SEPARATION AGREEMENT
dated as of
August 17, 1999
among
Olsten Corporation,
Aaronco Corp.
and
Adecco SA
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions.................................................2
ARTICLE II
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
Section 2.01. Transfer of Assets..........................................8
Section 2.02. Consideration for Transferred Assets........................9
Section 2.03. Assignment and Assumption of Liabilities....................9
Section 2.04. Delayed Assets and Liabilities.............................10
Section 2.05. Representations or Warranties; Disclaimers.................10
Section 2.06. Final Determination of Assets and Liabilities..............12
Section 2.07. Closing; Conveyancing and Stock Assumption Instruments.....13
Section 2.08. Cash Allocation............................................13
Section 2.09. True-Up Net Debt; Intercompany Balance.....................14
ARTICLE III
THE SPLIT-OFF
Section 3.01. Cooperation Prior to the Split-Off.........................14
Section 3.02. Conduct of Health Services Business Pending Split-Off......15
Section 3.03. Consummation of the Split-Off..............................15
ARTICLE IV
INDEMNIFICATION
Section 4.01. OHS Indemnification of Olsten..............................15
Section 4.02. Olsten Indemnification of OHS..............................16
Section 4.03. Notice and Payment of Claims...............................16
Section 4.04. Notice and Defense of Third-Party Claims...................16
Section 4.05. Insurance Proceeds.........................................17
Section 4.06. Contribution...............................................17
Section 4.07. Subrogation................................................17
Section 4.08. Third-Party Beneficiaries..................................17
Section 4.09. Remedies Cumulative........................................18
Section 4.10. Survival of Indemnities....................................18
Section 4.11. After-Tax Indemnification Payments.........................18
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ARTICLE V
CERTAIN ADDITIONAL MATTERS
Section 5.01. Ancillary Agreements.......................................19
Section 5.02. OHS Officers and Board of Directors........................19
Section 5.03. OHS Certificate of Incorporation and By-laws...............19
Section 5.04. Credit Agreement...........................................19
Section 5.05. Sales and Transfer Taxes...................................19
Section 5.06. Use of Names...............................................20
Section 5.07. Mail.......................................................21
Section 5.08. Transition Services........................................21
Section 5.09. Leases of Real Property....................................22
Section 5.10. Plea Agreements............................................22
Section 5.11. Insurance Policies and Claims Administration...............22
Section 5.12. Financial Covenants........................................25
Section 5.13. Tax Refund Escrow Account..................................27
Section 5.14. Worker's Compensation Letters of Credit....................27
ARTICLE VI
RECORDS AND INFORMATION; ACCESS
Section 6.01. Corporate Records..........................................27
Section 6.02. Access to Information......................................28
Section 6.03. Access to Employees........................................28
Section 6.04. Reimbursement..............................................28
Section 6.05. Confidentiality............................................28
ARTICLE VII
MISCELLANEOUS
Section 7.01. Termination................................................29
Section 7.02. Amendment..................................................29
Section 7.03. Waiver of Compliance; Consents.............................29
Section 7.04. Expenses...................................................29
Section 7.05. Notices....................................................29
Section 7.06. Counterparts...............................................30
Section 7.07. Governing Law..............................................30
Section 7.08. Entire Agreement...........................................31
Section 7.09. Assignment; No Third Party Beneficiaries...................31
Section 7.10. Ancillary Agreements.......................................31
Section 7.11. Tax Sharing Agreement......................................31
Section 7.12. Further Assurances and Consents............................31
Section 7.13. Exhibits and Schedules.....................................32
Section 7.14. Legal Enforceability.......................................32
Section 7.15. Dispute Resolution.........................................32
Section 7.16. Titles and Headings........................................33
Section 7.17. Survival of Representations and Agreements.................33
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Exhibit A Form of Employee Benefits Allocation Agreement
Exhibit B Form of Tax Sharing Agreement
Schedule 1 Health Subsidiaries
Schedule 2 Governmental Settlement Agreements
Schedule 3 OHS Names
Schedule 4 Olsten Names
Schedule 5 Balance Sheets
Schedule 6 Consents
Schedule 7 Shared Leased Property
Schedule 8 Licensed Olsten Names
Schedule 9 Board Composition
Schedule 10 Transition Team
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SEPARATION AGREEMENT
SEPARATION AGREEMENT ("Agreement") dated as of August 17, 1999 by and
among Olsten Corporation, a Delaware corporation ("Olsten"), Aaronco Corp., a
newly formed Delaware corporation and a wholly-owned subsidiary of Olsten
("OHS"), and Adecco SA, a societe anonyme organized under the laws of
Switzerland ("Adecco").
RECITALS
WHEREAS, Olsten currently conducts the Staffing Services Business, the
Information Technology Services Business and the Health Services Business (each
as defined below) and conducts certain related operations.
WHEREAS, the Staffing Services Business and the Information Technology
Services Business are conducted through Olsten and certain of its subsidiaries
(together with any other subsidiary of Olsten formed after the date hereof for
purposes of conducting the Staffing Services Business and the Information
Technology Services Business) other than the Health Subsidiaries (as defined
below) (the "Retained Subsidiaries") and the Health Services Business is
conducted through Olsten and the subsidiaries listed on Schedule 1 hereto,
together with any other subsidiary of Olsten formed after the date hereof for
purposes of conducting the Health Services Business (the "Health Subsidiaries").
WHEREAS, Olsten, Adecco and Staffing Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Adecco ("Merger Sub"),
have entered into an Agreement and Plan of Merger, dated as of August 17, 1999
(the "Merger Agreement"), pursuant to which, at the Effective Time (as defined
below), Merger Sub will merge with and into Olsten, with Olsten being the
surviving corporation (the "Merger").
WHEREAS, prior to the Effective Time, and subject to the terms and
conditions set forth in this Agreement, Olsten will transfer to OHS assets
related to the Health Services Business, and OHS will assume the liabilities
related thereto, as provided in this Agreement and the Ancillary Agreements (as
defined below).
WHEREAS, the Board of Directors of Olsten has determined that it is in
the best interest of Olsten and the stockholders of Olsten to split-off (the
"Split-Off") to the holders of Olsten Common Stock (as defined below) all of the
outstanding shares of OHS Common Stock (as defined below) in consideration for
the redemption of a portion of their shares of Olsten Common Stock.
WHEREAS, the parties have determined that it is necessary and
desirable to set forth the principal corporate transactions required to effect
the Split-Off and to set forth other agreements that will govern certain other
matters following the Split-Off.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements, provisions and covenants contained in this Agreement, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used herein, the following terms have
the following meaning:
"AAA Rules" has the meaning specified in Section 7.15.
"Action" means any claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, governmental or regulatory or
administrative agency or commission or any other tribunal.
"Adecco" has the meaning specified in the introduction to this
Agreement.
"Adecco Registration Statement" means the registration statement on
Form F-4 filed by Adecco with the Commission to effect the registration by
Adecco of the Stock Consideration, as such registration statement may be amended
from time to time.
"Affiliate" of any specified person means any other person that,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with such specified person.
"Agreement" has the meaning specified in the introduction to this
Agreement.
"Ancillary Agreements" means the Employee Benefits Allocation
Agreement and the Tax Sharing Agreement .
"Assets" means all properties, rights, contracts, leases and claims of
every kind and description, wherever located, whether tangible or intangible,
and whether real, personal or mixed.
"Assumed OHS Liabilities" has the meaning specified in Section 2.03.
"Balance Sheet" has the meaning specified in Section 2.01.
"Closing" has the meaning specified in Section 2.07.
"Closing Date" has the meaning specified in Section 2.07.
"Closing Intercompany Balance" means the balance outstanding in the
New Intercompany Account on the Closing Date.
"Commission" means the Securities and Exchange Commission.
"Consulting Agreements" means the Separation, Consulting and
Non-Competition Agreements dated as of August 17, 1999 by and among Adecco,
Olsten and each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and the Separation, Consulting and Non-Competition Agreement
dated as of August 17, 1999 by and between Olsten and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
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"Covered Claims" means those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the Policies,
whether or not subject to deductibles, co-insurance, uncollectability or
retrospectively rated premium adjustments.
"Delayed Asset" has the meaning specified in Section 2.04.
"Delayed Liabilities" has the meaning specified in Section 2.04.
"Demand" has the meaning specified in Section 7.15.
"Disputes" has the meaning specified in Section 7.15.
"Dissenting Shares" has the meaning specified in the Merger Agreement.
"Effective Time" has the meaning specified in the Merger Agreement.
"Employee Benefits Allocation Agreement" means the agreement to be
entered into between Olsten and OHS, before the Effective Time, providing for
certain matters relating to the allocation of employee benefits, the treatment
of employee stock options and other employee matters, in substantially the form
set forth as Exhibit A.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" has the meaning specified in the Merger Agreement.
"Existing Credit Agreement" means the Credit Agreement, dated August
9, 1996, as amended from time to time to the date hereof, among Olsten, each of
the Banks named therein and The Chase Manhattan Bank, as agent for the Banks.
"Governmental Authority" means any United States (federal, state or
local) or foreign government, or governmental, regulatory or administrative
authority, agency or commission.
"Governmental Settlement Agreements" means all compromise, settlement
or plea agreements listed on Schedule 2 and all compromise, settlement or plea
agreements between Olsten or any of its subsidiaries and any Governmental
Authority relating to the conduct of the Health Services Business.
"Governmental Settlement Agreement Liabilities" means all Liabilities
of Olsten and its subsidiaries pursuant to or in connection with the
Governmental Settlement Agreements.
"Health Services Business" means the health care business of Olsten
and the Health Subsidiaries conducted in the United States and Canada whereby
Olsten and the Health Subsidiaries provide, directly or under arrangement with
third parties, through licensed and unlicensed health care personnel, services,
including: (i) skilled nursing; education; home health aide and personal
services; pediatric and perinatal care; physical, occupational, neurological and
speech therapies; administration of drugs and disease management programs;
institutional, occupational and alternate site staffing; and marketing,
distribution and staffing solutions for pharmaceutical, biotechnology and
medical device firms; (ii) acute and chronic infusion therapy; and (iii) network
services, including care management and coordination services, such as
centralized intake and billing, claims adjudication, quality assurance and data
reporting and analysis, for managed care customers and self-insured employers.
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"Health Services Business Policies" means all Policies which are owned
or maintained by or on behalf of Olsten and/or any of its subsidiaries or their
respective predecessors pursuant to which the Health Subsidiaries and/or their
officers, directors or agents are eligible for coverage and Olsten and the
Retained Subsidiaries and their officers, directors and agents are not eligible
for coverage.
"Health Subsidiaries" has the meaning specified in the second recital
of this Agreement.
"Indemnifiable Losses" has the meaning specified in Section 4.01.
"Indemnified Party" has the meaning specified in Section 4.03.
"Indemnifying Party" has the meaning specified in Section 4.03.
