an appointed Administrative Committee.
(b) Allocation of Authority. In the event any of the
areas of authority and responsibilities of the Controlling Company and the
Board overlap with that of any other Plan fiduciary, the Controlling Company
and the Board shall coordinate with such other fiduciaries the execution of
such authority and responsibilities; provided, the decision of the Controlling
Company and the Board with respect to such authority and responsibilities
ultimately shall be controlling.
(c) Authority of Participating Companies.
Notwithstanding anything herein to the contrary, and in addition to the
authority and responsibilities specifically given to the Participating
Companies in the Plan, the Controlling Company, in its sole discretion, may
grant the Participating Companies such authority and charge them with such
responsibilities as the Controlling Company deems appropriate.
11.2 Administrative Committee.
The Administrative Committee shall have the authority and
responsibilities imposed by Article X hereof. With respect to said authority
and responsibilities, the Administrative Committee shall be a Named Fiduciary,
and as such, shall have no authority or responsibilities other than as granted
in the Plan or as imposed as a matter of law.
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11.3 Investment Committee.
The Investment Committee, if any is appointed, shall be a
Named Fiduciary with respect to its authority and responsibilities, as imposed
by Article X. The Investment Committee shall have no authority or
responsibilities other than those granted in the Plan and the Trust. If no
Investment Committee is appointed, then the Administrative Committee shall
serve as the Investment Committee.
11.4 Trustee.
The Trustee shall be a Named Fiduciary with respect to
investment of Trust Fund assets and shall have the powers and duties set forth
in the Trust Agreement.
11.5 Limitations on Obligations of Fiduciaries.
No fiduciary shall have authority or responsibility to deal
with matters other than as delegated to it under the Plan, under the Trust
Agreement or by operation of law. A fiduciary shall not in any event be liable
for breach of fiduciary responsibility or obligation by another fiduciary
(including Named Fiduciaries) if the responsibility or authority for the act or
omission deemed to be a breach was not within the scope of such fiduciary's
authority or delegated responsibility.
11.6 Delegation.
Named Fiduciaries shall have the power to delegate specific
fiduciary responsibilities (other than Trustee responsibilities). Such
delegations may be to officers or Employees of a Participating Company or to
other persons, all of whom shall serve at the pleasure of the Named Fiduciary
making such delegation and, if full-time Employees of a Participating Company,
without compensation. Any such person may resign by delivering a written
resignation to the delegating Named Fiduciary. Vacancies created by any reason
may be filled by the appropriate Named Fiduciary or the assigned
responsibilities may be reabsorbed or redelegated by the Named Fiduciary.
11.7 Multiple Fiduciary Roles.
Any person may hold more than one position of fiduciary
responsibility and shall be liable for each such responsibility separately.
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ARTICLE XII
AMENDMENT, TERMINATION AND ADOPTION
12.1 Amendment.
The provisions of the Plan may be amended at any time and from
time to time by the Board; provided, the Board may delegate amendment
authority, or any part thereof, to the Administrative Committee; and, provided
further:
(a) No amendment shall increase the duties or liabilities
of the Trustee without the consent of such party;
(b) No amendment shall decrease the balance or vested
percentage of an Account or eliminate an optional form of benefit;
(c) No amendment shall be made which would divert any of
the assets of the Trust Fund to any purpose other than the exclusive benefit of
Participants and Beneficiaries, except that the Plan and Trust Agreement may be
amended retroactively and to affect the Accounts of Participants and
Beneficiaries if necessary to cause the Plan and Trust to be qualified and
exempt from taxation under the Code; and
(d) Each amendment shall be approved by the Board or the
Administrative Committee (as applicable) by resolution.
12.2 Termination.
(a) Right to Terminate. The Controlling Company expects
the Plan to be continued indefinitely, but it reserves the right to terminate
the Plan or to completely discontinue Contributions to the Plan at any time by
action of the Board. In either event, the Administrative Committee, Investment
Committee, each Participating Company and the Trustee shall be promptly advised
of such decision in writing. [For termination of the Plan by a Participating
Company as to itself (rather than the termination of the entire Plan) refer to
Section 12.3(e).]
(b) Vesting Upon Complete Termination. If the Plan is
terminated by the Controlling Company or Contributions to the Plan are
completely discontinued, the Accounts of all Participants, Beneficiaries or
other successors in interest as of such date shall become 100 percent vested
and nonforfeitable. Upon termination of the Plan, the Administrative
Committee, in its sole discretion, shall instruct the Trustee either (i) to
continue to manage and administer the assets of the Trust for the benefit of
the Participants and their Beneficiaries pursuant to the terms and provisions
of the Trust Agreement, or (ii) if there is no successor plan permitted under
the terms of Section 9.1(c) or no benefits subject to the restrictions in said
Section, to pay over to each Participant the value of his interest in a single
sum and to thereupon dissolve the Trust.
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(c) Dissolution of Trust. In the event that the
Administrative Committee decides to dissolve the Trust, as soon as practicable
following the termination of the Plan or the Administrative Committee's
decision, whichever is later, the assets under the Plan shall be converted to
cash or other distributable assets, to the extent necessary to effect a
complete distribution of the Trust assets as described hereinbelow. Following
completion of the conversion, on a date selected by the Administrative
Committee, each individual with an Account under the Plan on such date shall
receive a distribution of the total amount then credited to his Account;
provided, if the Participating Companies maintain any defined Contribution plan
other than the Plan or an employee stock ownership plan as defined in Code
Section 4975(e)(9), and if the balance of a Participant's Account is greater
than $3,500 and such Participant does not consent to a lump sum distribution,
the Administrative Committee shall direct that the Participant's Account be
distributed by the purchase and distribution of a nonparticipating annuity with
distribution terms comparable to those in Section 9.1 (and the applicable
provisions in Article IX). The amount of cash and other property distributable
to each such individual shall be determined as of the date of distribution
(treating, for this purpose, such distribution date as the Valuation Date as
of which the distributable amount is determined). In the case of a termination
distribution as provided herein, the Administrative Committee may direct the
Trustee to take any action provided in Section 9.8 (dealing with unclaimed
benefits), except that it shall not be necessary to hold funds for any period
of time stated in such Section. Within the expense limitations set forth in
the Plan, the Administrative Committee may direct the Trustee to use assets of
the Trust Fund to pay any due and accrued expenses and liabilities of the Trust
and any expenses involved in termination of the Plan (other than expenses
incurred for the benefit of the Participating Companies).