"Information Technology Services Business" means the business whereby
Olsten and its subsidiaries provide information technology consultants on either
a project management or consulting basis to assist clients in the design,
development and maintenance of computer systems.
"Insurance Charges" has the meaning specified in Section 5.11(e)(ii).
"Insurance Proceeds" means those monies (i) received by an insured
from an insurance carrier or (ii) by an insurance carrier on behalf of an
insured.
"Intercompany Loan Balance" means (i) at July 4, 1999, the
intercompany loan balance reflected on the Balance Sheet and (ii) at the Closing
Date, an amount computed on a basis and using practices consistent with the
Intercompany Loan Balance at July 4, 1999.
"Liabilities" means any and all claims, debts, liabilities, license
fees, franchise fees, losses, penalties, deficiencies, litigation proceedings,
levies, duties, assessments, attorneys' fees, charges, allegations, demands,
damages, judgments and obligations, absolute or contingent, matured or not
matured, liquidated or unliquidated, accrued or not accrued, known or unknown,
whenever arising, and whether or not the same would properly be reflected on a
balance sheet, including all costs and expenses relating thereto including,
without limitation, under any law, rule, regulation, action, order or consent
decree of any Governmental Authority or any award of any arbitrator of any kind,
and those arising under any contract, commitment or undertaking.
"Licensed Olsten Names" has the meaning specified in Section 5.06(a).
"Merger" has the meaning specified in the third recital to this
Agreement.
"Merger Agreement" has the meaning specified in the third recital to
this Agreement.
"Merger Sub" has the meaning specified in the third recital to this
Agreement.
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"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"Net Debt" as of the True-Up Date means as of such date the sum of (i)
indebtedness for borrowed money, (ii) the deferred purchase price of property
and (iii) up to a maximum of $10 million of transaction fees related to the
transactions contemplated by the Merger Agreement and this Agreement less cash
on hand; provided, however, that cash on hand shall not include any cash amount
in the Tax Refund Escrow Account.
"Net Operating Loss Refund Claim" means a claim for a tax refund of
the Olsten affiliated group filed on federal form 1139, Corporate Application
for Tentative Refund or federal form 1120X, Amended Corporation Income Tax
Return or an equivalent state or local tax form with respect to a net operating
loss of the Olsten affiliated group.
"New Intercompany Account" has the meaning specified in Section 2.09.
"OHS" has the meaning specified in the introduction to this Agreement.
"OHS Common Stock" means the shares of common stock, par value $.01
per share, of OHS or any other shares or classes of capital stock of OHS that
may be created hereafter.
"OHS Employee" has the meaning set forth in the Employee Benefits
Allocation Agreement.
"OHS Indemnitees" has the meaning specified in Section 4.02.
"OHS Liabilities" means all of (i) the Liabilities of OHS under this
Agreement and the Employee Benefits Allocation Agreement that may arise
hereunder or thereunder, (ii) the Assumed OHS Liabilities, (iii) the Liabilities
of OHS, the Health Services Business and the Health Subsidiaries arising after
the Closing Date and (iv) the Liabilities of Olsten under Section 7 of the
Consulting Agreements.
"OHS Names" means the names listed on Schedule 3.
"OHS Proprietary Name Rights" has the meaning specified in Section
5.06.
"OHS Registration Statement" means the registration statement on Form
S-4 filed by OHS with the Commission to effect the registration of the OHS
Common Stock to be issued as the Split-Off Consideration pursuant to the
Securities Act, as such registration statement may be amended from time to time.
"Olsten" has the meaning specified in the introduction to this
Agreement.
"Olsten Common Stock" means, collectively, the outstanding shares of
common stock, par value $.10 per share, and the Class B common stock, par value
$.10 per share, of Olsten.
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"Olsten Indemnitees" has the meaning specified in Section 4.01.
"Olsten Liabilities" means all of the Liabilities of Olsten under this
Agreement and that may arise under this Agreement, and the Liabilities of
Olsten, whether arising before, on or after the Closing Date, but not including
(i) the Assumed OHS Liabilities and (ii) the Liabilities of OHS, the Health
Services Business and the Health Subsidiaries arising after the Closing Date.
"Olsten Names" means the names listed on Schedule 4.
"Olsten Proprietary Name Rights" has the meaning specified in Section
5.06.
"Olsten Proxy Statement" means the proxy statement in the form sent to
each holder of Olsten Common Stock in connection with the Merger and the
Split-Off.
"Panel" has the meaning specified in Section 7.15.
"Party" has the meaning specified in Section 7.15.
"Person" has the meaning specified in Section 7.16.
"Policies" or "Policy" means insurance policies and insurance
contracts of any kind as in effect as of the date hereof, including, without
limitation, primary, excess and umbrella, comprehensive general liability,
automobile, workers' compensation, employee dishonesty, property and crime
insurance policies and self-insurance and captive insurance company
arrangements, together with the rights, benefits and privileges thereunder.
"Quantum Debt" means the 4 3/4% Convertible Subordinated Debentures
due 2000 of Quantum Health Resources, Inc.
"Representatives" has the meaning specified in Section 7.15.
"Retained Assets" means all Assets of Olsten and its subsidiaries
(including the Tax Refund Escrow Account), other than the Transferred OHS
Assets.
"Retained Businesses" means any business conducted by Olsten now or in
the future other than the Health Services Business.
"Retained Businesses Policies" means all Policies which are owned or
maintained by or on behalf of Olsten and/or any of its subsidiaries or their
respective predecessors where Olsten and/or the Retained Subsidiaries and/or
their officers, directors or agents are eligible for coverage and the Health
Subsidiaries and their officers, directors and agents are not eligible for
coverage.
"Retained Subsidiaries" has the meaning specified in the second
recital of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
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"Shared Policies" means Policies where both the Retained Businesses
and the Health Services Business are eligible for coverage and/or Policies where
the employees, directors or agents of both the Retained Businesses and the
Health Services Business are eligible for coverage.
"Shareholder Liabilities" means all of the liabilities, including,
without limitation, the contingent liabilities, arising from the lawsuits
captioned In re Olsten Corporation Securities Litigation, ▇▇. ▇▇ ▇▇ ▇▇▇▇ (▇▇▇)
(▇▇▇▇▇▇ ▇▇▇▇▇▇ District Court for the Eastern District of New York), and ▇▇▇▇▇
▇. May, C.A. No. 17135NC (Delaware Chancery Court, County of New Castle).
"Split-Off" has the meaning specified in the sixth recital of this
Agreement.
"Split-Off Consideration" has the meaning specified in the Merger
Agreement.
"Staffing Services Business" means the business of Olsten and its
subsidiaries whereby it provides assignment employees in a variety of service
areas (other than the Health Services Business), including: supplemental
staffing; evaluation and training for office technology; general office and
administrative services; accounting and other financial services; legal,
scientific, engineering and technical services, including production technical
training; call centers; production/distribution/assembly services; training and
pre-employment services; retail services; marketing support and teleservices;
manufacturing, construction and industrial services; and managed services for
corporations.
"Stock Consideration" has the meaning specified in the Merger
Agreement.
"subsidiary" has the meaning specified in Section 7.16.
"Tax" shall have the meaning given to such term in the Tax Sharing
Agreement.
"Tax Refund Escrow Account" has the meaning specified in Section 5.13.
"Tax Sharing Agreement" means the agreement to be entered into between
Olsten, Adecco and OHS prior to the Effective Time providing for certain tax
related matters, in substantially the form set forth as Exhibit B.
"Third-Party Claim" has the meaning specified in Section 4.04.
"Transition Services" has the meaning specified in Section 5.08.
"Transition Services Invoice" has the meaning specified in Section
5.08.
"Transition Services Period" has the meaning specified in Section
5.08.
"Transaction Taxes" has the meaning specified in Section 5.05.
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"Transferred OHS Assets" has the meaning specified in Section 2.01(a).
"Transferred Olsten Assets" has the meaning specified in Section
2.01(b).
"True-Up Date" means the close of business on October 31, 1999.
"True-Up Intercompany Balance" means the intercompany loan balance on
the True-Up Date, computed on a basis and using practices consistent with the
Intercompany Loan Balance reflected on the Balance Sheet.
"US GAAP" means generally accepted accounting principles in the United
States, applied on a consistent basis.
ARTICLE II
TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
Section 2.01. Transfer of Assets. (a) Prior to the Effective Time,
Olsten shall take or shall cause to be taken all actions necessary to cause the
transfer, assignment, delivery and conveyance to OHS of all of Olsten's and its
subsidiaries' rights, title and interest in all of the Assets and related
goodwill, wherever located, relating exclusively to the operation of the Health
Services Business, including, without limitation, the assets listed below
(collectively, the "Transferred OHS Assets"):
(i) all assets shown or reflected on the balance sheet of the Health
Services Business as at July 4, 1999 attached on Schedule 5 (the "Balance
Sheet"), other than such assets as have been disposed of since July 4, 1999
in the ordinary course of business consistent with past practice;
(ii) Assets relating exclusively to the operation of the Health
Services Business that are acquired by any of the Health Subsidiaries in
the ordinary course of their business consistent with past practices after
July 4, 1999 and prior to the Effective Time;
(iii) the shares of capital stock of the Health Subsidiaries owned,
directly or indirectly, by Olsten and any equity interest owned, directly
or indirectly, by any of the Health Subsidiaries as set forth on Schedule
1;
(iv) all contracts, contract rights, agreements, arrangements or
commitments of any kind and all licenses and permits of the Health
Subsidiaries that relate exclusively to the Health Services Business,
including without limitation, the Governmental Settlement Agreements;
(v) all real property leases or other interests in real property or
rights to use thereof, and all buildings, structures, appurtenances and
improvements erected upon, attached to or located thereon of the Health
Subsidiaries that relate exclusively to the Health Services Business;
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(vi) the OHS Names and OHS Proprietary Name Rights and other
intangible properties and rights that relate exclusively to the Health
Services Businesses;
(vii) all books, records and files of, or relating exclusively to, the
Health Services Business; and
(viii) the Health Services Business Policies.
(b) Prior to the Effective Time, OHS shall take or shall cause to be
taken all actions necessary to cause the transfer, assignment, delivery and
conveyance to Olsten or the appropriate Retained Subsidiary of all rights, title
and interest of OHS and any Health Subsidiary in the Retained Businesses (the
"Transferred Olsten Assets").
(c) Notwithstanding anything contained in Section 2.01(a) to the
contrary, Olsten and the Retained Subsidiaries shall retain and shall not
transfer, assign, deliver or convey to OHS or any Health Subsidiary any Retained
Assets.
Section 2.02. Consideration for Transferred Assets. In full
consideration for the Transferred OHS Assets, (i) OHS shall issue to Olsten a
sufficient number of shares of OHS Common Stock that, together with the shares
of OHS Common Stock held by Olsten prior to such date, shall be sufficient to
enable Olsten and OHS to perform their obligations under the Merger Agreement
and (ii) OHS shall assume the Assumed OHS Liabilities. In full consideration for
the Transferred Olsten Assets, Olsten shall pay, perform and discharge the
Olsten Liabilities.