(d) Vesting Upon Partial Termination. In the event of a
partial termination of the Plan [as provided in Code Section 411(d)(3)], the
Accounts of those Participants and Beneficiaries affected shall become 100
percent vested and nonforfeitable and, unless transferred to another qualified
plan, shall be distributed in a manner and at a time consistent with the terms
of Article IX.
12.3 Adoption of the Plan by a Participating Company.
(a) Procedures for Participation. As of the Effective
Date, the Controlling Company and the other Affiliates listed on Schedule A
hereto shall be Participating Companies in the Plan. Any other company may
become a Participating Company and commence participation in the Plan subject
to the provisions of this subsection. In order for a company to become a
Participating Company, the Administrative Committee must designate such company
as a Participating Company and specify the effective date of such designation.
The name of any company which shall commence participation in the Plan, along
with the effective date of its participation, shall be recorded in the records
of the Controlling Company and/or the Plan. To adopt the Plan as a
Participating Company, the board of directors of the company must approve a
resolution expressly adopting the Plan for the benefit of its eligible
employees and accepting designation as a Participating Company, subject to all
of the provisions of this Plan and of the Trust. The resolution shall specify
the date as of which the designation as a Participating Company shall be
effective. A copy of the resolution (certified if requested) of the board of
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directors of the adopting Participating Company shall be provided to the
Administrative Committee. Upon adoption of the Plan by a Participating Company
as herein provided, the Employees of such company shall be eligible to
participate in the Plan subject to the terms hereof and of the resolution of
the Administrative Committee designating the adopting company as such.
(b) Single Plan. The Plan, as adopted by all
Participating Companies, shall be considered a single plan for purposes of
Treasury Regulation Section 1.414(l)-1(b)(1). All assets contributed to the
Plan by the Participating Companies shall be held together in a single fund
and shall be available to pay benefits to all Participants and Beneficiaries.
Nothing contained herein shall be construed to prohibit the separate accounting
of assets contributed by the Participating Companies for purposes of cost
allocation, contributions, forfeitures and other purposes, pursuant to the
terms of the Plan and as directed by the Administrative Committee.
(c) Authority under Plan. As long as a Participating
Company's designation as such remains in effect, such Participating Company
shall be bound by, and subject to, all provisions of the Plan and the Trust.
The exclusive authority to amend the Plan and the Trust shall be vested in the
Board and/or the Administrative Committee, and no other Participating Company
shall have any right to amend the Plan or the Trust. Any amendment to the Plan
or the Trust adopted by the Administrative Committee shall be binding upon
every Participating Company without further action by such Participating
Company.
(d) Contributions to Plan. Except as specified on a
Schedule to the Plan, a Participating Company shall be required to make
Contributions to the Plan at such times and in such amounts as specified in
Articles III and VI. The Contributions made (or to be made) to the Plan by the
Participating Companies shall be allocated between and among such companies in
whatever equitable manner or amounts as the Administrative Committee shall
determine.
(e) Withdrawal from Plan. The Administrative Committee
may terminate the designation of a Participating Company, effective as of any
date. A Participating Company may withdraw from participation in the Plan,
with the approval of the Administrative Committee, by action of its board of
directors, provided such action is communicated in writing to the
Administrative Committee. The withdrawal of a Participating Company shall be
effective as of the last day of the Plan Year in which the notice of withdrawal
is received by the Administrative Committee (unless the Controlling Company or
Administrative Committee consents to a different effective date). Any such
Participating Company which ceases to be a Participating Company shall be
liable for all costs and liabilities (whether imposed under the terms of the
Plan, the Code or ERISA) accrued through the effective date of its withdrawal
or termination. The withdrawing or terminating Participating Company shall
have no right to direct that assets of the Plan be transferred to a successor
plan for its employees unless such transfer is approved by the Controlling
Company or Administrative Committee in its sole discretion.
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12.4 Merger, Consolidation and Transfer of Assets or Liabilities.
In the event of any merger or consolidation of the Plan with,
or transfer of assets or liabilities of the Plan to, any other plan, each
Participant and Beneficiary shall have a plan benefit in the surviving or
transferee plan (determined as if such plan were then terminated immediately
after such merger, consolidation or transfer of assets or liabilities) that is
equal to or greater than the benefit he would have been entitled to receive
under the Plan immediately before such merger, consolidation or transfer of
assets or liabilities, if the Plan had terminated at that time.
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ARTICLE XIII
TOP-HEAVY PROVISIONS
13.1 Top-Heavy Plan Years.
The provisions set forth in this Article XIII shall become
effective for any Plan Years with respect to which the Plan is determined to be
a Top-Heavy Plan and shall supersede any other provisions of the Plan which are
inconsistent with these provisions; provided, if the Plan is determined not to
be a Top-Heavy Plan in any Plan Year subsequent to a Plan Year in which the
Plan was a Top-Heavy Plan, the provisions of this Article XIII shall not apply
with respect to such subsequent Plan Year; and, provided, further, to the
extent that any of the requirements of this Article XIII shall no longer be
required under Code Section 416 or any other section of the Code, such
requirements shall be of no force or effect.
13.2 Determination of Top-Heavy Status.
(a) Application. The Plan will be considered a Top-Heavy
Plan for a Plan Year if either:
(1) the Plan is not part of a Required
Aggregation Group or a Permissive Aggregation Group and, as of the
Determination Date of such Plan Year, the value of the Accounts of the
Participants who are Key Employees under the Plan exceeds 60 percent
of the value of the Accounts of all Participants; or
(2) the Plan is part of a Required Aggregation
Group which, as of the Determination Date of such Plan Year, is a
Top-Heavy Group;
provided, the Plan shall not be considered a Top-Heavy Plan for a Plan Year
under subsection (a)(2) hereof if the Plan also is part of a Permissive
Aggregation Group which is not a Top-Heavy Group for such Plan Year.
(b) Special Definitions.
(1) Determination Date. The term "Determination
Date" shall mean (i) in the case of the Plan Year that includes the
Effective Date of the Plan, the last day of such Plan Year, and (ii)
with respect to any other Plan Year of the Plan, the last day of the
immediately preceding Plan Year and (iii) for any plan year of each
other qualified plan maintained by a Participating Company or
Affiliate which is part of a Required or Permissive Aggregation Group,
the date determined under (i) or (ii) above as if the term "Plan Year"
means the plan year for each such other qualified plan.