Section 2.03. Assignment and Assumption of Liabilities. (a) Prior to
the Effective Time, simultaneously with the transfer of Assets pursuant to
Section 2.01, Olsten shall assign to OHS and OHS shall assume and agree to pay,
perform and discharge when due all of the Liabilities of the Health Subsidiaries
and of the Health Services Business including, without limitation, all
Liabilities of Olsten and its subsidiaries arising out of, relating to,
associated with or resulting from the operation of the Health Services Business
or the ownership, use or possession of the Transferred OHS Assets or other
activities in connection therewith, whether arising before, on or after the
Closing Date, including without limitation, the Shareholder Liabilities, the
Governmental Settlement Agreement Liabilities, the Liabilities reflected on the
Balance Sheet and the Quantum Debt (the "Assumed OHS Liabilities").
(b) Notwithstanding the foregoing, the Assumed OHS Liabilities shall
not include (i) any debt of Olsten for money borrowed (including but not limited
to any such debt evidenced by a note, debenture or other instrument), and (ii)
except as provided in clause (iv) of the definition of "OHS Liabilities," any
claims, losses, damages, demands, costs, expenses or liabilities for any Tax
(which shall be governed by the Tax Sharing Agreement and Sections 4.11 and
5.05).
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Section 2.04. Delayed Assets and Liabilities. Nothing herein shall be
deemed to require the transfer of any Assets ("Delayed Assets") or the
assumption of any Liabilities ("Delayed Liabilities") that by their terms or by
operation of law cannot be transferred or assumed; provided, however, that
Olsten and OHS and their respective subsidiaries and Affiliates shall cooperate
in seeking to obtain any necessary consents or approvals as promptly as possible
for the transfer of all Delayed Assets and assignment and assumption of all
Delayed Liabilities as contemplated by this Article II and in obtaining the
release of Olsten and the Retained Subsidiaries from the Assumed OHS Liabilities
and any guaranty or similar obligation of any Assumed OHS Liability and OHS and
the Health Subsidiaries from the Olsten Liabilities or any guaranty or similar
obligation of any Olsten Liability. In the event that any such transfer of
Assets or Liabilities has not been consummated on or prior to the Closing Date,
the party retaining such Delayed Asset or Delayed Liability shall thereafter
hold such Delayed Asset in trust for the use and benefit of the party entitled
thereto (at the expense of the party entitled thereto) and retain such Delayed
Liability for the account of the party by whom such Delayed Liability is to be
assumed pursuant hereto, and take such other actions as may be reasonably
required in order to place the parties, insofar as reasonably possible, in the
same position as would have existed had such Delayed Asset been transferred or
such Delayed Liability been assumed as contemplated hereby including, without
limitation, enjoyment of rights to indemnification as if such Delayed Liability
had been assumed. As and when any such Delayed Asset or Delayed Liability
becomes transferable, such transfer and assumption shall be effected forthwith.
In the event Olsten or the Retained Subsidiaries are not released from any
Assumed OHS Liabilities or Delayed Liabilities, including the Governmental
Settlement Agreement Liabilities, or OHS or the Health Subsidiaries are not
released from any Olsten Liabilities, in each case, prior to the Effective Time,
each such party shall be entitled to indemnification for all such Liabilities
pursuant to Section 4.01.
Section 2.05. Representations or Warranties; Disclaimers. (a) It is
understood and agreed (i) that neither Olsten nor any of the Retained
Subsidiaries is representing or warranting in any way as to the value or freedom
from encumbrance of, or any other matter concerning, any Transferred OHS Assets,
and (ii) that the Transferred OHS Assets are being transferred "as is, where is"
and with all faults (provided that the absence of such warranties shall not
negate the allocation of liabilities under this Agreement and shall have no
effect on any manufacturers, sellers or other third party warranties that are
intended to be transferred with such assets). Similarly, it is understood and
agreed that neither Adecco, Olsten nor any of the Retained Subsidiaries is, in
this Agreement or in any other agreement or document contemplated by this
Agreement, representing or warranting to OHS or any OHS Indemnitee in any way
that the obtaining of the consents and approvals, the execution and delivery of
any amendatory agreements and the making of the filings and applications
contemplated by this Agreement shall satisfy the provisions of any or all
applicable agreements or the requirements of all applicable laws or judgments.
(b) OHS represents and warrants that:
(i) OHS is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted;
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(ii) OHS has full corporate power and authority to execute this
Agreement and the Ancillary Agreements to which it will be a party and to
consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action on the part of OHS and, to the
extent required, by the stockholder of OHS. This Agreement has been duly
executed and delivered by OHS and, assuming due authorization, execution
and delivery hereof by Olsten, constitutes a valid and binding agreement of
OHS, enforceable against OHS in accordance with its terms, except to the
extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally or by general equitable
principles. Each of the Ancillary Agreements will be duly executed and
delivered by OHS on or prior to the Effective Time and, assuming due
authorization, execution and delivery thereof by each other party thereto,
will constitute a valid and binding agreement of OHS, enforceable against
OHS in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of
creditors' rights generally or by general equitable principles;
(iii) The execution and delivery by OHS of this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated
hereby or thereby will not contravene, violate, result in a breach of or
constitute a default under (x) any provision of applicable law or of the
articles of incorporation or by-laws of OHS or any Health Subsidiary or (y)
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to OHS or any Health Subsidiary or any of their properties or
assets, except for such contravention, violations, breaches or defaults
that, individually or in the aggregate, would not materially impair OHS's
ability to consummate the transactions contemplated hereby or (z) the
Governmental Settlement Agreements;
(iv) No filing or registration with, or permit, authorization, consent
or approval of, or notification or disclosure to, any Governmental
Authority is required by OHS in connection with the execution and delivery
of this Agreement, the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby, except (w) in connection with
the provisions of the Securities Act and the Exchange Act, (x) such
consents, approvals, orders, permits, authorizations, registrations,
declarations and filings as may be required under the Blue Sky laws of
various states, (y) consents, authorizations, approvals or notifications
listed on Schedule 6 and (z) such consents, approvals, orders, permits,
authorizations, registrations, declarations and filings, the failure of
which to obtain would not, individually or in the aggregate, materially
impair OHS's ability or Olsten's ability to consummate the transactions
contemplated hereby;
(v) The OHS Common Stock to be issued pursuant to Section 2.02 has
been duly authorized and, when so issued, will be fully paid, validly
issued and nonassessable and will not have been issued in violation of any
preemptive rights;
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(vi) At the Effective Time, neither OHS nor any of the Health
Subsidiaries will be a party to any material agreement, arrangement or
understanding with Olsten or any of the Retained Subsidiaries other than
this Agreement, the Ancillary Agreements and any other agreement entered
into in connection with the Split-Off as contemplated by this Agreement;
and
(vii) Each of the Balance Sheet and the balance sheets attached as
Schedule 5 for the years ended January 4, 1999 and December 28, 1997 fairly
present in all material respects the combined financial position of the
Health Services Business as of their respective dates, in accordance with
US GAAP (subject in the case of interim financial statements, to normal
year-end adjustments).
(c) In addition to the actions specifically provided for elsewhere in
this Agreement and except as otherwise expressly set forth in this Agreement,
each of the parties hereto shall act in good faith and use its respective
reasonable best efforts to take, or cause to be taken, all actions, and, to
execute and deliver, or cause to be executed and delivered, such additional
documents and instruments, and to do, or cause to be done, all things,
reasonably necessary, proper or advisable under applicable laws and agreements
to consummate and make effective the transactions contemplated by this
Agreement.
(d) Notwithstanding anything contained herein to the contrary, neither
Olsten nor OHS shall, without the prior written consent of Adecco, take any
action or inaction in effecting the transactions contemplated hereby if such
action or inaction would (i) materially increase the Liabilities of Olsten or
the Retained Subsidiaries, (ii) materially impair Olsten's ability to conduct
the Retained Businesses, or (iii) materially decrease the value of the Retained
Assets.
Section 2.06. Final Determination of Assets and Liabilities. (a) In
case of any dispute arising before the Split-Off, as to the identity or
existence of Assets relating to the operation of the Health Services Business
and the Retained Businesses or the existence of such a relationship or the
transferability thereof, or the allocation of insurance premium refunds, the
good faith determination of the Board of Directors of Olsten, together with the
consent of Adecco, which consent shall not be unreasonably withheld, if such
dispute shall concern Assets or Liabilities that are material to Olsten and the
Retained Subsidiaries, taken as a whole, if made before the Split-Off, shall be
final, conclusive and binding.
(b) In case of any dispute arising before the Split-Off as to the
identity or existence of Liabilities, to be assumed by OHS or as to which OHS is
to indemnify Olsten and its subsidiaries, or the identification or other
allocation of Liabilities in respect of insurance premium obligations, the good
faith determination of the Board of Directors of Olsten, together, in the case
of a dispute which concerns Assets or Liabilities that are material to Olsten
and the Retained Subsidiaries, taken as a whole, with the consent of Adecco,
which consent shall not be unreasonably withheld, if made before the Split-Off,
shall be final, conclusive and binding.
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Section 2.07. Closing; Conveyancing and Stock Assumption Instruments.
(a) The sale, transfer, assignment and delivery of Assets referred to in Section
2.01 and the assumption of Liabilities referred to in Section 2.03 (the
"Closing") shall take place at any time and place as may be designated by the
parties hereto, but in no event later than the Effective Time (the "Closing
Date").
(b) At the Closing the parties shall execute or cause to be executed
by the appropriate entities conveyancing and assumption instruments, including
using their reasonable best efforts to obtain from third-parties appropriate
releases and novations, in such forms as the parties shall reasonably agree,
including deeds as may be appropriate, the assignment of trademarks and
franchise rights, and the assignment and assumption of existing lease
agreements. Any transfer of capital stock (including the issuance of OHS Common
Stock described in Section 2.02) shall be effected by means of delivery of stock
certificates and executed stock powers and notation on the stock record books of
the corporation or other legal entities involved and, to the extent required by
applicable law, by notation on public registries.
Section 2.08. Cash Allocation.
(a) Cash Allocation on the Closing Date. The allocation between Olsten
and OHS of all domestic and international cash bank balances, short-term
investments and outstanding checks and drafts of Olsten and its subsidiaries
recorded on the books of Olsten and its subsidiaries shall be in accordance with
the following:
(i) all cash received in, and deposits of cash, checks, drafts or
short-term investments made to, depositary accounts as of the close of
business on the Closing Date shall be remitted to Olsten, other than cash
contained in accounts allocated to OHS pursuant to Section 2.03; and
(ii) all ▇▇▇▇▇ cash of the Health Services Business shall be allocated
to OHS on the Closing Date; and
(iii) all Liabilities for payment of outstanding checks or drafts
drawn on or prior to the Closing Date on accounts allocated to OHS pursuant
to Section 2.03 shall be paid by OHS.
(b) Cash Management After the Closing Date. The ▇▇▇▇▇ cash, depositary
and disbursement accounts of the Health Services Business shall be transferred
to OHS on the Closing Date after the allocations are made pursuant to Section
2.08(a)(i) and (ii). OHS shall establish and maintain a separate cash management
system and accounting records with respect to the Health Services Business
effective as of 12:01 a.m. New York time on the day following the Effective
Time.
(c) For purposes of this Section 2.08, any disagreement or dispute
arising between Olsten and OHS on or prior to the Closing Date shall be resolved
by the Board of Directors of Olsten, together, in the case of a dispute which
concerns Assets or Liabilities that are material to Olsten and the Retained
Subsidiaries, taken as a whole, with the consent of Adecco, which resolution
shall be binding and final upon each of the parties hereto and not subject to
further review.
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Section 2.09. True-Up Net Debt; Intercompany Balance.
(a) On the True-Up Date, the True-Up Intercompany Balance shall be
frozen and thereafter shall not be increased or decreased.
(b) On the True-Up Date, Olsten shall open a new intercompany account
(the "New Intercompany Account") to record intercompany transactions for the
period between the True-Up Date and the Closing Date. All entries to the New
Intercompany Account shall be made in the ordinary course of business and on a
basis consistent with the intercompany loan balance reflected on the Balance
Sheet.
(c) On the True-Up Date, if the Net Debt of Olsten and the Retained
Subsidiaries is (i) greater than $750 million, then the New Intercompany Account
shall reflect a payable by OHS to Olsten equal to the amount of such excess, or
(ii) less than $750 million, then Olsten shall pay to OHS cash on such date, in
an amount equal to such shortfall or (iii) equal to $750 million, then the New
Intercompany Account shall open with a zero balance.
(d) At the Effective Time, (i) the Closing Intercompany Balance shall
be settled by OHS or Olsten, as the case may be, delivering to the other a cash
payment in an amount equal to the amount owing by such party to the other, if
any, together with simple interest at 6% per annum from the True-Up Date to the
Effective Time on the average daily balance, and (ii) the True-Up Intercompany
Balance shall be contributed to the capital of OHS at the Effective Time.
(e) On the day following the True-Up Date, OHS shall establish a cash
management system for the Health Services Business and related accounts and the
Health Services Business shall cease participation in Olsten's cash management
system. Between the True-Up Date until the Effective Time, (i) all cash receipts
and disbursements of OHS and the Health Services Business shall be made through
the Health Services Business cash management system, and (ii) all transfers of
cash or other assets (other than to accomplish the transfer of assets pursuant
to Section 2.01), or transactions, including management fees and intercompany
loans, between the Retained Businesses, on the one hand and the Health Services
Business, on the other, shall be reflected in the New Intercompany Account, and
(iii) management fees shall be paid by OHS to Olsten on the same basis as prior
to the True-Up Date and shall be prorated to the Effective Time.
ARTICLE III
THE SPLIT-OFF
Section 3.01. Cooperation Prior to the Split-Off. As promptly as
practicable after the date hereof, (a) Olsten and OHS shall prepare, and Olsten
shall mail to the holders of Olsten Common Stock, the Olsten Proxy Statement,
which sets forth disclosure concerning OHS, the Split-Off, the Merger and other
matters. Olsten and OHS shall also prepare, and OHS shall file with the
Commission, the OHS Registration Statement, which will include or incorporate by
reference the Olsten Proxy Statement. Olsten and OHS shall use their reasonable
best efforts to cause the OHS Registration Statement to become effective under
the Securities Act.
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(b) Olsten and OHS shall cooperate in preparing, filing with the
Commission and causing to become effective any registration statements or
amendments thereto that are appropriate to reflect the establishment of or
amendments to any employee benefit and other plans contemplated by the Employee
Benefits Allocation Agreement.
(c) Olsten and OHS shall take all such action as may be necessary or
appropriate under the securities or Blue Sky laws of the states or other
political subdivisions of the United States in connection with the transactions
contemplated by this Agreement.
(d) OHS will prepare and file a preliminary listing application and
will pursue the approval of the application to permit listing or quotation of
the OHS Common Stock on a national securities exchange or NASDAQ, as determined
by Olsten.
Section 3.02. Conduct of Health Services Business Pending Split-Off.
Prior to the Split-Off:
(a) The Health Services Business, including, but not limited to, the
administration of accounts payable and accounts receivable, will be
conducted in the ordinary course of business consistent with past practice
and in compliance in all material respects with applicable laws, rules and
regulations of any Governmental Authority.
(b) OHS shall have no operations or conduct any business except in
preparation for the consummation of the transactions contemplated by this
Agreement.
Section 3.03. Consummation of the Split-Off. The Split-Off shall be
consummated at the Effective Time in accordance with the terms of the Merger
Agreement. Olsten agrees to provide all certificates for shares of OHS Common
Stock that the Exchange Agent shall require in order to effect the Split-Off.
ARTICLE IV
INDEMNIFICATION
Section 4.01. OHS Indemnification of Olsten. Except as otherwise
expressly provided in any of the Ancillary Agreements, from and after the
Closing Date, OHS shall indemnify, defend and hold harmless Olsten and its
subsidiaries, and each of their respective directors, officers, employees,
agents and Affiliates and each of the heirs, executors, successors and assigns
of any of the foregoing (the "Olsten Indemnitees") from and against any and all
damage, loss, liability, deficiency and expense (including, without limitation,
reasonable expenses of investigation and reasonable attorneys' fees and expenses
in connection with any or all such investigations or any and all Actions or
threatened Actions) (collectively, "Indemnifiable Losses") incurred or suffered
by any of the Olsten Indemnitees and arising out of or related to (i) the OHS
Liabilities or the failure of OHS or any of the Health Subsidiaries to pay,
perform or otherwise discharge any of the OHS Liabilities; (ii) with respect to
information in the Olsten Proxy Statement, the OHS Registration Statement or the
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Adecco Registration Statement related to the Health Services Business, OHS or
any of the Health Subsidiaries or the Split-Off, any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission to state
therein or necessary to make the statements therein in light of the
circumstances under which they were made, not misleading; (iii) any
misrepresentation or breach of any warranty in this Agreement made by OHS; (iv)
any breach of any agreement or covenant under this Agreement made by OHS; (v)
liabilities resulting from any holder of Olsten Common Stock exercising
appraisal rights under the Delaware General Corporation Law with respect to the
value of the Split-Off Consideration; and (vi) any cash paid to stockholders of
Olsten in lieu of fractional shares of OHS.
Section 4.02. Olsten Indemnification of OHS. Except as otherwise
expressly provided in any of the Ancillary Agreements, from and after the
Closing Date, Olsten shall indemnify, defend and hold harmless OHS and the
Health Subsidiaries, and each of their respective directors, officers,
employees, agents and Affiliates and each of the heirs, executors, successors
and assigns of any of the foregoing (the "OHS Indemnitees") from and against any
and all Indemnifiable Losses incurred or suffered by any of the OHS Indemnitees
and arising out of or related to (i) the Olsten Liabilities or the failure of
Olsten or any of its subsidiaries to pay, perform or otherwise discharge any of
the Olsten Liabilities or (ii) any breach of any agreement or covenant under
this Agreement made by Olsten after the Closing Date.
Section 4.03. Notice and Payment of Claims. If any Olsten Indemnitee
or OHS Indemnitee (the "Indemnified Party") determines that it is or may be
entitled to indemnification by OHS or Olsten, as the case may be (the
"Indemnifying Party"), under this Article IV (other than in connection with any
Action subject to Section 4.04), the Indemnified Party shall deliver to the
Indemnifying Party a written notice specifying, to the extent reasonably
practicable, the basis for its claim for indemnification and the amount for
which the Indemnified Party reasonably believes it is entitled to be
Indemnified. After the Indemnifying Party shall have been notified of the amount
for which the Indemnified Party seeks indemnification, the Indemnifying Party
shall, within 15 days after receipt of such notice, either (i) pay the
Indemnified Party such amount in cash or other immediately available funds (or
reach agreement with the Indemnified Party as to a mutually agreeable
alternative payment schedule) or (ii) object to the claim for indemnification or
the amount thereof by giving the Indemnified Party written notice setting forth
the grounds therefor. Any objection shall be resolved in accordance with Section
7.15. If the Indemnifying Party does not give such notice, the Indemnifying
Party shall be deemed to have acknowledged its liability for such claim and the
Indemnified Party may exercise any and all of its rights under applicable law to
collect such amount.
Section 4.04. Notice and Defense of Third-Party Claims. (a) Promptly
following the earlier of (a) receipt of written notice of the commencement by a
third party of any Action against or otherwise involving any Indemnified Party,
or (b) receipt of written information from a third party alleging the existence
of a claim against an Indemnified Party, in either case, with respect to which
indemnification may be sought pursuant to this Agreement (a "Third-Party
Claim"), the Indemnified Party shall give the Indemnifying Party prompt written
notice thereof. The failure of the Indemnified Party to give notice as provided
in this Section 4.04 shall not relieve the Indemnifying Party of its obligations
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under this agreement, except to the extent that the Indemnifying Party is
prejudiced by such failure to give notice. Such notice shall describe the
Third-Party Claim in reasonable detail and shall indicate the amount of the
Indemnifiable Loss that has been or will be sustained by the Indemnified Party.
(b) Within 30 days after receipt of such notice, the Indemnifying
Party may, by giving written notice thereof to the Indemnified Party, (i)
acknowledge liability for and at its option elect to assume the defense of such
Third-Party Claim at its sole cost and expense, or (ii) object to the claim of
indemnification for such Third-Party Claim setting forth the grounds therefor.
Any objection shall be resolved in accordance with Section 7.15. If the
Indemnifying Party does not within such 30-day period give the Indemnified Party
such notice, the Indemnifying Party shall be deemed to have acknowledged its
liability for such Third-Party Claim.
(c) Any defense of a Third-Party Claim as to which the Indemnifying
Party has elected to assume the defense shall be conducted by attorneys employed
by the Indemnifying Party and reasonably satisfactory to Olsten in the case of
Olsten Indemnitees and OHS in the case of OHS Indemnitees. The Indemnified Party
shall have the right to participate in such proceedings and to be represented by
attorneys of its own choosing at the Indemnified Party's sole cost and expense;
provided that if the defendants or parties against which relief is sought in any
such claim include both the Indemnifying Party and one or more Indemnified
Parties and, in the reasonable judgment of Olsten in the case of Olsten
Indemnitees and OHS in the case of OHS Indemnitees, a conflict of interest
between such Indemnified Parties and such Indemnifying Party exists in respect
of such claim, such Indemnified Parties shall have the right to employ one firm
of counsel selected by Olsten or OHS, as the case may be, and in that event the
reasonable fees and expenses of such separate counsel (but not more than one
separate counsel reasonably satisfactory to the Indemnifying Party) shall be
paid by such Indemnifying Party.