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(2) Key Employee. The term "Key Employee" shall
mean an Employee defined in Code Section 416(i) and the Treasury
regulations thereunder. Generally, Key Employee shall mean an
Employee, former Employee or deceased Employee (and the beneficiaries
of any such Employee) who, at any time during the Plan Year or the 4
previous Plan Years, was either:
(A) an officer of an Affiliate having a
combined annual Compensation [as defined in Section
1.22(c)] from all Affiliates greater than 50 percent of the
amount in effect under Code Section 415(b)(1)(A) for any such
Plan Year; provided, no less than one nor more than fifty
individuals shall be treated as officers of an Affiliate;
(B) one of the ten individuals owning
[or considered as owning under Code Section 318, as
modified by Code Section 416(i)(1)(B)(iii)] the largest
percentage ownership interests in value in the Affiliates (as
more fully described in Treasury Regulation Section 1.416-1,
T-19 and T-20) and having a combined annual Compensation [as
defined in Section 1.22(c)] from all Affiliates of more than
the limitation in effect under Code Section 415(c)(1)(A);
(C) a 5-percent owner [or constructive
owner within the meaning of Code Section 318, as modified by
Code Section 416(i)(1)(B)(iii)] of an Affiliate; or
(D) a 1-percent owner [or constructive
owner within the meaning of Code Section 318, as
modified by Code Section 416(i)(1)(B)(iii) and the Treasury
regulations thereunder] of an Affiliate having a combined
annual Compensation [as defined in Section 1.22(c)] from all
Affiliates of more than $150,000.
For purposes of subsection (B) hereof, if two individuals have the
same percentage ownership interest in an Affiliate, the individual
having greater combined annual Compensation from all Affiliates shall
be treated as having the larger interest. In determining percentage
ownership hereunder, employers that otherwise would be aggregated
under Code Section 414(b), (c) and (m) shall be treated as separate
employers.
(3) Non-Key Employee. The term "Non-Key
Employee" shall mean any Employee who is not a Key Employee. For
purposes hereof, former Key Employees shall be treated as Non-Key
Employees.
(4) Permissive Aggregation Group. The term
"Permissive Aggregation Group" shall mean a Required Aggregation Group
and any other qualified plan or plans maintained or contributed to by
an Affiliate which, when considered with the Required Aggregation
Group, would continue to satisfy the requirements of Code Section
Section 401(a)(4) and 410.
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(5) Required Aggregation Group. The term
"Required Aggregation Group" shall mean a group of plans of the
Affiliates consisting of (i) each plan which, for such Plan Year or
any of the 4 preceding Plan Years, qualifies under Code Section 401(a)
and in which a Key Employee is a participant, and (ii) each other plan
which, during this 5-year period, qualifies under Code Section 401(a)
and which enables any plan described in clause (i) hereof to satisfy
the requirements of Code Section Section 401(a)(4) or 410.
(6) Top-Heavy Group. The term "Top-Heavy Group"
shall mean a Required or Permissive Aggregation Group with respect to
which the sum (determined as of a Determination Date) of (i) the
present value of the cumulative accrued benefits for Key Employees
under all Defined Benefit Plans included in such group, and (ii) the
aggregate of the accounts of Key Employees under all Defined
Contribution Plans included in such group, exceeds 60 percent of a
similar sum determined for all Employees.
(c) Special Rules. The following rules shall apply in
determining whether the Plan is a Top-Heavy Plan under subsection (a)(1) or
(a)(2) above:
(1) The value of any account balance under any
Defined Contribution Plan and the value of any accrued benefit under
any Defined Benefit Plan shall be determined as of the most recent
valuation date that falls within, or ends with, the 12-month period
ending on the Determination Date or, if plans are aggregated, the
Determination Dates that fall within the same calendar year;
(2) The value of the Accounts under the Plan or
the accounts under any other Defined Contribution Plan included in a
Required or Permissive Aggregation Group for any Determination Date,
other than the Determination Date for the first plan year, shall
include the amounts actually contributed and paid to the plan on or
before the Determination Date, and shall exclude any amounts to be
contributed with respect to such preceding plan year but not actually
paid to the plan on or before the Determination Date. The value of
the accounts under any Defined Contribution Plan for the Determination
Date of the first plan year shall include all amounts contributed to
the plan as of the Determination Date, regardless of whether such
amounts shall have been actually paid or merely accrued as of the
Determination Date;
(3) The value of any account balance under any
Defined Contribution Plan and the present value of any accrued benefit
under any Defined Benefit Plan as of any Determination Date shall be
increased by the aggregate distributions made under the plan during
the 5-year period ending on the Determination Date;
(4) Accrued benefits and accounts of the
following individuals shall not be taken into account for a Plan Year:
(A) any Non-Key Employee who, in a prior Plan Year, was a Key Employee
or (B) any Employee who had not performed any services for a
Participating Company at any time during the 5-year period ending on
the Determination Date for such Plan Year;
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(5) The value of any account balance shall not
include deductible employee contributions, as described in Code
Section 72(o)(5)(A);
(6) The extent to which rollovers and plan to
plan transfers are taken into account in determining the value of any
account balance or accrued benefit shall be determined in accordance
with Code Section 416 and the regulations thereunder; and
(7) Effective for plan years beginning after
December 31, 1986, each Non-Key Employee's accrued benefit under the
Plan and any Defined Benefit Plans shall be determined (A) under the
method, if any, that uniformly applies for accrual purposes under all
Defined Benefit Plans, or (B) if there is no such method, as if such
benefit accrued more rapidly than the slowest accrual rate permitted
under the fractional accrual rate set forth under Code Section
411(b)(1)(C).
13.3 Top-Heavy Minimum Contribution.
(a) Multiple Defined Contribution Plans. For any Plan
Year in which the Plan is a Top-Heavy Plan, the aggregate Company Contributions
(when added to similar contributions made under other defined contribution
plans) allocated to the Account of any Active Participant who is a Non-Key
Employee shall not be less than the Defined Contribution Minimum. To the
extent that the Company Contributions are less than the Defined Contribution
Minimum, additional Company Contributions shall be provided under the Plan.
For purposes hereof, a Non-Key Employee shall not fail to
receive a minimum contribution hereunder for a Plan Year because (i) such
Non-Key Employee fails to complete 1,000 Hours of Service for such Plan Year or
(ii) such Non-Key Employee is excluded from participation (or receives no
allocation) merely because his Compensation is less than a stated amount or
because he failed to make a Deferral Election for such Plan Year.