(d) If the Indemnifying Party assumes the defense of a Third-Party
Claim, the Indemnifying Party may settle or compromise the claim without the
prior written consent of the Indemnified Party; provided that without the prior
written consent of Olsten in the case of Olsten Indemnitees and OHS in the case
of OHS Indemnitees, the Indemnifying Party may not agree to any such settlement
unless as a condition to such settlement the Indemnified Party receives a
written release from any and all liability relating to such Third-Party Claim
and such settlement or compromise does not include any remedy or relief to be
applied to or against the Indemnified Party, other than monetary damages for
which the Indemnifying Party shall be responsible hereunder.
(e) If the Indemnifying Party does not assume the defense of a
Third-Party Claim for which it has acknowledged liability for indemnification
under this Article IV, Olsten in the case of Olsten Indemnitees and OHS in the
case of OHS Indemnitees may pursue the defense of such Third-Party Claim and
choose one firm of counsel in connection therewith. The Indemnifying Party is
required to reimburse Olsten or OHS, as the case may be, on a current basis for
its reasonable expenses of investigation, reasonable attorney's fees and
reasonable out-of-pocket expenses incurred by Olsten in the case of Olsten
Indemnitees and OHS in the case of OHS Indemnitees in defending against such
Third-Party Claim and the Indemnifying Party shall be bound by the result
obtained with respect thereto; provided that the Indemnifying Party shall not be
liable for any settlement effected without the consent of Olsten in the case of
Olsten Indemnitees and OHS in the case of OHS Indemnitees, which consent shall
not be unreasonably withheld.
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(f) The Indemnifying Party shall pay to the Indemnified Party in cash
the amount for which the Indemnified Party is entitled to be indemnified (if
any) within 15 days after the final resolution of such Third-Party Claim
(whether by the final nonappealable judgment of a court of competent
jurisdiction or otherwise) or, in the case of any Third-Party Claim as to which
the Indemnifying Party has not acknowledged liability, within 15 days after such
Indemnifying Party's objection has been resolved pursuant to Section 7.15.
Section 4.05. Insurance Proceeds. The amount that any Indemnifying
Party is or may be required to pay to any Indemnified Party pursuant to this
Article IV shall be reduced (including, without limitation, retroactively) by
any insurance proceeds or other amounts actually recovered by or on behalf of
such Indemnified Parties in reduction of the related Indemnifiable Loss. If an
Indemnified Party shall have received the payment required by this Agreement
from an Indemnifying Party in respect of an Indemnifiable Loss and shall
subsequently actually receive insurance proceeds, or other amounts in respect of
such Indemnifiable Loss as specified above, then such Indemnified Party shall
pay to such Indemnifying Party a sum equal to the amount of such insurance
proceeds or other amounts actually received after deducting therefrom all of the
Indemnified Party's costs and expenses associated with the recovery of any such
amount.
Section 4.06. Contribution. If the indemnification provided for in
this Article IV is unavailable to an Indemnified Party in respect of any
Indemnifiable Loss arising out of or related to information about OHS, the
Health Subsidiaries or the Health Services Business contained in or omitted from
the OHS Registration Statement, the Adecco Registration Statement or the Olsten
Proxy Statement, then OHS, in lieu of indemnifying the Olsten Indemnitees, shall
contribute to the amount paid or payable by the Olsten Indemnitees as a result
of such Indemnifiable Loss in such proportion as is appropriate to reflect the
relative fault of OHS, on the one hand, and Olsten, on the other hand, in
connection with the statements or omissions that resulted in such Indemnifiable
Loss. The relative fault of the OHS Indemnitees on the one hand and of the
Olsten Indemnitees on the other hand shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information concerning OHS on the one hand or Olsten on the other hand.
Section 4.07. Subrogation. In the event of payment by an Indemnifying
Party to any Indemnified Party in connection with any Third-Party Claim, such
Indemnifying Party shall be subrogated to and shall stand in the place of such
Indemnified Party as to any events or circumstances in respect of which such
Indemnified Party may have any right or claim relating to such Third-Party
Claim. Such Indemnified Party shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party, in
prosecuting any subrogated right or claim.
Section 4.08. Third-Party Beneficiaries. This Article IV shall inure
to the benefit of, and be enforceable by, Olsten, OHS and Adecco and their
respective successors and permitted assigns. The indemnification provided for by
this Article IV shall not inure to the benefit of any other third party or
parties and shall not relieve any insurer who would otherwise be obligated to
pay any claim of the responsibility with respect thereto or, solely by virtue of
the indemnification provisions hereof, provide any subrogation rights with
respect thereto and each Party agrees to waive such rights against the other to
the fullest extent permitted.
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Section 4.09. Remedies Cumulative. The remedies provided in this
Article IV shall be cumulative and shall not preclude assertion by any
Indemnified Party of any other rights or the seeking of any and all other
remedies against any Indemnifying Party.
Section 4.10. Survival of Indemnities. The obligations of each of
Olsten and OHS under this Article IV shall survive the sale or other transfer by
it of any Assets or businesses or the assignment by it of any Liabilities, with
respect to any Indemnifiable Loss of the other related to such Assets,
businesses or Liabilities.
Section 4.11. After-Tax Indemnification Payments. Except as otherwise
expressly provided herein or in an Ancillary Agreement, any indemnification
payment made by any Indemnifying Party under this Article IV shall be computed
by taking into account the value of any and all applicable deductions, losses,
credits, offsets or other items for Federal, state or other tax purposes
attributable to the payment of the indemnified liability by the Indemnified
Party and any Tax incurred by the Indemnified Party attributable to receipt of
the indemnification payment.
ARTICLE V
CERTAIN ADDITIONAL MATTERS
Section 5.01. Ancillary Agreements. Prior to the Effective Time,
Olsten and OHS shall execute and deliver the Ancillary Agreements.
Section 5.02. OHS Officers and Board of Directors. Prior to the
Effective Time, Olsten shall take, and shall cause OHS to take, all actions
necessary to appoint as officers and directors of OHS those persons named in the
OHS Registration Statement to constitute the officers and directors of OHS on
the Closing Date. The Board of Directors of OHS shall be determined as set forth
on Schedule 9.
Section 5.03. OHS Certificate of Incorporation and By-laws. Prior to
the Effective Time, Olsten shall take all action necessary to cause the
certificate of incorporation and by-laws of OHS to be amended and restated
substantially in the form attached as an exhibit to the OHS Registration
Statement at the time it is declared effective.
Section 5.04. Credit Agreement. Prior to the Effective Time, Olsten
shall take all necessary action to amend or replace its Existing Credit
Agreement so as to release Quantum Health Resources, Inc. from any liability or
obligation with respect thereto from and after the Closing Date.
Section 5.05. Sales and Transfer Taxes. Olsten and OHS agree to
cooperate to determine the amount of sales or other transfer Taxes (including,
without limitation, all real estate, patent, copyright and trademark transfer
Taxes and recording fees) payable in connection with the transactions
contemplated by this Agreement, but excluding any income or franchise Taxes or
other Taxes imposed on or measured by income (the "Transaction Taxes");
provided, that Olsten shall be responsible for any Transaction Taxes payable in
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connection with the Merger. Olsten agrees to file promptly and timely the
returns for such Transaction Taxes with the appropriate taxing authorities and
remit payment of the Transaction Taxes and OHS will join in the execution of any
such tax returns or other documentation. Payment of all Transaction Taxes, other
than Transaction Taxes paid in connection with the Merger, shall be the
responsibility of OHS and shall be reimbursed to Olsten by OHS promptly upon
request by Olsten.
Section 5.06. Use of Names. (a) Following the Effective Time, OHS and
the Health Subsidiaries shall have the sole and exclusive ownership of and right
to use, as between Olsten and each of the Retained Subsidiaries, on the one
hand, and OHS and the Health Subsidiaries, on the other hand, the OHS Names, and
each of the trade marks, trade names, service marks and other proprietary rights
exclusively related to such OHS Names and any trade marks, trade names, service
marks or other proprietary rights mutually agreed among the parties prior to the
Effective Time (the "OHS Proprietary Name Rights"). Following the Effective
Time, Olsten and each of the Retained Subsidiaries shall have the sole and
exclusive ownership of and right to use, as between OHS and the Health
Subsidiaries, on the one hand, and Olsten and each of the Retained Subsidiaries,
on the other hand, the Olsten Names, and trade marks, trade names, service marks
and other proprietary rights related to such Olsten Names other than the OHS
Proprietary Name Rights and any trade marks, trade names, service marks or other
proprietary rights mutually agreed among the parties prior to the Effective Time
(the "Olsten Proprietary Name Rights"). Notwithstanding the foregoing, with
respect to the Olsten Names and Olsten Proprietary Name Rights which are listed
on Schedule 8 (the "Licensed Olsten Names"), Olsten hereby grants to OHS and
each of the Health Subsidiaries, a royalty-free license in order for OHS and the
Health Subsidiaries to continue to use the Licensed Olsten Names and have the
full privileges of a licensee with respect to the Licensed Olsten Names for a
period of one year following the Effective Time.
(b) Following the Effective Time, (x) OHS shall, and shall cause its
subsidiaries and other Affiliates to, take all action reasonably necessary to
cease using, and change as soon as commercially practicable (including by
amending any charter documents), any corporate or other names which are the same
as or confusingly similar to any of the Olsten Names or any of the Olsten
Proprietary Name Rights, and (y) Olsten shall, and shall cause its subsidiaries
and other Affiliates to, take all action reasonably necessary to cease using,
and change as soon as commercially practicable (including by amending any
charter documents), any corporate or other names which are the same as or
confusingly similar to any of the OHS Names or any of the OHS Proprietary Name
Rights.
(c) The license granted pursuant to Section 5.06(a) shall include the
right to use existing brochures, stationery, labeling, supplies, advertising
materials, office materials and any similar materials bearing any Licensed
Olsten Names until the earlier of (i) the termination of the license, and (ii)
the date such existing materials are exhausted and Olsten and the Retained
Subsidiaries shall have the right to use existing brochures, stationery,
labeling, supplies, advertising materials, office materials and any similar
materials bearing any OHS Names until the earlier of (i) one year after the
Effective Time and (ii) the date such existing materials are exhausted; provided
that each such Party shall use their reasonable best efforts to (a) replace such
materials with materials that do not use the other's names as promptly as
practicable and (b) to the extent commercially practicable, indicate by sticker
affixed to such materials that the name being used is being used under temporary
limited license from the other party who is the owner or licensor of such name.
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Section 5.07. Mail. After the Closing Date, each of Olsten and OHS may
receive mail, telegrams, packages and other communications properly belonging to
the other. Accordingly, at all times after the Effective Time, each of Olsten
and OHS authorizes the other to receive and open all mail, telegrams, packages
and other communications received by it and not unambiguously intended for the
other party or any of the other party's officers or directors specifically in
their capacities as such, and to retain the same to the extent that they relate
to the business of the receiving party or, to the extent that they do not relate
to the business of the receiving party and do relate to the business of the
other party, or to the extent that they relate to both businesses, the receiving
party shall promptly contact the other party by telephone for delivery
instructions and such mail, telegrams, packages or other communications (or, in
case the same relate to both businesses, copies thereof) shall promptly be
forwarded to the other party in accordance with its delivery instructions. The
foregoing provisions of this Section 5.07 shall constitute full authorization to
the postal authorities, all telegraph and courier companies and all other
persons to make deliveries to Olsten or OHS, as the case may be, addressed to
either of them or to any of their officers or directors specifically in their
capacities as such. The provisions of this Section 5.07 are not intended to and
shall not be deemed to constitute an authorization by either Olsten or OHS to
permit the other to accept service of process on its behalf, and neither party
is or shall be deemed to be the agent of the other for service of process
purposes or for any other purpose.
Section 5.08. Transition Services. Following the Effective Time and
ending on the one year anniversary of the Effective Time (such period, the
"Transition Services Period"), Olsten shall use its commercially reasonable
efforts to provide, or make available, to OHS and the Health Subsidiaries, at
such times and in such amounts as may be reasonably requested by OHS, the
following services (the "Transition Services") and OHS will pay for such
Transition Services on a cost basis as agreed to by the parties:
(i) tax preparation and filing services;
(ii) legal services, to be provided by Olsten's general counsel and
other internal counsel to the extent consistent with applicable standards
of professional responsibility;
(iii) information and technology support services and administrative
and office services;
(iv) procurement services; and
(v) such other additional services as may be reasonably requested by
OHS; provided that the scope of any services, as well as the time and the
manner in which such services are to be provided, shall be mutually
agreeable between the parties.
Following the end of the calendar month in which any Transition
Services are performed, Olsten shall provide to OHS an invoice (the "Transition
Services Invoice") setting forth in summary detail the Transition Services which
were provided during such calendar month and the appropriate cost thereof. OHS
shall pay Olsten, in a reasonably prompt manner (but in no event later than 30
days) following the delivery by Olsten of a Transition Services Invoice, the
amounts due with respect to the Transition Services reflected on such Transition
Services Invoice.
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Notwithstanding anything herein to the contrary, all Transition
Services shall be performed with reasonable care, but no Party hereto shall have
any liability whatsoever to any other Party or any third party for any loss,
liability, damage, cost or deficiency suffered by any such person arising out of
or resulting from providing any Transition Services hereunder.
Section 5.09. Leases of Real Property. (a) Olsten and OHS shall
jointly and promptly review all instances in which (i) OHS or the Health
Subsidiaries maintain facilities in, or otherwise occupy, real property leased
by Olsten or the Retained Subsidiaries and (ii) Olsten or the Retained
Subsidiaries maintain facilities in or otherwise occupy, real property leased by
a Health Subsidiary, each as set forth on Schedule 7, and shall use commercially
reasonable efforts in each case to either (x) negotiate and enter into a written
lease or sublease incorporating terms and conditions which are fair to both
parties, (y) assign such lease to OHS or Olsten, as the case may be, and OHS or
Olsten, as the case may be, shall accept responsibility for such lease, or (z)
terminate the arrangement on mutually agreeable terms; provided, however, that
the foregoing shall not apply in any instance (A) involving facilities
maintained, or real property occupied by the Health Subsidiaries that are to be
transferred to OHS in accordance with Section 2.01 or (B) covered by a written
lease agreement between the parties in effect on the date hereof.
(b) OHS agrees that it will use its reasonable best efforts to
promptly (but in no event later than six months) after the Effective Time,
relocate the headquarters for the Health Services Business from ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Main Headquarters"). Until the time when
the headquarters of the Health Service Business is relocated OHS shall be
entitled to occupy and use without charge office space at the Main Headquarters,
as shall be reasonably designated by Olsten as necessary to enable OHS and the
Health Subsidiaries to continue to conduct its current operations.
Section 5.10. Plea Agreements. OHS agrees to be bound by the terms of
the Plea Agreements dated July 19, 1999 between ▇▇▇▇▇▇▇▇ Home Health Care, Inc.
and the United States of America, including those terms governing the retention
and production of information, records and testimony.
Section 5.11. Insurance Policies and Claims Administration. (a)
Policies and Rights Included Within the Transferred OHS Assets. The Transferred
OHS Assets shall include: (i) any Health Services Business Policies and (ii) any
and all rights of the Health Subsidiaries under any Shared Policies covering (x)
Liabilities arising out of or relating to the conduct of the Health Services
Business prior to the Effective Time and (y) Liabilities arising out of or
relating to the conduct of the Retained Businesses prior to the Effective Time
to the extent any claim is made against OHS or any of the Health Subsidiaries
for such Liabilities, specifically including (in the case of (i) and (ii) above)
rights of indemnity and the right to be defended by or at the expense of the
insurer, with respect to all claims, suits, actions, proceedings, injuries,
losses, liabilities, damages and expenses and excluding rights covered by
Section 5.11(b).
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(b) Policies and Rights Included Within the Retained Assets. The
Retained Assets shall include: (i) any Retained Businesses Policies and (ii) any
and all rights of Olsten and its subsidiaries under any Shared Policies covering
(x) Liabilities arising out of or relating to the conduct of the Retained
Businesses prior to the Effective Time and (y) Liabilities arising out of or
relating to the conduct of the Health Services Business prior to the Effective
Time to the extent any claim is made against Olsten or any of the Retained
Subsidiaries for such Liabilities, specifically including (in the case of (i)
and (ii) above) rights of indemnity and the right to be defended by or at the
expense of the insurer, with respect to all claims, suits, actions, proceedings,
injuries, losses, liabilities, damages and expenses.
(c) Olsten to Maintain Insurance Coverage Prior to Effective Time. (i)
Olsten shall use its reasonable best efforts to maintain in full force and
effect, at all times up to and including the Effective Time, the Policies and
current coverages and limits of such Policies.
(ii) To the extent not already provided for by the terms of a Shared
Policy, Olsten shall use its commercially reasonable efforts to cause OHS and
the Health Subsidiaries, as appropriate, to be named as additional insureds
under each such Policy in respect of Covered Claims arising out of or relating
to periods prior to the Effective Time; provided, however, that nothing
contained herein shall be construed to require Olsten or any of the Retained
Subsidiaries to pay any additional premium or other charges in respect to, or
waive or otherwise limit any of its rights, benefits or privileges under, any
Shared Policy to effect the naming of OHS and the Health Subsidiaries as such
additional insureds.
(d) OHS Responsible for Establishing Insurance Coverage on and After
Effective Time. Commencing on and as of the Effective Time, OHS and each of the
Health Subsidiaries shall be responsible for establishing and maintaining its
own separate insurance programs for activities and claims relating to any period
on or after the Effective Time involving OHS or any of the Health Subsidiaries.
Notwithstanding any other agreement or understanding to the contrary, except as
set forth in Section 5.11(e)(i) and (ii) with respect to claims administration
and financial administration of the Shared Policies, as of and after the
Effective Time, neither Olsten nor any of the Retained Subsidiaries shall have
any responsibility for or obligation to OHS or the Health Subsidiaries relating
to insurance matters for any period, whether prior to, at or after the Effective
Time. Notwithstanding the foregoing, from the date hereof to the Effective Time,
Olsten shall use its commercially reasonable efforts to transfer to OHS and the
Health Subsidiaries the Health Services Business Policies and to obtain
insurance (or binders therefor) providing coverage to OHS and the Health
Subsidiaries similar to the coverage provided to the Health Services Business by
the Shared Policies prior to the Split-Off.
(e) Administration and Procedure. (i) OHS and its subsidiaries appoint
Olsten or a Retained Subsidiary, as appropriate, to administer, in good faith,
all claims and finances relating to the Shared Policies, including the
prosecution of any actions for declaratory relief, "bad faith" or other
extra-contractual damages. From and after the Effective Time, Olsten or a
Retained Subsidiary, as appropriate, shall be responsible for the claims
administration and financial administration of all Shared Policies relating to
the assets, ownership or operation prior to the Effective Time of the Health
-23-
Services Business; provided, however, that the responsibility for claims
administration and financial administration of the Shared Policies are in no way
intended to limit, inhibit or preclude any right to insurance coverage under the
Shared Policies. Olsten shall be entitled to compensation for and reimbursement
of expenses incurred in connection with performing the claims administration and
financial administration of the Shared Policies on a cost basis, as agreed by
the parties and Olsten and OHS shall comply with the provisions of the second
paragraph of Section 5.08 with respect to billing and reimbursement. Olsten
shall use reasonable care and act in good faith with respect to each of its
obligations under Section 5.11.
(ii) OHS shall promptly notify Olsten of any Covered Claim relating to
OHS or any Health Subsidiary under one or more of the Shared Policies relating
to any period prior to the Effective Time, and OHS agrees to cooperate and
coordinate with Olsten concerning any strategy Olsten may reasonably elect to
pursue to secure coverage and payment for such Covered Claim by the appropriate
insurance carrier. Olsten shall have final authority to compromise, settle or
otherwise resolve any claim or action under any Shared Policy, including,
without limitation, decisions to prosecute any action for declaratory relief,
"bad faith" or other extra-contractual damages; provided, that, as a condition
to any compromise or settlement of any such claim or action on behalf of OHS (x)
Olsten obtains a written release on behalf of OHS for such claim or action and
(y) if such settlement or compromise includes any remedy or relief against OHS,
other than monetary damages within the coverage limits of the applicable Shared
Policy, Olsten shall, prior to entering into any such compromise or settlement,
obtain the consent of OHS, which consent shall not be unreasonably withheld.
Notwithstanding anything contained herein, in any other agreement or Shared
Policy or any understanding to the contrary, OHS or the appropriate Health
Subsidiary assumes responsibility for, and shall pay to the appropriate
insurance carriers or otherwise, any premiums, reporting endorsements, tails,
noses, retroactive endorsements, retrospectively-rated premiums, defense costs,
indemnity payments, deductibles, retentions or other charges, as appropriate
(collectively, "Insurance Charges"), whenever arising, which shall become due
and payable under the terms and conditions of any Shared Policy in respect of
any liabilities, losses, claims, actions or occurrences, whenever arising or
becoming known, involving or relating to any of the assets, businesses,
operations or liabilities of the Health Services Business, which charges relate
to the period after the Effective Time. To the extent that the terms of any
applicable Shared Policy provide that Olsten or a Retained Subsidiary, as
appropriate, shall have an obligation to pay or guarantee the payment of any
Insurance Charges, Olsten or such Retained Subsidiary shall be entitled to
demand that OHS or a Health Subsidiary make such payment directly to the person
or entity entitled thereto. In connection with any such demand, Olsten shall
submit to OHS or a Health Subsidiary a copy of any invoice received by Olsten or
any Retained Subsidiary pertaining to such Insurance Charges, together with
appropriate supporting documentation, if available. In the event that OHS or any
of the Health Subsidiaries fails to pay any Insurance Charges when due and
payable, whether at the request of the party entitled to payment or upon demand
by Olsten or a Retained Subsidiary, Olsten or a Retained Subsidiary may (but
shall not be required to) pay such Insurance Charges for and on behalf of OHS or
the Health Subsidiary and, thereafter, OHS or the Health Subsidiary shall
forthwith reimburse Olsten or the Retained Subsidiaries for such payment.