(b) Defined Contribution and Benefit Plans. In the event
that Non-Key Employees are covered under both the Plan and one or more Defined
Benefit Plans maintained by an Affiliate, the minimum contribution level set
forth in subsection (a) hereof shall be satisfied if each such Non-Key Employee
receives a benefit level under such Defined Contribution and Defined Benefit
Plans which is not less than the Defined Benefit Minimum offset by any benefits
provided under the Plan and any other Defined Contribution Plans maintained by
any Affiliate.
(c) Defined Contribution Minimum. The term "Defined
Contribution Minimum" means, with respect to the Plan, a minimum level of
Company Contributions allocated with respect to a Plan Year to the Account of
each Active Participant who is a Non-Key Employee; such level being the lesser
of:
(1) 3 percent of such Active Participant's
Compensation for such Plan Year; or
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(2) if no Defined Benefit Plan of an Affiliate
uses the Plan to satisfy the requirements of Code Section Section
401(a)(4) or 410, the highest percentage of Compensation at which
Company Contributions are made, or are required to be made, under the
Plan for such Plan Year for any Key Employee.
For purposes of this subsection, (i) qualified nonelective contributions made
by the Company in order to satisfy the anti-discrimination tests of Code
Section 401(k) or Section 401(m) may be treated as Company Contributions; (ii)
Before-Tax and Matching Contributions shall be taken into account as Company
Contributions for Key Employees; (iii) Matching Contributions may be treated
as Company Contributions and may be taken into account for satisfying the
Minimum Contribution Requirement for Non-Key Employees, but only if such
Matching Contributions are not treated as Matching Contributions for purposes
of the ADP Tests or Code Section 401(m) and instead satisfy the requirements
of Code Section 401(a)(4) as Company Contributions; and (iv) Before-Tax
Contributions shall not be taken into account for satisfying the Minimum
Contribution Requirement for Non-Key Employees.
(d) Defined Benefit Minimum. The term "Defined Benefit
Minimum" means, with respect to a Defined Benefit Plan, a minimum level of
accrued benefit derived from employer contributions with respect to a plan year
for each participant who is a Non-Key Employee; such level, when expressed as
an annual retirement benefit, being not less than the product of (1) and (2),
where:
(1) equals the Non-Key Employee's average
Compensation for the period of consecutive years (not exceeding 5)
when such Non-Key Employee had the highest aggregate Compensation from
all Affiliates; and
(2) equals the lesser of (A) 2 percent times such
Non-Key Employee's number of years of service or (B) 20 percent.
For purposes of determining the Defined Benefit Minimum, "years of service"
shall not include any year of service if the plan was not a Top-Heavy Plan for
the plan year ending during such year of service and shall not include any
years of service completed in a plan year beginning before January 1, 1984.
Compensation in years before January 1, 1984, and Compensation in years after
the close of the last plan year in which the plan is a Top-Heavy Plan shall be
disregarded. All accruals of employer-provided benefits, whether or not
attributable to years for which the Plan is top heavy, may be used in
determining whether the minimum contribution requirements set forth in this
Section are satisfied.
13.4 Top-Heavy Minimum Vesting.
The Plan's normal vesting schedule satisfies the top-heavy
minimum vesting requirements.
13.5 Adjustments in Code Section 415 Limitations for Top-Heavy
Plans.
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(a) Special Adjustment. In the event that, during a Plan
Year in which the Plan is a Top-Heavy Plan, an individual is a participant in
both a Defined Benefit Plan and a Defined Contribution Plan maintained by an
Affiliate, the computation of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction, as set forth in subsections 6.7(d)(3) and (5)
hereof, shall be modified by substituting "100 percent" for "125 percent" each
time it appears in said subsections; provided, in the event that the
requirements set forth in subsection (b) hereof are satisfied, the
modifications otherwise required by this subsection (a) shall not be required
and shall be of no effect.
(b) Exception. In the event that:
(1) the Plan would not be a Top-Heavy Plan if "90
percent" were substituted for "60 percent" each time it appears in
Section 13.2(a)(1) hereof and in the definition of Top-Heavy Group in
Section 13.2(b)(6);
(2) the Plan would continue to satisfy the
requirements of Section 13.3 hereof if "3 percent" were substituted
for "2 percent" each time it appears in Section 13.3(d), and if "20
percent", as used in Section 13.3(d), were increased by one percentage
point (but not by more than 10 percentage points) for each year for
which the plan was taken into account under this Section 13.5; and
(3) the Plan would continue to satisfy the
requirements of Section 13.3 hereof if "4 percent" were substituted
for "3 percent" each time it is used in Section 13.3(c);
then, the substitution of "100 percent" for "125 percent" as otherwise required
in subsection (a) hereof, shall not be required or effected.
13.6 Special Effective Date.
The provisions of this Article generally are effective as of
the Effective Date, but to the extent the Code requires an earlier or later
effective date with respect to any portion(s) of this Article, such other
effective date shall apply.
13.8 Construction of Limitations and Requirements.
The descriptions of the limitations and requirements set forth
in this Article are intended to serve as statements of the minimum legal
requirements necessary for the Plan to remain qualified under the applicable
terms of the Code. The Participating Companies do not desire or intend, and
the terms of this Article shall not be construed, to impose any more
restrictions on the operation of the Plan than required by law. Therefore, the
terms of this Article and any related terms and definitions in the Plan shall
be interpreted and operated in a manner which imposes the least restrictions on
the Plan. For example, if use of a more liberal definition of "Compensation"
is permissible at any time under the law, then the more liberal provisions may
be applied as if such provisions were included in the Plan.
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ARTICLE XIV
MISCELLANEOUS
14.1 Nonalienation of Benefits and Spendthrift Clause.
(a) General Nonalienation Requirements. Except to the
extent permitted by law and as provided in subsections (b) and (c) hereof, none
of the Accounts, benefits, payments, proceeds or distributions under the Plan
shall be subject to the claim of any creditor of a Participant or Beneficiary
or to any legal process by any creditor of such Participant or of such
Beneficiary; and neither such Participant nor any such Beneficiary shall have
any right to alienate, commute, anticipate or assign any of the Accounts,
benefits, payments, proceeds or distributions under the Plan except to the
extent expressly provided herein.
(b) Exception for Qualified Domestic Relations Orders.
(1) The nonalienation requirements of subsection
(a) hereof shall apply to the creation, assignment or recognition of
a right to any benefit, payable with respect to a Participant pursuant
to a domestic relations order, unless such order is (i) determined to
be a qualified domestic relations order, as defined in Code Section
414(p), entered on or after January 1, 1985, or (ii) any domestic
relations order, as defined in Code Section 414(p), entered before
January 1, 1985, pursuant to which a transferor plan was paying
benefits on January 1, 1985. The Administrative Committee shall
establish reasonable written procedures to determine the qualified
status of a domestic relations order. Further, to the extent provided
under a qualified domestic relations order, a former spouse of a
Participant shall be treated as the Spouse or Surviving Spouse for all
purposes under the Plan.
(2) The Administrative Committee shall establish
reasonable procedures to administer distributions under qualified
domestic relations orders which are submitted to it. The
Administrative Committee, to the extent provided in a qualified
domestic relations order, shall direct the Trustee to pay, in a single
sum payment, the full amount of the benefit payable to any alternate
payee under a qualified domestic relations order. Such cash-out
payment shall be made as soon as practicable after the end of the
month within which the Administrative Committee determines that a
domestic relations order is a qualified domestic relations order, or
if later, when the terms of the qualified domestic relations order
permit such a distribution. (See also Section 9.7.) If the terms of a
qualified domestic relations order do not permit an immediate cash-out
payment, the benefits shall be paid to the alternate payee in
accordance with the terms of such order and the applicable terms of
the Plan.
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14.2 Headings.
The headings and subheadings in the Plan have been inserted
for convenience of reference only and are to be ignored in any construction of
the provisions hereof.
14.3 Construction, Controlling Law.
In the construction of the Plan, the masculine shall include
the feminine and the feminine the masculine, and the singular shall include the
plural and the plural the singular, in all cases where such meanings would be
appropriate. Unless otherwise specified, any reference to a section shall be
interpreted as a reference to a section of the Plan. The Plan shall be
construed in accordance with the laws of the State of Georgia and applicable
federal laws.
14.4 No Contract of Employment.
Neither the establishment of the Plan, nor any modification
thereof, nor the creation of any fund, trust or account, nor the payment of any
benefits shall be construed as giving any Participant, Employee or any person
whomsoever the right to be retained in the service of any Affiliate, and all
Participants and other Employees shall remain subject to discharge to the same
extent as if the Plan had never been adopted.
14.5 Legally Incompetent.
The Administrative Committee may in its discretion direct that
payment be made and the Trustee shall make payment on such direction, directly
to an incompetent or disabled person, whether incompetent or disabled because
of minority or mental or physical disability, or to the guardian of such person
or to the person having legal custody of such person, without further liability
with respect to or in the amount of such payment either on the part of any
Participating Company, the Administrative Committee or the Trustee.
14.6 Heirs, Assigns and Personal Representatives.
The Plan shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties, including each
Participant and Beneficiary, present and future.
14.7 Title to Assets, Benefits Supported Only By Trust Fund.
No Participant or Beneficiary shall have any right to, or
interest in, any assets of the Trust Fund upon termination of his employment or
otherwise, except as provided from time to time under the Plan, and then only
to the extent of the benefits payable under the Plan to such Participant out of
the assets of the Trust Fund. Any person having any claim under the Plan shall
look solely to the assets of the Trust Fund for satisfaction. The foregoing
sentence notwithstanding, each Participating Company shall indemnify and save
any of its officers, members of its board of directors or agents, and each of
them, harmless from any and all claims, loss, damages, expense and liability
arising from their responsibilities in connection with
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the Plan and from acts, omissions and conduct in their official capacity,
except to the extent that such effects and consequences shall result from their
own willful misconduct or gross negligence.
14.8 Legal Action.
In any action or proceeding involving the assets held with
respect to the Plan or Trust Fund or the administration thereof, the
Participating Companies, the Administrative Committee and the Trustee shall be
the only necessary parties and no Participants, Employees, or former Employees
of the Company, their Beneficiaries or any other person having or claiming to
have an interest in the Plan shall be entitled to any notice of process;
provided, that such notice as is required by the Internal Revenue Service and
the Department of Labor to be given in connection with Plan amendments,
termination, curtailment or other activity shall be given in the manner and
form and at the time so required. Any final judgment which is not appealed or
appealable that may be entered in any such action or proceeding shall be
binding and conclusive on the parties hereto, the Administrative Committee and
all persons having or claiming to have an interest in the Plan.
14.9 No Discrimination.
The Controlling Company, through the Administrative Committee,
shall administer the Plan in a uniform and consistent manner with respect to
all Participants and Beneficiaries and shall not permit discrimination in favor
of officers, stockholders, supervisory or highly compensated Employees.
14.10 Severability.
If any provisions of the Plan shall be held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof, and the Plan shall be construed and enforced as if such
provisions had not been included.
14.11 Exclusive Benefit; Refund of Contributions.
No part of the Trust Fund shall be used for or diverted to
purposes other than the exclusive benefit of the Participants and their
Beneficiaries, subject, however, to the payment of all costs of maintaining and
administering the Plan and Trust. Notwithstanding the foregoing, Contributions
to the Trust by a Participating Company may be refunded to the Participating
Company under the following circumstances and subject to the following
limitations:
(a) Permitted Refunds. If and to the extent permitted by
the Code and other applicable laws and regulations thereunder, upon the
Participating Company's request, a Contribution which is (i) made by a mistake
in fact, or (ii) conditioned upon the deductibility of the Contribution under
Code Section 404, shall be returned to the Participating Company making the
Contribution within 1 year after the payment of the Contribution, the denial of
the
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qualification, or the disallowance of the deduction (to the extent disallowed),
whichever is applicable.
(b) Payment of Refund. If any refund is paid to a
Participating Company hereunder, such refund shall be made without interest or
other investment gains, shall be reduced by any investment losses attributable
to the refundable amount and shall be apportioned among the Accounts of the
Participants as an investment loss, except to the extent that the amount of the
refund can be attributed to one or more specific Participants (for example, as
in the case of certain mistakes of fact), in which case the amount of the
refund attributable to each such Participant's Account shall be debited
directly against such Account.
(c) Limitation on Refund. No refund shall be made to a
Participating Company if such refund would cause the balance in a Participant's
Account to be less than the balance would have been had the refunded
contribution not been made.
14.12 Special Effective Dates.
(a) Intent of Plan. The Plan generally is effective as
of January 1, 1994 and, as of such date, shall begin serving as the amendment
and restatement of the Plan. As such a restatement and amendment, the Plan is
intended to bring the Plan into compliance with all current laws and
regulations, including the following laws and regulations (which are listed in
Section 4 of IRS Revenue Procedure 88-42):
(1) Titles XI and XVIII of the Tax Reform Act of
1986;
(2) Subtitle C of Title IX of the Omnibus Budget
Reconciliation Act of 1986;
(3) Sections 9343(c) and 9346 of the Omnibus
Budget Reconciliation Act of 1987;
(4) Optional Form of Benefit Regulations;
(5) Temporary regulations under Code Section
414(q) and (s);
(6) Proposed regulations under Code Section
401(a)(9), 410 and 411;
(7) Notice 87-20, regarding amendments to Code
Section 411(a)(11)(B) and 417(e)(3) made by Code Section 1139 of the
Tax Reform Act of 1986;
(8) Notice 87-21, regarding changes to Code
Section 415 made by the Tax Reform Act of 1986; and
(9) Rev. Rul. 86-74, regarding changes to the
plan integration rules resulting from the Social Security Amendments
of 1983.
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In addition, the Plan is intended to include all provisions required by the
Technical Corrections and Miscellaneous Revenue Act of 1988.
(b) Effective Dates. To the extent any of the changes
and provisions described above have requisite effective dates prior to or after
January 1, 1994, the effective date of the Plan shall be deemed to be effective
as of such requisite effective dates solely for the purpose of satisfying such
legal and regulatory requirements.
14.13 Predecessor Service.
In the event a Participating Company maintains the Plan as
successor to a predecessor employer who maintained the Plan, service for the
predecessor employer shall be treated as service for the Participating Company.
14.14 Plan Expenses.
As permitted under the Code and ERISA, expenses incurred with
respect to administering the Plan and Trust shall be paid by the Trustee from
the Trust Fund to the extent such costs are not paid by the Participating
Companies or to the extent the Controlling Company requests that the Trustee
reimburse it for its payment of such expenses.
IN WITNESS WHEREOF, the Controlling Company has caused the
Plan to be executed by its duly authorized officers, as of this 30th day of
December, 1994.
NORRELL CORPORATION
By: /s/ Madeson CO??
---------------------------------
Title: V.P.
----------------------------
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NORRELL CORPORATION 401(K) RETIREMENT SAVINGS PLAN
(1994 RESTATEMENT)
SCHEDULE A
PARTICIPATING COMPANIES AND EFFECTIVE DATES
[See Plan Section 1.64 and Section 12.3]
<TABLE>
<CAPTION>
Name Effective Date
- ---- --------------
<S> <C>
Norrell Corporation November 1, 1972
Norrell Services, Inc. November 1, 1972
Norrell Temporary Services, Inc. November 1, 1972
HCA-Health Care Services, Inc. April 1, 1988
Norrell Health Care of New York, Inc. April 1, 1988
Tascor, Inc.* August 1, 1992
Health Task L.P. (a Related Company) September 1, 1994
</TABLE>
*Date of participation in Tascor Plan.
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<PAGE> 91
NORRELL CORPORATION 401(K) RETIREMENT SAVINGS PLAN
(1994 RESTATEMENT)
SCHEDULE B
MATCHING CONTRIBUTIONS
[See Plan Section 3.2]
For each Active Participant on whose behalf a Participating Company
has made, with respect to a payroll period, any Before-Tax Contributions, such
Participating Company shall make, with respect to such payroll period, a
Matching Contribution equal to 25 percent of the amount of the total of such
Before-Tax Contributions; provided, the total amount of the Matching
Contributions which a Participating Company shall make for any Active
Participant for any payroll period shall not exceed 4 percent (the Specified
Matching Compensation Percentage) of such Active Participant's Compensation
paid by such Participating Company for such payroll period (that is, the
25-percent Matching Contribution shall not be applied to the amount of a
Before-Tax Contribution that exceeds 4 percent of a Participant's Compensation
for a payroll period), nor shall such amount exceed (or cause the Contributions
to exceed) any of the maximum limitations described in Section 6.1, Section
6.4 or Section 6.7. The Administrative Committee, in its sole discretion, may
change the 25 percent and 4 percent levels set forth hereinabove, and any such
change shall be effective without amendment to the Plan.
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NORRELL CORPORATION 401(K) RETIREMENT SAVINGS PLAN
(1994 RESTATEMENT)
SCHEDULE C
PRE-1995 CONTRIBUTIONS
[See Plan Section 3.8]
Notwithstanding anything in the Plan to the contrary, all Company
Contributions (other than Before-Tax Contributions) to the Plan for the Plan
Year ending December 31, 1994 shall be determined and made in accordance with
the following provisions, which reflect the terms of the Plan and the Tascor
Plan as in effect immediately prior to the merger of such plans effective as of
December 31, 1994.
Profit Sharing Contributions under the Plan
The Controlling Company may, but shall not be required to, make a
Profit Sharing Contribution to the Plan with respect to the Plan Year ending
December 31, 1994. Subject to the limitations set forth in Section 6.1 and
6.7, the amount of any such Profit Sharing Contribution shall be determined at
the discretion of the Administrative Committee. If the Controlling Company
makes a Profit Sharing Contribution to the Plan for such Plan Year, each other
Participating Company (other than Participating Companies which participated in
the Tascor Plan and make Basic Matching Contributions to the Plan for such Plan
Year as described below) shall contribute to the Plan for such Plan Year the
same percentage of Compensation that such Participating Companies pays to its
Employees who are Eligible Participants for such Plan Year, as the Controlling
Company contributes with respect to its Employees who are Eligible Participants
for such Plan Year.
If Profit Sharing Contributions are made for the Plan Year ending
December 31, 1994, each Eligible Participant who is employed by a Participating
Company making such a contribution (excluding Participating Companies which
participated in the Tascor Plan) shall have allocated and credited to his
Profit Sharing Account a portion of such Profit Sharing Contribution in the
same proportion that the Compensation of such Eligible Participant for such
Plan Year bears to the total Compensation of all such Eligible Participants for
such Plan Year.
Matching Contributions under the Tascor Plan.
Participating Companies that participated in the Tascor Plan as of
December 31, 1994 shall make Basic Matching Contributions equal to 25 percent
of the amount of the total Before-Tax Contributions for each Participant on
whose behalf such Participating Companies made Before-Tax Contributions for any
payroll period; provided, the total amount of the Basic Matching contributions
which a Participating Company shall make for any Participant for any payroll
period shall not exceed 4% of such Participant's Compensation for such payroll
period,
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nor shall such amount exceed (or cause the Contributions to exceed) any of the
maximum limitations described in Section 6.1, Section 6.4 or Section 6.7.
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FIRST AMENDMENT TO THE
NORRELL CORPORATION 401(k) RETIREMENT SAVINGS PLAN
(1994 RESTATEMENT)
THIS FIRST AMENDMENT to the Norrell Corporation 401(k) Retirement
Savings Plan (1994 Restatement) (the "Plan") is made on this 12 day of
December, 1995, by Norrell Corporation (the "Company"), to be effective as of
January 1, 1996.
W I T N E S S E T H:
WHEREAS, Section 12.1 of the Plan provides that the Company has the
right to amend the Plan at any time; and
WHEREAS, the Company desires to amend the Plan to allow certain
Temporary Services Employees to participate in the Plan under the terms and
conditions set forth herein;
NOW, THEREFORE, the Plan hereby is amended as follows:
I.
Section 1.25(b) is amended to read as follows:
(b) A Temporary Services Employee who has not
completed 1,000 Hours of Service in accordance with Section
3. 1 (d).
II.
Section 1.37 is amended to read as follows:
1.37 Eligible Participant shall mean, for any Plan Year,
any Active Participant (other than a Management Services,
Staffing or Temporary Services Employee) who was in the
active employ of an Affiliate on the last day of the Plan
Year.
Section 1.46 is amended to read as follows:
1.46 Hour of Service shall mean the increments of
time described in subsection (a) hereof, as modified by
subsections (b) and (c) hereof:
<PAGE> 95
(a) General Rule.
(1) Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for an Affiliate
during the applicable computation period;
(2) Each hour for which an Employee is paid, or
entitled to payment, by an Affiliate on account of a period of
time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty or Leave of Absence; provided:
(A) No more than 501 Hours of Service shall
be credited under this subsection (2) to an Employee for any single
continuous period during which he performs no duties as an employee of
an Affiliate (whether or not such period occurs in a single
computation period);
(B) An hour for which an Employee is
directly or indirectly paid, or entitled to payment, on account
of a period during which he performs no duties as an employee of an
Affiliate shall not be credited as an Hour of Service if such payment
is made or due under a plan maintained solely to comply with
applicable workers' compensation, unemployment compensation or
disability insurance laws; and
(C) Hours of Service shall not be credited
to an Employee for a payment which solely reimburses such Employee
for medical or medically related expenses incurred by him.
(D) Hours of Service credited under this
subsection (a)(2) will be credited for the computation period(s) in
which the duties were or would have been performed.
For purposes of this subsection (2), a payment shall be deemed to be
made by or due from an Affiliate regardless of whether such payment is
made by or due from an Affiliate directly, or indirectly through,
among others, a trust fund or insurer, to which the Affiliate
contributes or pays premiums and regardless of whether contributions
made or due to the trust fund, insurer or other entity are for the
benefit of particular employees or are on behalf of a group of
employees in the aggregate; and
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(3) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an Affiliate;
provided, the same Hours of Service shall not be credited both under
subsection (1) or subsection (2), as the case may be, and under this
subsection (3); and, provided further, crediting of Hours of Service
for back pay awarded or agreed to with respect to periods described
in subsection (2) shall be subject to the limitations set forth in
that subsection. The Hours of Service credited under this subsection
(a)(3) will be credited for the computation period(s) to which the
award or agreement pertains rather than the computation period(s) in
which the award, agreement or payment is made.
(b) Equivalencies. Each Employee for whom an Affiliate
does not keep records of actual Hours of Service shall be credited, in
accordance with this Section and applicable regulations promulgated by
the Department of Labor, as follows:
(1) If a daily basis is used, the Employee shall
be credited with 10 Hours of Service for each day for which the
Employee would be credited with at least one Hour of Service;
(2) If a weekly basis is used, the Employee shall
be credited with 45 Hours of Service for each week for which the
Employee would be credited with at least one Hour of Service;
(3) If a semi-monthly basis is used, the Employee
shall be credited with 95 Hours of Service for each semi-monthly
period for which the Employee would be credited with at least one Hour
of Service; or
(4) If a monthly basis is used, the Employee
shall be credited with 190 Hours of Service for each calendar month
for which the Employee would be credited with at least one Hour of
Service.
The exact basis for determining the number of Hours of Service
to be credited to any Employee shall be determined by the
Participating Company, but the same basis shall be used for all
similarly situated Employees.
(c) DOL Standards. Hours of Service shall be credited and
determined in compliance with Department of Labor Regulation
-3-
<PAGE> 97
Section 2530.200b-2(b) and (c), 29 CFR Part 2530, as may be amended
from time to time, or such other federal regulations as may from time
to time be applicable.
IV.
A new Section 2.1 (d) is added to read as follows:
(d) Temporary-Services Employees. A Temporary Services
Employee shall become an Active Participant in the Plan on the
Entry Date coinciding with or next following the first date on which
he completes 1,000 Hours of Service during a 12-consecutive-month
computation period. For this purpose, the computation period
initially shall be the 12-consecutive-month period beginning on the
date the Temporary Services Employee first completes an Hour of
Service and thereafter shall be the Plan Year which includes the first
anniversary of the Employee's employment or reemployment commencement
date.
V.
Section 2.4 is amended to read as follows:
2.4 Limited Participation by Certain Employees
Notwithstanding anything herein to the contrary, Management
Services Employees, Staffing Employees and Temporary Services
Employees [provided such Temporary Services Employees have completed
1,000 Hours of Service as provided in sec. 3.1(d)] shall be eligible
to make Rollover Contributions and Before-Tax Contributions to the
Plan but shall not be eligible to receive allocations of Matching
Contributions for any period in which they are employed in such
status, as provided in Section 1.37 and Section 3.2.
VI.
Section 3.2 is amended by revising the parenthetical in the first
sentence thereof to read as follows:
(other than a Management Services, Staffing or Temporary Services
Employee)
-4-
<PAGE> 98
IN WITNESS WHEREOF, the Company has caused its duly authorized officer
to execute this Amendment on the date first written above.
NORRELL CORPORATION
By:
----------------------------------
Title:
-------------------------------
-5-
<PAGE> 1
EXHIBIT 11.1
NORRELL CORPORATION AND SUBSIDIARIES
COMPUTATION OF PRIMARY EARNINGS PER SHARE
(Dollars and shares in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------------- -------------------------
October 27, October 29, October 27, October 29,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME AVAILABLE TO COMMON SHARES
PRIMARY:
Income from continuing operations $ 7,275 $ 4,839 $ 25,257 $ 17,326
Loss from discontinued operations - - - (348)
-------- -------- -------- --------
Net income applicable to common stock $ 7,275 $ 4,839 $ 25,257 $ 16,978
======== ======== ======== ========
WEIGHTED AVERAGE SHARES
PRIMARY:
Common shares 23,540 23,162 23,408 23,040
Common share equivalents applicable to stock options 2,280 1,402 1,936 1,317
-------- -------- -------- --------
Total 25,820 24,564 25,344 24,357
======== ======== ======== ========
EARNINGS PER SHARE 24,357
PRIMARY:
Income from continuing operations $ 0.28 $ 0.20 $ 1.00 $ 0.71
Loss from discontinued operations - - - (0.01)
-------- -------- -------- --------
Net income applicable to common stock $ 0.28 $ 0.20 $ 1.00 $ 0.70
======== ======== ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 11.2
NORRELL CORPORATION AND SUBSIDIARIES
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
(Dollars and shares in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------------- -------------------------
October 27, October 29, October 27, October 29,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME AVAILABLE TO COMMON SHARES
FULLY DILUTED:
Income from continuing operations $ 7,275 $ 4,839 $ 25,257 $ 17,326
Loss from discontinued operations - - - (348)
-------- -------- -------- --------
Net income applicable to common stock $ 7,275 $ 4,839 $ 25,257 $ 16,978
======== ======== ======== ========
Weighted Average Shares
Fully Diluted:
Common shares 23,540 23,162 23,407 23,040
Common share equivalents applicable to stock options 2,216 1,494 1,937 1,626
-------- -------- -------- --------
Total 25,756 24,656 25,344 24,666
======== ======== ======== ========
EARNINGS PER SHARE (A)
FULLY DILUTED:
Income from continuing operations $ 0.28 $ 0.20 $ 1.00 $ 0.70
Loss from discontinued operations - - - (0.01)
-------- -------- -------- --------
Net income applicable to common stock $ 0.28 $ 0.20 $ 1.00 $ 0.69
======== ======== ======== ========
</TABLE>
(a) This calculation is submitted in accordance with Regulation S-K 601(b)(11)
although not required by footnote 2 to paragraph 14 of APB Opinion No. 15
because it results in dilution of less than 3%.
<PAGE> 1
EXHIBIT 21
<TABLE>
<CAPTION>
SUBSIDIARIES OF NORRELL CORPORATION STATE OF INCORPORATION
- ----------------------------------- ----------------------
<S> <C>
Norrell Services, Inc. Georgia
Norrell Services International, Inc. Georgia
Norrell Services, Ltd. Canada
Norrell Temporary Services, Inc. Georgia
Dynamic Temporary Services, Inc. Georgia
Norrell Acquisition Corp. Delaware
Norrell Health Care, Inc. Georgia
Tascor Incorporated Georgia
HealthTask Corporation* Delaware
HealthTask L.P.** Delaware
The Executive Speaker, Inc. Florida
Norrell Home Health Services, Inc. Georgia
Norrell Home Health Services of Nashville, TN, Inc. Tennessee
Norrell Home Health Services of Florida, Inc. Florida
Norrell Home Health Services of Corpus Christi, TX, Inc. Texas
HCA - Home Care Services, Inc. New York
Norrell Health Care of New York, Inc. New York
Nurse World, Inc. Florida
Nurse World of Lake County, Inc. Florida
Nurse World Home Health Agency, Inc. Florida
Norrell Infusion Services, Inc. Georgia
Norrell Asset Management Company Nevada
Norrell Licensing Company Nevada
Norrell Finance Company Nevada
Norrell Enterprises Corporation Nevada
Norrell Resources Corporation Delaware
NC Holding Corporation Georgia
NSSI, Inc. Georgia
CallTask Incorporated Georgia
NCCT, Inc. Georgia
Valley Temporary Services, Inc. Arizona
Manzanita Resources, Inc. Arizona
Norrell Technical Services, Inc. Georgia
N. Acquisition Corp. Georgia
Norcross Teleservices Inc.*** Delaware
Tascor Resources Corporation Georgia
American Technical Resources, Inc. Virginia
Accounting Resources, Inc. Rhode Island
Accounting Resources of Massachusetts, Inc. Massachusetts
Comtex Information Systems, Inc. Delaware
</TABLE>
* 50% owned by Norrell Corporation
50% owned by Ernst & Young Resources L.L.C.
* Limited Partnership
50% owned by Tascor Incorporated
50% owned by Ernst & Young U.S. LLP
*** 51% owned by Norrell Corporation
49% owned by Cross Country Group
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed Form S-8
Registration Statements File Nos. 33-82004 (1994 Stock Incentive Plan), 33-82002
(1991 Stock Option Plan), 33-82006 (Management Equity Plan), 33-82348 (Goal
Plan), 33-82350 (Horizon-Pace and Strides), and 33-99934 (Employee Stock
Purchase Plan).
ARTHUR ANDERSEN LLP
January 16, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-27-1996
<PERIOD-START> OCT-30-1995
<PERIOD-END> OCT-27-1996
<EXCHANGE-RATE> 1
<CASH> 8,876
<SECURITIES> 0
<RECEIVABLES> 145,843
<ALLOWANCES> 7,411
<INVENTORY> 0
<CURRENT-ASSETS> 167,388
<PP&E> 37,050
<DEPRECIATION> 13,513
<TOTAL-ASSETS> 263,231
<CURRENT-LIABILITIES> 102,798
<BONDS> 0
0
0
<COMMON> 236
<OTHER-SE> 97,796
<TOTAL-LIABILITY-AND-EQUITY> 263,231
<SALES> 1,013,877
<TOTAL-REVENUES> 1,013,877
<CGS> 795,013
<TOTAL-COSTS> 795,013
<OTHER-EXPENSES> 175,110
<LOSS-PROVISION> 2,315
<INTEREST-EXPENSE> 1,200
<INCOME-PRETAX> 41,069
<INCOME-TAX> 15,812
<INCOME-CONTINUING> 25,257
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,257
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