-24-
(iii) OHS or a Health Subsidiary, as appropriate, shall be responsible
for all Insurance Charges claims administration and financial administration and
risk management programs relating to the Health Services Business Policies and
any insurance policies established and maintained by OHS and the Health
Subsidiaries for claims relating to any period on or after the Effective Time
involving OHS or any of the Health Subsidiaries.
(f) Allocation of Insurance Proceeds of Shared Policies. Insurance
Proceeds received with respect to claims, costs and expenses under the Shared
Policies shall be paid to Olsten with respect to Covered Claims of Olsten and
shall be paid to OHS with respect to Liabilities related to Covered Claims of
OHS. Payment of the allocable portions of indemnity costs of Insurance Proceeds
resulting from Shared Policies will be made to the appropriate party upon
receipt from the insurance carrier. For purposes of the prior sentence,
Insurance Proceeds shall include any damages paid or received from prosecution
of claims on a Shared Policy for "bad faith" or extra-contractual damages. In
the event that the aggregate limits on any Shared Policies are exceeded by the
aggregate outstanding Covered Claims by Olsten and the Retained Subsidiaries and
OHS and the Health Subsidiaries and any of the Covered Claims of Olsten or the
Retained Subsidiaries relate to Liabilities arising out of the Health Services
Business (including, but not limited to, the Shareholder Liabilities) prior to
the Effective Time, Olsten shall be entitled to be paid in full all of the
Insurance Proceeds relating to such Liabilities of the Health Services Business
prior to payment of Insurance Proceeds relating to any other claims of Olsten
and the Retained Subsidiaries or OHS and the Health Subsidiaries. Thereafter, or
in the event there are no such Liabilities of Olsten relating the Health
Services Business prior to the Effective Time, the Insurance Proceeds shall be
allocated pro rata to Olsten and the Retained Subsidiaries, on the one hand, and
OHS and the Health Subsidiaries, on the other hand, based upon their respective
bona fide claims or in such other proportions as the parties shall agree based
on an equitable allocation of Insurance Proceeds. The parties agree to use
commercially reasonable efforts to maximize available coverage under the Shared
Policies applicable to it, and to take all commercially reasonable steps to
recover from all other responsible parties in respect of a Covered Claim to the
extent coverage limits under a Shared Policy have been exceeded or would be
exceeded as a result of such Insured Claim.
(g) Agreement for Waiver of Conflict and Shared Defense. In the event
that Covered Claims of both Olsten and OHS exist relating to the same
occurrence, Olsten and OHS agree to jointly defend and to waive any conflict of
interest necessary to the conduct of that joint defense. Nothing in this Section
5.11 shall be construed to limit or otherwise alter in any way the obligations
of the parties to this Agreement, including those created by this Agreement, by
operation of law or otherwise.
Section 5.12. Financial Covenants. (a) Immediately prior to the
Effective Time (after giving effect to the transactions contemplated herein):
(i) Indebtedness for borrowed money plus the deferred purchase price
of property less cash on hand of OHS and the Health Subsidiaries shall not
exceed $100 million.
-25-
(ii) Indebtedness for borrowed money plus the deferred purchase price
of property of OHS and the Health Subsidiaries shall not exceed $150
million.
(iii) Earnings before interest, taxes, depreciation and amortization
of OHS and its subsidiaries during the period between July 4, 1999 and the
Effective Time shall not be less than $0 (excluding restructuring charges
in connection with the Split-Off) and sales for each of the full monthly
periods between the date hereof and the Effective Time shall average $100
million per month during such period.
(iv) OHS will have a committed credit facility with a borrowing
capacity of no less than $100 million.
(b) Olsten and OHS jointly represent, warrant and covenant that the
Retained Businesses and the Health Services Business shall, between the date
hereof and the Effective Time, be operated in the ordinary course of business
consistent with past practice, in nature, manner and amount, including, to the
extent practicable, as to levels and relationships of asset, liability, revenue,
expense, and cash flow items and totals within the respective businesses (it
being understood that unpaid amounts in respect of settlements of governmental
liabilities with respect to health care operations on terms previously disclosed
to Adecco, shall be considered ordinary course items). Without limiting the
generality of the foregoing, with respect to Olsten, the Retained Subsidiaries
and the Retained Businesses and, through the True-Up Date, OHS and the Health
Services Business, neither Olsten nor OHS nor any of their respective
Subsidiaries shall, without the prior written consent of Adecco, directly or
indirectly:
(i) authorize, permit to make or make any capital expenditures other
than pursuant to the capital expenditure plan previously provided by Olsten
to Adecco, or fail to make any investments for capital expenditures
contemplated by such plan;
(ii) permit or make any change to the billing processes for services
rendered or otherwise, other than as may be related to planned system
improvements and the like, or in the processes, method or terms of
collection of accounts receivable;
(iii) cause or permit any discounting, factoring or securitization of
accounts receivables or any other securitization or consignment of any
assets;
(iv) permit or make any change in the aging of accounts payables or in
the payment practices for accounts payable in effect as of the date hereof
(which aging and payment practices are consistent with past practice); or
(v) except for cash transfers made, in the ordinary course of business
through and reflected in the intercompany loan balance, sell, transfer,
pledge, mortgage or otherwise dispose of or encumber any assets, except in
the ordinary course of business and in arms-length transactions and at
market rates (with the parties acknowledging that the management fees paid
consistent with past practice fall within such exception).
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(c) To assure conformity with the provisions of clause (b) above and
the other provisions of this Section 5.12, the parties agree that it is the
intent of Section 5.03(a) of the Merger Agreement that representatives of Adecco
reasonably acceptable to Olsten shall be permitted to be present on a daily
basis at the headquarters and other facilities of Olsten to monitor compliance
with such provisions, and Olsten shall fully cooperate with and make all
information reasonably requested promptly available to such monitors. In
addition, and consistent with, and not by way of limitation of, Section 5.03(a)
of the Merger Agreement, the parties hereto agree and acknowledge that Olsten
shall provide Adecco with (y) pro-forma combined balance sheets, statements of
income, statements of cash flows and statements of shareholders equity as of the
close of business on each of the True-Up Date and the last day of each monthly
period thereafter up to the Closing Date of each of (i) Olsten and the Retained
Subsidiaries and (ii) OHS and the Health Subsidiaries, in each case, (A)
prepared in accordance with US GAAP and (B) giving effect to the Split-Off and
the provisions of Section 2.09 hereof and (z) all work papers of Olsten and OHS
and, as applicable, their respective independent public accountants as of such
dates or related to such balance sheets or statements and all other work papers
in respect of the separation of the Health Services Business and the Retained
Businesses contemplated hereby.
(d) The parties agree that any breach of this Section 5.12 by either
Olsten or OHS, other than breaches which are insignificant in both nature and
effect, shall cause a covenant of this Agreement to have been materially
breached by Olsten for purposes of Section 10.01(g) of the Merger Agreement and
shall provide Adecco with the right to terminate the Merger Agreement pursuant
to such Section 10.01(g), subject to the cure right contained therein.
Section 5.13. Tax Refund Escrow Account. Olsten agrees to deposit any
cash payments received prior to the Effective Time by Olsten from any Net
Operating Loss Refund Claim into an escrow account (the "Tax Refund Escrow
Account") which shall not be removed from such account until the earlier of (i)
the Effective Time, and (ii) the termination of the Merger Agreement.
Section 5.14. Worker's Compensation Letters of Credit. On the Closing
Date, OHS agrees to issue, or have issued on its behalf, a letter of credit to
Olsten in an amount equal to the amount of worker's compensation claims pending
on the Closing Date made by any OHS Employee prior to the Effective Time, as
such amount is mutually agreed upon among the parties hereto, determined on a
basis consistent with the Balance Sheet.
ARTICLE VI
RECORDS AND INFORMATION; ACCESS
Section 6.01. Corporate Records. (a) Each of Olsten and OHS shall
arrange as soon as practicable following the Closing Date for the delivery to
the other of existing corporate governance documents (e.g. minute books, stock
registers, stock certificates, documents of title, etc.) in its possession
relating to the other or to its business and affairs.
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(b) Except as otherwise required by law or agreed to in writing, each
party shall, and shall cause each of its respective subsidiaries to, retain all
information relating to the other party's business in accordance with the past
practice of such party. Notwithstanding the foregoing, except as provided in the
Tax Sharing Agreement, any party may destroy or otherwise dispose of any
information at any time, providing that, prior to such destruction or disposal,
(a) such party shall provide no less than 90 days prior written notice to the
other party, specifying the information proposed to be destroyed or disposed of,
and (b) if the recipient of such notice shall request in writing prior to the
scheduled date for such destruction or disposal that any of the information
proposed to be destroyed or disposed of be delivered to such requesting party,
the party proposing the destruction or disposal shall promptly arrange for the
delivery of such of the information as was requested at the expense of the
requesting party.
Section 6.02. Access to Information. From and after the Closing Date,
each of Olsten and OHS shall afford the other, including its accountants,
counsel and other designated representatives, reasonable access (including using
reasonable efforts to give access to persons or firms possessing information)
and duplicating rights during normal business hours to all records, books,
contacts, instruments, computer data and other data and information in such
party's possession relating to the business and affairs of the other (other than
data and information subject to an attorney/client or other privilege), insofar
as such access is reasonably required by the other party including, without
limitation, for audit, accounting and litigation purposes, as well as for
purposes of fulfilling disclosure and reporting obligations.
Section 6.03. Access to Employees. Each of Olsten and OHS shall use
reasonable efforts to make available to the other, upon written request, its
officers, directors, employees and agents as witnesses to the extent that such
persons may reasonably be required in connection with any legal, administrative
or other proceedings arising out of the business of the other prior to the
Closing Date in which the requesting party may from time to time be involved.
Section 6.04. Reimbursement. Each party providing information or
witnesses under Sections 6.02 or 6.03 to the other shall be entitled to receive
from the recipient, upon the presentation of invoices therefor, payment for all
out-of-pocket costs and expenses as may be reasonably incurred in providing such
information or witnesses.
Section 6.05. Confidentiality. Each party shall hold and shall cause
its directors, officers, employees, agents, consultants and advisors to hold, in
strict confidence, unless compelled to disclose by judicial or administrative
process or, in the opinion of its counsel, by other requirements of law, all
confidential, proprietary or other non-public information or trade secrets
concerning the other party except to the extent that such information can be
shown to have been (a) in the public domain through no fault of such party, or
(b) later lawfully acquired on a non-confidential basis from other sources by
the party to which it was furnished or (c) developed independently by the
representatives of such recipient. Neither party shall release or disclose any
such information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors who shall be advised of and
comply with the provisions of this Section 6.05.
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ARTICLE VII
MISCELLANEOUS
Section 7.01. Termination. In the event the Merger Agreement is
terminated, notwithstanding any provision hereof, Adecco shall automatically be
released as a party to this Agreement and this Agreement may be terminated and
the Split-Off abandoned at any time prior to the Effective Time by and in the
sole discretion of the Board of Directors of Olsten without the approval of OHS
or the stockholders of Olsten. In the event of such termination, no party shall
have any liability to any other party pursuant to this Agreement.
Section 7.02. Amendment. This Agreement may not be amended, except by
an instrument in writing signed on behalf of Olsten, OHS and Adecco.
Section 7.03. Waiver of Compliance; Consents. Rights under this
Agreement may be waived only by a written agreement signed by Olsten, OHS and
Adecco. Any waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing.
Section 7.04. Expenses. Except as specifically provided in this
Agreement or in an Ancillary Agreement, all costs and expenses incurred in
connection with the preparation, execution, delivery and implementation of this
Agreement and with the consummation of the transactions contemplated by this
Agreement shall be paid by the party incurring the expense. The determination of
who has incurred an expense shall be made by the Chief Financial Officer of
Olsten, which determination shall be binding and final upon each of the parties
hereto and not subject to further review.
Section 7.05. Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally, by next-day courier or
mailed by registered or certified mail (return receipt requested), first class
postage prepaid, or sent by facsimile, telegram or telex, to the parties at the
addresses specified below (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof). Any such notice shall be effective upon
receipt, if personally delivered or telecommunicated, one day after delivery to
a courier for next-day delivery, or three days after mailing, if deposited in
the U.S. mail, first class postage prepaid.
If to Olsten prior to the Effective Time or OHS prior to or after the
Effective Time, to:
Olsten Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Adecco, prior to or after the Effective Time or to Olsten after
the Effective Time, to:
Adecco ▇▇
▇▇▇▇ Cheserex
Switzerland
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: ▇▇▇ ▇▇ ▇▇ ▇▇▇ ▇▇▇▇
Telecopy: 011 41 21 321 6688
With a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ & ▇▇▇▇▇▇
Rechtsanwaelte
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: PD ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
Telephone: 011 41 1 26 1 5150
Telecopy: 011 41 25 1 3025
Section 7.06. Counterparts. This Agreement may be executed in two or
more counterparts each of which shall be deemed an original, but all of which
together shall constitute but one and the same Agreement.
Section 7.07. Governing Law. This Agreement shall be governed by the
laws of the State of New York (regardless of the laws that might otherwise
govern under applicable New York principles of conflicts of law) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies. Each of the parties hereto irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and of the United States of America located in the
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State of New York (the "New York Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such courts), waives
any objection to the laying of venue of any such litigation in the New York
Courts and agrees not to plead or claim in any New York Court that such
litigation brought therein has been brought in an inconvenient forum. Each of
the parties hereto hereby agrees to service of process in any litigation arising
out of or relating to this Agreement and the transactions contemplated hereby by
certified mail, return receipt requested, postage prepaid, to it at its address
for notice specified in Section 7.05.
Section 7.08. Entire Agreement. This Agreement, including the
schedules and exhibits hereto, together with the Ancillary Agreements, embodies
the entire agreement and understanding of the parties hereto in respect to the
subject matter contained herein and supersedes all prior agreements and
understandings among the parties with respect thereto. There are no
representations, promises, warranties, covenants or undertakings by any party,
other than those expressly set forth or referred to herein.
Section 7.09. Assignment; No Third Party Beneficiaries. This Agreement
and all of the provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the prior written consent
of the other parties. Nothing contained in this Agreement, expressed or implied,
is intended to confer any benefits, rights or remedies upon any person or
entity, other than Olsten, OHS and Adecco and, in accordance with Article IV,
the Olsten Indemnitees and the OHS Indemnitees.
Section 7.10. Ancillary Agreements. If any of the terms of this
Agreement are inconsistent with the terms of an Ancillary Agreement regarding
the specific matters covered by such Ancillary Agreement, then the terms of such
Ancillary Agreement shall govern.
Section 7.11. Tax Sharing Agreement. Other than as provided in Section
4.11, Section 5.05 and clause (iv) of the definition of OHS Liabilities, this
Agreement shall not govern any Tax, and any and all claims, losses, damages,
demands, costs, expenses, liabilities, refunds, deductions, write-offs, or
benefits relating to Taxes shall be exclusively governed by the Tax Sharing
Agreement.
Section 7.12. Further Assurances and Consents. In addition to the
actions specifically provided for elsewhere in this Agreement, each of the
parties hereto will use its reasonable best efforts to (i) execute and deliver
such further instruments and documents and take such other actions as any other
party may reasonably request in order to effectuate the purposes of this
Agreement and to carry out the terms hereof and (ii) take, or cause to be taken,
all actions, and to do, or cause to be done, all things, reasonably necessary,
proper or advisable under applicable laws, regulations and agreements or
otherwise to consummate and make effective the transactions contemplated by this
Agreement, including, without limitation, using its reasonable efforts to obtain
any consents and approvals and to make any filings and applications necessary or
desirable in order to consummate the transactions contemplated by this
Agreement; provided that no party hereto shall be obligated to pay any
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consideration therefor (except for filing fees and other similar charges) to any
third party from whom such consents, approvals and amendments are requested or
to take any action or omit to take any action if the taking of or the omission
to take such action would be unreasonably burdensome to the party or its
business. In connection with the consummation of the transaction contemplated
hereby, the persons listed on Schedule 10 are designated to act as the
"Transition Team" and are authorized to act on behalf of Adecco, Olsten and OHS
in taking any action necessary to consummate the Split-Off. The persons listed
on Schedule 10 who are Adecco employees are authorized to deliver the consent of
Adecco if such consent is required by the terms of this Agreement.
Section 7.13. Exhibits and Schedules. The exhibits and schedules
hereto shall be construed with and as an integral part of this Agreement to the
same extent as if the same had been set forth verbatim herein.
Section 7.14. Legal Enforceability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Without prejudice
to any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that from and after the Effective Time damages would be an
inadequate remedy for any breach of the provisions of this Agreement and agrees
that the obligations of the parties hereunder shall be specifically enforceable.
Section 7.15. Dispute Resolution. (a) Except as otherwise set forth in
Sections 2.06 and 2.08(c), resolution of any and all disputes arising after the
Effective Time from or in connection with this Agreement or any of the Ancillary
Agreements, whether based on contract, tort, statute or otherwise, including,
but not limited to, disputes over arbitrability and disputes in connection with
indemnification for claims by third parties (collectively, "Disputes") shall be
exclusively governed by and settled in accordance with the provisions of this
Section 7.15; provided, however, that nothing contained herein shall preclude
either party from seeking or obtaining (a) injunctive relief or (b) equitable or
other judicial relief to enforce the provisions hereof or to preserve the status
quo pending resolution of Disputes hereunder.
(b) Any party hereto (each a "Party") may commence proceedings
hereunder by delivering a written notice to the other Party providing a
reasonable description of the Dispute to the other (the "Demand").
(c) Promptly following a Demand, the Dispute shall be referred to
representatives of the parties for decision, each party being represented by a
senior executive officer who has no direct operational responsibility for the
matters contemplated by this Agreement (the "Representatives"). The
Representatives shall promptly meet in a good faith effort to resolve the
dispute. If the Representatives do not agree upon a decision within 30 calendar
days after reference of the matter to them, each of Olsten and OHS shall be free
to exercise the remedies available to them under Section 7.15(d).
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(d) The parties hereby agree to submit all Disputes not resolved by
negotiation pursuant to Section 7.15(c) to arbitration under the terms hereof,
which arbitration shall be final, conclusive and binding upon the parties, their
successors and assigns. The arbitration shall be conducted in New York by three
arbitrators (the "Panel") acting by majority vote selected by agreement of the
Parties not later than 10 days after the failure of the Representatives to
resolve the dispute as set forth in Section 7.15(c) or, failing such agreement,
by three arbitrators appointed pursuant to the Commercial Arbitration Rules of
the American Arbitration Association, as amended from time to time (the "AAA
Rules"). If an arbitrator so selected becomes unable to serve, his or her
successors shall be similarly selected or appointed. The arbitration shall be
conducted pursuant to the United States Arbitration Act, 9 U.S.C. ss. 1, et seq.
and such procedures as the Parties may agree, or, in the absence of or failing
such agreement, pursuant to the AAA Rules. Notwithstanding the foregoing, in
connection with such arbitration: (a) each Party shall have the right to audit
the books and records of the other Party that are reasonably related to the
Dispute; (b) each Party shall provide to the other, reasonably in advance of any
hearing, copies of all documents which a Party intends to present in such
hearing; (c) each party shall be allowed to conduct reasonable discovery through
written requests for information, document requests, requests to admit and
depositions, the nature and extent of which discovery shall be determined by the
Panel, taking into account the needs of the Parties and the desirability of
making discovery expeditious and cost effective. All hearings shall be conducted
on an expedited schedule, and all proceedings shall be confidential. Either
party may at its expense make a stenographic record thereof. The Panel shall
make a final award not later than 30 days after the conclusion of the hearing
and receipt of any post-hearing submissions requested by the Panel. The award
shall be in writing and shall specify the factual and legal basis for the award.
The fees and expenses of the arbitrators shall be shared equally by the Parties
and advanced by them from time to time as required; provided that at the
conclusion of the arbitration, the Panel shall allocate costs and expenses
(including the costs of the arbitration previously advanced and the fees and
expenses of attorneys, accountants and other experts) and interest as the Panel
determines is appropriate among the parties. The arbitrators, whether the Panel
or those arbitrators appointed under the AAA Rules, shall not be empowered to
award to any Party any consequential damages, lost profits or punitive damages
in connection with any Dispute and each party hereby irrevocably waives any
right to recover such damages.
Section 7.16. Titles and Headings. The article and section headings
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties and shall not in any way affect the meaning
or interpretation of this Agreement. As used in this Agreement, (i) the term
"Person" shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof and (ii) the term "subsidiary" of any specified
corporation shall mean any corporation of which at least a majority of the
outstanding securities having ordinary voting power to elect a majority of the
board of directors is directly or indirectly owned or controlled by such
specified corporation, any person of which such corporation is a general
partner, or any other person of which at least a majority of the equity
interests therein is, directly or indirectly, owned or controlled by such
specified corporation.
Section 7.17. Survival of Representations and Agreements. All
representations, warranties and agreements of the parties hereto contained in
this Agreement shall survive the Effective Time.
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Separation Agreement
Signature Page
THIS AGREEMENT CONTAINS BINDING ARBITRATION PROVISIONS WHICH MAY BE
ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the day and year first above written.
Olsten Corporation,
a Delaware corporation
By: _____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
Aaronco Corp.,
a Delaware corporation
By: _____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
Adecco S.A.,
a societe anonyme organized
under the laws of Switzerland
By: _____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
By: _____________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer