<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 4, 1999
------------
Commission File No. 1-8279
------
OLSTEN CORPORATION
------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-2610512
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
175 Broad Hollow Road, Melville, New York 11747-8905
- ----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 844-7800
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 12, 1999
- ------------------------------------ ------------------------------
Common Stock, $.10 par value 68,236,653 shares
Class B Common Stock, $.10 par value 13,065,764 shares
<PAGE>
INDEX
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Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) -
July 4, 1999 and January 3, 1999, respectively 2
Consolidated Statements of Operations (Unaudited) -
Quarters and Six Months Ended July 4, 1999 and
June 28, 1998, respectively 3
Consolidated Statements of Cash Flows (Unaudited) -
Six Months Ended July 4, 1999 and
June 28, 1998, respectively 4
Notes to Consolidated Financial Statements (Unaudited) 5-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-15
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 17-18
Item 5. Other Information 19-20
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Olsten Corporation
Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)
July 4, 1999 January 3, 1999
------------ ---------------
ASSETS
CURRENT ASSETS:
Cash $ 14,991 $ 53,831
Receivables, net 1,146,546 1,005,685
Other current assets 141,399 134,303
--------- ---------
Total current assets 1,302,936 1,193,819
FIXED ASSETS, NET 238,081 233,131
INTANGIBLES, NET 595,802 613,616
OTHER ASSETS 9,633 18,241
--------- ---------
$2,146,452 $2,058,807
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accrued expenses $ 197,756 $ 195,594
Payroll and related taxes 154,641 144,330
Accounts payable 134,559 142,547
Insurance costs 41,545 36,338
--------- ---------
Total current liabilities 528,501 518,809
LONG-TERM DEBT 745,915 606,107
OTHER LIABILITIES 105,225 111,371
SHAREHOLDERS' EQUITY:
Common stock $.10 par value;
authorized 110,000,000 shares;
issued 68,276,817 and 68,253,080
shares, respectively 6,828 6,825
Class B common stock $.10 par value;
authorized 50,000,000 shares;
issued 13,066,003 and 13,071,560
shares, respectively 1,307 1,307
Additional paid-in capital 447,649 447,488
Retained earnings 322,023 377,268
Accumulated other comprehensive loss (10,541) (9,913)
Less treasury stock, at cost;
45,700 shares (455) (455)
--------- ---------
Total shareholders' equity 766,811 822,520
--------- ---------
$2,146,452 $2,058,807
========= =========
See notes to consolidated financial statements.
2
<PAGE>
<TABLE>
Olsten Corporation
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Second Quarter Ended Six Months Ended
-------------------- ----------------
July 4, 1999 June 28, 1998 July 4, 1999 June 28, 1998
------------ ------------- ------------ --------------
<S> <C> <C> <C> <C>
Service sales, franchise fees,
management fees and other income $1,248,633 $1,126,142 $2,446,589 $2,176,084
Cost of services sold 944,833 883,017 1,848,309 1,666,902
--------- --------- --------- ---------
Gross profit 303,800 243,125 598,280 509,182
Selling, general and administrative expenses 266,538 286,591 638,576 523,451
Interest expense, net 10,840 7,476 19,838 13,382
--------- --------- --------- ---------
Income (loss) before income taxes and minority
interests 26,422 (50,942) (60,134) (27,651)
Income tax expense (benefit) 10,241 (19,740) (15,774) (10,714)
--------- --------- --------- ---------
Income (loss) before minority interests 16,181 (31,202) (44,360) (16,937)
Minority interests 2,673 2,262 4,384 3,726
--------- --------- --------- ---------
Net income (loss) $ 13,508 $ (33,464) $ (48,744) $ (20,663)
========= ========= ========= =========
SHARE INFORMATION:
Basic earnings (loss) per share:
Net income (loss) $ .17 $ (.41) $ (.60) $ (.25)
========= ========= ========= =========
Average shares outstanding 81,291 81,346 81,285 81,361
========= ========= ========= =========
Diluted earnings (loss) per share:
Net income (loss) $ .17 $ ( .41) $ (.60) $ (.25)
========= ========= ========= =========
Average shares outstanding 81,352 81,346 81,285 81,361
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
<TABLE>
Olsten Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
<CAPTION>
Six Months Ended
----------------
July 4, 1999 June 28, 1998
------------ -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (48,744) $ (20,663)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 39,507 32,512
Changes in assets and liabilities,
net of effect from acquisitions:
Accounts receivable and other current assets (181,393) (70,907)
Current liabilities 55,614 41,803
Other, net (435) (8,775)
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (135,451) (26,030)
-------- --------
INVESTING ACTIVITIES:
Purchases of fixed assets (39,557) (35,146)
Acquisitions of businesses, net of cash acquired (14,894) (60,408)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (54,451) (95,554)
-------- --------
FINANCING ACTIVITIES:
Net proceeds from (repayments of) line of credit agreements 174,353 (60,862)
Redemption of debentures (7,688) --
Repayment of notes payable (6,517) (6,202)
Cash dividends (6,501) (11,378)
Net proceeds from issuance of notes -- 133,806
Issuances of common stock under stock plans -- 54
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 153,647 55,418
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (2,585) (278)
-------- --------
NET DECREASE IN CASH (38,840) (66,444)
CASH AT BEGINNING OF PERIOD 53,831 84,810
-------- --------
CASH AT END OF PERIOD $ 14,991 $ 18,366
======== ========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
Olsten Corporation
Notes to Consolidated Financial Statements
(Unaudited)
1. Accounting Policies
-------------------
The unaudited consolidated financial statements have been prepared by
Olsten Corporation (the "Company") pursuant to the rules and regulations of
the Securities and Exchange Commission and, in the opinion of management,
include all adjustments necessary for a fair presentation of results of
operations, financial position and cash flows for each period presented.
Results for interim periods are not necessarily indicative of results for a
full year. The year-end balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles.
2. Comprehensive Income (Loss)
---------------------------
Total comprehensive income amounted to $16 million and comprehensive loss
was $37 million during the second quarters of 1999 and 1998, respectively.
During the six months, total comprehensive loss amounted to $49 million and
$25 million for 1999 and 1998, respectively.
3. Acquisitions
------------
Under the terms of the 1997 purchase agreement for Olsten Travail
Temporaire (formerly Sogica S.A.), an additional payment of approximately
$31 million was paid in the second quarter of 1998. An additional purchase
price payment will be required in the year 2000, calculated based upon the
average net income for the three fiscal years ended 1999. Such additional
payments relate to the Company's original purchase of 70 percent of the
Olsten Travail Temporaire shares. The Company is also obligated in the year
2000 to purchase the remaining 30 percent of the shares at a price to be
determined by a multiple ranging from an upper limit of 16 to a lower limit
of 10, applied to the average net income for the fiscal years ended 1998
and 1999.
During the first six months of 1999, the Company purchased additional
Staffing Services operations in France and Health Services operations in
the United States for approximately $15 million in cash. All acquisitions
have been accounted for by the purchase method of accounting.
4. Special Charges and Adjustments
-------------------------------
On March 30, 1999, the Company announced plans to take a special charge
aggregating $102 million. The charge provides for the settlement of two
federal investigations focusing on the Company's Medicare home office cost
reports and certain transactions with Columbia/HCA and a provision of $46
million for the realignment of business units as part of a new
restructuring plan, including compensation and severance costs of $22
million to be paid to operational support staff, branch administrative
personnel and management, asset write-offs of $16 million and integration
costs of $8 million, primarily related to obligations under lease
agreements for offices and other facilities being closed. With respect to
the two federal investigations, the final civil, administrative and
criminal agreements were finalized and signed on July 19, 1999 and the
settlement amount was paid on August 11, 1999. The payment was funded by
5
<PAGE>
the Company's revolving credit agreement in the amount of $45 million with
the remainder coming from operating cash flows. Asset write-offs relate
primarily to fixed assets being disposed of in offices being closed and
facilities being consolidated as well as fixed assets and goodwill
attributable to the Company's exit from certain businesses previously
acquired but not within the Company's strategic objectives. The Company
expects that the realignment of the business units will achieve a reduction
of expenses of approximately $14 million for the last three quarters of
1999, due to reduced employee, lease and depreciation expenses.
The Health Services' division represented $73 million of the total
charge, inclusive of a provision for the settlement of the two
government investigations of $56 million, compensation and
severance costs of $5 million, asset write-offs of $7 million and
integration costs of $5 million.
The charge for the Staffing Services' division totaled $16 million
and related to business realignments, including $6 million for
compensation and severance costs, $8 million for asset write-offs
and $2 million for integration costs.
The balance of the charge of $13 million relates to corporate
operations and consists primarily of compensation and severance
costs.
As of the end of the first six months of 1999, 60 percent of
closures and consolidations of facilities have been completed and
approximately 70 percent of the 640 expected terminations have
occurred.
In 1998, as a part of the Balanced Budget Act, the government enacted the
Interim Payment System ("IPS") for reimbursement of home care services
provided under Medicare. Prior to enactment of the IPS, home care services
were reimbursed based on cost subject to a cap determined by the Health
Care Financing Administration. The IPS reimburses home care services based
on costs, subject to both a per-beneficiary limit and a per-visit limit.
Further, the IPS reduced the per-visit limit to 1994 levels. As a result of
these cuts in reimbursement, provider margins have been reduced. In order
to operate at the lowered reimbursement rates, home health care companies
reduced the services provided to patients by providing fewer patient
visits. In addition, the regulatory climate that ensued in home health care
caused a lower level of physician referrals.
In 1998, the Company recorded non-recurring charges and other adjustments
of $66 million related to the restructuring of the Company's Health
Services division. These charges, which were primarily for 60 office
closings and consolidations in the United States, were taken to help
position the Company to operate more efficiently under the new IPS. In
addition, the Company has also made significant technological investments
in order to improve operational efficiencies and employee retention levels.
The benefit of the restructuring began to be realized in the second quarter
of 1998.
Included in this provision was $37 million charged to selling,
general and administrative expenses, which included lease payments
of $3 million, employee severance of $4 million, professional fees
6
<PAGE>
and related costs of $13 million, fixed asset and software
write-offs of $5 million to reflect the loss incurred upon the
Company's decision to dispose of the assets in certain closed
offices, and an increase in the allowance for doubtful accounts of
$12 million. The charge for professional fees and related costs
resulted from the settlement with several government agencies
regarding certain past business practices of Quantum, the level of
effort required to respond to the significant inquiries conducted
by the government, and costs incurred to redesign the credit and
collection process of the home health business. All closures and
consolidations, related to this charge, of facilities and employee
terminations have been completed. The allowance for doubtful
accounts was increased because the collection of receivables is
highly dependent on the service provider's ability to provide
certain evidence of service and authorization documentation to a
variety of third-party payors. The office closings, consolidation
of certain business service centers and the termination of
employees are all events that, in the Company's past experience,
impair the ability to provide the aforementioned documentation and
to collect on receivables.
In addition, the Company recorded a reduction in revenues in the
second quarter of 1998 of $14 million in anticipation of lower
Medicare reimbursements resulting from the new per-visit and
per-beneficiary limits that have been imposed by Medicare under
the Interim Payment System.
The Company recorded a charge to cost of sales of $15 million to
reflect the estimated increase in costs that have been incurred,
but not yet reported, based upon a change in the actuarial
estimates utilized to determine the level of service to patients
covered under the Company's capitated contracts.
The major components, and amount of costs charged during the six months
ended July 4, 1999, of the previous years' special charges, as well as the
1999 special charge, were as follows:
<TABLE>
<CAPTION>
Accounts Compensation
Dollars in Receivable and and Severance Integration
Thousands Settlements Other Assets Costs Costs Other Total
--------- ----------- ------------ ------------- ----------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at January 3, 1999 $ -- $ 5,298 $ 1,383 $ 896 $ 476 $ 8,053
Cash expenditures -- -- (1,156) (544) (476) (2,176)
Non-cash write-offs -- (83) -- -- -- (83)
------- ------- ------- ------ ----- -------
Balance at July 4, 1999 $ -- $ 5,215 $ 227 $ 352 $ -- $ 5,794
------- ------- ------- ------ ----- -------
Charge - 1999 $ 56,000 $ 16,060 $ 22,245 $ 7,695 $ -- $102,000
Cash expenditures (330) -- (14,728) (2,844) -- (17,902)
Non-cash write-offs -- (11,488) -- -- -- (11,488)
------- ------- ------- ------ ----- -------
Balance at July 4, 1999 $ 55,670 $ 4,572 $ 7,517 $ 4,851 $ -- $ 72,610
------- ------- ------- ------ ----- -------
Balance of all charges
combined at July 4, 1999 $ 55,670 $ 9,787 $ 7,744 $ 5,203 $ -- $ 78,404
======= ======= ======= ====== ==== =======
</TABLE>
7
<PAGE>
5. Long-Term Debt
--------------
In February 1999, the Company's revolving credit agreement, which expires
in 2001, was amended, to revise the provision related to the maintenance of
various financial ratios and covenants, including granting the Company
approval to repurchase up to $40 million of the convertible subordinated
debentures. The Company retired $7.7 million of the convertible
subordinated debentures at 88.5 percent of the principal amount, resulting
in a gain of approximately $.9 million in January 1999. In May 1999, the
Company's revolving credit agreement was further amended to revise various
financial ratios and covenants and to restrict further repurchase of the
convertible subordinated debentures, as well as the Company's common
shares.
Interest expense, net, consists primarily of interest on long-term debt for
the quarter of $11 million in 1999 and $8 million in 1998, offset by
interest income from investments of $.6 million for 1999 and $1 million for
1998. Interest expense for the six months was $21 million, net of interest
income of $1 million in 1999 and $15 million, net of interest income of $2
million in 1998.
6. Business Segment Information
----------------------------
The Company operates in three business segments:
Staffing Services
The Company operates Olsten Staffing Services in the United States and
Canada, and staffing companies in 12 countries of Europe and Latin America,
providing 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. The Company's services meet the full range of business
needs, including traditional temporary help, project staffing,
professional-level staffing, strategic partnerships, regular full-time
hires and outsourcing. The Company's Financial Staffing Services operations
provide temporary, "temp-to-hire" and full-time placement of accounting and
financial professionals. The Company's Legal Staffing Services operations
provide temporary and full-time attorneys, paralegals and legal support
staff to law firms, corporate law departments and government, as well as
computerized litigation support.
Information Technology Services
The Company operates IMI Systems Inc. in the United States and related
companies in Canada and the United Kingdom providing design, programming
and maintenance of computer systems, on either a project or consulting
basis; focused solutions, comprising both horizontal practices and vertical
industry offerings; applications management, encompassing applications
outsourcing, and the support and development of legacy systems and
enterprise resource planning systems; quality assurance services, including
testing environment assessment and/or creation, test planning and
execution, and use of IMI's proprietary methodology, RadSTAR(TM); and
enterprise support services, including help desk support, technology and
software deployment, infrastructure operability/testing and Web/Internet
support.
8
<PAGE>
Health Services
The Company operates Olsten Health Services in the United States and
Canada, delivering home health-related services, including Network
Services, providing care management and coordination for managed care
organizations and self-insured employers; skilled nursing, home health aide
and personal services; acute and chronic infusion therapy;
physical/occupational/neurological/speech therapies; pediatric and
perinatal care; disease management; marketing and distribution services for
pharmaceutical, biotechnology and medical device firms; and institutional,
occupational and alternate site health care staffing.
The Company evaluates performance and allocates resources based on income
or loss from operations before income taxes and minority interests. Segment
data includes charges for allocating corporate costs to each of the
operating segments. Prior period segment data has been restated to conform
with the current period presentation. Information about the Company's
operations, net of a special charge of $102 million, before taxes, in the
first quarter of 1999 ($16 million related to Staffing Services, $73
million related to Health Services, and $13 million related to Corporate
and other), and $66 million, before taxes, in the second quarter of 1998
related to Health Services, is as follows:
Services sales,
franchise fees, Income (loss) before
Dollars in management fees income taxes and
Thousands and other income minority interests
--------- ---------------- --------------------
Second quarter ended July 4, 1999
---------------------------------
Staffing Services $ 767,953 $ 19,627
Information Technology Services 108,107 3,189
Health Services 372,573 3,606
---------- --------
$1,248,633 $ 26,422
========= =======
Second quarter ended June 28, 1998
----------------------------------
Staffing Services $ 702,585 $ 20,769
Information Technology Services 108,356 4,049
Health Services 315,201 (75,760)
--------- -------
$1,126,142 $(50,942)
========= =======
Six months ended July 4, 1999
-----------------------------
Staffing Services $1,490,271 $ 14,854
Information Technology Services 216,469 6,964
Health Services 739,849 (68,852)
Corporate and other -- (13,100)
--------- -------
$2,446,589 $(60,134)
========= =======
9
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Six months ended June 28, 1998
------------------------------
Staffing Services $1,328,070 $ 44,074
Information Technology Services 200,847 6,516
Health Services 647,167 (78,241)
--------- -------
$2,176,084 $(27,651)
========= =======
7. Subsequent Event
----------------
On August 18, 1999, the Company announced it intends to merge its staffing
and information technology services businesses with Adecco S.A. On closing,
the Company's health services business will be split off to Olsten
shareholders as an independent, health services company.
When the transactions become effective, each holder of Olsten stock will
receive for each share of Olsten common stock and Olsten Class B stock,
$8.75 in cash, or 0.12472 of an Adecco American Depositary Receipt (ADR)
(one ADR represents one-eighth of one share of Adecco common stock), or a
mixture of cash and Adecco ADRs valued in the aggregate at approximately
$8.75 per Olsten share, subject to proration in order that the aggregate
consideration received by all holders will be half cash and half Adecco ADR
shares. The value of the stock received by shareholders in the health
services company will be determined upon commencement of trading in the new
security.
The transactions required by the merger agreement require the affirmative
vote of holders of a majority of Olsten's common stock and Class B stock,
voting as a single class, as well as customary regulatory and other
conditions. Stuart Olsten, Chairman of the Company, and certain other
holders of the Company's Class B stock, constituting a majority of the
voting power of the Company's combined classes of stock, have committed to
vote in favor of the transactions.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Results of Operations
- ---------------------
Revenues increased 11 percent, or $123 million, during the second quarter and 12
percent, or $271 million, for the first six months of 1999, with 7 percent and
11 percent attributable to acquisitions, respectively. Staffing Services'
revenues increased 9 percent, or $65 million, for the second quarter of 1999 and
12 percent, or $162 million, for the six months of 1999. In Europe, Staffing
Services' second quarter of 1999 revenue grew by 36 percent, principally in
France and Scandinavia, reflecting industry growth and favorable economic
conditions, while North American second quarter of 1999 revenues declined 3
10
<PAGE>
percent due, in part, to the historically low level of unemployment in the
United States. Partially offsetting this decrease was a 37 percent increase in
the Canadian staffing business' second quarter of 1999 revenues and a 31 percent
increase in the Company's accounting and financial services specialty division.
Staffing Services' revenues were unfavorably impacted by changes in currency
exchange rates during the second quarter of 1999 due to the strengthening of the
U.S. dollar relative to currencies in Europe, particularly in France, Norway and
the United Kingdom. At constant exchange rates, the increase in Staffing
Services' revenues would be 11 percent, or $77 million. For the six months of
1999, Staffing Services' revenues would have been $1.5 billion, an increase of
13 percent, had exchange rates remained unchanged. Information Technology
Services' revenues were essentially flat in both North America and Europe for
the second quarter of 1999 and grew 8 percent, or $16 million, for the six
months of 1999. Health Services' revenues increased 18 percent, or $57 million,
for the second quarter, and 14 percent, or $93 million, for the six months,
driven by growth in the Infusion, Network and Staffing business, while the
Nursing business was flat due, in part, to the impact of the 1998 change to
Medicare's Interim Payment System discussed below.
Gross profit margins, as a percentage of revenues, increased to 24.3 percent and
24.5 percent for the second quarter and six months from 21.6 percent and 23.4
percent for last year's second quarter and six months, respectively. Excluding
the impact of the non-recurring charge in the second quarter of 1998, gross
profit margins increased from 23.9 percent and remained essentially flat for
last year's second quarter and six months, respectively. Staffing Services'
gross profit margins declined for the quarter and six months as a result of
decreased markups, increased subcontractor utilization, and growth in low margin
Corporate Accounts and Partnership business in North America. Additionally,
increased international competition, a changing business mix and increased
social costs in Europe reduced margins. Information Technology's gross profit
margins remained essentially flat in comparison to the second quarter and six
months of 1998. Health Services' gross profit margins increased slightly,
excluding the effect of the non-recurring charge and other adjustments in the
second quarter of 1998, from 32.3 percent to 34.2 percent in the quarter and
33.3 percent to 34.1 percent in the six months.
On March 30, 1999, the Company announced plans to take a special charge
aggregating $102 million. The charge provides for the settlement of two federal
investigations focusing on the Company's Medicare home office cost reports and
certain transactions with Columbia/HCA and a provision of $46 million for the
realignment of business units as part of a new restructuring plan, including
compensation and severance costs of $22 million to be paid to operational
support staff, branch administrative personnel and management, asset write-offs
of $16 million and integration costs of $8 million, primarily related to
obligations under lease agreements for offices and other facilities being
closed. With respect to the two government investigations, the final civil,
administrative and criminal agreements were finalized and signed on July 19,
1999 and the settlement amount was paid on August 11, 1999. The payment was
funded by the Company's revolving credit agreement in the amount of $45 million
with the remainder coming from operating cash flows. Asset write-offs relate
primarily to fixed assets being disposed of in offices being closed and
facilities being consolidated as well as fixed assets and goodwill attributable
to the Company's exit from certain businesses previously acquired but not within
the Company's strategic objectives. The Company expects that the realignment of
the business units will achieve a reduction of expenses of approximately $13.6
million for the last three quarters of 1999, due to reduced employees, lease and
depreciation expenses.
11
<PAGE>
The Health Services' division represented $73 million of the total
charge, inclusive of a provision for the settlement of the two
government investigations of $56 million, compensation and
severance costs of $5 million, asset write-offs of $7 million and
integration costs of $5 million.
The charge for the Staffing Services' division totaled $16 million
and related to business realignments, including $6 million for
compensation and severance costs, $8 million for asset write-offs
and $2 million for integration costs.
The balance of the charge of $13 million relates to corporate
operations and consists primarily of compensation and severance
costs.
As of the end of the second quarter of 1999, 60 percent of the
closures and consolidations of facilities have been completed and
approximately 70 percent of the expected 640 terminations have
occurred.
In 1998, as a part of the Balanced Budget Act, the government enacted the
Interim Payment System ("IPS") for reimbursement of home care services provided
under Medicare. Prior to enactment of the IPS, home care services were
reimbursed based on cost subject to a cap determined by the Health Care
Financing Administration. The IPS reimburses home care services based on costs,
subject to both a per-beneficiary limit and a per-visit limit. Further, the IPS
reduced the per-visit limit to 1994 levels. As a result of these cuts in
reimbursement, provider margins have been reduced. In order to operate at the
lowered reimbursement rates, home health care companies reduced the services
provided to patients by providing fewer patient visits. In addition, the
regulatory climate that ensued in home health care caused a lower level of
physician referrals.
In 1998, the Company recorded non-recurring charges and other
adjustments of $66 million related to the restructuring of the
Company's Health Services division. These charges, which were
primarily for 60 office closings and consolidations in the United
States, were taken to help position the Company to operate more
efficiently under the new IPS. In addition, the Company has also
made significant technological investments in order to improve
operational efficiencies and employee retention levels. The
benefit of the restructuring began to be realized in the second
quarter of 1998.
Included in this provision was $37 million charged to selling,
general and administrative expenses, which included lease payments
of $3 million, employee severance of $4 million, professional fees
and related costs of $13 million, fixed asset and software
write-offs of $5 million to reflect the loss incurred upon the
Company's decision to dispose of the assets in certain closed
offices, and an increase in the allowance for doubtful accounts of
$12 million. The charge for professional fees and related costs
resulted from the settlement with several government agencies
regarding certain past business practices of Quantum, the level of
12
<PAGE>
effort required to respond to the significant inquiries conducted
by the government, and costs incurred to redesign the credit and
collection process of the home health business. All closures and
consolidations, related to this charge, of facilities and employee
terminations have been completed. The allowance for doubtful
accounts was increased because the collection of receivables is
highly dependent on the service provider's ability to provide
certain evidence of service and authorization documentation to a
variety of third-party payors. The office closings, consolidation
of certain business service centers and the termination of
employees are all events that, in the Company's past experience,
impair the ability to provide the aforementioned documentation and
to collect receivables.
In addition, the Company recorded a reduction in revenues in the
second quarter of 1998 of $14 million in anticipation of lower
Medicare reimbursements resulting from the new per-visit and
per-beneficiary limits that have been imposed by Medicare under
the Interim Payment System.
The Company recorded a charge to cost of sales of $15 million to
reflect the estimated increase in costs that have been incurred,
but not yet reported, based upon a change in the actuarial
estimates utilized to determine the level of service to patients
covered under the Company's capitated contracts.
Selling, general and administrative expenses decreased to $267 million in the
second quarter of 1999 from $287 million in the second quarter of 1998 due to
the non-recurring charges and other adjustments and recorded in the second
quarter of 1998. Excluding the charge, such expenses, at 21.3% and 21.9% as a
percentage of revenue for the second quarter of 1999 and 1998, respectively,
have remained flat for the quarter. Conversely, selling, general and
administrative expenses increased to $639 million from $524 million in the six
months due to the special charge recorded in the first quarter of 1999.
Excluding both charges, selling, general and administrative expenses for the six
months have been essentially flat as a percentage of revenue at 22.2% in 1998
and 21.9% in 1999.
Net interest expense was $10.8 million and $7.5 million for the second quarters
of 1999 and 1998, respectively, and $20 million and $13 million for the six
months of 1999 and 1998. Net interest primarily reflected borrowing costs on
long-term debt offset by interest income on investments. The increase resulted
from interest expense incurred as the Company continued to fund both its
acquisition program and working capital requirements, particularly accounts
receivable, necessary to support growth in its Staffing Services' business and
Infusion business.
Liquidity and Capital Resources
- -------------------------------
Working capital at July 4, 1999, including $15 million in cash, was $774
million, an increase of 15 percent versus $675 million at January 3, 1999.
Receivables, net, increased $141 million, or 14 percent, predominantly due to
revenue growth and acquisitions in the Staffing Services' business as well as
growth in Health Services' Infusion business, which requires additional working
capital.
13
<PAGE>
The Company has a revolving credit agreement for up to $400 million in
borrowings and letters of credit. In February 1999, the Company's revolving
credit agreement, which expires in 2001, was amended, to revise the provision
related to the maintenance of various financial ratios and covenants, including
granting the Company approval to repurchase up to $40 million of the convertible
subordinated debentures. The Company retired $7.7 million of the convertible
subordinated debentures at 88.5 percent of the principal amount, resulting in a
gain of approximately $.9 million in January 1999. In May 1999, the Company's
revolving credit agreement was further amended to revise the provision related
to the maintenance of various financial ratios and covenants and to restrict
further repurchase of the convertible subordinated debentures, as well as the
Company's common shares. As of July 4, 1999, there were $344 million in
borrowings and $15 million in standby letters of credit outstanding under the
revolving credit agreement. The Company has invested available funds in secure,
short-term, interest-bearing investments.
The Company anticipates that, in addition to its projected cash flow from
operations, new borrowings may be required to meet the Company's projected
working capital requirements to fund capital expenditures currently anticipated
by the Company. Although no assurance can be given, the Company currently
believes that cash flows from operations, borrowings available to the Company
under existing financing agreements, and additional borrowings that the Company
believes it will be able to obtain should be adequate to meet its projected
requirements during 1999 and thereafter. If cash flows from operations or
availability under existing and new financing agreements fall below
expectations, the Company may be forced to delay planned capital expenditures,
reduce operating expenses, or consider other alternatives designed to enhance
the Company's liquidity. On August 11, 1999, the Company paid $61 million in
settlement of the U.S. Department of Justice home office cost reports and
Columbia/HCA investigation of which $45 million was funded by the Company's
revolving credit agreement with the remainder coming from operating cash flows.
The Company's 1999 second quarter dividend on common stock and Class B common
stock was $.04 per share.
Year 2000
- ---------
The Year 2000 issue concerns the inability of information systems to properly
recognize and process date-sensitive information beyond January 1, 2000.
The Company's technical infrastructure, encompassing all business applications,
is planned to be Year 2000 ready. Systems not directly related to the financial
operations of the business, primarily voice communications, are also being
upgraded to help ensure readiness.
The North American Staffing Services business is achieving Year 2000 readiness
by replacing all business applications and related infrastructure with compliant
technology. This project, referred to as Project REach, is being implemented to
increase efficiencies and improve the Company's ability to provide services to
customers. The selected systems are Year 2000 compliant and, therefore, no
remediation of current applications is necessary. Project REach is approximately
95 percent completed and is scheduled to be fully implemented by September 1999.
The Company's European and Latin American staffing operations are achieving
readiness primarily through remediation of existing systems and both are
expected to be completed by October 31, 1999.
The Information Technology Services business required minimal remediation to
achieve Year 2000 compliance, and was completed June 30, 1999.
14
<PAGE>
In the Health Services segment, systems critical to the business, which have
been identified as non-year 2000 compliant, are being replaced as part of a
project, referred to as Project REO, which is also being implemented to increase
efficiencies and improve the Company's ability to provide services to customers.
The new infrastructure, which is Year 2000 compliant, is currently being
implemented in field offices and is scheduled for completion by October 31,
1999. Other Health Services' systems, which require remediation, are expected to
be completed by October 31, 1999.
The total cost of the Company's remediation plan (exclusive of Project REach and
Project REO costs) is estimated to be approximately $3 million.
As part of its Year 2000 readiness activities, the Company has contacted its
significant vendors and third parties to determine the extent to which the
Company is vulnerable to their potential failure to remediate their own systems
to address the Year 2000 issues. Approximately 93% of those inquired have
responded in writing and indicated their current compliance or that they will be
compliant by the end of 1999.
With respect to the risks associated with its systems, the Company believes that
the most reasonably likely worst case scenario is that the Company may
experience minor system malfunctions and errors in the early days and weeks of
the Year 2000. The Company does not expect these problems to have a material
impact on the Company's ability to place and pay workers or invoice customers.
The Company is not heavily reliant on electronic transmissions from third
parties. With respect to the risks associated with the third parties, the
Company believes that the most reasonably likely worst case scenario is that
some of the Company's vendors and customers will not be compliant. The Company
believes that the number of such third parties will have been minimized by the
Company's program of contacting significant vendors and large customers. Despite
the Company's diligence, there can be no guarantee that significant vendors and
third parties that the Company relies upon to conduct day to day business will
be compliant. Failure by these companies, or any governmental entities, to
remediate their systems on a timely basis could impact cash flow from
operations.
Due to the general uncertainty inherent in the Year 2000 issue resulting, in
part, from the uncertainty of the Year 2000 readiness of third-party suppliers
and customers, and government agencies, the Company is unable to determine at
this time whether the consequences of Year 2000 failures will have a material
impact on the Company's results of operations, liquidity or financial condition.
The continuing Year 2000 effort is expected to help reduce the Company's level
of uncertainty about the Year 2000 issue and, in particular, about the Year 2000
readiness. The Company believes that the implementation of new business systems
and the completion of its Year 2000 plan as scheduled should help reduce the
likelihood of significant interruptions of normal operations.
The Company's plan is to address its significant Year 2000 issues prior to being
affected by them. Should the Company identify significant risks related to its
Year 2000 readiness or its progress deviates from the anticipated timeline, the
Company will develop contingency plans as deemed necessary at that time.
The failure to correct a material Year 2000 problem could result in an
interruption or a failure of certain normal business activities or operations.
Such failures could materially and adversely affect the Company's results of
operations, liquidity and financial condition.
15
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's exposure to market risk for changes in interest rates relates
primarily to the fair value of long-term fixed-rate debt. The Company has
historically managed interest rates through the use of a combination of fixed
and variable rate borrowings. Generally, the fair market value of fixed rate
debt will increase as interest rates fall and decrease as interest rates rise.
The Company's long-term debt is primarily composed of fixed rate obligations.
Based on the overall interest rate exposure on the Company's fixed rate
borrowings at July 4, 1999, a 10 percent change in market interest rates would
not have a material effect on the fair value of the Company's long-term debt.
Based on variable rate debt levels, a 10 percent change in market interest rates
(54 basis points on a weighted average) would have less than a 3 percent impact
on the Company's interest expense, net.
Other than intercompany transactions between the United States and the Company's
foreign entities, the Company generally does not have significant transactions
that are denominated in a currency other than the functional currency applicable
to each entity.
Fluctuations in currency exchange rates may also impact the shareholders' equity
of the Company. The assets and liabilities of the Company's non-U.S.
subsidiaries are translated into U.S. dollars at the exchange rates in effect at
the balance sheet date. Revenues and expenses are translated into U.S. dollars
at the weighted average exchange rate for the quarter. The resulting translation
adjustments are recorded in shareholders' equity as accumulated other
comprehensive income (loss).
Although currency fluctuations impact the Company's reported results of
operations, such fluctuations generally do not affect the Company's cash flow or
result in actual economic gains or losses. Each of the Company's subsidiaries
derives revenues and incurs expenses primarily within a single country, and
consequently, does not generally incur currency risks in connection with the
conduct of normal business operations. The Company generally has few cross
border transfers of funds, except for transfers from or to the United States as
working capital loans. To reduce the currency risk related to the loans, the
Company may borrow funds under the existing Revolving Credit Agreement in the
foreign currency to lend to the subsidiary.
Foreign exchange gains and losses are included in the Consolidated Statements of
Operations and historically have not been significant. The Company generally
does not engage in hedging activities, except as discussed above. The Company
did not hold any derivative instruments at July 4, 1999.
OTHER
- -----
INFORMATION CONTAINED HEREIN, OTHER THAN HISTORICAL INFORMATION, SHOULD BE
CONSIDERED FORWARD-LOOKING AND IS SUBJECT TO VARIOUS RISK FACTORS AND
UNCERTAINTIES. FOR INSTANCE, THE COMPANY'S STRATEGIES AND OPERATIONS INVOLVE
RISKS OF COMPETITION, CHANGING MARKET CONDITIONS, CHANGES IN LAWS AND
REGULATIONS AFFECTING THE COMPANY'S INDUSTRIES AND NUMEROUS OTHER FACTORS
DISCUSSED IN THIS DOCUMENT AND IN OTHER COMPANY FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION. ACCORDINGLY, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THOSE PROJECTED IN ANY FORWARD-LOOKING STATEMENTS CONTAINED HEREIN.
16
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
On September 8, 1998, a Consolidated Amended Class Action Complaint
(the "Amended Complaint") was filed by the plaintiffs in the four
previously disclosed purported class action lawsuits (Weichman,
Goldman, Waldman and Cannold) pending against Olsten and certain of
its officers and directors (collectively, the "Class Action"). The
Amended Complaint asserts claims under Sections 10(b) (including
Rule 10b-5 promulgated thereunder), 14(a) and 20(a) of the
Securities Exchange Act of 1934 and Sections 11, 12(a)(2) and 15 of
the Securities Act of 1933. On October 19, 1998, the Company and the
individual defendants served a motion seeking an Order dismissing
the Amended Complaint; that motion was fully briefed on December 23,
1998. The Amended Complaint seeks certification of the proposed
class, a judgment declaring the conduct of the defendants to be in
violation of the law, unspecified compensatory damages and
unspecified costs and expenses, including attorneys' fees and
experts' fees. While the Company is unable at this time to assess
the probable outcome of the Class Action or the materiality of the
risk of loss in connection therewith (given the preliminary stage of
the Class Action and the fact that the Amended Complaint does not
allege damages with any specificity), the Company believes that it
acted responsibly with respect to its shareholders and has
vigorously defended the Class Action.
On or about May 11, 1999, a Complaint was served in a derivative
lawsuit, captioned Robert Rubin, et al. v. John M. May, et al., No.
17135-NC (Delaware Chancery Court), which was filed against the
following current and former directors of the Company: John M. May,
Raymond S. Troubh, Jo[sh] S. Weston, Victor F. Ganzi, Stuart R.
Levine, Frank N. Liguori, Miriam Olsten, Stuart Olsten and Richard
J. Sharoff. The Complaint, which names Olsten as a nominal
defendant, alleges a claim for breach of fiduciary duties arising
out of the Class Action referenced above and the Healthcare
Investigations defined and referenced in Item 5, below. Plaintiffs
seek a judgment (1) requiring the defendants to account to the
Company for unspecified alleged damages resulting from the
defendants' alleged conduct; (2) directing the defendants to
establish and maintain effective compliance programs; and (3)
awarding plaintiffs the costs and expenses of the lawsuit, including
reasonable attorneys' fees.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
(a) The Annual Meeting of Shareholders of the Company was
held on May 4, 1999.
(c)(i) At the Annual Meeting, shareholders elected directors of
the Company by votes as follows:
17
<PAGE>
Name of Director Votes For Votes Withheld
---------------- ---------- --------------
Edward A. Blechschmidt 57,081,576 568,092
Victor F. Ganzi 105,127,692 57,170
Stuart R. Levine 105,126,032 58,830
John M. May 57,000,941 648,727
Miriam Olsten 105,124,162 60,700
Stuart Olsten 105,127,692 57,170
Richard J. Sharoff 105,127,670 57,192
Raymond S. Troubh 105,126,122 57,192
Josh S. Weston 57,004,071 645,597
(ii) At the Annual Meeting, shareholders voted upon a
proposal to approve the Company's Executive Officers
Bonus Plan. The votes were as follows:
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
159,496,261 3,144,977 191,892 400
(iii) At the Annual Meeting, shareholders voted upon a
proposal to approve the appointment by the Board of
Directors of PricewaterhouseCoopers LLP as independent
accountants for the Company for its 1999 fiscal year.
The votes were as follows:
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
162,468,082 277,902 88,546 -0-
(iv) At the Annual Meeting, shareholders voted upon a
proposal to eliminate stock options, bonuses and
restricted shares for top senior management. The votes
were as follows:
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
2,412,856 142,357,982 361,314 17,702,378
(v) At the Annual Meeting, shareholders voted upon a
proposal to require shareholder approval of change of
control agreements. The votes were:
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
9,136,926 135,633,978 361,845 17,701,781
(vi) At the Annual Meeting, shareholders voted upon a
proposal requesting the prompt sale of the Company to
the highest bidder. The votes were as follows:
Votes For Votes Against Abstentions Broker Non-Votes
--------- ------------- ----------- ----------------
3,981,267 140,747,746 373,737 17,731,780
18
<PAGE>
Item 5. Other Information.
------------------
Government Investigations. The Company's home health care business
is subject to extensive federal and state regulations which govern,
among other things, Medicare, Medicaid, CHAMPUS and other
government-funded reimbursement programs, reporting requirements,
certification and licensure standards for certain home health
agencies and, in some cases, certificate-of-need and
pharmacy-licensing requirements. The Company is also subject to a
variety of federal and state regulations which prohibit fraud and
abuse in the delivery of health care services, including, but not
limited to, prohibitions against the offering or making of direct or
indirect payments for the referral of patients. As part of the
extensive federal and state regulation of the Company's home health
care business, the Company is subject to periodic audits,
examinations and investigations conducted by or at the direction of
governmental investigatory and oversight agencies. Violation of the
applicable federal and state health care regulations can result in a
health care provider being excluded from participation in the
Medicare, Medicaid and/or CHAMPUS programs, and can subject the
provider to civil and/or criminal penalties.
The Company has cooperated with the previously disclosed health care
industry investigations being conducted by certain governmental
agencies (collectively, the "Healthcare Investigations").
Among the Healthcare Investigations with which the Company continues
to cooperate is that being conducted into the Company's preparation
of Medicare cost reports by the Office of Investigations section of
the Office of Inspector General (an agency within the U.S.
Department of Health and Human Services) and the U.S. Department of
Justice (the "Cost Reports Investigation").
The Company also continues to cooperate with the U.S. Department of
Justice and other federal agencies investigating the relationship
between Columbia/HCA Healthcare Corporation and Olsten in connection
with the purchase, sale and operation of certain home health
agencies which had been owned by Columbia/HCA and managed under
contract by Olsten Health Management, a unit of Olsten Health
Services that provides management services to hospital-based home
health agencies (the "Columbia/HCA Investigation").
The Company continues to cooperate with various state and federal
agencies, including the U.S. Department of Justice and the Office of
the Attorney General of New Mexico, in connection with their
investigations into certain healthcare practices of Quantum Health
Resources ("Quantum"). Among the matters into which the government
has been inquiring are allegations of improper billing and fraud
against various federally-funded medical assistance programs on the
part of Quantum and its post-acquisition successor, the Infusion
Therapy Services division of Olsten Health Services (the "Quantum
New Mexico Investigation"). Most of the time period that the Company
understands to be at issue in the Quantum New Mexico Investigation
predates the Company's June 1996 acquisition of Quantum.
19
<PAGE>
On July 19, 1999, the Company entered into written civil and
criminal agreements with the U.S. Department of Justice (and, as to
the civil agreement, the Office of Inspector General of the U.S.
Department of Health and Human Services) finalizing the
understanding that it announced on March 30, 1999 to settle the
civil and criminal aspects of the Cost Reports Investigation and the
Columbia /HCA investigation. Pursuant to the settlement, (a) the
Company paid on August 11, 1999 the sum of $61 million to the U.S.
Department of Justice, including approximately $10.1 million in
criminal fines and penalties; (b) in connection with the
Columbia/HCA Investigation, a subsidiary of the Company, Kimberly
Home Health Care, Inc., a Missouri corporation, pled guilty in the
United States District Courts for the Northern District of Georgia,
the Southern District of Florida and the Middle District of Florida,
respectively, to a criminal violation of the federal mail fraud,
conspiracy and kickback statutes; (c) Kimberly Home Health Care,
Inc. has been permanently excluded from participation in Medicare,
Medicaid and all other federal health care programs as defined in 42
U.S.C. ss.1320a-7b(f); and (d) the Company has executed a Corporate
Integrity Agreement with the Office of Inspector General of the U.S.
Department of Health and Human Services.
By letter dated June 30, 1999, the Medicare Fraud Control Unit of
the New Mexico Attorney General's Office notified the Company that
it has declined to criminally prosecute the so-called "J-Code issue"
relating to Quantum's past practices in seeking government health
care reimbursement.
On January 28, 1999, the Company announced that it had been advised
by the United States Attorney's Office for the District of New
Mexico ("New Mexico U.S. Attorney's Office") that, in connection
with the Quantum New Mexico Investigation, it had dropped its
criminal investigation into certain past practices of Quantum. The
criminal aspect of the Quantum New Mexico Investigation had focused
on allegations of improper billing and fraud against various
federally funded medical assistance programs on the part of Quantum
during the period between January 1992 and April 1997. By letter
dated February 1, 1999, the New Mexico U.S. Attorney's Office
advised the Company that, having ended its criminal inquiry, the
Office has referred the Quantum matter to its Affirmative Civil
Enforcement ("ACE") Section. As it had done with the Criminal
Division of the New Mexico U.S. Attorney's Office, the Company
intends to cooperate fully with that Office's ACE Section in
connection with its civil inquiry into the Quantum matter that has
been referred to it. Although, at this time, the Company is unable
to predict what relief, if any, the ACE Section will seek in
connection with the civil Quantum New Mexico Investigation, such
relief could include money damages and/or civil penalties.
20
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) The following exhibits are filed herewith:
Exhibit 2.1 Agreement and Plan of Merger, dated as of
August 17, 1999, by and among Adecco SA,
Staffing Acquisition Corporation and the
Company.
Exhibit 2.2 Separation Agreement, dated as of August 17,
1999, by and among the Company, Aaronco
Corp., and Adecco SA.
Exhibit 10.1 Employment Agreement dated as of February 10,
1999 between the Company and Edward A.
Blechschmidt.
Exhibit 10.2 Supplemental Executive Retirement Plan, as
amended and restated January 4, 1999.
Exhibit 10.3 Separation, Consulting and Non-Competition
Agreement, dated as of August 17, 1999, by
and among Stuart Olsten, Adecco SA, and the
Company.
Exhibit 10.4 Separation, Consulting and Non-Competition
Agreement, dated as of August 17, 1999, by
and among Edward A. Blechschmidt, Adecco SA,
and the Company.
Exhibit 10.5 Separation, Consulting and Non-Competition
Agreement, dated as of August 17, 1999, by
and among Anthony Puglisi, Adecco SA, and the
Company.
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K.
(i) The Company has not filed any report on Form 8-K
during the quarter for which this report is filed.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OLSTEN CORPORATION
(REGISTRANT)
Date: August 18, 1999 By: /s/Edward A. Blechschmidt
-------------------------------------
Edward A. Blechschmidt
President and Chief Executive Officer
Date: August 18, 1999 By: /s/Anthony J. Puglisi
--------------------------------------
Anthony J. Puglisi
Executive Vice President and
Chief Financial Officer
22
<PAGE>
EXHIBIT INDEX
Exhibit 2.1 Agreement and Plan of Merger, dated as of August 17, 1999, by
and among Adecco SA, Staffing Acquisition Corporation and the
Company.
Exhibit 2.2 Separation Agreement, dated as of August 17, 1999, by and among
the Company, Aaronco Corp., and Adecco SA.
Exhibit 10.1 Employment Agreement dated as of February 10, 1999 between the
Company and Edward A. Blechschmidt.
Exhibit 10.2 Supplemental Executive Retirement Plan, as amended and restated
January 4, 1999.
Exhibit 10.3 Separation, Consulting and Non-Competition Agreement, dated as
of August 17, 1999, by and among Stuart Olsten, Adecco SA, and
the Company.
Exhibit 10.4 Separation, Consulting and Non-Competition Agreement, dated as
of August 17, 1999, by and among Edward A. Blechschmidt, Adecco
SA, and the Company.
Exhibit 10.5 Separation, Consulting and Non-Competition Agreement, dated as
of August 17, 1999, by and among Anthony Puglisi, Adecco SA, and
the Company.
Exhibit 27 Financial Data Schedule
23
AGREEMENT AND PLAN
OF MERGER
BY AND AMONG
ADECCO SA,
STAFFING ACQUISITION CORPORATION
and
OLSTEN CORPORATION
DATED AS OF AUGUST 17, 1999
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I. THE MERGER.........................................................2
Section 1.01 The Merger...................................................2
Section 1.02 Effective Time...............................................2
Section 1.03 Certificate of Incorporation and By-Laws of
Surviving Corporation.......................................3
Section 1.04 Directors and Officers of Surviving Corporation..............3
Section 1.05 Stockholders'Meetings........................................3
Section 1.06 Further Assurances...........................................4
ARTICLE II. CONVERSION OF SHARES..............................................4
Section 2.01 Olsten Common Stock..........................................4
Section 2.02 Election Procedures..........................................6
Section 2.03 Merger Sub Common Stock; Adecco Owned Olsten Common Stock....7
Section 2.04 Exchange of Shares...........................................8
Section 2.05 Effect on Options and Convertible Securities.................9
Section 2.06 Fractional Shares...........................................11
Section 2.07 Dissenting Shares...........................................11
Section 2.08 Lost Certificates...........................................12
Section 2.09 Withholding Rights..........................................12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF ADECCO AND MERGER SUB.........12
Section 3.01 Organization, Etc...........................................13
Section 3.02 Authority...................................................13
Section 3.03 Consents; No Violations, Etc................................14
Section 3.04 Capitalization..............................................14
Section 3.05 SEC and Other Filings.......................................15
Section 3.06 Financial Statements........................................15
Section 3.07 Absence of Undisclosed Liabilities..........................16
Section 3.08 Absence of Changes or Events................................16
Section 3.09 Litigation..................................................17
Section 3.10 Compliance with Laws........................................17
Section 3.11 Taxes.......................................................17
Section 3.12 Employee Benefit Plans; ERISA...............................17
Section 3.13 Environmental Matters.......................................18
Section 3.14 Finders or Brokers..........................................18
Section 3.15 Board Recommendation........................................18
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF OLSTEN.........................19
Section 4.01 Organization, Etc...........................................19
Section 4.02 Authority...................................................19
Section 4.03 Consents; No Violations, Etc................................20
Section 4.04 Capitalization..............................................20
Section 4.05 SEC Filings.................................................21
Section 4.06 Financial Statements........................................22
Section 4.07 Absence of Undisclosed Liabilities..........................22
Section 4.08 Absence of Changes or Events................................22
Section 4.09 Litigation..................................................24
Section 4.10 Subsidiaries and Investments................................24
Section 4.11 Compliance with Laws........................................25
i
<PAGE>
Section 4.12 Intellectual Property Rights................................26
Section 4.13 Taxes.......................................................26
Section 4.14 Employee Benefit Plans; ERISA...............................28
Section 4.15 Labor and Employment Matters................................31
Section 4.16 No Change of Control Payments...............................32
Section 4.17 Environmental Matters.......................................32
Section 4.18 Insurance...................................................33
Section 4.19 Leases......................................................33
Section 4.20 Contracts and Commitments...................................33
Section 4.21 Finders or Brokers..........................................34
Section 4.22 Opinions....................................................35
Section 4.23 Board Recommendation........................................35
Section 4.24 Voting Requirements.........................................35
Section 4.25 State Antitakeover Statutes.................................35
ARTICLE V. COVENANTS.........................................................35
Section 5.01 Conduct of Business of Olsten and Adecco....................35
Section 5.02 No Solicitation.............................................39
Section 5.03 Access to Information.......................................41
Section 5.04 Registration Statements and Proxy Statements................41
Section 5.05 Other Actions; Filings; Consents............................43
Section 5.06 Public Announcements........................................43
Section 5.07 Notification of Certain Matters.............................44
Section 5.08 Expenses....................................................44
Section 5.09 Affiliates..................................................44
Section 5.10 Stock Exchange Listing......................................44
Section 5.11 Indemnification.............................................45
Section 5.12 Settlement Releases.........................................45
Section 5.13 Board Representation........................................45
Section 5.14 Taxation and the Split-Off..................................45
Section 5.15 Certain Employee Benefits...................................46
Section 5.16 Carryback Elections.........................................46
Section 5.17 Tax Basis and Earnings & Profits Study......................46
Section 5.18 Waiver of Repurchase Obligation.............................46
ARTICLE VI. CONDITIONS TO THE OBLIGATIONS OF OLSTEN, ADECCO AND MERGER SUB...46
Section 6.01 Registration Statement......................................47
Section 6.02 Stockholder Approval........................................47
Section 6.03 Certain Orders..............................................47
Section 6.04 HSR Act and Other Antitrust Approvals.......................47
Section 6.05 Stock Exchange Listing......................................47
ARTICLE VII. CONDITIONS TO THE OBLIGATIONS OF ADECCO AND MERGER SUB..........47
Section 7.01 Representations and Warranties True.........................48
Section 7.02 Performance.................................................48
Section 7.03 Material Adverse Effect.....................................48
Section 7.04 Compliance with Separation Agreement........................48
Section 7.05 Separation Agreement Representations and Warranties True....48
ARTICLE VIII. CONDITIONS TO THE OBLIGATIONS OF OLSTEN........................48
Section 8.01 Representations and Warranties True.........................48
Section 8.02 Performance.................................................49
Section 8.03 Material Adverse Effect.....................................49
ii
<PAGE>
ARTICLE IX. CLOSING..........................................................49
Section 9.01 Time and Place..............................................49
Section 9.02 Filings and Deliveries at the Closing.......................49
ARTICLE X. TERMINATION AND ABANDONMENT.......................................49
Section 10.01 Termination.................................................49
Section 10.02 Procedure for Termination...................................51
Section 10.03 Effect of Termination and Abandonment.......................51
Section 10.04 Termination Fees............................................51
ARTICLE XI. DEFINITIONS......................................................52
Section 11.01 Terms Defined in This Agreement.............................52
ARTICLE XII. MISCELLANEOUS...................................................54
Section 12.01 Amendment and Modification..................................54
Section 12.02 Waiver of Compliance; Consents..............................54
Section 12.03 Survival of Representations and Warranties; Investigations..55
Section 12.04 Notices.....................................................55
Section 12.05 Assignment; Third Party Beneficiaries.......................56
Section 12.06 Governing Law...............................................56
Section 12.07 Agent for Service; Waiver of Limitations....................56
Section 12.08 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES....................57
Section 12.09 Counterparts................................................57
Section 12.10 Severability................................................57
Section 12.11 Interpretation..............................................57
Section 12.12 Entire Agreement............................................58
Section 12.13 Enforcement of Agreement....................................58
EXHIBITS
Exhibit A - Form of Separation Agreement
Exhibit B - Form of Olsten Voting Agreement
Exhibit C - Form of Certificate of Incorporation of the Surviving Corporation
Exhibit D - Form of Affiliate Letter
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 17, 1999 (the
"Agreement"), by and among Adecco SA, a societe anonyme organized under the laws
of Switzerland ("Adecco"), Staffing Acquisition Corporation, a Delaware
corporation and a wholly-owned subsidiary of Adecco ("Merger Sub") and Olsten
Corporation, a Delaware corporation ("Olsten"). Merger Sub and Olsten are
hereinafter sometimes collectively referred to as the "Constituent
Corporations."
RECITALS
WHEREAS, Adecco and Olsten wish to effect the combination of the
staffing services and information services businesses of Adecco and Olsten
through a merger of Olsten with Merger Sub (the "Merger") on the terms and
conditions set forth herein;
WHEREAS, prior to the Merger, Olsten will transfer, on the terms and
subject to the conditions set forth in the separation agreement, dated as of the
date hereof, among Adecco, Olsten and OHS (as hereinafter defined) in the form
attached hereto as Exhibit A (the "Separation Agreement," which term shall
include the Ancillary Agreements (as defined in the Separation Agreement)), the
Health Services Business (as defined in the Separation Agreement) of Olsten and
its Subsidiaries and the Assumed OHS Liabilities (as defined in the Separation
Agreement) to Aaronco Corp. ("OHS"), a Delaware corporation and a wholly-owned
subsidiary of Olsten and at the Effective Time (as defined in Section 1.02
hereof) the holders of shares of Olsten common stock, par value $.10 ("Olsten
Stock"), and Olsten Class B common stock, par value $.10 ("Olsten Class B
Stock," and, together with the Olsten Stock, the "Olsten Common Stock"), will
receive shares of common stock of OHS in consideration for the redemption of a
portion of their shares of Olsten Common Stock (the "Split-Off");
WHEREAS, upon the Split-Off it is intended that Olsten will own only
the Retained Businesses (as defined in the Separation Agreement) subject to the
terms and conditions of the Separation Agreement;
WHEREAS, in order to effect the Split-Off and the Merger (together,
the "Transaction"), Merger Sub will merge with and into Olsten and each issued
and outstanding share of Olsten Common Stock (other than shares of Olsten Common
Stock held by Olsten as treasury stock or owned by Adecco or Merger Sub
immediately prior to the Effective Time and other than Dissenting Shares (as
defined in Section 2.07 hereof)), will be converted into the right to receive
(i) the Merger Consideration (as defined in Section 2.01 hereof) and (ii) the
Split-Off Consideration (as defined in Section 2.01 hereof) as set forth below;
WHEREAS, the Board of Directors of Olsten has unanimously determined
that the Merger and the Split-Off are advisable on the terms and conditions
contained in this Agreement, the Separation Agreement and the other agreements
contemplated hereby and thereby, and that each of the other transactions
contemplated herein and therein are fair to, and in the best interests of Olsten
and Olsten's stockholders, and has approved and adopted this Agreement, the
Separation Agreement, the Merger, the Split-Off and each of the other
transactions contemplated herein and therein and intends to recommend the
approval and adoption of this Agreement, the Merger and the other transactions
contemplated hereby by the stockholders of Olsten;
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WHEREAS, the Board of Directors of Adecco has determined that the
Merger is advisable on the terms and conditions contained in this Agreement and
that each of the other transactions contemplated herein is consistent with and
in furtherance of the long-term business strategy of Adecco and is fair to, and
in the best interests of Adecco and Adecco's stockholders, and has approved and
adopted this Agreement and the other transactions contemplated herein and
intends to recommend that the stockholders of Adecco approve (i) the issuance of
the Adecco Common Stock (as defined Section 2.01 hereof) and, if necessary, the
Adecco ADSs (as defined in Section 2.01 hereof) making up the Stock
Consideration (as defined in Section 2.01 hereof) and required for issuance
pursuant to Section 2.05 of this Agreement and the waiver of any preemptive
rights with respect thereto and (ii) the increase in the size of the Board of
Directors of Adecco and the election of new directors as contemplated by Section
5.13 hereof (such proposals collectively referred to herein as the "Adecco
Stockholder Proposals");
WHEREAS, certain holders of Olsten Class B Stock have committed to
vote in favor of approving this Agreement, the Merger, and the other
transactions contemplated hereby, all as provided in the form attached hereto as
Exhibit B (the "Voting Agreement");
WHEREAS, Adecco, Merger Sub and Olsten desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger; and
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
Section 1.01 The Merger. (a) In accordance with the provisions of this
Agreement and the General Corporation Law of the State of Delaware (the
"Delaware Act"), at the Effective Time, which shall occur as soon as practicable
after the satisfaction or waiver of the conditions set forth in Articles VI, VII
and VIII, Merger Sub shall be merged with and into Olsten, and Olsten shall be
the surviving corporation (hereinafter sometimes called the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Delaware. The name of the Surviving Corporation shall be "Olsten," or
such other name as may be designated by Adecco. At the Effective Time the
separate existence of Merger Sub shall cease.
(b) The Merger shall have the effects on Olsten and Merger Sub as
constituent corporations of the Merger as provided under the Delaware Act.
Section 1.02 Effective Time. The Merger shall become effective at the
time of filing of, or at such later time specified in, a certificate of merger,
in the form required by and executed in accordance with the Delaware Act, with
the Secretary of State of the State of Delaware in accordance with the Delaware
Act (the "Certificate of Merger"). The date and time when the Merger shall
become effective is herein referred to as the "Effective Time."
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Section 1.03 Certificate of Incorporation and By-Laws of Surviving
Corporation. The Certificate of Incorporation of Olsten shall be amended as of
the Effective Time to read as set forth on Exhibit C. The By-Laws of Olsten, as
in effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended as provided by law.
Section 1.04 Directors and Officers of Surviving Corporation. The
initial directors of the Surviving Corporation shall be those persons who serve
as directors of Merger Sub immediately prior to the Effective Time and the
initial officers of the Surviving Corporation shall be those persons who serve
as officers of Olsten immediately prior to the Effective Time, in each case
until their successors are elected and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and By-Laws.
Section 1.05 Stockholders' Meetings. (a) Olsten shall take all action
necessary in accordance with applicable law and its Certificate of Incorporation
and By-Laws to call and convene a special meeting of its stockholders (the
"Olsten Special Meeting" and, together with the Adecco Special Meeting (as
defined below), the "Special Meetings") as soon as practicable to consider, vote
upon and obtain the approval of this Agreement, the Merger and the other
transactions contemplated hereby by a majority of the voting power represented
by the outstanding shares of Olsten Stock and Olsten Class B Stock entitled to
vote thereon, voting together as a single class. Olsten shall, through its Board
of Directors, (i) recommend to its stockholders approval of this Agreement, the
Merger and the other transactions contemplated hereby, which recommendation
shall be contained in a proxy statement of Olsten (the "Olsten Proxy Statement")
and shall not withdraw, modify or change in any manner or take action
inconsistent with its recommendation of this Agreement, the Merger or the other
transactions contemplated hereby and shall not resolve to do any of the
foregoing and publicly disclose such resolution; provided, however, that,
subject to compliance with the provisions of Section 5.02 hereof, the Board of
Directors of Olsten may fail to make its recommendation to its stockholders or
may withdraw, modify or change in any manner or take action inconsistent with
such recommendation or resolve to do any of the foregoing and publicly disclose
such resolution if such Board of Directors reasonably believes after (x)
receiving a Superior Proposal (as hereinafter defined) which was not solicited
by it after July 26, 1999 and which did not result from a breach of Section 5.02
hereof, (y) receiving the advice of outside legal counsel that failure to take
such action would be a breach of its fiduciary duties to its stockholders under
applicable law and (z) receiving the advice of a financial advisor of nationally
recognized reputation that the party making such proposal is financially capable
and that such Superior Proposal is more favorable from a financial point of view
to its stockholders than the Merger and the Split-Off, that the making of such
recommendation or the failure to so withdraw, modify or change in any manner or
take any action inconsistent with such recommendation or to resolve to do any of
the foregoing and publicly disclose such resolution would be a breach of its
fiduciary duties under applicable law and (ii) cause to be solicited from its
stockholders proxies regarding approval and adoption of this Agreement, the
Merger and the other transactions contemplated hereby.
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(b) Adecco shall take all action necessary in accordance with
applicable law and its Certificate of Incorporation and By-Laws (or other
applicable organizational documents) to call and convene a special meeting of
its stockholders (the "Adecco Special Meeting") as soon as practicable to
consider and vote upon the approval of the Adecco Stockholder Proposals. Adecco,
through its Board of Directors, (i) shall recommend to its stockholders the
approval of the Adecco Stockholder Proposals, which recommendation shall be
contained in any materials of Adecco delivered by Adecco to its stockholders in
connection with the convening of the Adecco Special Meeting (the "Adecco Proxy
Statement") and (ii) cause to be solicited from its stockholders the approval of
the Adecco Stockholder Proposals.
Section 1.06 Further Assurances. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, obligation, title or interest in, to or under
any of the rights, properties or assets of either of the Constituent
Corporations acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger or otherwise to carry out this Agreement,
the officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of each of the Constituent
Corporations or otherwise, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of the
Constituent Corporations or otherwise, all such other actions and things as may
be necessary or desirable to vest, perfect or confirm any and all right,
obligation, title and interest in, to and under such rights, properties or
assets in the Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE II.
CONVERSION OF SHARES
Section 2.01 Olsten Common Stock. (a) At the Effective Time, each
share of Olsten Common Stock issued and outstanding immediately prior to the
Effective Time (except for Dissenting Shares (as hereinafter defined), shares,
if any, owned by Olsten as treasury stock or owned by Adecco, Merger Sub or any
of their wholly-owned Subsidiaries or by any wholly-owned Subsidiary of Olsten)
shall, by virtue of the Split-Off and the Merger and without any action on the
part of the holder thereof, be converted into the right to receive (x) all of
the shares of validly issued, fully paid and nonassessable shares (the
"Split-Off Consideration") of common stock of OHS (the "OHS Common Stock"),
except for a nominal number of the outstanding shares of OHS Common Stock which
may be retained by Olsten, which shares shall be identified, prior to the
Effective Time, in a writing between Olsten and Adecco and (y) either (A) $8.75
per share, without interest (the "Cash Consideration") or (B) .12472 Adecco
American Depositary Shares ("Adecco ADSs"), each Adecco ADS representing
one-eighth of one validly issued, fully paid and nonassessable share of Adecco's
common shares, par value CHF 10.00 per share (the "Adecco Common Stock"),
evidenced by American Depositary Receipts of Adecco ("Adecco ADRs") (the "Stock
Consideration") or (C) a combination of a fraction of an Adecco ADS and cash,
determined in accordance with Section 2.01(d), (e) or (f), as applicable (the
foregoing clause (A) or (B) or (C) (the "Merger Consideration"). The ADSs are to
be issued pursuant to a Deposit Agreement (the "Deposit Agreement") dated
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November 1994, among Adecco, Morgan Guaranty Trust Company of New York, as
Depositary and the holders from time to time of Adecco ADRs evidencing Adecco
ADSs representing Adecco Common Stock issued thereunder. The Split-Off
Consideration and the Merger Consideration pursuant to this Section 2.01(a) are
hereinafter sometimes called the "Closing Consideration."
(b) Effect on Olsten Common Stock. At the Effective Time all
outstanding shares of Olsten Common Stock, by virtue of the Merger and without
any action on the part of the holders thereof, shall no longer be outstanding
and shall be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Olsten Common Stock shall thereafter
cease to have any rights with respect to such shares of Olsten Common Stock,
except the right to receive the Closing Consideration for such shares of Olsten
Common Stock as specified in the foregoing clause (a) upon the surrender of such
certificate in accordance with Section 2.04 or dissenters' rights pursuant to
Section 2.07.
(c) Election of Merger Consideration. Subject to the allocation and
election procedures set forth in this Section 2.01 and Section 2.02, each holder
of record (as of the Effective Time) of shares of Olsten Common Stock will be
entitled, with respect to each such share, to (i) receive the Split-Off
Consideration and (ii)(A) elect to receive cash (a "Cash Election"), (B) elect
to receive Adecco ADSs (a "Stock Election"), or (C) indicate that such record
holder has no preference as to the receipt of cash or Adecco ADSs (a
"Non-Election"). Any holder who fails to make a valid and timely election shall
be deemed to have made a Non-Election. All such elections shall be made on a
form designed for that purpose (a "Form of Election") in accordance with the
procedures specified in Section 2.02.
(d) Excess Cash Elections. If the aggregate number of shares of Olsten
Common Stock covered by Cash Elections (the "Cash Election Shares") exceeds the
Cash Election Number (as defined below), then all shares of Olsten Common Stock
covered by Stock Elections and all shares of Olsten Common Stock covered by
Non-Elections (the "Non-Election Shares") shall be converted into the right to
receive the Split-Off Consideration and Stock Consideration, and all shares of
Olsten Common Stock covered by Cash Elections shall be converted into the right
to receive (in addition to the Split-Off Consideration) Adecco ADSs and cash in
the following manner:
each share shall be converted into the right to receive (i) an amount
in cash, without interest, equal to the product of (x) the Cash
Consideration and (y) a fraction (the "Cash Fraction"), the numerator
of which shall be the Cash Election Number and the denominator of
which shall be the total number of Cash Election Shares, and (ii) a
number of shares of Adecco ADSs equal to the product of (x) the Stock
Consideration and (y) a fraction equal to one minus the Cash Fraction.
The "Cash Election Number" shall be equal to (i) 50% of the number of
shares of Olsten Common Stock outstanding as of immediately prior to the
Effective Time, minus (ii) (A) the number of shares of Olsten Common Stock
represented by Dissenting Shares (as defined below), (B) the number of shares of
Olsten Common Stock for which cash in lieu of fractional shares of Adecco ADSs
is payable pursuant to Section 2.06 and (C) the number of shares of Olsten
Common Stock, if any, owned by Olsten as treasury stock or owned by Adecco,
Merger Sub or any of their wholly-owned Subsidiaries or by any wholly-owned
Subsidiary of Olsten.
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<PAGE>
(e) Excess Stock Elections. If the aggregate number of shares of
Olsten Common Stock covered by Stock Elections (the "Stock Election Shares")
exceeds the Stock Election Number (as defined below), then all shares of Olsten
Common Stock covered by Cash Elections and all shares of Olsten Common Stock
covered by Non-Elections shall be converted into the right to receive the
Split-Off Consideration and the Cash Consideration, and all shares of Olsten
Common Stock covered by Stock Elections shall be converted into the right to
receive (in addition to the Split-Off Consideration) Adecco ADSs and cash in the
following manner:
each share shall be converted into the right to receive (i) a number
of shares of Adecco ADSs equal to a fraction (the "Stock Fraction"),
the numerator of which shall be the Stock Election Number and the
denominator of which shall be the total number of Stock Election
Shares, and (ii) an amount in cash, without interest, equal to the
product of (x) the Cash Consideration and (y) a fraction equal to one
minus the Stock Fraction.
The "Stock Election Number" shall be equal to (i) 50% of the number of
shares of Olsten Common Stock outstanding as of immediately prior to the
Effective Time minus (ii) the number of shares of Olsten Common Stock, if any,
owned by Olsten as treasury stock or owned by Adecco, Merger Sub or any of their
wholly-owned Subsidiaries or by any wholly-owned Subsidiary of Olsten.
(f) Insufficient Elections. In the event that neither Section 2.01(d)
nor Section 2.01(e) above is applicable, all shares of Olsten Common Stock
covered by Cash Elections shall be converted into the right to receive the
Split-Off Consideration and the Cash Consideration, all shares of Olsten Common
Stock covered by Stock Elections shall be converted into the right to receive
the Split-Off Consideration and the Stock Consideration, and the shares of
Olsten Common Stock covered by Non-Elections, if any, shall be converted into
the right to receive (in addition to the Split-Off Consideration) Adecco ADSs
and cash in the following manner:
each share shall be converted into the right to receive (i) an amount
in cash, without interest, equal to the product of (x) the Cash
Consideration and (y) a fraction (the "Non-Election Fraction"), the
numerator of which shall be the excess, if any, of the Cash Election
Number over the total number of Cash Election Shares and the
denominator of which shall be the Non-Election Shares and (ii) a
number of shares of Adecco ADSs equal to the product of (x) the Stock
Consideration and (y) a fraction equal to one minus the Non-Election
Fraction.
Section 2.02 Election Procedures. (a) Elections shall be made by
holders of Olsten Common Stock by mailing to the Exchange Agent (as hereinafter
defined) a Form of Election. To be effective, a Form of Election must be
properly completed, signed and submitted to the Exchange Agent and accompanied
by Certificates (as hereinafter defined) representing the shares of Olsten
Common Stock as to which the election is being made. Holders of record of shares
of Olsten Common Stock who hold such shares as nominees, trustees or in other
representative capacities (a "Representative") may submit multiple Forms of
Elections, provided that such Representative certifies in writing that each such
Form of Election covers all the shares of Olsten Common Stock held by each
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Representative for a particular beneficial owner. Olsten shall have the
discretion, which it may delegate in whole or in part to the Exchange Agent, to
determine whether Forms of Election have been properly completed, signed and
submitted or revoked and to disregard immaterial defects in Forms of Election.
The decision of Olsten (or the Exchange Agent) in such matters shall be
conclusive and binding. Neither Olsten nor the Exchange Agent shall be under any
obligation to notify any person of any defect in a Form of Election submitted to
the Exchange Agent. The Exchange Agent shall make all computations contemplated
by Section 2.01 and this Section 2.02 and all such computations shall be
conclusive and binding on the holders of Olsten Common Stock. Forms of Election
and other appropriate and customary transmittal materials (which shall specify
that delivery shall be effected and risk of loss and title to the Certificates
theretofore representing shares of Olsten Common Stock shall pass, only upon
proper delivery of such Certificates to the Exchange Agent) in such form as
Adecco and Olsten shall mutually agree shall be mailed on the date that the
Olsten Proxy Statement is first mailed to the stockholders of Olsten.
(b) A holder of Olsten Common Stock who does not submit a Form of
Election which is received by the Exchange Agent prior to the Election Deadline
(as defined below) shall be deemed to have made a Non-Election. If Olsten or the
Exchange Agent shall determine that any purported Cash Election or Stock
Election was not properly made with respect to any or all of the shares of
Olsten Common Stock of a holder, such purported Cash Election or Stock Election
shall be deemed to be of no force and effect and the stockholder making such
purported Cash Election or Stock Election shall, for purposes hereof, be deemed
to have made a Non-Election.
(c) Olsten shall use its reasonable best efforts to mail the Form of
Election to all persons or entities who become holders of Olsten Common Stock
during the period between the record date for the Olsten Special Meeting and
10:00 a.m., New York time, on the date five business days prior to the
anticipated Effective Time and to make the Form of Election available to all
persons or entities who become holders of Olsten Common Stock subsequent to such
day and no later than the close of business on the business day prior to the
Effective Time. A Form of Election must be received by the Exchange Agent by
4:00 p.m. on the last business day prior to the Effective Time (the "Election
Deadline") in order to be effective. All elections may be revoked in writing
until the Election Deadline.
Section 2.03 Merger Sub Common Stock; Adecco Owned Olsten Common
Stock. (a) At the Effective Time, each share of common stock, par value $.001
per share, of Merger Sub ("Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into one
validly issued, fully paid and nonassessable share of common stock, par value
$.10 per share, of the Surviving Corporation ("Surviving Corporation Common
Stock").
(b) At the Effective Time all outstanding shares of Olsten Common
Stock that are owned by Olsten as treasury stock and any shares of Olsten Common
Stock that are owned by Adecco or Merger Sub or any wholly-owned Subsidiary
thereof or by any wholly-owned Subsidiary of Olsten, by virtue of the Merger and
without any action on the part of the holders thereof, shall no longer be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of Olsten Common Stock
shall thereafter cease to have any rights with respect to such shares of Olsten
Common Stock and no consideration shall be delivered in exchange therefor.
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Section 2.04 Exchange of Shares. (a) Adecco and Olsten shall jointly
designate one or more persons in the United States to act as the Exchange Agent
(the "Exchange Agent") for the purposes described in Section 2.02 and for the
purpose of exchanging certificates representing shares of Olsten Common Stock
for the Closing Consideration. At least one business day prior to the Effective
Time, Adecco will deposit with the Exchange Agent the aggregate Merger
Consideration, and Olsten shall deposit or cause OHS to deposit with the
Exchange Agent the aggregate Split-Off Consideration, each to be paid in respect
of the shares of Olsten Common Stock. For purposes of determining the aggregate
Merger Consideration and the aggregate Split-Off Consideration to be so
deposited with the Exchange Agent, Adecco and Olsten shall assume that no holder
of shares of Olsten Common Stock will perfect his/her right to appraisal of
his/her shares of Olsten Common Stock pursuant to Section 2.07 hereof. Adecco
will pay all fees and expenses associated with the issuance of the Adecco ADSs
evidenced by Adecco ADRs to Morgan Guaranty Trust Company of New York, as
depositary (the "Depositary") and the issuance by the Depositary of the Adecco
ADSs.
(b) Promptly after the Effective Time, Adecco and the Surviving
Corporation shall cause the Exchange Agent to mail to each record holder, as of
the Effective Time, of an outstanding certificate or certificates that
immediately prior to the Effective Time represented shares of Olsten Common
Stock (the "Certificates") a form letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Exchange Agent)
and instructions for use in effecting the surrender of the Certificates in
exchange for the Closing Consideration.
(c) Upon surrender to the Exchange Agent of a Certificate, together
with such letter of transmittal duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Closing Consideration that
such holder has the right to receive under this Article II, and such Certificate
shall forthwith be canceled. If any shares of Adecco ADSs are to be issued to a
person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of exchange that such surrendered
Certificate shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such exchange shall pay any transfer or other
taxes required by reason of the exchange by a person other than the registered
holder of the Certificate surrendered or such person shall establish to the
satisfaction of Adecco that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.04, each
Certificate shall represent, for all purposes, the right to receive the Closing
Consideration in respect of the number of shares of Olsten Common Stock
evidenced by such Certificate. No dividends or other distributions that are
declared after the Effective Time on Adecco Common Stock or OHS Common Stock and
payable to the respective holders of record thereof after the Effective Time
will be paid to holders of Certificates until such holders surrender their
Certificates. Upon such surrender, Adecco or OHS, as the case may be, shall
deposit with the Exchange Agent and shall cause the Exchange Agent to pay to the
record holder of the shares of Adecco ADRs or Adecco Common Stock, as the case
may be, representing Stock Consideration or the recordholder of the OHS Common
Stock representing Split-Off Consideration, the dividends or other
distributions, excluding interest, that became payable after the Effective Time
and were not paid because of the delay in surrendering Certificates for
exchange.
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(d) From and after the Effective Time, there shall be no transfers on
the stock transfer books of Olsten of the shares of Olsten Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to Adecco or the Surviving
Corporation, they shall be canceled and exchanged as provided in this Article
II.
(e) Neither Olsten, Adecco nor the Surviving Corporation shall be
liable to any holder of Certificates with respect to any Closing Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(f) Any Closing Consideration payable to holders of Olsten Common
Stock pursuant to Section 2.01 which remains undistributed to the holders of
Olsten Common Stock for a period of six months after the Closing Date shall be
delivered to the Surviving Corporation, upon its request, and any holders of
Olsten Common Stock who have not surrendered Certificates to the Exchange Agent
for the Closing Consideration or complied with the instructions in the letter of
transmittal, as the case may be, shall thereafter look only to the Surviving
Corporation for payment of the Closing Consideration.
(g) Notwithstanding Section 2.01(a), Adecco will provide holders of
Olsten Common Stock with the option to elect to receive one share of Adecco
Common Stock for every eight shares of Adecco ADSs such holder would otherwise
be entitled to receive pursuant to Section 2.01(a). The Form of Election will
provide, consistent with the terms of the Deposit Agreement, for such election
option and holders of Olsten Common Stock who wish to do so must irrevocably
elect to receive such Adecco Common Stock at the time they surrender their
Certificates representing shares of Olsten Common Stock in accordance with the
provisions described in this Section 2.04, and the receipt of such Adecco Common
Stock will be deemed for all purposes of this Agreement as the receipt of the
Stock Consideration and reference to Adecco ADSs in the provisions of Article II
shall, as applicable for such purposes, be deemed references to such Adecco
Common Stock.
Section 2.05 Effect on Options and Convertible Securities. (a) The
parties hereto agree that each option to purchase shares of Olsten Common Stock
(each a "Olsten Option") issued and outstanding under the Olsten 1994 Stock
Incentive Plan, the 1990 Nonqualified Stock Option Plan for Non-Employee
Directors and Consultants, the Of Counsel Enterprises, Inc. 1993 Employee Stock
Option Plan, the IMI Systems, Inc. 1988 Incentive Stock Option Plan, the
Lifetime Corporation 1989 Non-Employee Directors Stock Option Plan, and the
Quantum Health Resources, Inc. 1991 Restated Stock Option Plan (the "Olsten
Plans"), to the extent, if any, provided in the Olsten Plans as in effect on
August 1, 1999, shall be fully vested and exercisable prior to or at the
Effective Time.(b) Effective as of the Effective Time, all outstanding Olsten
Options held by Olsten Employees (as defined in the Employee Benefits Allocation
Agreement) and Olsten non-employee directors shall be adjusted as described
below to represent options to purchase Adecco Common Stock. Each such Olsten
Option shall be adjusted such that (i) the aggregate post-transaction difference
between the fair market value of the Adecco Common Stock subject to the option
over the aggregate exercise price of the option remains the same as the
aggregate pre-transaction difference between the fair market value of the Olsten
Common Stock subject to the option over the aggregate exercise price of the
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option, (ii) the aggregate exercise price of the option remains the same and
(iii) the ratio of the post-transaction fair market value per share subject to
the option to exercise price per share is the same as the pre-transaction ratio.
For this purpose, the post-transaction fair market value of Adecco Common Stock
shall be the average of the closing prices on the Swiss Stock Exchange for the
five trading days immediately preceding the Effective Time (converted into U.S.
Dollars at the Federal Reserve's Noon Buying Rate for U.S. Dollars and CHF on
each of such days as determined pursuant to instructions for Form 20-F of the
Securities Exchange Commission (the "SEC")), and the pre-transaction fair market
value of the Olsten Common Stock shall be the average of the closing prices on
the New York Stock Exchange (the "NYSE") for the five trading days immediately
preceding the Effective Time. If appropriate, the exercise price of the Olsten
Options, as adjusted, shall be converted into CHF at the Federal Reserve's Noon
Buying Rate for U.S. Dollars and CHF on the Effective Date.
(c) Effective as of the Effective Time, all Olsten Options held by OHS
Employees (as defined in the Employee Benefits Allocation Agreement) shall be
assumed by OHS and, at the election of OHS, either retired, to the extent
permitted by the Olsten Plans and applicable option agreements, in exchange for
cash, or converted into options to purchase OHS shares on terms set forth by the
OHS Board of Directors (or a committee thereof), in its discretion, subject to
the Olsten Plans and applicable option agreements.
(d) Without limiting the foregoing and except as otherwise provided in
clauses (b) and (c) above, the duration and other terms of each adjusted Olsten
Options immediately after the Effective Time (unless otherwise agreed in writing
by the optionee with respect to a particular option) shall be the same as the
corresponding Olsten Option that were in effect immediately before the Effective
Time, except that all references to Olsten in the Olsten Plans (and the
corresponding references in each option agreement documenting each such stock
option) shall be deemed to be references to Adecco or OHS, as applicable.
(e) As soon as practicable after the Effective Time, Adecco shall
deliver to optionees appropriate notices setting forth such optionee's rights
pursuant to the adjusted Olsten Options referenced in clause (b) above.
(f) Adecco shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Adecco Common Stock for delivery upon
exercise of stock options referenced in clause (b) above. As soon as practicable
after the Effective Time, Adecco shall file registration statements on Form S-8,
or another appropriate form, as the case may be (or any successor form), with
respect to the shares of Adecco Common Stock subject to such options.
(g) Subject to Adecco's performance of its obligations in the first
sentence of clause (f) above, Olsten, prior to the Effective Time, shall take
all corporate action necessary to cause all outstanding Olsten Options to cease
to represent any claim on the equity of Olsten.
(h) Olsten agrees to cooperate with Adecco to develop and implement a
program to be effective at the Effective Time, whereby out-of-the money Olsten
Options will, with the consent of the several holders, be replaced or
restructured with appropriate employee incentives, or terminated for an
equitable amount. As to such Olsten Options which are not so replaced,
restructured or terminated, Olsten will, to the extent allowed by the Olsten
Plans, terminate such options at the Effective Time.
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(i) At and after the Effective Time, the Quantum Debt shall no longer
be exchangeable for shares of Olsten Class B Stock, but instead shall thereafter
be exchangeable, upon surrender of the instrument evidencing such Quantum Debt
to OHS, into the Closing Consideration that would have been payable to the
holder of such instrument, had such instrument been surrendered in exchange for
Olsten Class B Stock immediately prior to the Effective Time as if such holder
had made a Non-Election. Adecco shall take all corporate action necessary to
reserve for issuance a sufficient number of Adecco ADSs for issuance to holders
of Quantum Debt surrendering the instruments evidencing such Quantum Debt and,
upon payment by OHS of the fair market value of such Adecco ADSs, shall provide
such Adecco ADSs to OHS in satisfaction of such exchange obligation. After the
Effective Time, the Quantum Debt shall cease to represent any claim on the
equity of Olsten.
Section 2.06 Fractional Shares. Notwithstanding any other provision of
this Agreement, each holder of shares of Olsten Common Stock who upon surrender
of all of the Certificates of such holder would be entitled to receive
fractional shares of Adecco Common Stock, Adecco ADSs or OHS Common Stock shall
receive, in lieu of such fractional shares, cash in an amount equal to such
fraction multiplied by the Market Value of Adecco Common Stock, Adecco ADSs or
OHS Common Stock, as applicable. With respect to Adecco ADSs, "Market Value"
shall mean the arithmetic average of the last reported sale price of Adecco ADSs
as reported on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") for the five (5) consecutive trading days ending
with the last trading day prior to the Effective Time. With respect to Adecco
Common Stock, "Market Value" shall mean the arithmetic average of the last
reported sale price of Adecco Common Stock as reported on the Swiss Stock
Exchange for the five (5) consecutive trading days ending with the last trading
day prior to the Effective Time. With respect to OHS Common Stock, "Market
Value" shall mean the last reported sale price of OHS Common Stock as reported
on a national securities exchange or NASDAQ on the first full trading day
following the Effective Time. All references in this Agreement to Adecco ADSs or
Adecco Common Stock to be issued as Stock Consideration or OHS Common Stock to
be issued as Split-Off Consideration shall be deemed to include any cash in lieu
of fractional shares of Adecco ADSs, Adecco Common Stock or OHS Common Stock, as
applicable, payable pursuant to this Section 2.06.
Section 2.07 Dissenting Shares. (a) Notwithstanding anything in this
Agreement to the contrary, Olsten Common Stock which is issued and outstanding
immediately prior to the Effective Time and which is held by Olsten stockholders
who have not voted such shares in favor of the Merger, who shall have delivered
a written demand for appraisal of such shares of Olsten Common Stock in the
manner provided in the Delaware Act and who, as of the Effective Time, shall not
have effectively withdrawn or lost such right to appraisal ("Dissenting Shares")
shall not be converted into or represent a right to receive the Closing
Consideration pursuant to Section 2.01 hereof, but the holders thereof shall be
entitled only to such rights as are granted by Section 262 of the Delaware Act.
Each holder of Dissenting Shares who becomes entitled to payment for such shares
pursuant to Section 262 of the Delaware Act shall receive payment therefor from
the Surviving Corporation in accordance with the Delaware Act; provided,
however, that if (i) any such holder of Dissenting Shares shall have failed to
establish his/her entitlement to appraisal rights as provided in Section 262 of
the Delaware Act, (ii) any such holder of Dissenting Shares shall have
effectively withdrawn his/her demand for appraisal of such shares of Olsten
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Common Stock or lost his/her right to appraisal and payment for his/her shares
of Olsten Common Stock under Section 262 of the Delaware Act or (iii) neither
any holder of Dissenting Shares nor the Surviving Corporation shall have filed a
petition demanding a determination of the value of all Dissenting Shares within
the time provided in Section 262 of the Delaware Act, such holder or holders, as
the case may be, shall forfeit the right to appraisal of such shares and each
such share shall thereupon be deemed to have been converted, as of the Effective
Time, into and represent the right to receive from the Surviving Corporation the
Closing Consideration, without interest thereon, as provided in Section 2.01
hereof. In such case, the Surviving Corporation will provide to such holder or
holders, the Split-Off Consideration with respect to such shares.
(b) Notice of Appraisal Demands. Olsten shall give Adecco and Merger
Sub (i) prompt notice of any written demands for appraisal, withdrawals of
demands for appraisal and any other instruments served pursuant to Section 262
of the Delaware Act received by Olsten and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under Section
262 of the Delaware Act. Olsten shall not, except with the prior written consent
of Adecco, voluntarily make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands.
Section 2.08 Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Exchange Agent, the posting by such person of a bond in such
reasonable amount as Adecco may direct as indemnity against any claim that may
be made against it with respect to such Certificate, the Surviving Corporation
or Olsten will issue in exchange for such lost, stolen or destroyed Certificate
the Closing Consideration in respect thereof pursuant to this Agreement.
Section 2.09 Withholding Rights. Each of Olsten and Adecco shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of former Olsten Common Stock such
amounts as may be required to be deducted and withheld with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or under any provision of state, local or foreign tax law. To the
extent that amounts are so withheld and paid over to the appropriate taxing
authority, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Olsten Common Stock in
respect of which such deduction and withholding was made.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF Adecco AND MERGER SUB
Subject to the disclosure schedule delivered by Adecco to Olsten at or
prior to the execution of this Agreement (the "Adecco Disclosure Statement"),
the section numbers of which are numbered to correspond to the sections of this
Agreement to which they relate, each of Adecco and Merger Sub represents and
warrants to Olsten as follows:
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Section 3.01 Organization, Etc. Adecco is a corporation duly
organized, validly existing and in good standing under the laws of Switzerland
and has all requisite power and authority to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted.
Adecco is duly qualified as a foreign corporation to do business, and is in good
standing in each jurisdiction where the character of its properties owned,
leased or operated or the nature of its activities makes such qualification
necessary, except for failures to be so qualified or in good standing that would
not, individually or in the aggregate, have a material adverse effect on the
business, results of operations, assets or condition (financial or otherwise) of
Adecco and its Subsidiaries taken as a whole, other than any change or effect
arising out of or resulting from general economic conditions or conditions
affecting the staffing services industry (an "Adecco Material Adverse Effect").
Neither Adecco nor Merger Sub is in violation of any of the provisions of its
organizational documents. Complete and correct copies of the organizational
documents, as currently in effect, of Adecco and Merger Sub have been made
available to Olsten.
Section 3.02 Authority. Each of Adecco and Merger Sub has full
corporate power and authority to execute and deliver this Agreement and, subject
to approval of the Adecco Stockholder Proposals by the holders of Adecco Common
Stock at the Adecco Special Meeting, to consummate the Merger and the other
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the Merger and the other transactions contemplated
hereby have been duly and validly authorized by the Boards of Directors of
Adecco and Merger Sub, and by Adecco as the sole shareholder of Merger Sub, and
no other corporate proceedings on the part of Adecco or Merger Sub are necessary
to authorize this Agreement or to consummate the Merger or the other
transactions contemplated hereby (other than the approval of and the adoption of
the Adecco Stockholder Proposals at the Adecco Special Meeting or any
adjournment thereof by the requisite holders of the outstanding shares of Adecco
Common Stock). This Agreement has been duly and validly executed and delivered
by each of Adecco and Merger Sub and, assuming the due authorization, execution
and delivery hereof by Olsten, constitutes a valid and binding agreement of each
of Adecco and Merger Sub, enforceable against Adecco and Merger Sub 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. Adecco has full corporate power and authority to
execute and deliver the Separation Agreement. The execution and delivery of the
Separation Agreement have been duly and validly authorized by the Board of
Directors of Adecco, and no other corporate proceedings on the part of Adecco
are necessary to authorize the Separation Agreement. The Separation Agreement
has been duly and validly executed and delivered by Adecco and, assuming the due
authorization, execution and delivery thereof by Olsten and OHS, constitutes a
valid and binding agreement of Adecco, enforceable against Adecco 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.
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Section 3.03 Consents; No Violations, Etc. (a) No filing or
registration with, or permit, authorization, consent or approval of, or
notification or disclosure to, any United States (federal, state or local) or
foreign government, or governmental, regulatory or administrative authority,
agency or commission (a "Governmental Authority"), court or third party is
required by Adecco or Merger Sub in connection with the execution and delivery
of this Agreement and, as applicable, the Separation Agreement, or the
consummation of the Merger and the other transactions contemplated hereby,
except (i) in connection with the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and applicable foreign antitrust or other similar laws, (ii) in connection with
the provisions of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act") and the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act"), (iii) the filing of appropriate merger
documents as required by the Delaware Act, (iv) such consents, approvals,
orders, permits, authorizations, registrations, declarations and filings as may
be required under the Blue Sky laws of various states and (v) such consents,
approvals, orders, permits, authorizations, registrations, declarations and
filings which will have been made or obtained prior to the Effective Time and
will then be in full force and effect.
(b) Assuming that all filings, permits, authorizations, consents,
disclosures and approvals required prior to the Effective Time have been duly
made or obtained as contemplated by Section 3.03(a), the execution, delivery and
performance of this Agreement and the Separation Agreement and the consummation
of the Merger and the other transactions contemplated hereby by Adecco will not
(i) subject to approval by the holders of Adecco Common Stock at the Adecco
Special Meeting, violate any provision of the organizational documents of Adecco
or Merger Sub, (ii) violate any statute, rule, regulation, injunction, judgment,
writ, order or decree of any Governmental Authority or court applicable to
Adecco or Merger Sub or by which Adecco or Merger Sub or any of their properties
are bound or (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation, acceleration, redemption or repurchase)
under, any of the terms, conditions or provisions of any (x) note, bond,
mortgage, indenture or deed of trust relating to indebtedness for borrowed money
or (y) license, lease, agreement or other instrument or obligation to which
Adecco or Merger Sub is a party or by which either of them or any of their
properties or assets may be bound, excluding from the foregoing clauses (ii) and
(iii)(y) violations, breaches or defaults that, individually or in the
aggregate, would not either impair Adecco's or Merger Sub's ability to
consummate the Merger or the other transactions contemplated hereby or have an
Adecco Material Adverse Effect.
Section 3.04 Capitalization. At July 4, 1999, the authorized capital
stock of Adecco consists of 19,769,082 shares of Adecco Common Stock and 24,500
shares of Participation Certificates (Class A), nominal value 2.0 CHF per share.
As of July 4, 1999, there were 17,197,948 shares of Adecco Common Stock issued
and outstanding and 67,180 shares of Adecco Common Stock held in Adecco's
treasury. All issued and outstanding shares of capital stock of Adecco are duly
authorized and validly issued, fully paid and nonassessable. The Adecco Common
Stock to be issued in accordance with Section 2.01 hereof, when so issued, will
be duly and validly authorized and, when Adecco ADSs representing the Adecco
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Common Stock to be issued hereunder are issued, the ADSs will be duly and
validly issued, fully paid and nonassessable and free of preemptive rights with
respect thereto. Upon issuance by the Depositary of ADRs evidencing ADSs against
the deposit of Adecco Common Stock in respect thereof in accordance with the
provisions of the Deposit Agreement, such ADRs will be duly and validly issued
and the persons in whose names the ADRs are registered will be entitled to the
rights specified therein and in the Deposit Agreement. Other than pursuant to
the options to acquire Adecco Common Stock, there has not been any issuance of
capital stock of Adecco since July 4, 1999. Adecco is a "foreign private
issuer," as such term is defined in Rule 3b-4(c) under the Exchange Act.
Section 3.05 SEC and Other Filings. (a) Adecco has timely filed with
the SEC, any similar foreign regulatory authority and any stock exchange on
which Adecco Common Stock or Adecco ADRs are listed all required forms, reports,
registration statements and documents required to be filed by it with the SEC or
such other authority since January 1, 1997 (collectively, the "Adecco Reports"),
all of which complied as to form when filed in all material respects with the
applicable provisions of the Securities Act, the Exchange Act or the applicable
laws or regulations of any such authority, as the case may be. As of their
respective dates, the Adecco Reports (including all exhibits and schedules
thereto and documents incorporated by reference therein) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All documents required
to be filed as exhibits to the Adecco Reports have been so filed. None of
Adecco's Subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) Adecco will deliver to Olsten, as soon as they become available,
true and complete copies of any report or statement mailed by Adecco to its
securityholders generally or filed by it with the SEC, any similar foreign
regulatory authority or any stock exchange on which Adecco Common Stock or
Adecco ADRs are listed, in each case subsequent to the date hereof and prior to
the Effective Time. As of their respective dates, such reports and statements
(excluding any information therein provided by Olsten, as to which Adecco makes
no representation) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they are
made, not misleading and will comply in all material respects with all
applicable requirements of law. The audited consolidated financial statements
and unaudited consolidated interim financial statements of Adecco and its
Subsidiaries required to be included or incorporated by reference in such
reports and statements (if any) will be prepared in accordance with U.S. GAAP
(as defined below) and will fairly present the consolidated financial position
of Adecco and its Subsidiaries as of the dates thereof and the consolidated
results of operations and consolidated cash flows for the periods then ended
(subject, in the case of any unaudited interim financial statements, to normal
year-end adjustments and to the extent they may not include footnotes or may be
condensed or summary statements).
Section 3.06 Financial Statements. The audited consolidated financial
statements of Adecco and its Subsidiaries included or incorporated by reference
in any of the Adecco Reports have been prepared in accordance with generally
accepted accounting principles in the United States, applied on a consistent
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basis during the periods involved (except as may be indicated in the notes
thereto) ("U.S. GAAP"), and fairly present in all material respects the
consolidated financial position of Adecco and its Subsidiaries as of the dates
thereof and the consolidated results of operations and consolidated cash flows
for the periods then ended, and such audited consolidated financial statements
are accompanied by an unqualified auditors' report thereon by Adecco's
independent public accountants. The unaudited consolidated balance sheets and
statements of operations as of July 4, 1999 of Adecco and its Subsidiaries
provided to Olsten have been prepared in accordance with U.S. GAAP. The
Consolidated Balance Sheet as at January 3, 1999 of Adecco and its Subsidiaries
contained in such financial statements is hereinafter referred to as the "Adecco
Balance Sheet."
Section 3.07 Absence of Undisclosed Liabilities. As of the date
hereof, neither Adecco nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether absolute, accrued, unmatured, contingent or
otherwise, or any unsatisfied judgments or any unusual or extraordinary
commitments, except for (i) the liabilities recorded on the Adecco Balance Sheet
and/or reflected in the notes thereto, (ii) liabilities and obligations
disclosed in any Adecco Report filed since January 3, 1999 and prior to the date
of this Agreement or in the unaudited consolidated balance sheets as of July 4,
1999 of Adecco and its Subsidiaries provided to Olsten, (iii) liabilities and
obligations incurred since January 3, 1999 in the ordinary course of business
consistent with past practice, which are not unusual in nature or amount and
which would not, individually or in the aggregate, have an Adecco Material
Adverse Effect and (iv) liabilities or obligations that, individually or in the
aggregate, would not have an Adecco Material Adverse Effect.
Section 3.08 Absence of Changes or Events. From January 3, 1999
through the date of this Agreement and except as set forth in the Adecco Reports
filed prior to the date hereof (a) there has been no Adecco Material Adverse
Effect, (b) Adecco and its Subsidiaries have conducted their business only in
the ordinary course and (c) neither Adecco nor any of its Subsidiaries has,
directly or indirectly:
(a) purchased or otherwise acquired, or agreed to purchase or otherwise
acquire, any shares of capital stock of Adecco or any of its Subsidiaries, or
any options, warrants or other equity securities of Adecco or any of its
Subsidiaries, in each case, other than purchases or acquisitions (or agreements
with respect thereto) of minority interests or made in the ordinary course of
business consistent with past practice, or declared, set aside or paid any
dividend or otherwise made a distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock;
(b) instituted any significant change in accounting methods, principles or
practices affecting its assets, liabilities or business, except insofar as may
be appropriate to conform to changes in law or U.S. GAAP; or
(c) agreed to do any of the things described in the preceding clauses (a)
or (b).
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Section 3.09 Litigation. There is no (i) claim, action, suit or
proceeding pending or, to the best of Adecco's knowledge, threatened against
Adecco or any of its Subsidiaries before any court or governmental or regulatory
authority or body or arbitration tribunal or (ii) outstanding judgment, order,
writ, injunction or decree of any court, governmental agency or arbitration
tribunal in a proceeding to which Adecco, any of its Subsidiaries or any of
their respective assets was or is a party, except, in the case of clauses (i)
and (ii) above, such as would not, individually or in the aggregate, either
impair Adecco's or Merger Sub's ability to consummate the Merger or the other
transactions contemplated hereby or have an Adecco Material Adverse Effect.
Section 3.10 Compliance with Laws. Neither Adecco nor any of its
Subsidiaries has violated or failed to comply with any statute, law, ordinance,
regulation, rule or order of any Governmental Authority, or any judgment, decree
or order of any court, applicable to its business or operations, except for any
such violations or failures to comply that, individually or in the aggregate,
would not either impair Adecco's or Merger Sub's ability to consummate the
Merger or the other transactions contemplated hereby or have an Adecco Material
Adverse Effect.
Section 3.11 Taxes. Adecco and each of its Subsidiaries have (i)
timely filed all Tax Returns required to be filed by them (taking into account
extensions) and all such Tax Returns were complete, correct and accurate in all
material respects, (ii) timely paid all Taxes shown to be due on such Tax
Returns, (iii) timely paid all Taxes for which a notice of assessment or
collection has been received (other than amounts being contested in good faith
by appropriate proceedings and properly accrued in accordance with U.S. GAAP),
except in the case of clause (i), (ii) or (iii) for any such filings or payments
that, individually or in the aggregate, would not have an Adecco Material
Adverse Effect. There are no liens for Taxes upon the assets of Adecco or any of
its Subsidiaries (other than liens for Taxes that are not yet due). "Tax" or
"Taxes" shall mean any U.S. federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not,
and shall include any transferee liability in respect of Taxes and any liability
in respect of Taxes imposed by contract, tax sharing agreement, tax indemnity
agreement or any similar agreement. "Tax Return" shall mean any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
Section 3.12 Employee Benefit Plans; ERISA. (a) To the extent
required, Adecco and each of its Subsidiaries are in compliance with the
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Code and other applicable laws with respect to the
employee benefit plans (within the meaning of Section 3(3) of ERISA) maintained
or contributed to by Adecco or its Subsidiaries, except where the failure to
comply would not, singly or in the aggregate, reasonably be expected to have an
Adecco Material Adverse Effect. Adecco and each of its Subsidiaries are in
compliance with applicable laws with respect to each of Adecco's material Adecco
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Foreign Plans (as hereinafter defined), except where the failure to comply would
not, singly or in the aggregate, reasonably be expected to have an Adecco
Material Adverse Effect. For purposes of this Agreement, the term "Adecco
Foreign Plan" shall mean any employee benefit plan, program, policy or
arrangement maintained or contributed to, by, or entered into with, Adecco or
any of its Subsidiaries with respect to employees (or former employees) employed
outside the United States.
(b) Neither Adecco nor any of its Subsidiaries nor any of their ERISA
Affiliates (as defined below) has incurred, or reasonably expects to incur, any
liability to the Pension Benefit Guaranty Corporation (the "PBGC") or to a
trustee appointed under Section 4042(b) or (c) of ERISA other than for the
payment of premiums, all of which have been paid when due. For purposes of this
Agreement, "ERISA Affiliate" shall mean any person (as defined in Section 3(9)
of ERISA) that is a member of any group of persons described in Section 414(b),
(c) or (m) of the Code which includes the referent person or its Subsidiaries.
(c) Neither Adecco nor any of its Subsidiaries nor any of their ERISA
Affiliates has any liability (including any contingent liability under Section
4204 of ERISA) with respect to any multiemployer plan, within the meaning of
Section 3(37) of ERISA, except for any such liability which would not, singly or
in the aggregate, reasonably be expected to have an Adecco Material Adverse
Effect.
Section 3.13 Environmental Matters. Except as would not have an Adecco
Material Adverse Effect, Adecco and each of its subsidiaries are in compliance
with and have no liability under applicable Environmental Laws (as hereinafter
defined). As used in this Agreement, the term "Environmental Laws" means the
common law, and any law, statute, rule, regulation, ordinance, judgment,
directive, order or decree relating to pollution or protection of the
environment, including without limitation, natural resources, or to human health
or safety.
Section 3.14 Finders or Brokers. Other than Goldman, Sachs & Co.,
neither Adecco nor any of its Subsidiaries has employed any investment banker,
broker, finder or intermediary in connection with the transactions contemplated
hereby who might be entitled to a fee or any commission the receipt of which is
conditioned upon consummation of the Merger or the amount of which is calculated
with reference to any part of the Closing Consideration.
Section 3.15 Board Recommendation. The Board of Directors of Adecco
has, by a unanimous vote at a meeting of such Board duly held on August 12,
1999, approved and adopted the Merger and the other transactions contemplated
hereby, and determined that the Agreement, the Separation Agreement, the Merger
and the other transactions contemplated hereby, taken together, are in the best
interest of the stockholders of Adecco, and prior to the date hereof resolved to
recommend that the holders of Adecco Common Stock approve the Adecco Stockholder
Proposals.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF OLSTEN
Subject to the disclosure schedule delivered by Olsten to Adecco and
Merger Sub at or prior to the execution of this Agreement (the "Olsten
Disclosure Statement"), the section numbers of which are numbered to correspond
to the section numbers of this Agreement to which they relate, Olsten represents
and warrants to Adecco and Merger Sub as follows:
Section 4.01 Organization, Etc. Olsten is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware and has all requisite power and authority to own, lease and operate its
properties and assets and to carry on its business as it is now being conducted.
Olsten is duly qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated or the nature of its activities makes such qualification
necessary, except for failures to be so qualified or in good standing that would
not, individually or in the aggregate, have a material adverse effect on the
business, results of operations, assets or condition (financial or otherwise) of
(i) Olsten and its Subsidiaries taken as a whole, or (ii) Olsten and the
Retained Subsidiaries, taken as a whole, other than any change or effect arising
out of or resulting from general economic conditions or conditions affecting the
staffing services industry (a "Olsten Material Adverse Effect"). Olsten is not
in violation of any of the provisions of its organizational documents. Complete
and correct copies of the organizational documents, as currently in effect, of
Olsten have been made available to Adecco.
Section 4.02 Authority. Olsten has full corporate power and authority
to execute and deliver this Agreement and the Separation Agreement and, subject
to approval by the requisite holders of the outstanding shares of Olsten Stock
and Olsten Class B Stock, voting together as a single class, at the Olsten
Special Meeting, to consummate the Merger, the Split-Off and the other
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Separation Agreement and the consummation of the Merger, the
Split-Off and the other transactions contemplated hereby and thereby have been
duly and validly authorized by the Board of Directors of Olsten, and no other
corporate proceedings on the part of Olsten are necessary to authorize this
Agreement or the Separation Agreement or to consummate the Merger, the Split-Off
and the other transactions contemplated hereby and thereby (other than the
approval of and adoption of this Agreement, the Merger and the other
transactions contemplated hereby at the Olsten Special Meeting or any
adjournment thereof by the requisite holders of the outstanding shares of Olsten
Common Stock and Olsten Class B Stock, voting together as a single class). Each
of this Agreement and the Separation Agreement has been duly and validly
executed and delivered by Olsten and, in the case of Separation Agreement, OHS,
and assuming the due authorization, execution and delivery hereof by Adecco and
Merger Sub, in the case of the Merger Agreement, constitutes a valid and binding
agreement of Olsten and, in the case of the Separation Agreement, OHS,
enforceable against Olsten, and in the case of the Separation Agreement, 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.
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Section 4.03 Consents; No Violations, Etc. (a) No filing or
registration with, or permit, authorization, consent or approval of, or
notification or disclosure to, any Governmental Authority, court or third party
is required by Olsten or OHS in connection with the execution and delivery of
this Agreement and the Separation Agreement or the consummation by Olsten of the
Merger and the consummation by Olsten and OHS of the Split-Off and the other
transactions contemplated hereby and thereby, except (i) in connection with the
applicable requirements of the HSR Act and applicable foreign antitrust or other
similar laws, (ii) in connection with the provisions of the Securities Act and
the Exchange Act, (iii) the filings of appropriate merger documents as required
by the Delaware Act, (iv) such consents, approvals, orders, permits,
authorizations, registrations, declarations and filings as may be required under
the Blue Sky laws of various states and (v) such consents, approvals, orders,
permits, authorizations, registrations, declarations and filings which will have
been made or obtained prior to the Effective Time and will then be in full force
and effect.
(b) Assuming that all filings, permits, authorization, consents,
disclosures and approvals required prior to the Effective Time have been duly
made or obtained as contemplated by Section 4.03(a), the execution and delivery
of this Agreement and the Separation Agreement and the consummation by Olsten of
the Merger and Olsten and OHS of the Split-Off and the other transactions
contemplated hereby and thereby will not (i) subject to obtaining the approval
of the requisite holders of the outstanding shares of Olsten Common Stock and
Olsten Class B Stock, voting together as a single class, violate any provision
of the organizational documents of Olsten or any of its Subsidiaries, (ii)
violate any statute, rule, regulation, injunction, judgment, writ, order or
decree of any Governmental Authority or court applicable to Olsten or any of its
Subsidiaries or by which Olsten, any of its Subsidiaries or any of their
properties are bound or (iii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation, acceleration, redemption or repurchase)
under, any of the terms, conditions or provisions of any (x) note, bond,
mortgage, indenture or deed of trust relating to indebtedness for borrowed money
or Governmental Settlement Agreement (as defined in the Separation Agreement) or
(y) license, lease, agreement or other instrument or obligation to which Olsten
or any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, excluding from the foregoing clauses (ii) and
(iii)(y) violations, breaches or defaults that, individually or in the
aggregate, would not either impair Olsten's or OHS', as applicable, ability to
consummate the Merger or Split-Off or the other transactions contemplated hereby
or by the Separation Agreement or have an Olsten Material Adverse Effect.
Section 4.04 Capitalization. The authorized capital stock of Olsten
consists of 110,000,000 shares of Olsten Stock, 50,000,000 shares of Olsten
Class B Stock and 250,000 shares of preferred stock, par value $.10 per share.
As of April 4, 1999, there were 68,255,667 shares of Olsten Stock outstanding,
13,068,973 shares of Olsten Class B Stock outstanding, 45,700 shares of Olsten
Stock held in Olsten's treasury and 7,475,040 shares of Olsten Common Stock
(including 5,731,342 shares of Olsten Stock and 1,743,698 shares of Olsten Class
B Stock) reserved for issuance upon the exercise of options theretofore granted
pursuant to the Olsten Plans and upon conversion of the Quantum Debt (as defined
in the Separation Agreement). All issued and outstanding shares of capital stock
of Olsten are duly authorized and validly issued, fully paid, nonassessable and
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free of preemptive rights with respect thereto. Section 4.04 of the Olsten
Disclosure Statement lists each Olsten Plan and each outstanding option and
stock grant as of August 12, 1999, the number of shares of Olsten Common Stock
to be received upon exercise thereof and the exercise price of each such option
(the "Olsten Common Stock Equivalents"). Except for the Olsten Common Stock
Equivalents and the Quantum Debt, there are no options, warrants, calls,
subscriptions, or other rights, agreements or commitments obligating Olsten to
issue, transfer or sell any shares of capital stock of Olsten or any other
securities convertible into or evidencing the right to subscribe for any such
shares. Other than stock, if any, issued pursuant to the Olsten Plans, stock, if
any, issued upon conversion of the Quantum Debt and stock, if any, issued upon
exercise of stock options or the vesting of stock grants pursuant to the Olsten
Common Stock Equivalents, there has not been any issuance of capital stock of
Olsten since August 12, 1999. There are no outstanding stock appreciation rights
with respect to the capital stock of Olsten. At and after the Effective Time,
none of the options or warrants exercisable for or other securities convertible
into shares of capital stock of Olsten shall, then or thereafter, continue to be
so exercisable or convertible into capital stock or other claim on the equity of
Olsten.
Section 4.05 SEC Filings. (a) Olsten has timely filed with the SEC and
any stock exchange on which Olsten Common Stock is listed all required forms,
reports, registration statements and documents required to be filed by it with
the SEC or such other authority since January 1, 1996 (collectively, the "Olsten
SEC Reports"), all of which complied as to form when filed in all material
respects with the applicable provisions of the Securities Act or the Exchange
Act or the applicable laws or regulations of any such authority, as the case may
be. As of their respective dates, the Olsten SEC Reports (including all exhibits
and schedules thereto and documents incorporated by reference therein) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except as
set forth in Section 4.05(a) of the Olsten Disclosure Statement, all documents
required to be filed as exhibits to the Olsten SEC Reports have been so filed.
None of Olsten's subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Olsten will deliver to Adecco as soon as they become available
true and complete copies of any report or statement mailed by Olsten to its
securityholders generally or filed by it with the SEC, in each case subsequent
to the date hereof and prior to the Effective Time. As of their respective
dates, such reports and statements (excluding any information therein provided
by Adecco, as to which Olsten makes no representation) will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading and will comply in
all material respects with all applicable requirements of law. The audited
consolidated financial statements and unaudited consolidated interim financial
statements of Olsten and its Subsidiaries to be included or incorporated by
reference in such reports and statements will be prepared in accordance with
U.S. GAAP and regulations of the SEC applicable to public companies and will
fairly present the consolidated financial position of Olsten and its
Subsidiaries as of the dates thereof and the consolidated results of operations
and consolidated cash flows for the periods then ended (subject, in the case of
any unaudited interim financial statements, to normal year-end adjustments and
to the extent they may not include footnotes or may be condensed or summary
statements).
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Section 4.06 Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Olsten and
its Subsidiaries included or incorporated by reference in any of the Olsten SEC
Reports have been prepared in accordance with U.S. GAAP and regulations of the
SEC applicable to public companies and fairly present in all material respects
the consolidated financial position of Olsten and its Subsidiaries as of the
dates thereof and the consolidated results of operations and consolidated cash
flows for the periods then ended (subject, in the case of any unaudited interim
financial statements, to normal year-end adjustments and to the extent they may
not include footnotes or may be condensed or summary statements), and such
audited consolidated financial statements are accompanied by an unqualified
opinion thereon by Olsten's independent accountants. The Consolidated Balance
Sheet as at January 3, 1999 of Olsten and its Subsidiaries contained in such
financial statements is hereinafter referred to as the "Olsten Balance Sheet."
Section 4.07 Absence of Undisclosed Liabilities. As of the date
hereof, neither Olsten nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether absolute, accrued, unmatured, contingent or
otherwise, or any unsatisfied judgments or any unusual or extraordinary
commitments, except for (i) the liabilities recorded on the Olsten Balance Sheet
and/or reflected in the notes thereto, (ii) liabilities and obligations
disclosed in any Olsten SEC Report filed since January 3, 1999 and prior to the
date of this Agreement, (iii) liabilities and obligations incurred since January
3, 1999 in the ordinary course of business consistent with past practice, which
are not unusual in nature or amount and which would not, individually or in the
aggregate, have an Olsten Material Adverse Effect and (iv) liabilities or
obligations that, individually or in the aggregate, would not have an Olsten
Material Adverse Effect.
Section 4.08 Absence of Changes or Events. From January 3, 1999
through the date of this Agreement and except as set forth in the Olsten SEC
Reports filed prior to the date hereof: (a) there has been no Olsten Material
Adverse Effect, (b) Olsten and its Subsidiaries have conducted their business
only in the ordinary course and (c) neither Olsten nor any of its Subsidiaries
has, directly or indirectly:
(a) other than pursuant to any Olsten Plan, issued any capital stock or
purchased, redeemed or otherwise acquired, or agreed to purchase, redeem or
otherwise acquire, any shares of capital stock of Olsten or any of its
Subsidiaries, or issued or purchased any options, warrants or other equity
securities, debt securities or evidence of indebtedness of Olsten or any of its
Subsidiaries, or declared, set aside or paid any dividend or otherwise made a
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock;
(b) split, combined or reclassified any of its capital stock;
(c) (i) assumed, guaranteed, endorsed or otherwise as an accommodation
become responsible for the obligations of any other individual, firm or
corporation (other than any wholly-owned Subsidiary of Olsten), or made any
loans or advances to any other individual, firm or corporation (other than loans
among Olsten and any of its wholly-owned Subsidiaries) except in the ordinary
course of business consistent with past practice; or (ii) incurred any
liabilities, except for liabilities that, individually or in the aggregate,
would not reasonably be expected to have an Olsten Material Adverse Effect;
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(d) made any payment with respect to any option, warrant or other equity
security, or any debt security or evidence of indebtedness of Olsten or any of
its Subsidiaries (other than regular, periodic payments of principal and/or
interest required pursuant to the terms of the applicable security or
instrument);
(e) instituted any significant change in accounting methods, principles or
practices affecting its assets, liabilities, reserve or expense recognition,
reserves, amortization or accruals, except insofar as may be appropriate to
conform to changes in law or U.S. GAAP;
(f) revalued any of its assets, including without limitation, writing down
the value of inventory or notes or accounts receivables;
(g) suffered any damage, destruction or loss, whether covered by insurance
or not, except for such that, individually or in the aggregate, would not have
an Olsten Material Adverse Effect;
(h) since the date of the information contained in Olsten's proxy
statement dated April 13, 1999, (i) increased in any manner the compensation or
benefits of any of its directors or, except in the ordinary course of business
consistent with past practice, officers or employees, except in each case as
required under plans or arrangements existing at April 13, 1999; (ii) paid or
agreed to pay any pension, retirement allowance or other employee benefit not
required under agreements, plans or arrangements existing at April 13, 1999;
(iii) paid any bonus, except for bonuses paid in the ordinary course of business
consistent with past practice; (iv) granted any severance or termination pay to
any person, or entered into any employment consulting and severance agreement
with, any person providing for total compensation and severance payments in
excess of $100,000; (v) entered into or made any material modification or
amendment to, any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving Olsten of the nature contemplated hereby or by the
Separation Agreement, or (vi) become obligated under any new pension plan,
welfare plan, multiemployer plan, employee benefit plan, benefit arrangement or
similar plan or arrangement (including any bonus, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other benefit plan, contract, agreement
or understanding) that was not in existence as a plan of Olsten prior to April
13, 1999, or amended any such plan or arrangement in existence at or prior to
April 13, 1999, in each case except as may be required by applicable law;
(i) sold, transferred, pledged, mortgaged, or otherwise disposed of, or
leased or licensed to or from any person, or encumbered, any material properties
or assets, real, personal or mixed, except in the ordinary course of business;
or
(j) agreed to do any of the things described in the preceding clauses (a)
through (i).
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Section 4.09 Litigation. Except as described specifically in the
Olsten SEC Reports filed prior to the date hereof, there is no (i) claim,
action, suit or proceeding pending or, to Olsten's knowledge, threatened against
Olsten or any of its Subsidiaries before any court or governmental or regulatory
authority or body or arbitration tribunal or (ii) outstanding judgment, order,
writ, injunction or decree of any court, governmental agency or arbitration
tribunal in a proceeding to which Olsten, any of its Subsidiaries or any of
their respective assets was or is a party, except, in the case of clauses (i)
and (ii) above, such as would not, individually or in the aggregate, either
impair Olsten's or OHS' (as applicable) ability to consummate the Merger, the
Split-Off or the other transactions contemplated hereby or by the Separation
Agreement or have an Olsten Material Adverse Effect.
Section 4.10 Subsidiaries and Investments. (a) Section 4.10(a) of the
Olsten Disclosure Statement contains a complete list as of the date hereof of
each Subsidiary of Olsten and sets forth with respect to each of Olsten's
Subsidiaries its name and jurisdiction of organization and, with respect to each
Subsidiary of Olsten that is not wholly-owned, the percentage of share capital
owned by Olsten or a Subsidiary of Olsten. Each Subsidiary of Olsten is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and, except as would not, individually or in the
aggregate, have an Olsten Material Adverse Effect, has all requisite power and
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted. Each subsidiary of Olsten is duly qualified
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned, leased or operated or the nature of its
activities makes such qualification necessary, except for failures to be so
qualified or in good standing that, individually or in the aggregate, would not
have an Olsten Material Adverse Effect. All of the outstanding shares of capital
stock or share capital of each Subsidiary of Olsten are validly issued, fully
paid and nonassessable, and those owned by Olsten or by a Subsidiary of Olsten
are owned free and clear of any liens, claims or encumbrances. There are no
options, warrants, calls, subscriptions or other rights, agreements or
commitments obligating any of the Subsidiaries of Olsten to issue, transfer or
sell any shares of its capital stock or other securities convertible into or
evidencing the right to subscribe for any such shares.
(b) Section 4.10(b) of the Olsten Disclosure Statement lists, as of
the date hereof, each corporation, partnership, joint venture or other business,
association or entity (other than its Subsidiaries) in which Olsten or any of
its Subsidiaries owns, directly or, to the knowledge of Olsten, indirectly, an
equity interest other than any ownership interest of less than 5% of the
outstanding equity securities of any issuer whose securities are registered
under the Exchange Act.
(c) Section 4.10(c) of the Olsten Disclosure Statement lists all
agreements which contain liabilities or obligations whether absolute, accrued,
contingent, matured, unmatured or otherwise of Olsten and its Subsidiaries for
earn-outs or other similar payments related to acquisitions and other similar
transactions and all puts and other buy-out obligations related to minority
interests.
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Section 4.11 Compliance with Laws. (a) Except as described
specifically in the Olsten SEC Reports filed prior to the date hereof, (i)
neither Olsten nor any of its Subsidiaries has violated or failed to comply with
any statute, law, ordinance, regulation, rule or order of any Governmental
Authority, or any judgment, decree or order of any court, applicable to it, its
business or operations or by which it, its business or operations are bound,
except for any such violations or failures to comply that, individually or in
the aggregate, would not impair Olsten's or OHS' (as applicable) ability to
consummate the Merger, the Split-Off and the other transactions contemplated
hereby or by the Separation Agreement or have an Olsten Material Adverse Effect,
(ii) no investigation or review by any Governmental Authority is pending or, to
Olsten's knowledge, has been threatened against Olsten or any of its
Subsidiaries, nor, to Olsten's knowledge, has any Governmental Authority
indicated by written notice or, to Olsten's knowledge, otherwise, an intention
to conduct an investigation of Olsten or any of its Subsidiaries, other than any
such investigation which would not, individually or in the aggregate, impair
Olsten's or OHS' (as applicable) ability to consummate the Merger, the Split-Off
or the other transactions contemplated hereby or by the Separation Agreement or
have an Olsten Material Adverse Effect; (iii) neither Olsten nor any of its
Subsidiaries is liable, either primarily or jointly and severally with any other
party, for any fines, penalties or other amounts payable to any Governmental
Authority in an aggregate amount in excess of $5,000,000 and (iv) there is no
agreement, judgement, injunction, order or decree binding upon Olsten or any of
its Subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Olsten or any of
its Subsidiaries, any acquisition of material property by Olsten or any of its
Subsidiaries, the conduct of business by Olsten as currently conducted, or the
Merger or Split-Off or the other transactions contemplated by this Agreement and
the Separation Agreement. Other than as disclosed by Olsten to Adecco, Olsten
and its Subsidiaries are each in compliance, in all material respects, with all
material laws and regulations relating to franchising and their relationship
with their franchisees and licensed area representatives.
(b) Each of Olsten and its Subsidiaries has such certificates,
permits, licenses, franchises, consents, approvals, orders, authorizations and
clearances from appropriate Governmental Authorities ("Olsten Licenses") as are
necessary to own, lease or operate its properties and assets and to conduct its
business in the manner described in the Olsten SEC Reports and as presently
conducted and all such Olsten Licenses are valid and in full force and effect,
except for any failures to have any such Olsten License or any failures of any
such Olsten License to be valid and in full force and effect that, individually
or in the aggregate, would not have an Olsten Material Adverse Effect. Each of
Olsten and its Subsidiaries is, and within the period of all applicable statues
of limitation has been, in compliance with its obligations under such Olsten
Licenses and no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination of such Olsten Licenses, except for any
such failures to be in compliance with such obligations or any such revocations
or terminations that, individually or in the aggregate, would not have an Olsten
Material Adverse Effect. Olsten has no knowledge of any facts or circumstances
that could reasonably be expected to result in an inability of Olsten or any of
its Subsidiaries to renew any Olsten License. Neither the execution and delivery
by Olsten of this Agreement or by Olsten and OHS of the Separation Agreement nor
the consummation of the Merger or the Split-Off or any of the other transactions
contemplated herein or therein will result in any revocation or termination of
any Olsten License, except for Olsten Licenses, the revocation or termination of
which would not, individually or in the aggregate, have an Olsten Material
Adverse Effect or impair, in any material respect, the operation of the Retained
Businesses after the Merger.
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Section 4.12 Intellectual Property Rights. To Olsten's knowledge,
Olsten and its Subsidiaries own or have the right to use all Olsten Intellectual
Property Rights (as defined below) necessary to the conduct of their respective
businesses, except for such lack or defects in ownership or possession as would
not, individually or in the aggregate, have an Olsten Material Adverse Effect.
There have been no written claims or assertions made by others that Olsten or
any of its Subsidiaries has infringed any material intellectual property rights
of others in the preceding three year period and, to Olsten's knowledge, there
has been no such infringement by Olsten or any of its Subsidiaries during this
period except for such infringements that, individually or in the aggregate,
would not have an Olsten Material Adverse Effect. Olsten has no knowledge of any
infringement of Olsten Intellectual Property Rights by others, except for such
infringements that, individually or in the aggregate, would not have an Olsten
Material Adverse Effect. All material issued patents, registered trademarks and
service marks owned by Olsten or its Subsidiaries are recorded on the public
record in the name of Olsten or its Subsidiaries, except to the extent that the
failure to be so recorded would not materially impair the ownership, use or
protection of such patents, trademarks and service marks .
Section 4.12 of the Olsten Disclosure Statement contains a list of all
material patents, trade names, registered copyrights, registered and
unregistered trademarks and service marks and applications for the foregoing
owned by Olsten or its Subsidiaries. Olsten and/or its Subsidiaries have clear
and unencumbered title to the Olsten Intellectual Property Rights set forth in
Section 4.12 of the Olsten Disclosure Statement and such title has not been
challenged (pending or threatened) by others except for the encumbrances listed
therein.
"Olsten Intellectual Property Rights" shall mean and include rights
relating to Olsten's or its Subsidiaries, patents, trademarks, service marks,
trade names, copyrights, and all currently pending applications for any thereof,
and any inventions, processes, trade secrets, know-how, confidentiality
agreements, consulting agreements, software systems, proprietary field systems,
software licenses or options to obtain rights or licenses.
Section 4.13 Taxes.
(a) Filing of Tax Returns. Olsten and its Subsidiaries have timely
filed, taking into account extensions, with the proper taxing or other
governmental authorities all Tax Returns (as such term is defined in Section
3.11) required to be filed through the date hereof. Such Tax Returns are
complete, correct and accurate in all respects. Olsten and its Subsidiaries have
delivered to Adecco complete and accurate copies of all consolidated federal,
state and local income or franchise Tax Returns filed by Olsten and its
Subsidiaries for their taxable year ended December 28, 1997.
(b) Payment of Taxes. Olsten and its Subsidiaries have paid or will
have paid all Taxes for all periods or portions thereof ending on or before the
Effective Time, or adequate reserves (in conformity with U.S. GAAP applied on a
consistent basis and consistent with such entity's past custom and practice)
have been established therefor, and Olsten and its Subsidiaries have no material
liability for Taxes in excess of the amounts so paid or reserves so established.
All Taxes that Olsten and each of its Subsidiaries have been required to collect
or withhold have been duly collected or withheld and, to the extent required
when due, have been or will be duly paid to the proper taxing or other
governmental authority.
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(c) Audit History.
(i) No deficiencies for Taxes of Olsten or any of its
Subsidiaries have been claimed in writing or assessed by any taxing or
other governmental authority, which deficiencies have not been paid or
finally settled.
(ii) There are no pending or, to Olsten's knowledge, threatened
audits, investigations or claims for or relating to any liability in
respect of Taxes of Olsten or its Subsidiaries.
(iii) No extension of a statute of limitations relating to Taxes
is in effect with respect to Olsten or any of its Subsidiaries.
(d) Tax Elections.
(i) Olsten and each of its Subsidiaries have not made any
elections, and are not required, to treat any of their assets as owned by
another person or as tax-exempt bond financed property or tax-exempt use
property within the meaning of Section 168 of the Code or under any
comparable state or local income Tax or other Tax provision.
(ii) Olsten and its Subsidiaries are not parties to or bound by
any tax sharing, tax indemnity or tax allocation agreement or other similar
arrangement with any other person or entity (including, without limitation,
any advance pricing agreement, closing agreement or other agreement
relating to Taxes with any taxing authority).
(iii) Olsten and its Subsidiaries have not filed consents
pursuant to the collapsible corporation provisions of Section 341(f) of the
Code (or any corresponding provision of state or local law) or agreed to
have Sections 341(f)(2) of the Code (or any corresponding provision of
state or local law) apply to any disposition of any asset owned by it.
(e) Additional Representations.
(i) There are no liens for Taxes (other than for Taxes not yet
delinquent) upon the assets of Olsten or any of its Subsidiaries.
(ii) Since 1992, Olsten and its Subsidiaries have never been
members of an affiliated group of corporations within the meaning of
Section 1504 of the Code, with the exception of the affiliated group for
which Olsten is the common parent. Neither Olsten nor any of its
Subsidiaries, or any predecessor or affiliate of any of them, has become
liable (whether by contract, as transferee or successor, by law or
otherwise) for the Taxes of any other person or entity under Treasury
Regulation section 1.1502-6 or any similar provision of state, local or
foreign law, except for other members of the affiliated group of which
Olsten is the common parent.
(iii) Olsten and its Subsidiaries have not made, requested or
agreed to make, nor are they required to make, any adjustment under Section
481(a) of the Code by reason of a change in accounting method or otherwise
for any taxable year.
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(iv) Neither Olsten nor any of its Subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of any amount as to which a
deduction may be denied under Section 162(m) of the Code.
(v) Olsten and its Subsidiaries have not been "United States real
property holding corporations" within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section
897(c)(1)(A)(ii).
(vi) Olsten and its Subsidiaries have properly requested,
received and retained all necessary exemption certificates and other
documentation supporting any claimed exemption or waiver of Taxes on sales
or other transactions as to which Olsten and its Subsidiaries would have
been obligated to collect or withhold Taxes, except for any failure to do
so which would not be expected to have a Material Adverse Effect on Olsten
and its Subsidiaries taken as a whole.
(vii) There is no contract, agreement, plan or arrangement
covering any employee or former employee of Olsten or any of its
Subsidiaries (with respect to such employee's relationship with Olsten or
the applicable Subsidiary) that, individually or collectively, requires, or
in any prior period required, the payment by Olsten or any of its
Subsidiaries of any amount (i) that is or was not deductible under Section
162(a)(1) or 404 of the Code or (ii) that is or was an "excess parachute
payment" pursuant to Section 280G of the Code.
Section 4.14 Employee Benefit Plans; ERISA. (a) Olsten has disclosed
to Adecco in Section 4.14(a) of the Olsten Disclosure Statement all "employee
pension benefit plans" (as defined in Section 3(2) of ERISA) maintained or
contributed to by Olsten or any of its Subsidiaries or any of their ERISA
Affiliates, or to which Olsten or any of its Subsidiaries or any of their ERISA
Affiliates contributes or is obligated to make payments thereunder or otherwise
may have any liability (collectively, the "Olsten Pension Benefit Plans").
(b) Olsten has delivered or made available to Adecco true and complete
copies of all "welfare benefit plans" (as defined in Section 3(1) of ERISA)
maintained or contributed to by Olsten or any of its Subsidiaries (the "Olsten
Welfare Plans"), all multiemployer plans (as defined in Section 3(37) of ERISA)
to which Olsten or any of its Subsidiaries or any of their ERISA Affiliates is
required to make contributions or otherwise may have any liability and all stock
bonus, stock option, restricted stock, stock appreciation right, stock purchase,
bonus, incentive, deferred compensation, severance and vacation plans maintained
or contributed to by Olsten or a Subsidiary of Olsten.
(c) Olsten and each of its Subsidiaries and each of the Olsten Pension
Benefit Plans and Olsten Welfare Plans are in compliance with the applicable
provisions of ERISA, the Code and other applicable laws with respect to the
Olsten Pension Benefit Plans and Olsten Welfare Plans, except where the failure
to comply would not, singly or in the aggregate with all other failures,
non-compliance, liabilities, transactions, events and other matters that are the
subject of any representation and warranty under this Section 4.14, reasonably
be expected to have an Olsten Material Adverse Effect.
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(d) All contributions to, and payments from, the Olsten Pension
Benefit Plans which are required to have been made in accordance with the Olsten
Pension Benefit Plans and, when applicable, Section 302 of ERISA or Section 412
of the Code have been timely made, except where the failure to make such
contributions or payments on a timely basis would not, singly or in the
aggregate with all other failures, non-compliance, liabilities, transactions,
events and other matters that are the subject of any representation and warranty
under this Section 4.14, reasonably be expected to have an Olsten Material
Adverse Effect.
(e) The Olsten Pension Benefit Plans intended to qualify under Section
401 of the Code have been determined by the Internal Revenue Service (the "IRS")
to be so qualified and nothing has occurred with respect to the operation of
such Olsten Pension Benefit Plans which would reasonably be expected to cause
the loss of such qualification or exemption or the imposition of any material
liability, penalty or tax under ERISA or the Code.
(f) There are (i) no investigations pending, to the knowledge of
Olsten, by any governmental entity involving the Olsten Pension Benefit Plans or
Olsten Welfare Plans, (ii) no termination proceedings involving the Olsten
Pension Benefit Plans and (iii) no pending or, to Olsten's knowledge, threatened
claims (other than routine claims for benefits), suits or proceedings with
respect to any Olsten Pension Benefit Plan or Olsten Welfare Plan, against the
assets of any of the trusts under any Olsten Pension Benefit Plan or Olsten
Welfare Plan or against any fiduciary of any Olsten Pension Benefit Plan or
Olsten Welfare Plan with respect to the operation of such plan or asserting any
rights or claims to benefits under any Olsten Pension Benefit Plan or against
the assets of any trust under such plan, nor, to Olsten's knowledge, are there
any facts which would give rise to any such investigations, claims, suits or
proceedings, except for any such matter which would not, singly or in the
aggregate with all other failures, non-compliance, liabilities, transactions,
events and other matters that are the subject of any representation and warranty
under this Section 4.14, reasonably be expected to have an Olsten Material
Adverse Effect.
(g) None of Olsten, any of its Subsidiaries or any employee of the
foregoing, nor any trustee, administrator, other fiduciary or any other "party
in interest" or "disqualified person" with respect to the Olsten Pension Benefit
Plans or Olsten Welfare Plans, has engaged in a "prohibited transaction" (as
such term is defined in Section 4975 of the Code or Section 406 of ERISA) which
would be reasonably likely to result in a tax, penalty, or other liability on
Olsten or any of its Subsidiaries under Section 4975 of the Code or Section
502(i) of ERISA, except any such event which would not, singly or in the
aggregate with all other failures, non-compliance, liabilities, transactions,
events and other matters that are the subject of any representation and warranty
under this Section 4.14, reasonably be expected to have an Olsten Material
Adverse Effect.
(h) Neither the Olsten Pension Benefit Plans subject to Title IV of
ERISA nor any trust created thereunder has been terminated nor have there been
any "reportable events" (as defined in Section 4043 of ERISA and the regulations
thereunder) with respect to either thereof, nor has there been any event with
respect to any Olsten Pension Benefit Plan requiring disclosure under Section
4063(a) of ERISA or any event with respect to any Olsten Pension Benefit Plan
requiring disclosure under Section 4041(c)(3)(C) of ERISA.
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(i) Neither Olsten nor any Subsidiary of Olsten nor any of their ERISA
Affiliates has incurred any currently outstanding liability to the PBGC or to a
trustee appointed under Section 4042(b) or (c) of ERISA other than for the
payment of premiums, all of which have been paid when due. No Olsten Pension
Benefit Plan has applied for, or received, a waiver of the minimum funding
standards imposed by Section 412 of the Code. The information supplied to the
actuary by Olsten or any of its Subsidiaries for use in preparing the most
recent actuarial report for the Olsten Pension Benefit Plans is complete and
accurate in all material respects.
(j) Neither Olsten, any of its Subsidiaries nor any of their ERISA
Affiliates has any material liability (including any contingent liability under
Section 4204 of ERISA) with respect to any multiemployer plan, within the
meaning of Section 3(37) of ERISA.
(k) With respect to each of the Olsten Pension Benefit Plans and
Olsten Welfare Plans, true, correct and complete copies of the following
documents have been delivered or made available to Adecco: (i) the current plans
and related trust documents, including amendments thereto, (ii) any current
summary plan descriptions, (iii) the most recent Forms 5500, financial
statements and actuarial reports, if applicable, and (iv) the most recent IRS
determination letter, if applicable, and (v) any filings with or correspondence
to or from the IRS, or compliance statements, with respect to self-corrections
of any disqualifying defects pursuant to Revenue Procedure 98-22.
(l) Neither Olsten, any of its Subsidiaries, any organization to which
Olsten is a successor or parent corporation, within the meaning of Section
4069(b) of ERISA, nor any of their ERISA Affiliates has engaged in any
transaction described in Section 4069(a) of ERISA which would reasonably be
expected to result in a material liability to Olsten or its Subsidiaries.
(m) None of the Olsten Welfare Plans maintained by Olsten or any of
its Subsidiaries are retiree life or retiree health insurance plans which
provide for continuing benefits or coverage for any participant or any
beneficiary of a participant following termination of employment, except as may
be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), or except at the expense of the participant or the
participant's beneficiary. Olsten and each of its Subsidiaries which maintain a
"group health plan" within the meaning of Section 5000(b)(1) of the Code have
complied with the notice and continuation requirements of Section 4980(B) of the
Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the regulations
thereunder, except for noncompliance which would not, singly or in the aggregate
with all other failures, non-compliance, liabilities, transactions, events and
other matters that are the subject of any representation and warranty under this
Section 4.14, reasonably be expected to have an Olsten Material Adverse Effect.
(n) No liability under any Olsten Pension Benefit Plan or Olsten
Welfare Plan has been funded nor has any such obligation been satisfied with the
purchase of a contract from an insurance company as to which Olsten or any of
its Subsidiaries has received notice that such insurance company is in
rehabilitation.
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(o) The execution of, and consummation of the transactions
contemplated by, this Agreement and the Separation Agreement will not, either
alone or upon the occurrence of subsequent events, result in an increase in the
amount of compensation or benefits or accelerate the vesting or timing of
payment or funding of any benefits or compensation payable to or in respect of
any employee or former employee of Olsten or any of its Subsidiaries. Olsten has
disclosed to Adecco in the Olsten Disclosure Statement any severance agreements
or severance policies of Olsten or its Subsidiaries providing benefits in the
event of a change of control of Olsten.
(p) Olsten has disclosed to Adecco in Section 4.14(p) of the Olsten
Disclosure Statement each of Olsten's material Olsten Foreign Plans (as
hereinafter defined) to the extent the benefits provided thereunder are not
mandated by the laws of the applicable foreign jurisdiction. Olsten and each of
its Subsidiaries and each of such Olsten Foreign Plans are in compliance with
applicable laws and all required contributions have been made to the Olsten
Foreign Plans, except where the failure to comply or make contributions would
not, singly or in the aggregate with all other failures, non-compliance,
liabilities, transactions, events and other matters that are the subject of any
representation and warranty under this Section 4.14, reasonably be expected to
have an Olsten Material Adverse Effect. For purposes of this Agreement, the term
"Olsten Foreign Plan" shall mean any employee benefit plan, program, policy or
arrangement maintained or contributed to, by, or entered into with, Olsten or
any of its Subsidiaries with respect to employees (or former employees) employed
outside the United States.
Section 4.15 Labor and Employment Matters. (a) Each of Olsten and its
Subsidiaries is in compliance in all material respects with all applicable laws
respecting employment and employment practices, terms and conditions of
employment, safety, wages and hours, and neither Olsten nor any of its
Subsidiaries is engaged in any unfair labor practice in each case, except as
would not, individually or in the aggregate, reasonably be expected to have an
Olsten Material Adverse Effect. Olsten and each of its Subsidiaries: (i) has
withheld all amounts required by law or by agreement to be withheld from wages,
salaries and other payments to employees; (ii) to Olsten's knowledge, is not
liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the laws set forth in the preceding sentence; and (iii) is
not liable for any material payment to any trust or other fund or to any
Governmental Authority or administrative authority, with respect to unemployment
compensation benefits, social security or other benefits or obligations for
employees (other than routine payments to be made in the normal course of
business and consistent with past practice), except in the case of each of
clauses (i), (ii) and (iii), for failures to withhold and liabilities which
would not, individually or in the aggregate, have an Olsten Material Adverse
Effect. There are no pending, or, to Olsten's knowledge, threatened or
reasonably anticipated claims or actions against under any worker's compensation
policy or long-term disability policy, except as would not, individually or in
the aggregate, have an Olsten Material Adverse Effect. There is no labor strike,
slowdown or stoppage pending (or, to the knowledge of Olsten, any labor strike,
slowdown or stoppage threatened) against or affecting Olsten or any of its
Subsidiaries, except as would not, individually or in the aggregate, have an
Olsten Material Adverse Effect. None of Olsten or its Subsidiaries is a party to
any union contract or collective bargaining agreement in North America. To
Olsten's knowledge, no union organizing activities with respect to any of its or
its Subsidiaries' employees are occurring or threatened, except as would not,
individually or in the aggregate, have an Olsten Material Adverse Effect.
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(b) Neither Olsten nor any of its Subsidiaries is a party to any
employment, management services, consultation or other contract or agreement
with any past or present officer or director or, to Olsten's knowledge, any
entity affiliated with any past or present officer or director, other than the
agreements executed by employees generally, the forms of which have been
provided to Adecco.
Section 4.16 No Change of Control Payments. Neither the execution and
delivery by Olsten of this Agreement or the execution and delivery by Olsten or
OHS of the Separation Agreement nor the consummation of any of the transactions
contemplated hereby or thereby gives rise to any obligation of Olsten or any of
its Subsidiaries to, or any right of any holder of any security (equity or debt)
of Olsten or any of its Subsidiaries or any holder of any other indebtedness of
Olsten or any of its Subsidiaries or any of Olsten's franchisees or licensed
area representatives to, require Olsten to purchase, offer to purchase, redeem,
otherwise prepay or repay, pay any penalty or otherwise make any payments with
respect to, any such security, indebtedness, or franchise or licensed area
representative contract or agreement, or deposit any funds to effect the same.
Section 4.17 Environmental Matters. Except as would not have an Olsten
Material Adverse Effect:
(a) Olsten and each of its subsidiaries are in compliance with and
have no liability under applicable Environmental Laws;
(b) there is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, notice or
demand letter, or request for information pending, or to Olsten's knowledge
threatened, under any Environmental Law (as hereinafter defined) against
Olsten or any of its Subsidiaries;
(c) neither Olsten nor any of its Subsidiaries has received written
notice of actual or potential liability under any Environmental Law that
has not been resolved, or is performing or obligated to perform any
investigation or other action under any Environmental Law;
(d) to Olsten's knowledge after due inquiry, there are no past or
present events, activities, conditions or occurrences, including, without
limitation, any disposal, spill, discharge or release of any Hazardous
Materials (as hereinafter defined), that would reasonably be expected to
result in any liability under any Environmental Law on the part of Olsten
or any of its subsidiaries; and
(e) to Olsten's knowledge, there is no asbestos or underground storage
tank located at, on or under any facility or property owned, operated or
leased by Olsten or any of its Subsidiaries.
As used in this Agreement, the term "Environmental Laws" means the
common law, and any law, statute, rule, regulation, ordinance, judgment,
directive, order or decree relating to pollution or protection of the
environment, including without limitation, natural resources, or to human health
or safety; and the term "Hazardous Materials" means any pollutant, contaminant,
chemical, substance, constituent, waste or material regulated or which can give
rise to liability under any Environmental Law.
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Section 4.18 Insurance. Olsten has insurance policies and fidelity
bonds covering its and its Subsidiaries' assets, business, equipment,
properties, operations, employees, officers and directors of the type and in
amounts customarily carried by persons conducting business similar to that of
Olsten and such Subsidiaries. All premiums due and payable under all such
policies and bonds have been paid, and Olsten is otherwise in full compliance
with the terms and conditions of all such policies and bonds, except where the
failure to have made payment or to be in full compliance would not, singularly
or in the aggregate with all such other failures, have an Olsten Material
Adverse Effect. The reserves established by Olsten in respect of all matters as
to which Olsten self-insures or carries retention and/or deductibles, including
for workers' medical coverage and workers' compensation, are adequate and
appropriate in light of Olsten's experience with respect thereto and Olsten is
not aware of any facts or circumstances existing as of the date hereof that
could reasonably be expected to cause such reserves to be inadequate or
inappropriate.
Section 4.19 Leases. Neither Olsten nor any of its Subsidiaries owns
any real property. Olsten has delivered or made available to Adecco true and
complete copies of each lease requiring the payment of rentals aggregating, or
pursuant to which the annual rentals are reasonably expected to be, at least
$250,000 per annum pursuant to which real property is held under lease by Olsten
or any of its Subsidiaries, and true and complete copies of each lease pursuant
to which Olsten or any of its Subsidiaries leases real property to others.
Section 4.19 of the Olsten Disclosure Statement sets forth a true and complete
list of all such leases. All of the leases of Olsten or its Subsidiaries listed
on Section 4.19 of the Olsten Disclosure Statement, are valid and subsisting and
in full force and effect with respect to Olsten and its Subsidiaries, as the
case may be, and, to Olsten's knowledge, with respect to any other party thereto
except any such failures to be in full force and effect as would not be
reasonably expected to have an Olsten Material Adverse Effect. Neither Olsten
nor any of its Subsidiaries nor, to Olsten's knowledge, any landlord is in
default of its obligations under any lease to which Olsten is bound and, to
Olsten's knowledge, there are no conditions which, given notice and the passage
of time, could constitute a default under such lease, except for any defaults
which would not reasonably be expected to have an Olsten Material Adverse
Effect. Olsten or its Subsidiaries, as the case may be, have valid leasehold
interests in all properties leased thereunder free and clear of all liens,
except as would not, individually or in the aggregate, have an Olsten Material
Adverse Effect. To Olsten's knowledge, the leased real properties are in good
operating order and condition.
Section 4.20 Contracts and Commitments. (a) As of the date hereof,
none of Olsten or any of its Subsidiaries is a party to any existing contract,
obligation or commitment of any type in any of the following categories except
for contracts filed as exhibits to the Olsten SEC Reports or set forth in
Section 4.20 of the Olsten Disclosure Statement (true and complete copies of
which contracts have been delivered to or made available to Adecco):
(i) contracts that provide for annual payments to or by Olsten or
any of its Subsidiaries aggregating in excess of $6,000,000;
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(ii) any contract under which Olsten or any Subsidiary has or
may, except by way of endorsement of negotiable instruments for collection
in the ordinary course of business and consistent with past practice,
become absolutely or contingently or otherwise liable for (x) the
performance under a contract of any other person, firm or corporation or
(y) the whole or any part of the indebtedness or liabilities of any other
person, firm or corporation, in all cases, individually in excess of
$1,000,000 and in the aggregate in excess of $5,000,000;
(iii) employment agreements, consulting agreements, contracts or
commitments with any employee or member of Olsten's Board of Directors,
other than those which are terminable by Olsten or any of its Subsidiaries
on not more than thirty days notice without liability or financial
obligation, and within each such category of agreements, contracts or
commitments, which are individually in excess of $150,000;
(iv) any agreements or plans, including, without limitation, any
stock option, stock appreciation right or stock purchase plans or
agreements, any of the benefits of which will be increased, or the vesting
of benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement;
(v) any contract with any director, officer or more than 5%
stockholder of Olsten other than in such person's capacity as a director or
officer of Olsten or any contract with any entity in which, to Olsten's
knowledge, any director, officer or more than 5% stockholder or any family
member of any director, officer or stockholder has a material economic
interest;
(vi) any contract that limits or restricts in any material
respect where Olsten or any of its Subsidiaries may conduct its or their
business or the type or line of business that Olsten or any of its
Subsidiaries may engage in; and
(vii) any material contract containing any agreement with respect
to any change of control.
(b) All of the contracts listed in Section 4.20 of the Olsten
Disclosure Statement are in full force and effect, except for those contracts
the ineffectiveness of which would not reasonably be expected to have an Olsten
Material Adverse Effect. None of Olsten or its Subsidiaries is in breach of or
default under any contract to which it is a party, except for breaches or
defaults that would not, individually or in the aggregate, either impair
Olsten's or OHS' (as applicable) ability to consummate the Merger or the
Split-Off or the other transactions contemplated hereby or by the Separation
Agreement or have an Olsten Material Adverse Effect.
Section 4.21 Finders or Brokers. Other than Warburg Dillon Read and
Salomon Smith Barney, neither Olsten nor any of its Subsidiaries has employed
any investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to a fee or any
commission the receipt of which is conditioned upon consummation of the Merger
or the amount of which is calculated with reference to any part of the Closing
Consideration.
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Section 4.22 Opinions. The Board of Directors of Olsten has received
the opinions of Warburg Dillon Read LLC and Salomon Smith Barney Inc. to the
effect that as of the date of this Agreement the Closing Consideration is fair
to the holders of Olsten Common Stock from a financial point of view.
Section 4.23 Board Recommendation. The Board of Directors of Olsten
has, by a unanimous vote at a meeting of such board duly held on August 14,
1999, approved and adopted this Agreement, the Merger, the Split-Off and the
other transactions contemplated hereby and thereby, and determined that this
Agreement, the Separation Agreement, the Merger, the Split-Off and the other
transactions contemplated hereby and thereby, taken together, are in the best
interest of the stockholders of Olsten, and prior to the date hereof resolved to
recommend that the holders of Olsten Common Stock approve and adopt this
Agreement, the Merger and the other transactions contemplated hereby.
Section 4.24 Voting Requirements. The approval by a majority of the
voting power represented by the outstanding shares of Olsten Stock and Olsten
Class B Stock entitled to vote thereon, and voting together as a single class,
is the only vote of the holders of any class of Olsten's capital stock necessary
to approve this Agreement, the Merger and the other transactions contemplated
hereby. No separate approval by the holders of any other class or series of
capital stock of Olsten is necessary to approve this Agreement, the Merger or
any of the other transactions contemplated hereby.
Section 4.25 State Antitakeover Statutes. Olsten has granted all
approvals and taken all other steps necessary to exempt this Agreement, the
Voting Agreement, the Merger and the other transactions contemplated hereby from
the requirements and provisions of Section 203 of the Delaware Act and any other
state or other antitakeover statute or regulation to the extent applicable such
that none of the provisions of such "business combination," "moratorium,"
"control share," or other state antitakeover statute or regulation (x) prohibits
or restricts Olsten's ability to perform its obligations under this Agreement or
its ability to consummate the Merger and the other transactions contemplated
hereby, (y) would have the effect of invalidating or voiding this Agreement or
any provisions hereof, or (z) would subject Olsten or Adecco to any material
impediment or condition in connection with the exercise of any of their
respective rights under this Agreement.
ARTICLE V.
COVENANTS
Section 5.01 Conduct of Business of Olsten and Adecco. (a) Except as
specifically contemplated by this Agreement or the Separation Agreement or as
expressly agreed to in writing by Adecco, during the period from the date of
this Agreement to the Effective Time, each of Olsten and its Subsidiaries will
conduct its operations according to its ordinary and usual course of business
consistent with past practice, and will use all commercially reasonable efforts
to preserve intact its business organization, to keep available the services of
its officers and employees and to maintain satisfactory relationships with
suppliers, vendors, contractors, customers and others having significant
business relationships with it and will take no action that would adversely
affect its ability to consummate the Merger, the Split-Off or the other
transactions contemplated hereby or by the Separation Agreement. Without
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limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement or the Separation Agreement, from the date of this
Agreement to the Effective Time, neither Olsten nor any of its Subsidiaries
will, without the prior written consent of Adecco:
(i) amend its organizational documents;
(ii) authorize for issuance, issue, sell, deliver, pledge, otherwise
encumber, grant any options, warrants, calls, subscriptions or other rights (the
"Rights") for, or otherwise agree or commit to issue, sell, deliver, pledge or
otherwise encumber any shares of any class of its capital stock or the capital
stock of any of its Subsidiaries or any securities convertible into or
exchangeable or exercisable for shares of any class of its capital stock or the
capital stock of any of its Subsidiaries other than pursuant to and in
accordance with and subject to the terms of outstanding Olsten Common Stock
Equivalents;
(iii) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
or, except pursuant to agreements in effect on the date of execution of this
Agreement which have been disclosed in the Olsten Disclosure Statement,
purchase, prepay, redeem or otherwise acquire any shares of its own capital
stock or any of its Rights or any indebtedness or debt security;
(iv) (A) increase in any manner the compensation of any directors or,
except in the ordinary course of business consistent with past practice, its
officers or other employees; (B) pay or agree to pay any pension, retirement
allowance or other employee benefit, or enter into any contract, agreement or
understanding with any of its or its Subsidiaries' past or present employees
relating to any such pension, retirement allowance or other employee benefit,
except (as to other than directors or officers) in the ordinary course of
business consistent with past practice or except as required under agreements,
plans or arrangements existing as of the date hereof; (C) grant any severance or
termination pay to, or enter into or amend any severance agreement with, any
person, except as required under agreements existing as of the date hereof or
done in the ordinary course of business consistent with past practice; (D) enter
into or amend any contract, agreement or understanding with any past or present
officers or directors or, except in the ordinary course of business consistent
with past practice, with past or present other employees; and (E) except as may
be required to comply with applicable law, adopt or become obligated under any
new pension plan, welfare plan, multiemployer plan, employee benefit plan,
benefit arrangement, or similar plan or arrangement that was not in existence
prior to the date hereof, including any bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation right, group insurance,
severance pay, retirement or other benefit plan, or amend any such plans,
contracts, agreements or understandings in existence prior to the date hereof;
(v) consolidate, merge or amalgamate with or into any person or sell
or transfer any of its capital stock (other than in intercompany transactions
expressly contemplated by the Separation Agreement and required to effect the
Split-Off) or 5% or more of its assets (whether in one or a series of related
transactions) to another person;
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(vi) acquire (including, without limitation, by merger, consolidation,
amalgamation or acquisition of stock or assets) any interest in any corporation,
partnership, other business organization or any division thereof, or any assets,
other than acquisitions of assets in the ordinary course of business consistent
with past practice;
(vii) maintain its books and records in a manner not in the ordinary
course of business consistent with past practice;
(viii) institute any significant change in accounting methods,
principles or practices affecting its assets, liabilities, reserve or expense
recognition, reserves, amortization or accruals, except insofar as may be
appropriate to conform to changes in law or U.S. GAAP;
(ix) make any material change in tax accounting methods, any new
election with respect to material taxes or any modification or revocation of any
existing election with respect to material taxes, or settle or otherwise dispose
of any material tax matter;
(x) revalue any of its respective assets, including without
limitation, writing down the value of inventory or notes or accounts
receivables, in each case, except in the ordinary course of business consistent
with past practice and except insofar as may be appropriate to conform to
changes in law or U.S. GAAP;
(xi) enter into, or permit any of its Subsidiaries to enter into, any
material agreement or arrangement with any of their respective affiliates (other
than wholly-owned Subsidiaries) on terms less favorable to Olsten or such
Subsidiary than could reasonably be expected to have been obtained with an
unaffiliated third party on an arm's length basis;
(xii) authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into any agreement in principle or an
agreement with any other person with respect to any plan of liquidation or
dissolution;
(xiii) except in the ordinary course of business consistent with past
practice, enter into a material contract or any amendment or modification of any
material contract or release or relinquish any material contract rights and even
in the ordinary course, enter into a supply or vendor agreement, which agreement
requires annual payments in excess of $1,500,000, which is not terminable by
Olsten upon 60 days' or less notice, other than with respect to capital
expenditures;
(xiv) enter into any contract, or amend, modify or terminate any
existing contract, in each case with or relating to any of its franchisees or
licensed area representatives;
(xv) authorize or commit to make capital expenditures in excess of
$20,000,000 per calendar quarter;
(xvi) permit any material insurance policy naming it as a beneficiary
or a loss payee to be cancelled, terminated or materially altered, unless such
policy is replaced with a comparable policy for comparable cost;
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(xvii) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than as required
by law or in the ordinary course of business consistent with past practice;
(xviii) (A) create or incur indebtedness for borrowed money other than
indebtedness incurred under existing working capital facilities of Olsten to
fund working capital but in no event in excess of $50,000,000 in the aggregate
at any one time outstanding, (B) assume, guarantee, endorse or otherwise become
liable or responsible for the obligations of any other individual, firm or
corporation or make any loans or advances, except for indebtedness incurred in
the ordinary course of business consistent with past practice, (C) enter into
any commitment or transaction material to Olsten and its Subsidiaries, taken as
a whole, other than in the ordinary course of business consistent with past
practice, or (D) incur any liabilities, except for liabilities that,
individually or in the aggregate, would not have an Olsten Material Adverse
Effect;
(xix) (A) other than in the ordinary course of business consistent
with past practice (but not if restricted by the Separation Agreement), make any
intercompany loans or transfer assets through the intercompany accounts or
otherwise between the Retained Subsidiaries, on the one hand, and OHS or its
Subsidiaries (after giving effect to the Split-Off), on the other, or (B) engage
in or enter into any new intercompany or other transactions among the Retained
Subsidiaries, on the one hand, and OHS or its Subsidiaries (after giving effect
to the Split-Off), on the other;
(xx) sell, transfer, pledge, mortgage, or otherwise dispose of, or
lease or license to or from any person, or encumber, any material real or
personal properties, except in the ordinary course of business;
(xxi) make any change in their lines of business as of the date hereof
that would, based on the facts and circumstances and conduct of the particular
business, materially increase the potential liability of Olsten or the Retained
Businesses.
(xxii) take any action that is likely to (i) have a material adverse
effect on its ability to consummate the transactions contemplated by this
Agreement or the Separation Agreement or (ii) delay materially the consummation
of the transactions contemplated by this Agreement or the Separation Agreement;
or
(xxiii) agree to do any of the foregoing.
(b) Prior to the Effective Time, neither Adecco nor any of its
Subsidiaries will do or agree to do any of the following without the prior
written consent of Olsten:
(i) amend its organizational documents;
(ii) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock;
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(iii) in the case of Adecco and Merger Sub, authorize, recommend,
propose or announce an intention to authorize, recommend or propose, or enter
into any agreement in principle or an agreement with any other person with
respect to any plan of liquidation or dissolution;
(iv) maintain its books and records in a manner not in the ordinary
course of business consistent with past practice;
(v) institute any significant change in accounting methods, principles
or practices affecting its assets, liabilities or business except insofar as may
be appropriate to conform to change in law or U.S. GAAP;
(vi) revalue any of its respective assets, including without
limitation, writing down the value of inventory or writing off notes or accounts
receivables, in each case, except in the ordinary course of business consistent
with past practice and except insofar as may be appropriate to conform to change
in law or U.S. GAAP;
(vii) in the case of Adecco, consolidate, merge or amalgamate into
another person or sell all or substantially all of its capital stock or assets;
(viii) take any action that is likely to (i) have a material adverse
effect on its ability to consummate the transactions contemplated by this
Agreement or (ii) delay materially the consummation of the transactions
contemplated by this Agreement; or
(ix) agree to do any of the foregoing.
Section 5.02 No Solicitation. (a) Olsten agrees that from and after
the date hereof it will not, nor will it authorize or permit any of its
Subsidiaries or any of its or its Subsidiaries' directors, officers, employees,
investment bankers, attorneys, accountants or other agents or representatives
(collectively "Agents") to, directly or indirectly, (w) solicit, initiate,
facilitate or encourage (including by way of furnishing or disclosing nonpublic
information) any inquiries or the making of any offer or proposal by any
corporation, partnership, trust, person or other entity or group (a "Third
Party") with respect to, or that could reasonably be expected to lead to, any
merger, consolidation, share exchange, business combination, tender or exchange
offer or other similar transaction regarding Olsten or any of its Subsidiaries
or involving the acquisition of a substantial portion (15% or more) of the
assets of Olsten and any of its Subsidiaries, taken as a whole, or a significant
equity interest (15% or more by numbers or vote) in (including by way of tender
offer), or a recapitalization or restructuring of, Olsten or any of its
Subsidiaries (any of the foregoing being an "Acquisition Transaction"), (x)
negotiate, explore or otherwise communicate in any way with any Third Party with
respect to any Acquisition Transaction or enter into, approve or recommend any
agreement, arrangement or understanding requiring it to abandon, terminate or
fail to consummate the Merger or any other transaction contemplated by this
Agreement, (y) agree to do any of the foregoing or (z) take any other action
inconsistent with its obligations and commitments pursuant to this Section 5.02;
provided, however, that Olsten may, in response to a Superior Proposal (as
defined below) which was not solicited by it after July 26, 1999 and which did
not otherwise result from a breach of this Section 5.02, subject to compliance
with all of the provisions of this Section 5.02, furnish information to, or
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engage in discussions and negotiations with, such Third Party, if but only if
(A) the Board of Directors of Olsten, having received (x) the advice of outside
legal counsel that failure to take such action would be a breach of its
fiduciary duties to its stockholders under applicable law and (y) the advice of
a financial advisor of nationally recognized reputation that the party making
such proposal is financially capable and that such Superior Proposal would be
more favorable from a financial point of view to its stockholders than the
Merger and the Split-Off, reasonably determines in good faith that taking such
action is reasonably likely to lead to an Acquisition Transaction that is more
favorable to it and its stockholders than the Merger and the Split-Off and that
failing to take such action would be a breach of the directors' fiduciary duties
under applicable law, (B) prior to furnishing or disclosing any non-public
information to, or entering into discussions or negotiations with, such Third
Party, it receives from such Third Party an executed confidentiality agreement
with respect to the information to be furnished with terms no less favorable in
the aggregate to it than those contained in the Confidentiality Agreement, but
which confidentiality agreement shall not (nor shall any other agreement or
arrangement between Olsten or any of its Subsidiaries, on the one hand, and such
Third Party, on the other hand, or any of their respective Agents) provide for
any exclusive right to negotiate with Olsten or any payments by Olsten and (C)
it advises Adecco of all such non-public information delivered to such Third
Party no later than concurrently with such delivery. Nothing in this Section
5.02 shall prohibit the Board of Directors of Olsten from complying with Rule
14e-2 promulgated under the Exchange Act with regard to a tender or exchange
offer. As used herein, "Superior Proposal" means a bona fide, written and
unsolicited offer made by a financially responsible Third Party with respect to
an Acquisition Transaction involving the acquisition of all of Olsten's equity
interests (or all or substantially all of Olsten's and its Subsidiaries'
assets). Without limiting the foregoing, it is understood that any violation of
the restrictions set forth in this Section 5.02(a) by any officer or director of
Olsten or any of its Subsidiaries or any investment banker, attorney or other
advisor or Agent of Olsten or any of its Subsidiaries shall be deemed to be a
breach of this Section 5.02 by Olsten.
(b) Olsten shall (i) as promptly as practicable (and in any event no
later than the close of business on the next business day) notify Adecco in
writing of receipt of any inquiries, proposals or offers with respect to an
Acquisition Transaction or any request for nonpublic information relating to it
in connection with an Acquisition Transaction or for access to its or any of its
Subsidiaries' properties, books or records by any Third Party that informs
Olsten's Board of Directors that it is considering making, or has made (or which
Olsten's Board of Directors reasonably believes may be considering making or has
made) a proposal or offer with respect to an Acquisition Transaction, (ii) in
such written notice, indicate in reasonable detail the identity of such Third
Party (including the name of such Third Party) and the terms and conditions of
such proposal or offer, (iii) immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing, and take all necessary steps to
inform such individuals or entities of the obligations undertaken in this
Section 5.02 and (iv) as promptly as practicable (and in any event no later than
the close of business on the next business day) notify Adecco in writing of any
determination by its Board of Directors to furnish information or engage in
discussions or negotiations with any Third Party. If any notice is given or
required to be given in accordance with clause (iv) of the immediately preceding
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sentence, then Olsten shall thereafter continue to keep Adecco informed, on a
current basis, of the status of any such discussions or negotiations and the
terms being discussed or negotiated. Notwithstanding the foregoing, Olsten shall
not accept or enter into any agreement concerning a Superior Proposal for a
period of at least three business days after Adecco's receipt of the
notification of the terms thereof pursuant to the second preceding sentence (and
only in compliance with the terms of Article X hereof), during which period
Adecco shall be afforded the opportunity to match the terms and conditions
contained in such Superior Proposal (with equivalent value in the case of
non-cash consideration).
Section 5.03 Access to Information. (a) Subject to the terms of the
Confidentiality Agreement, dated April 15, 1999 (the "Confidentiality
Agreement"), between Olsten and Adecco, from the date hereof until the Effective
Time, Olsten will give Adecco and its authorized representatives (including
counsel, consultants, accountants, auditors and agents) reasonable access during
normal business hours to all facilities and to all books and records (and audit
workpapers of independent public accountants) of it and its Subsidiaries and
will cause its officers and those of its Subsidiaries to furnish Adecco with
such reasonable financial and operating data and other information with respect
to its business and properties as Adecco may from time to time reasonably
request, in each case, in a manner that does not unduly interfere with the
normal operations of Olsten's business.
(b) Subject to the terms of the Confidentiality Agreement from the
date hereof until the Effective Time, Adecco will give Olsten and its authorized
representatives (including counsel, consultants, accountants, auditors and
agents) reasonable access during normal business hours to such facilities and to
its officers and representatives and provide such information with respect to
its business and properties as Olsten may from time to time reasonably request
as is customarily provided by a Swiss corporation to its stockholders and which
is materially necessary in order for Olsten to determine the value of the Stock
Consideration to be issued in the Merger, in each case, in a manner that does
not unduly interfere with the normal operations of Adecco's business; provided,
however, to the extent the exercise of fiduciary duty, in the opinion of outside
legal counsel, may require access to additional documents in order to determine
such value, Adecco will use all reasonable efforts to provide Olsten with such
documents.
Section 5.04 Registration Statements and Proxy Statements. (a) As soon
as is reasonably practicable after the date hereof (i) Olsten, in cooperation
with Adecco, will prepare the Olsten Proxy Statement, (ii) Olsten and OHS shall
prepare a Registration Statement on Form S-4 (or any successor form) in
connection with the registration under the Securities Act of the shares of OHS
Common Stock to be issued at the Effective Time as Split-Off Consideration (the
"OHS Registration Statement"), (iii) Adecco will prepare the Adecco Proxy
Statement, (iv) Adecco will prepare a Registration Statement on Form F-4 (or any
successor form) (the "Adecco Registration Statement") and will cause the
Depositary to prepare a Registration Statement on Form F-6 (or any successor
form) (the "Depositary Registration Statement," and together with the OHS
Registration Statement and the Adecco Registration Statement, the "Registration
Statements"), in each case in connection with the registration under the
Securities Act of the shares of Adecco Common Stock and Adecco ADSs (evidenced
by Adecco ADRs) to be issued at the Effective Time as Stock Consideration.
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Olsten shall, with the cooperation of Adecco, file the Olsten Proxy Statement
with the SEC and shall cause OHS to timely file the OHS Registration Statement
with the SEC and Adecco shall, with the cooperation of Olsten, timely file the
Adecco Registration Statement with the SEC. The parties will cooperate to cause
the Olsten Proxy Statement, the OHS Registration Statement and the Adecco
Registration Statement (collectively, the "Filed Documents") to comply as to
form in all material respects with the applicable provisions of the Securities
Act and the Exchange Act. The parties will cooperate to cause the Adecco Proxy
Statement to comply with any applicable laws or regulations, including those of
any foreign or national securities exchange on which Adecco Common Stock or
Adecco ADSs are listed. Olsten and Adecco shall, and Olsten shall cause OHS to,
use their respective reasonable best efforts to have the Olsten Proxy Statement
cleared by the SEC, to have the OHS Registration Statement and the Adecco
Registration Statement declared effective by the SEC as promptly as practicable
after the filing thereof (including, without limitation, responding to any
comments received from the SEC with respect thereto) and to keep the OHS
Registration Statement and the Adecco Registration Statement effective as long
as is necessary to consummate the Split-Off and the Merger, as applicable. Each
party shall, and Olsten will cause OHS to, as promptly as practicable, provide
the other party with copies of any written comments received from the SEC with
respect to the Filed Documents and advise the other of any oral comments with
respect thereto received from the SEC. Olsten and Adecco shall use their
respective reasonable best efforts to obtain, prior to the effective date of the
OHS Registration Statement, all necessary state securities law or Blue Sky
permits or approvals required to carry out the transactions contemplated by this
Agreement and the Separation Agreement. Olsten or OHS will pay all such expenses
required for the OHS Registration Statement and Adecco will pay all such
expenses required by the Adecco Registration Statement.
(b) Each party agrees that none of the information supplied or to be
supplied by it or its Subsidiaries for inclusion or incorporation by reference
in the Filed Documents (i) in the case of the Olsten Proxy Statement and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the stockholders meetings contemplated by Section 1.05, or (ii) in the case
of the OHS Registration Statement or the Adecco Registration Statement and each
amendment or supplement thereto, at the time it is filed or becomes effective
and thereafter until the Effective Time, will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If at any time prior to the Effective Time
an event with respect to Olsten or its Subsidiaries or Adecco or its
Subsidiaries shall occur that is required to be described in the Filed Documents
or the Adecco Proxy Statement such event shall be so described, and an amendment
or supplement shall be promptly filed with the SEC (in the case of the Filed
Documents) and, as required by law, disseminated to the stockholders of Olsten.
No amendment or supplement to any Filed Document will be made by either party,
and Olsten will not permit any amendment or supplement to be made by OHS,
without the approval of both Olsten and Adecco, except, in each case, to the
extent such party is advised by outside legal counsel that any such amendment or
supplement is required by law, in which case it shall be permitted to the extent
so required. Each of Olsten and Adecco will advise the other party, promptly
after it receives notice thereof, of the time when the OHS Registration
Statement or the Adecco Registration Statement has become effective or any
supplement or amendment has been filed, the issuance of any stop order, or the
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suspension of the qualification of the OHS Common Stock, the Adecco Common Stock
or Adecco ADRs issuable in connection with the Transaction for offering or sale
in any jurisdiction or any request by the SEC for amendment of any of the Filed
Documents or comments thereon and responses thereto or requests by the SEC for
additional information.
Section 5.05 Other Actions; Filings; Consents. Subject to the terms
and conditions provided in this Agreement and the Separation Agreement, Olsten
and Adecco shall (i) use their reasonable best efforts to take, or cause to be
taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate under applicable laws and regulations or
required to be taken by any Governmental Authority to consummate and make
effective the transactions contemplated by this Agreement and the Separation
Agreement as promptly as practicable, (ii) use their reasonable best efforts to
make, as promptly as practicable, all necessary filings, and thereafter make any
other required submissions with respect to this Agreement, the Separation
Agreement, the Merger or the Split-Off required under (A) the Securities Act,
the Exchange Act and any other applicable foreign, federal or state securities
laws or regulations, (B) the HSR Act and any applicable foreign antitrust or
similar laws and any related governmental request thereunder and (C) any other
applicable federal, state, local or foreign statute, law, rule or regulation,
(iii) use their reasonable best efforts to obtain from any Governmental
Authorities any consents, licenses, permits, waivers, approvals, authorizations
or orders required to be obtained or made by Olsten or Adecco or any of their
respective Subsidiaries in connection with the authorization, execution and
delivery of this Agreement, the Separation Agreement and the consummation of the
transactions contemplated hereby and thereby, (iv) use their reasonable best
efforts to resolve any objections as may be asserted by any Governmental
Authority with respect to the Merger and the Split-Off and the transactions
contemplated hereby and in the Separation Agreement under any antitrust or trade
or regulatory laws or regulations of any Governmental Authority, (v) furnish the
other with copies of all correspondence, filings and communications between them
and their affiliates and their respective representatives, on the one hand, and
any Governmental Authority or member of their respective staffs, on the other
hand, with respect to this Agreement and the Separation Agreement and the
transactions contemplated hereby and thereby, (vi) furnish the other with such
necessary information and reasonable assistance as the other may reasonably
request in connection with their preparation of necessary filings, registrations
or submissions of information to any Governmental Authority and (vii) use their
reasonable best efforts to defend vigorously any litigation seeking to enjoin,
prevent or delay the consummation of the Merger or the Split-Off or the
transactions contemplated hereby or in the Separation Agreement or seeking
material changes and to lift, remove or rescind any injunction or restraining
order or other order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby.
Section 5.06 Public Announcements. Before issuing any press release or
otherwise making any public statement with respect to the Merger, the Split-Off,
any Acquisition Transaction or any of the other transactions contemplated by
this Agreement or the Separation Agreement, Olsten and Adecco will consult with,
and obtain the consent of, each other as to its form and substance and shall not
issue any such press release or make any such public statement prior to
obtaining such consent, except as may be required by law or pursuant to any
order of any court or governmental agency, tribunal or regulatory authority.
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Section 5.07 Notification of Certain Matters. Each party shall cause
one or more of its representatives to confer on a regular and frequent basis
with representatives of the other and to report on the general status of its
ongoing operations. Each party shall give prompt notice to the other parties of
(i) any written notice or other communication from any Third Party alleging that
the consent of such Third Party is or may be required in connection with the
Merger or Split-Off or other transactions contemplated by this Agreement or the
Separation Agreement, (ii) its receipt of written notice of any governmental
complaints, investigations or hearings or any litigation, in each case, that in
its good faith judgement is (or would be with the passage of time or otherwise)
likely to impair its ability to consummate the transactions contemplated by this
Agreement or the Separation Agreement or to have an Olsten Material Adverse
Effect or an Adecco Material Adverse Effect, as the case may be, (iii) any
change or event that in its good faith judgment is (or would be with the passage
of time or otherwise) likely to impair its ability to consummate the
transactions contemplated by this Agreement or the Separation Agreement or to
have an Olsten Material Adverse Effect or Adecco Material Adverse Effect, as the
case may be, or (iv) the occurrence or existence of any event that would, or
could with the passage of time or otherwise, make any representation or warranty
contained herein untrue.
Section 5.08 Expenses. Except as set forth in Section 10.04 (or, with
respect to Olsten, as may be allocated between Olsten and OHS in the Separation
Agreement), Olsten and Adecco shall bear their respective expenses incurred in
connection with this Agreement, the Separation Agreement, the Merger, the
Split-Off and the transactions contemplated by this Agreement and the Separation
Agreement, including, without limitation, the preparation, execution and
performance of this Agreement, the Separation Agreement and the transactions
contemplated hereby and thereby and all fees and expenses of investment bankers,
finders, brokers, agents, representatives, counsel and accountants.
Section 5.09 Affiliates. Section 5.09 of the Olsten Disclosure
Statement lists all persons who may currently be deemed to be "affiliates" of
Olsten, for purposes of Rule 145 under the Securities Act ("Affiliates"), and
Olsten shall advise Adecco in writing of any person who becomes an Affiliate
after the date hereof and prior to the Effective Time, and shall use its
reasonable best efforts to cause each such person to deliver to Adecco, at or
prior to the Effective Time, a written agreement substantially in the form of
Exhibit D hereto.
Section 5.10 Stock Exchange Listing. Adecco will use its reasonable
best efforts to have the Adecco ADRs to be issued in connection with the Merger,
as Stock Consideration, authorized for quotation or listing, as the case may be,
on the NYSE or NASDAQ, subject to notice of issuance. Adecco shall use its
reasonable best efforts to have the Adecco Common Stock to be issued in
connection with the Merger, as Stock Consideration, authorized for listing on
the Swiss Stock Exchange, subject to notice of issuance. Olsten will use its
reasonable best efforts to have the OHS Common Stock to be issued in connection
with the Split-Off, as Split-Off Consideration, listed on a national securities
exchange or authorized for quotation on NASDAQ, subject to official notice of
issuance.
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Section 5.11 Indemnification. (a) From and after the Effective Time,
each of Adecco and the Surviving Corporation shall fulfill and honor all rights
to indemnification now existing in favor of any employee, director or officer of
Olsten and its Subsidiaries as provided in its charter or by-laws, in an
agreement between any such person and Olsten or one of its Subsidiaries, or
otherwise by law, which obligation shall survive the Merger and shall continue
in full force and effect for a period of not less than six years from the
Effective Time; provided that in the event any claim or claims are asserted or
made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until final disposition of any and all
such claims. Adecco will cause the Surviving Corporation to indemnify all
directors and officers of Olsten (the "Indemnified Parties"), to the fullest
extent that Olsten would have been permitted under Delaware law and its charter
or bylaws in effect as of the date hereof to indemnify such individuals, with
respect to all matters arising out of or pertaining to such Indemnified Party's
services as directors or officers of Olsten or any of its Subsidiaries occurring
prior to the Effective Time, including without limitation the transactions
contemplated by this Agreement, and shall also cause the Surviving Corporation
to advance expenses as incurred to the fullest extent permitted by applicable
law, provided the Indemnified Party to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
Indemnified Party is not entitled to indemnification. Adecco and the Surviving
Corporation shall pay reasonable expenses, including attorneys' fees, that may
be incurred by any Indemnifying Party in enforcing the indemnity and other
obligations provided for in this Section 5.11. (b)......Adecco agrees that, from
and after the Effective Time, it shall cause to be maintained in effect for not
less than six years from the Effective Time the current policies of the
directors' and officers' liability insurance maintained by Olsten; provided that
Adecco may substitute therefor policies of at least the same coverage containing
terms and conditions which are no less advantageous, provided that such
substitution shall not result in any gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time; and provided, further, that
Adecco shall not be required to pay an annual premium in excess of 300% of the
last annual premium paid by Olsten prior to the date hereof and if Adecco is
unable to obtain the insurance required by this Section 5.11 it shall obtain as
much comparable insurance as possible for an annual premium equal to such
maximum amount.
Section 5.12 Settlement Releases. Olsten shall use its reasonable best
efforts to obtain the release of it and each of its affiliates after the Merger
as a party, guarantor or other obligor under and with respect to the
Governmental Settlement Agreements.
Section 5.13 Board Representation. At or prior to the Effective Time,
Stuart Olsten shall be appointed or elected to the Board of Directors of Adecco.
Section 5.14 Taxation and the Split-Off. Adecco shall, and shall cause
the Surviving Corporation to, treat the Split-Off for all federal, state and
local taxes purposes as an integral part of the Merger and thus report the
Split-Off as a redemption, for purposes of Section 302(a) of the Code, of a
number of shares of Olsten Common Stock equal in value to the value of the OHS
Common Stock distributed in the Split-Off.
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Section 5.15 Certain Employee Benefits. As soon as practicable after
the execution of this Agreement, Olsten and Adecco shall confer and work
together in good faith to agree upon mutually acceptable employee benefit and
compensation arrangements (and terminate Olsten Pension Benefit Plans and/or
Olsten Welfare Plans immediately prior to the Effective Time if appropriate) so
as to provide benefits and compensation to Olsten employees who will be
employees of the Retained Businesses generally equivalent in the aggregate to
those provided to similarly situated employees of Adecco.
Section 5.16 Carryback Elections. Prior to the effective time neither
Olsten nor any member of the affiliated group of which Olsten is the common
parent shall make or file any election with any federal, state or local agency
or authority which, for purposes of any income or franchise Tax, prevents or in
any other way impairs Olsten from carrying back existing net operating losses to
prior taxable years.
Section 5.17 Tax Basis and Earnings & Profits Study. Immediately
following the execution of this Agreement, Olsten and all of its Subsidiaries
will cooperate fully with Olsten's independent public accountants and its
designated representatives in preparing a study of the basis and earnings and
profits for federal income tax purposes of Olsten and OHS, which study will be
promptly furnished to Adecco and its designated representatives together with
all background and other materials as shall be reasonably requested in order to
permit them to review and analyze such study. Each of the parties hereto shall,
and Olsten shall cause OHS to, attempt in good faith to resolve any issues
raised by Adecco or its designated representatives with respect to such study.
Section 5.18 Waiver of Repurchase Obligation. Olsten shall use its
reasonable best efforts to cause the Board of Directors of Quantum Health
Resources to approve the transactions contemplated hereby so as to cause such
transactions not to be a Risk Event (as defined in the indenture, as
supplemented, governing the Quantum Debt).
Section 5.19 Review and Filing of Tax Returns. With respect to all
consolidated or combined federal, state, or local income or franchise Tax
Returns filed on or after the date hereof and prior to the Effective Time,
Adecco shall have the right to receive a draft of each such Tax Return for
review reasonably in advance of the due date for filing such Tax Return. Olsten
shall be obligated to consider in good faith any reasonable suggestions made by
Adecco with respect to such Tax Returns. Olsten shall prepare and file all such
Tax Returns in a manner reasonably consistent with past practices.
ARTICLE VI.
CONDITIONS TO THE OBLIGATIONS
OF OLSTEN, ADECCO AND MERGER SUB
The respective obligations of each party to effect the Merger and of
Olsten to effect the Split-Off shall be subject to the fulfillment at or prior
to the Closing (as defined in Section 9.01) of each of the following conditions:
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Section 6.01 Registration Statement. The Adecco Registration Statement
and the OHS Registration Statement shall have become effective in accordance
with the provisions of the Securities Act and, with respect to the Adecco
Registration Statement, any other applicable foreign laws. No stop order
suspending the effectiveness of the Adecco Registration Statement or the OHS
Registration Statement shall have been issued by the SEC and, with respect to
the Adecco Registration Statement, any other applicable governmental authority,
and remain in effect.
Section 6.02 Stockholder Approval. (a) This Agreement, the Merger and
the other transactions contemplated in this Agreement shall have been approved
and adopted by the affirmative vote of the holders of a majority of the voting
power represented by the outstanding shares of Olsten Stock and Olsten Class B
Stock, voting together as a single class.
(b) The Adecco Stockholder Proposals shall have been approved and
adopted by the affirmative vote of the requisite shares of Adecco Common Stock.
Section 6.03 Certain Orders. No writ, order, decree or injunction of a
court of competent jurisdiction or governmental entity shall have been entered
against Olsten, Adecco or OHS which prohibits or restricts the consummation of
the Merger or the Split-Off or would otherwise restrict the Surviving
Corporation's exercise of any material rights with respect to the ownership or
operation of the Retained Businesses (as defined in the Separation Agreement).
Section 6.04 HSR Act and Other Antitrust Approvals. All necessary
consents and approvals of, and notifications and disclosures to, and filings and
registrations with, any United States or any other governmental authority under
the HSR Act and any applicable foreign antitrust or other similar laws required
for the consummation of the Merger shall have been obtained and any waiting
period applicable to the consummation of the Merger under the HSR Act and any
other applicable antitrust clearances shall have expired or been terminated.
Section 6.05 Stock Exchange Listing. The Adecco ADRs and the Adecco
Common Stock issuable in the Merger as Stock Consideration shall have been
authorized for quotation, as appropriate, on NYSE or NASDAQ and the Swiss Stock
Exchange, respectively, subject to official notice of issuance. The OHS Common
Stock issuable in the Split-Off as Split-Off Consideration shall have been
authorized for listing on a national securities exchange or authorized for
quotation on NASDAQ, subject to official notice of issuance.
ARTICLE VII.
CONDITIONS TO THE OBLIGATIONS OF ADECCO
AND MERGER SUB
The obligation of Adecco and Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Closing of the following
additional conditions, any one or more of which may be waived by Adecco:
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Section 7.01 Representations and Warranties True. The representations
and warranties of Olsten contained herein that are qualified with reference to
an Olsten Material Adverse Effect or materiality shall be true and correct and
the representations and warranties of Olsten contained herein that are not so
qualified shall be true and correct in all material respects, in each case, as
of the Effective Time as though made as of such date, except that those
representations and warranties that address matters only as of a particular date
shall remain true and correct as of such date.
Section 7.02 Performance. Olsten shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be performed or complied with by it on or prior to the
Closing Date, except for those failures to so perform or comply that
individually or in the aggregate would not either impair Olsten's ability to
consummate the Merger and the Split-Off and the other transactions contemplated
by this Agreement and the Separation Agreement or have an Olsten Material
Adverse Effect.
Section 7.03 Material Adverse Effect. No Olsten Material Adverse
Effect shall have occurred since the date of this Agreement and be continuing.
Section 7.04 Compliance with Separation Agreement. Olsten and OHS
shall have complied in all material respects with all of their respective
obligations under the Separation Agreement (except for Sections 5.12 and 5.13 of
the Separation Agreement which shall have been complied with in all respects)
and shall have taken all action required to be taken thereunder prior to the
Effective Time.
Section 7.05 Separation Agreement Representations and Warranties True.
The representations and warranties of OHS contained in the Separation Agreement
that are qualified with reference to materiality shall be true and correct, and
the representations and warranties of OHS contained therein that are not so
qualified shall be true and correct in all material respects, as of the
Effective Time as though made as of said date, except that those representations
and warranties that address matters only as of a particular date shall remain
true and correct as of such date.
ARTICLE VIII.
CONDITIONS TO THE OBLIGATIONS OF OLSTEN
The obligations of Olsten under this Agreement and the Separation
Agreement to effect the Merger and the Split-Off shall be subject to the
fulfillment on or before the Closing Date of each of the following additional
conditions, any one or more of which may be waived by Olsten:
Section 8.01 Representations and Warranties True. The representations
and warranties of Adecco and Merger Sub contained herein that are qualified with
reference to an Adecco Material Adverse Effect or materiality shall be true and
correct and the representations and warranties of Adecco and Merger Sub
contained herein that are not so qualified shall be true and correct in all
material respects, in each case, as of the Effective Time as though made as of
such date, except that those representations and warranties that address matters
only as of a particular date shall remain true and correct as of such date.
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Section 8.02 Performance. Adecco and Merger Sub shall have performed
and complied in all material respects with all agreements, obligations and
conditions required by this Agreement to be performed or complied with by them
on or prior to the Closing Date, except for those failures to so perform or
comply that, individually or in the aggregate, would not either impair the
ability of Adecco or Merger Sub to consummate the Merger and the other
transactions contemplated hereby or have an Adecco Material Adverse Effect.
Section 8.03 Material Adverse Effect. No Adecco Material Adverse
Effect shall have occurred since the date of this Agreement and be continuing.
ARTICLE IX.
CLOSING
Section 9.01 Time and Place. Subject to the provisions of Articles VI,
VII, VIII and X, the closing of the Merger and the Split-Off (the "Closing")
shall take place at the offices of Cahill Gordon & Reindel, as soon as
practicable but in no event later than 9:30 A.M., local time, on the first
business day after the date on which each of the conditions set forth in
Articles VI, VII and VIII have been satisfied or waived by the party or parties
entitled to the benefit of such conditions; or at such other place, at such
other time, or on such other date as Olsten and Adecco may mutually agree. The
date on which the Closing actually occurs is herein referred to as the "Closing
Date."
Section 9.02 Filings and Deliveries at the Closing. (a) Subject to the
provisions of Articles VI, VII, VIII and X, Olsten, Adecco and Merger Sub shall
cause to be executed at the Closing the Certificate of Merger and shall cause
the Certificate of Merger to be filed and recorded in accordance with the
applicable provisions of the Delaware Act and shall take any and all other
lawful actions and do any and all other lawful things necessary to cause the
Merger and the Split-Off to become effective.
(b) Prior to the Closing, each of Olsten, Adecco and Merger Sub shall
furnish such certificates of its officers to evidence compliance with the
conditions set forth in this Agreement and other matters as may be reasonably
requested by the other party hereto.
ARTICLE X.
TERMINATION AND ABANDONMENT
Section 10.01 Termination. This Agreement may be terminated and the
Merger may be abandoned any time prior to the Effective Time, whether before or
after approval by the stockholders of Olsten or Adecco:
(a) by mutual written consent of the Boards of Directors of Olsten and
Adecco;
(b) by either Olsten or Adecco if, without fault of such terminating
party, the Merger shall not have been consummated on or before March 31, 2000,
which date may be extended by mutual consent of the parties hereto; provided,
however, that the right to terminate this Agreement pursuant to this Section
49
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10.01(b) shall not be available to any party whose failure to perform or observe
in any material respect any of its obligations under this Agreement in any
manner shall have been the cause of, or resulted in, the failure of the Merger
to occur on or before such date; and provided, further, that if, on March 31,
2000, the Merger could be consummated but for the failure to obtain consents,
waivers, approvals, authorizations or orders of a Governmental Entity as
contemplated by Section 6.04, either Olsten or Adecco may, upon notice to the
other, extend the period for consummation of the Merger to the earlier of the
date on which such approvals are obtained or June 30, 2000, but only so long as
the party requesting such extension shall be using its reasonable best efforts
to obtain receipt of such consents, waivers, approvals, authorizations or
orders;
(c) by either Olsten or Adecco if any court of competent jurisdiction or
other Governmental Authority shall have issued an order (other than a temporary
restraining order), decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger or the Split-Off, and such order,
decree, ruling or other action shall have become final and nonappealable;
(d) by Olsten, if the stockholders of Adecco shall have failed to approve
the Adecco Stockholder Proposals at a meeting duly convened therefor;
(e) by Adecco, if the holders of Olsten Common Stock, voting as a single
class, shall have failed to approve and adopt this Agreement, the Merger and the
other transactions contemplated hereby at a meeting duly convened therefor;
(f) by Olsten, if Adecco or Merger Sub has materially breached any
representation, warranty, covenant or agreement contained herein and has not
cured such breach within ten (10) business days of receipt of written notice
from Olsten or by the Closing Date, if earlier;
(g) by Adecco, if Olsten has materially breached any representation,
warranty, covenant or agreement contained herein or in the Separation Agreement
and has not cured such breach within ten (10) business days of receipt of
written notice from Adecco or by the Closing Date, if earlier;
(h) by Adecco, if the Board of Directors of Olsten shall have (1)
withdrawn, changed or modified in any manner its recommendation that its
stockholders vote in favor of this Agreement, the Merger or the other
transactions contemplated hereby; (2) Olsten shall have failed to include in the
Olsten Proxy Statement the recommendation of the Board of Directors of Olsten in
favor of the approval of this Agreement, the Merger and the other transactions
contemplated hereby; (3) the Board of Directors of Olsten or any committee
thereof shall have approved or publicly recommended any Acquisition Transaction;
(4) Olsten shall have entered into any letter of intent or similar document or
any agreement, contract or commitment accepting or expressing an intention to
accept any Acquisition Transaction; or (5) a tender or exchange offer relating
to securities of Olsten shall have been commenced by a Person unaffiliated with
Adecco, and Olsten shall not have sent to its stockholders pursuant to Rule
14e-2 promulgated under the Securities Act, within 10 business days after such
tender or exchange offer is first published sent or given, a statement
disclosing that Olsten recommends rejection of such tender or exchange offer.
(i) by Olsten, prior to the approval by its stockholders of the Merger, if
(1) Olsten shall have received a Superior Proposal which was not solicited by it
after July 26, 1999 and which did not result from a breach of Section 5.02
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hereof, (2) the Board of Directors of Olsten shall have received (x) the advice
of outside legal counsel that failure to take the actions permitted by the
proviso to the first sentence of Section 5.02(a) would be a breach of the
fiduciary duties of the Board of Directors of Olsten to its stockholders under
applicable law and (y) the advice of a financial advisor of nationally
recognized reputation that the party making such proposal is financially capable
and that such Superior Proposal would be more favorable from a financial point
of view to its stockholders than the Merger and the Split-Off, and, thereafter,
reasonably determines in good faith that such Superior Proposal would be more
favorable to its stockholders than the Merger and that failing to take such
actions would be a breach of the directors' fiduciary duties under applicable
law and (3) Olsten shall have given Adecco three business days' written notice
prior to such termination and otherwise complied with the provisions of Section
5.02 and Adecco shall not have matched such Superior Proposal; provided that
such termination shall not be effective until the fee specified in Section 10.04
has been paid.
Section 10.02 Procedure for Termination. In the event of termination
and abandonment of the Merger by any party pursuant to this Article X, written
notice thereof shall immediately be given to the other party.
Section 10.03 Effect of Termination and Abandonment. In the event of
termination of this Agreement and abandonment of the Merger pursuant to Section
10.01, this Agreement and the Separation Agreement shall become void and have no
effect, without liability on the part of any party (or any of its directors,
officers or stockholders), except under this Section 10.03, Sections 5.06, 5.08
and 10.04, Article XII and the Confidentiality Agreement. Nothing herein shall
relieve any party from liability for any breach of this Agreement occurring
before such termination or shall prejudice the ability of a non-breaching party
from seeking damages from any other party for any breach of this Agreement,
including, without limitation, reasonable attorneys' fees and the right to
pursue any remedy at law or in equity.
Section 10.04 Termination Fees. In order for Olsten to induce Adecco
to enter into this Agreement and to reimburse Adecco for its costs and expenses
related to entering into this Agreement and seeking to consummate the Merger, if
(a) Olsten terminates this Agreement pursuant to 10.01(i); (b) Olsten terminates
this Agreement pursuant to Section 10.01 hereof and at such time Adecco would
have been permitted to terminate this Agreement under Section 10.01(h) hereof;
(c) Adecco terminates this Agreement pursuant to Section 10.01(h) hereof; (d)
Adecco or Olsten terminates this Agreement pursuant to Section 10.01(b) or (c)
and (x) at the time of such termination a definitive proposal for an Acquisition
Transaction has been provided to Olsten by a Third Party and such proposal has
not been rejected by the Board of Directors of Olsten and (y) within one year of
such termination Olsten shall have consummated, or have entered into a
definitive agreement with respect to, an Acquisition Transaction (on terms more
favorable than the terms of this Agreement (without taking into account the
payment of the fee provided for in this Section 10.04)); or (e) Adecco
terminates this Agreement pursuant to Section 10.01(e) or (g) and within one
year of such termination Olsten shall have consummated, or have entered into a
definitive agreement with respect to, an Acquisition Transaction on terms more
favorable than the terms of this Agreement (without taking into account the
payment of the fee provided for in this Section 10.04), then Olsten shall pay to
Adecco, concurrently (i) in the case of clauses (a), (b) and (c) with such
termination and (ii) in the case of clauses (d) and (e), with the earlier of
such consummation or entering into of a definitive agreement, a fee, in cash, of
$40,000,000 (the "Termination Fee").
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ARTICLE XI.
DEFINITIONS
Section 11.01 Terms Defined in This Agreement. The following
capitalized terms used herein shall have the meanings ascribed in the indicated
sections.
Acquisition Transaction........................... 5.02
Adecco............................................ First Paragraph
Adecco ADRs....................................... 2.01
Adecco ADSs....................................... 2.01
Adecco Balance Sheet.............................. 3.06
Adecco Common Stock............................... 2.01
Adecco Disclosure Statement....................... 3.00
Adecco Foreign Plan............................... 3.12
Adecco Material Adverse Effect.................... 3.01
Adecco Proxy Statement............................ 1.05
Adecco Registration Statement..................... 5.04
Adecco Reports.................................... 3.05
Adecco Special Meeting............................ 1.05
Adecco Stockholder Proposals...................... Recitals
Affiliates........................................ 5.09
Agent............................................. 5.02
Agreement......................................... First Paragraph
Ancillary Agreements.............................. Recitals
Assumed OHS Liabilities........................... Recitals
Cash Consideration................................ 2.01
Cash Election..................................... 2.01
Cash Election Number.............................. 2.01
Cash Election Shares.............................. 2.01
Cash Fraction .................................... 2.01
Certificate of Merger............................. 1.02
Certificates...................................... 2.04
CHF............................................... 12.11
Closing........................................... 9.01
Closing Date...................................... 9.01
Closing Consideration............................. 2.01
COBRA............................................. 4.14
Code.............................................. 2.09
Confidentiality Agreement......................... 5.03
Constituent Corporations.......................... First Paragraph
Delaware Act...................................... 1.01
Delaware Courts................................... 12.06
Depositary........................................ 2.04
Depositary Registration Statement................. 5.04
Deposit Agreement................................. 2.01
Dissenting Shares................................. 2.07
$ or Dollars...................................... 12.11
Effective Time.................................... 1.02
Election Deadline................................. 2.02
Environmental Laws................................ 3.13, 4.17
ERISA............................................. 3.12
ERISA Affiliate................................... 3.12
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Exchange Act...................................... 3.03
Exchange Agent.................................... 2.04
Filed Documents................................... 5.04
Form of Election.................................. 2.01
Governmental Settlement Agreement................. 4.03
Governmental Authority............................ 3.03
Hazardous Material................................ 4.17
Health Services Assets............................ Recitals
Health Services Business.......................... Recitals
Health Services Liabilities....................... Recitals
HSR Act........................................... 3.03
Indemnified Parties............................... 5.11
IRS............................................... 4.14
Market Value...................................... 2.06
Merger............................................ Recitals
Merger Consideration.............................. 2.01
Merger Sub........................................ First Paragraph
Merger Sub Common Stock........................... 2.03
NASDAQ............................................ 2.06
Non-Election...................................... 2.01
Non-Election Shares............................... 2.01
Non-Election Fraction............................. 2.01
NYSE.............................................. 2.05
OHS............................................... Recitals
OHS Common Stock.................................. 2.01
OHS Registration Statement........................ 5.04
Olsten............................................ First Paragraph
Olsten Balance Sheet.............................. 4.06
Olsten Class B Stock.............................. Recitals
Olsten Common Stock............................... Recitals
Olsten Common Stock Equivalents................... 4.04
Olsten Disclosure Statement....................... 4.00
Olsten Foreign Plan............................... 4.14
Olsten Intellectual Property Rights............... 4.12
Olsten Licenses................................... 4.11
Olsten Material Adverse Effect.................... 4.01
Olsten Option..................................... 2.05
Olsten Pension Benefit Plans...................... 4.14
Olsten Plans...................................... 2.05
Olsten Proxy Statement............................ 1.05
Olsten SEC Reports................................ 4.05
Olsten Special Meeting............................ 1.05
Olsten Staffing Business.......................... 6.03
Olsten Stock...................................... Recitals
Olsten Welfare Plans.............................. 4.14
PBGC.............................................. 3.12
Person............................................ 12.11
Quantum Debt...................................... 4.04
Registration Statements........................... 5.04
Representative.................................... 2.02
Retained Businesses............................... Recitals
Rights............................................ 5.01
SEC............................................... 2.05
Securities Act.................................... 3.03
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Separation Agreement.............................. Recitals
Special Meetings.................................. 1.05
Split-Off......................................... Recitals
Split-Off Consideration........................... 2.01
Stock Consideration............................... 2.01
Stock Election.................................... 2.01
Stock Election Shares............................. 2.01
Stock Election Number............................. 2.01
Stock Fraction.................................... 2.01
Stock Option Agreement............................ Recitals
Subsidiary........................................ 12.11
Superior Proposal................................. 5.02
Surviving Corporation............................. 1.01
Surviving Corporation Common Stock................ 2.03
Tax............................................... 3.11
Tax Return........................................ 3.11
Termination Fee................................... 10.04
Third Party....................................... 5.02
Transaction....................................... Recitals
Transferred Assets................................ 5.12
U.S. GAAP......................................... 3.06
Voting Agreement.................................. Recitals
ARTICLE XII.
MISCELLANEOUS
Section 12.01 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by written
agreement of Olsten, Adecco and Merger Sub at any time prior to the Effective
Time with respect to any of the terms contained herein; provided, however, that
after this Agreement is adopted by the stockholders of Olsten, no such amendment
or modification shall change the amount or form of the Closing Consideration.
Section 12.02 Waiver of Compliance; Consents. At any time prior to the
Effective Time, any party hereto may (a) extend the time for the performance of
any obligation or other act of any other party hereto, (b) waive any inaccuracy
in the representations and warranties made to such party contained herein or in
any document delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
only be valid if set forth in an instrument in writing signed on behalf of such
party. 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 in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 12.02.
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Section 12.03 Survival of Representations and Warranties;
Investigations. The respective representations and warranties of Olsten, Adecco
and Merger Sub contained herein or in any certificates or other documents
delivered prior to or at the Closing shall not be deemed waived or otherwise
affected by any investigation made by any party hereto. The representations,
warranties and agreements in this Agreement or in any instrument delivered
pursuant hereto by any person shall terminate at the Effective Time, except that
the agreements set forth in Articles I, II and XII and Sections 5.11 and 5.14 of
this Agreement shall survive the Merger.
Section 12.04 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.
(a) if to Adecco or Merger Sub, to:
Adecco SA
1275 Cheserex
Switzerland
Attention: Felix A. Weber
Telephone: 011 41 21 321 6666
Telecopy: 011 41 21 321 6688
with a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Thomas W. Dobson, Esq.
Telephone: (213) 485-1234
Telecopy: (213) 891-8763
and:
Baer & Karrer
Rechtsanwaelte
Seefeldstrasse 19
8024 Zurich
Switzerland
Attention: PD Dr. Rolf Watter
Telephone: 011 41 1 261 51 50
Telecopy: 011 41 1 251 30 25
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(b) if to Olsten, to:
Olsten Corporation
175 Broad Hollow Road
Melville, New York 11747
Attention: Edward A. Blechschmidt
Telephone: (516) 844-7800
Telecopy: (516) 844-7266
with a copy to:
Cahill Gordon & Reindel
Eighty Pine Street
New York, NY 10005
Attention: Kenneth W. Orce, Esq.
Telephone: (212) 701-3000
Telecopy: (212) 269-5420
Section 12.05 Assignment; 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; provided, however, that Adecco shall have the authority,
in its sole discretion, to assign and transfer the rights, benefits, duties and
obligations of Merger Sub under this Agreement to another newly formed direct or
indirect Subsidiary of Adecco. This Agreement is not intended to confer any
rights or remedies hereunder upon any other person except for officers,
directors, or employees of Olsten pursuant to Section 5.11.
Section 12.06 Governing Law. This Agreement shall be governed by the
laws of the State of Delaware (regardless of the laws that might otherwise
govern under applicable Delaware 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 Delaware and of the United States of America located in the
State of Delaware (the "Delaware 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 Delaware
Courts and agrees not to plead or claim in any Delaware 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 12.04.
Section 12.07 Agent for Service; Waiver of Limitations. By the
execution and delivery of this Agreement, Adecco (i) acknowledges that it will,
by separate written instrument, designate and appoint RL&F Service Corp., One
Rodney Square, Wilmington, Delaware 19801 (and any successor entity) as its
authorized agent upon which process may be served in any suit or proceeding
56
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arising out of or relating to this Agreement or the transactions contemplated
hereby and acknowledges that RL&F Service Corp. will accept such designation and
(ii) agrees that service of process upon RL&F Service Corp. and written notice
of said service to Adecco in accordance with Section 12.04 shall be deemed in
every respect effective service of process upon Adecco in any such suit or
proceeding. To the extent that Adecco has or hereafter may acquire any immunity
from jurisdiction of any court or from any legal process (whether through
service of notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, it hereby
irrevocably waives such immunity in respect of its obligations under this
Agreement and the transactions contemplated hereby to the extent permitted by
law.
Section 12.08 Waiver of Jury Trial and Certain Damages. Each party to
this Agreement waives, to the fullest extent permitted by applicable law, (a)
any right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement and (b) any right it may
have to receive damages from any other party based on any theory of liability
for any special, indirect, consequential (including lost profits) or punitive
damages; provided, however, that CLAUSE (B) OF this section 12.08 does not apply
to section 10.04 AND SHALL IN NO WAY LIMIT ANY RIGHTS OF ADECCO THEREUNDER OR
WITH RESPECT THERETO.
Section 12.09 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 one and the same instrument.
Section 12.10 Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect against a party hereto, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby and such invalidity, illegality or unenforceability shall only
apply as to such party in the specific jurisdiction where such judgment shall be
made.
Section 12.11 Interpretation. 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; (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; (iii) "$" or dollars shall mean the lawful currency of
the United States of America and (iv) "CHF" shall mean the lawful currency of
Switzerland. In this Agreement, unless the context otherwise requires, words
describing the singular number shall include the plural and vice versa, and
words denoting any gender shall include both genders. In this Agreement, the
phrase "to the knowledge of" and similar phrases relating to knowledge of Olsten
or Adecco shall mean the actual knowledge of its executive officers.
57
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Section 12.12 Entire Agreement. This Agreement and the Separation
Agreement, including the exhibits hereto and thereto and the documents and
instruments referred to herein and therein, embody the entire agreement and
understanding of the parties hereto in respect of 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 and therein.
Section 12.13 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur to a party in the event any provision of this
Agreement was not performed by the other party in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
58
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IN WITNESS WHEREOF, Adecco SA, Staffing Acquisition Corporation and
Olsten Corporation have caused this Agreement to be signed by their respective
duly authorized officers as of the date first above written.
Adecco SA,
a societe anonyme organized
under the laws of Switzerland
By: __________________________
Name: John P. Bowmer
Title: Chief Executive Officer
By: __________________________
Name: Felix A. Weber
Title: Chief Financial Officer
Staffing Acquisition Corporation,
a Delaware corporation
By: __________________________
Name: John P. Bowmer
Title: President
By: __________________________
Name: Felix A. Weber
Title: Vice-President
Olsten Corporation,
a Delaware corporation
By: ___________________________
Name: Edward A. Blechschmidt
Title: President and Chief
Executive Officer
SEPARATION AGREEMENT
dated as of
August 17, 1999
among
Olsten Corporation,
Aaronco Corp.
and
Adecco SA
<PAGE>
TABLE OF CONTENTS
Page
----
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
-I-
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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:
<PAGE>
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 Edward A. Blechschmidt, Stuart Olsten, William P. Costantini
and Anthony Puglisi and the Separation, Consulting and Non-Competition Agreement
dated as of August 17, 1999 by and between Olsten and Maureen McGurl.
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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, No. 97 CV 5056 (DRH)
(United States District Court for the Eastern District of New York), and Rubin
v. 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 petty 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 petty 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 175 Broad Hollow
Road, Melville, New York 11747 (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 Kimberly 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
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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.
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(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.
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(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
175 Broad Hollow Road
Melville, New York 11747
Attention: Edward A. Blechschmidt
Telephone: (516) 844-7220
Telecopy: (516) 844-7335
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With a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attention: Kenneth W. Orce, Esq.
Telephone: (212) 701-3000
Telecopy: (212) 269-5420
If to Adecco, prior to or after the Effective Time or to Olsten after
the Effective Time, to:
Adecco SA
1275 Cheserex
Switzerland
Attention: Felix A. Weber
Telephone: 011 41 21 321 6666
Telecopy: 011 41 21 321 6688
With a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Thomas W. Dobson, Esq.
Telephone: (213) 485-1234
Telecopy: (213) 891-8763
With a copy to:
Baer & Karrer
Rechtsanwaelte
Seefeldstrasse 19
8024 Zurich
Switzerland
Attention: PD Dr. Rolf Watter
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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<PAGE>
(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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<PAGE>
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: Edward A. Blechschmidt
Title: President and Chief Executive
Officer
Aaronco Corp.,
a Delaware corporation
By: _____________________________________
Name: Edward A. Blechschmidt
Title: Chairman and Chief Executive
Officer
Adecco S.A.,
a societe anonyme organized
under the laws of Switzerland
By: _____________________________________
Name: John T. Bowmer
Title: Chief Executive Officer
By: _____________________________________
Name: Felix A. Weber
Title: Chief Financial Officer
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT, dated as of February 10, 1999, by and between
OLSTEN CORPORATION, a Delaware corporation (the "Company"), and EDWARD A.
BLECHSCHMIDT ("Executive").
W I T N E S S E T H:
-------------------
WHEREAS, Executive has served the Company as its President and Chief
Operating Officer since October 19, 1998; and
WHEREAS, the Company desires that Executive assume the position of
Chief Executive Officer and Executive is willing to accept such appointment;
WHEREAS, the Company and Executive wish to enter into an agreement
embodying the terms of his employment as Chief Executive Officer (the
"Agreement"); and
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and Executive hereby agree as follows:
1. Employment. Upon the terms and subject to the conditions of this Agreement,
the Company hereby agrees to continue to employ Executive and Executive hereby
agrees to continue his employment by the Company until February 9, 2002. At the
expiration of the original term or any extended term, Executive's employment
hereunder shall be automatically extended, upon the same terms and conditions,
for successive periods of two years each, unless either party, at least 90 days
prior to the expiration of the original term or any extended term, shall give
written notice to the other of its intention not to renew such employment.
Notwithstanding the foregoing, the term of this Agreement shall expire on the
last day of the month in which Executive attains age 65. The period during which
Executive is employed pursuant to this Agreement, including any extension
thereof in accordance with this Section 1, shall be referred to as the
"Employment Period."
2. Position and Duties. During the Employment Period, Executive shall serve as
Chief Executive Officer of the Company and shall be nominated for election, and
if so elected, shall serve as a member of the Board of Directors of the Company
(the "Board"). In addition, Executive shall serve in such other position or
positions with the Company and its subsidiaries commensurate with his position
and experience as the Board shall from time to time specify. During the
Employment Period, Executive shall have the duties, responsibilities and
obligations customarily assigned to individuals serving as the chief executive
officer of a New York Stock Exchange listed company, and such other duties,
responsibilities and obligations as the Board shall from time to time specify.
Executive shall devote his full time to the services required of him hereunder,
except for vacation time and reasonable periods of absence due to sickness,
personal injury or other disability, and shall use his best efforts, judgement,
skill and energy to perform such services in a manner consonant with the duties
of his position and to improve and advance the business and interests of the
Company and its subsidiaries. Nothing contained in this Section 2 shall preclude
Executive from (i) serving on the board of directors of any business
<PAGE>
corporation, unless such service would be contrary to applicable law, (ii)
serving on the board of, or working for, any charitable or community
organization or (iii) pursuing his personal financial and legal affairs, so long
as such activities, individually or collectively, do not interfere with the
performance of Executive's duties hereunder or violate any of the provisions of
Section 6 hereof.
3. Compensation.
(a) Base Salary. During the Employment Period, the Company shall pay
Executive a base salary at the annual rate of $750,000 per annum. The annual
base salary payable under this section shall be reduced, however, to the extent
Executive elects to defer such salary under the terms of any deferred
compensation or savings plan or arrangement maintained or established by the
Company or any other arrangement acceptable to the Company. The Board (or the
appropriate committee of the Board) shall annually review Executive's base
salary in light of competitive practices, the base salaries paid to other
executive officers of the Company and the performance of Executive and the
Company, and may, in its discretion, increase such base salary by an amount it
determines to be appropriate. Any such increase shall not reduce or limit any
other obligation of the Company hereunder. Executive's base salary (as set forth
above or as may be increased from time to time) shall not be reduced, except
that Executive's base salary may be reduced in proportion to comparable
reductions in the base salaries of the Company's other executive officers (as
determined for purposes of Section 16(b) of the Securities Exchange Act of 1934,
as amended). Executive's annual base salary payable hereunder, as it may be
increased from time to time and without reduction for any amounts deferred as
described above, is referred to herein as "Base Salary." The Company shall pay
Executive the portion of his Base Salary not deferred not less frequently than
in equal bi-weekly installments.
(b) Annual Bonus. For each calendar year ending during the Employment
Period, Executive shall have the opportunity to receive an annual bonus ("Annual
Target Bonus Opportunity"), based on the achievement of target levels of
performance, equal to 80% of his Base Salary; provided that, so long as
Executive is employed on the last day of each such calendar year, in no event
shall the annual bonus payable to Executive for each of the Company's 1999 and
2000 fiscal years be less than an amount equal to 50% of Executive's Base
Salary, regardless of whether any applicable performance criteria have been met.
Depending on actual results as measured against the performance objectives
established, Executive's actual bonus payment may range from (i) a low of (A)
50% of Executive's Base Salary with respect to the Company's 1999 and 2000
fiscal years and (B) zero for subsequent fiscal years to (ii) a maximum of 120%
of Executive's Base Salary for each full fiscal year during the Employment
Period. Subject to the guaranteed minimum set forth above, the actual bonus, if
any, payable for any such year shall be determined in accordance with the terms
of the Company's Executive Officers' Bonus Plan (the "Annual Plan") based upon
the performance of the Company and/or Executive against target objectives
established under such Annual Plan. The determination of whether and to what
extent the requisite performance objectives have been met shall be made by the
committee responsible for administering the Annual Plan, whose determination
shall be final. Subject to Executive's election to defer all or a portion of any
annual bonus payable hereunder pursuant to the terms of any deferred
compensation or savings plan or arrangement maintained or established by the
Company, any annual bonus payable under this Section 3(b) shall be paid to
2
<PAGE>
Executive in accordance with the terms of the Annual Plan, provided, however
that, regardless of the terms of such Annual Plan, Executive shall have the
right to defer payment of up to that portion of his annual bonus which, when
coupled with any portion of his Base Salary deferred for the same year of
service, does not exceed 50% (or such greater percentage as the Company shall
permit) of the sum of his Base Salary and his annual bonus, provided, however,
that, any portion of Executive's annual bonus which would not be deductible to
the Company pursuant to the provisions of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"), shall be deferred. Unless Executive shall
otherwise elect a different payment date or dates or a different number of
payments, any portion of Executive's annual bonus and/or Base Salary which is
deferred in accordance with this Section 3 (whether at Executive's election or
by reason of Section 162(m)) shall be payable to Executive in a single lump sum
as soon as practicable following termination of Executive's employment for any
reason and shall be credited with interest, on a compounded basis, on the last
day of each calendar quarter, at 1% above the prime rate (as reported in The
Wall Street Journal, Eastern Edition), as in effect on the first day of each
such calendar quarter. Any election by Executive to change the timing of the
distribution of the deferred amounts and/or the number of payments to be made
shall be made in writing in a calendar year prior to the date payment is to be
made, and shall only be effective if Executive completes at least six months'
additional service as an employee following the date any such election is filed
with the Secretary of the Company.
(c) Stock Option Grant. Effective as of the date of this Agreement,
Executive has been awarded a stock option (the "Option") in respect of 150,000
shares of the Company's common stock, par value $.10 per share (the "Common
Stock"). Subject to the provisions of Section 5, the Option shall become vested
and exercisable in five annual installments of 30,000 shares each on each of the
first five anniversaries of the date of grant, subject to acceleration of the
exercisability thereof in certain circumstances (including, without limitation,
a Change of Control as defined in the 1994 Stock Incentive Plan ("SOP")) to be
set forth in the option agreement related to such grant and subject to
forfeiture, in whole or in part, in the event of Executive's termination of
employment prior to the Option becoming exercisable in full. The Option shall
have a ten year term, subject to earlier termination in the event of Executive's
termination of employment. Except as otherwise provided above, the terms of the
Option shall be as determined under the SOP and as set forth in a separate stock
option agreement.
(d) Performance Based-Stock Award.
(i) Fifteen Dollar Performance Hurdle. If, at any date on or before
December 31, 2000, the trading price of a share of Common Stock reported on any
national securities exchange on which the Common Stock is listed for trade
equals or exceeds $15 or the Company's shareholders receive for a share of
Common Stock cash and/or property in any transaction constituting a Change of
Control, as defined below (the "Change of Control Consideration"), having a
combined value at any time on the date of such transaction at least to equal to
$15 (with the value of any property which does not have a readily ascertainable
fair market value to be conclusively determined by the Compensation Committee of
the Board, as constituted immediately prior to any such transaction), then, as
of such date (the "Stock Grant Date"), Executive shall be awarded 60,467 shares
of Common Stock (the "Restricted Shares") that are subject to forfeiture until
vested, in whole or in part, as hereinafter provided. Certificates evidencing
3
<PAGE>
the Restricted Shares shall be issued to Executive as soon as practicable after
the Stock Grant Date, but shall be legended in such manner as the Company shall
determine to reflect the fact that such Restricted Shares are not vested and
have not been registered under the Securities Act of 1933, as amended. Subject
to the restrictions imposed hereby, Executive shall have all rights of a
shareholder, including the right to vote the Restricted Shares and to receive
any amounts paid as a dividend thereon, from and after the Stock Grant Date and
unless and until such Restricted Shares are forfeited by Executive. The
Restricted Shares will vest in three installments of 20,155, 20,156 and 20,156
shares on each of the first, second and third anniversaries of the Stock Grant
Date, provided that Executive is still in the Company's employ on each such
anniversary date. Any Restricted Shares outstanding at such time will also vest
upon the occurrence of a Change of Control (as defined in Section 5(d) hereof).
The Restricted Shares shall not be transferrable by Executive to any
person (other than the Company) prior to the time such Restricted Shares vest in
accordance herewith. Except as otherwise expressly provided herein, if
Executive's employment terminates for any reason, any Restricted Shares that
have not otherwise become vested in accordance with this Section 3(d)(i) shall
be forfeited and returned to the Company without any payment therefor. In the
event that Executive's employment terminates due to his death or Disability, or
in a Termination Without Cause or a Termination for Good Reason,
(i) on or after the Stock Grant Date and prior to fully vesting in any
Restricted Shares awarded hereunder, Executive will be deemed fully
vested in all of such Restricted Shares on the date of such
termination of employment or
(ii) prior to a Stock Grant Date and a Stock Grant Date occurs on or
before December 31, 2000 and
(A) on or before the three (3) month anniversary of Executive's
termination of employment, Executive shall be treated as fully
and automatically vested in all of the Restricted Shares on the
Stock Grant Date, or
(B) after the three month anniversary of Executive's termination of
employment, Executive shall be treated as automatically vested
in one-half of the Restricted Shares on the Stock Grant Date.
For purposes of subclauses (A) and (B) above, a monthly anniversary
date shall occur on the same date in a following month as the date of
termination or, if there is no same date in any subsequent month, on
the last day of such following month (e.g., if the termination date
is December 31, the relevant anniversary dates shall be January 31,
February 28 and March 31).
If a share of Common Stock does not trade at a value (or the shareholders do not
receive Change of Control Consideration) at least equal to $15 per share on or
before December 31, 2000, no Restricted Shares shall be awarded to Executive.
4
<PAGE>
(ii) Twenty-Five Dollar Performance Hurdle. If, at any time on or
before December 31, 2001, the trading price of a share of Common Stock reported
on any national securities exchange on which the Common Stock is listed for
trade equals or exceeds $25 or the Company's shareholders receive Change of
Control Consideration having a combined value at any time on the date of such
transaction at least to equal to $25 (with the value of any property which does
not have a readily ascertainable fair market value to be conclusively determined
by the Compensation Committee of the Board, as constituted immediately prior to
any such transaction), then, as of such date (the "Supplemental Stock Grant
Date"), Executive shall be awarded 76,280 shares of Common Stock (the
"Supplemental Restricted Shares") that are subject to forfeiture until vested,
in whole or in part, as hereinafter provided. Certificates evidencing the
Supplemental Restricted Shares shall be issued to Executive as soon as
practicable after the Supplemental Stock Grant Date, but shall be legended in
such manner as the Company shall determine to reflect the fact that such
Supplemental Restricted Shares are not vested and have not been registered under
the Securities Act of 1933, as amended. Subject to the restrictions imposed
hereby, Executive shall have all rights of a shareholder, including the right to
vote the Supplemental Restricted Shares and to receive any amounts paid as a
dividend thereon, from and after the Supplemental Stock Grant Date and unless
and until such Supplemental Restricted Shares are forfeited by Executive. The
Supplemental Restricted Shares will vest in three installments of 25,426, 25,427
and 25,427 shares on each of the first, second and third anniversaries of the
Supplemental Stock Grant Date, provided that Executive is still in the Company's
employ on each such anniversary date. The Supplemental Restricted Shares will
also vest upon the occurrence of a Change of Control (as defined in Section 5(d)
hereof).
The Supplemental Restricted Shares shall not be transferrable by
Executive to any person (other than the Company) prior to the time at which such
Supplemental Restricted Shares vest in accordance herewith. Except as otherwise
expressly provided herein, if Executive's employment terminates for any reason,
any Supplemental Restricted Shares that have not otherwise become vested in
accordance with this Section 3(d)(ii) shall be forfeited and returned to the
Company without any payment therefor. In the event that Executive's employment
terminates due to his death or Disability, or in a Termination Without Cause or
a Termination for Good Reason,
(i) on or after the Supplemental Stock Grant Date and prior to fully
vesting in any Supplemental Restricted Shares awarded hereunder,
Executive will be deemed fully vested in all of such Supplemental
Restricted Shares on the date of such termination of employment or
(ii) prior to a Supplemental Stock Grant Date and a Supplemental Stock
Grant Date occurs on or before December 31, 2001 and
(A) on or before the three (3) month anniversary of Executive's
termination of employment, Executive shall be treated as fully
and automatically vested in all of the Supplemental Restricted
Shares on the Supplemental Stock Grant Date, or
(B) after the three month anniversary of Executive's termination of
employment, Executive shall be treated as automatically vested
in one-half of the Supplemental Restricted Shares on the
Supplemental Stock Grant Date.
5
<PAGE>
For purposes of subclauses (A) and (B) above, a monthly anniversary
date shall occur on the same date in a following month as the date of
termination or, if there is no same date in any subsequent month, on
the last day of such following month (e.g., if the termination date
is December 31, the relevant anniversary dates shall be January 31,
February 28 and March 31).
If a share of Common Stock does not trade at a value (or the shareholders do not
receive Change of Control Consideration) at least equal to $25 per share on or
before December 31, 2001, no Supplemental Restricted Shares shall be awarded to
Executive.
(iii)In the event of a stock split (including a reverse stock split)
with respect to, or a stock dividend on, the Company's Common Stock or other
recapitalization or similar transaction affecting the capital stock of the
Company, the appropriate committee of the Board shall make an appropriate
adjustment to the stock price targets and the number of Restricted Shares and
Supplemental Restricted Shares referred to in subclauses (i) and (ii) above.
(iv) Executive shall be entitled to elect to pay the amount of income
and employment taxes required to be withheld in respect of any Restricted Shares
or Supplemental Restricted Shares that become vested from such Shares by
directing the Company in writing to withhold from each installment thereof the
least number of shares as shall be necessary to satisfy such withholding
obligations and to distribute to Executive (or, in the event of his death, his
estate) the net number of such Restricted Shares or Supplemental Restricted
Shares as shall have become vested.
(v) Upon the vesting of any Restricted Shares and/or Supplemental
Restricted Shares, Executive shall surrender the legended certificate
representing such Shares and the Company shall issue a new certificate, without
legend, reflecting the number of Shares that have become vested (but reduced by
the number, if any, of shares applied to satisfy Executive's withholding
obligations in accordance with subsection (iii) above) and a new legended
certificate representing the remaining number of unvested Restricted Shares or
Supplemental Restricted Shares.
(vi) Prior Performance Award. The performance-based stock award
granted to Executive pursuant to Section 5 of the Letter Agreement by and
between Executive and the Company, dated as of September 11, 1998 (the "Letter
Agreement"), is hereby superseded in its entirety.
4. Benefits, Perquisites and Expenses.
(a) Benefits. During the Employment Period, Executive shall be eligible to
participate in (i) each welfare benefit plan sponsored or maintained by the
Company, including, without limitation, each group life, hospitalization,
medical, dental, health, accident or disability insurance or similar plan or
program of the Company, and (ii) each pension, retirement, deferred compensation
or savings plan sponsored or maintained by the Company, in each case, whether
now existing or established hereafter, to the extent that Executive is eligible
to participate in any such plan under the generally applicable provisions
thereof. Nothing in this Section 4(a) shall limit the Company's right to amend
or terminate any such plan in accordance with the procedures set forth therein.
6
<PAGE>
(b) SERP Supplement. Effective as of the date hereof, Executive shall be
credited, under the terms of the Company's Supplemental Retirement Plan for Key
Executives Designated by the Company ("SERP"), with 10 years of service, in
addition to any other service that may be credited thereunder based on
Executive's actual employment with the Company. In determining the maximum
benefit payable under the SERP in the case of Executive's retirement prior to
age 62, the fraction set forth in Section 5.5 of the SERP shall be deemed to be
one. Additionally, if Executive completes 10 years of actual service with the
Company prior to his termination of employment or if his employment is
terminated prior to completing 10 years of actual service in a termination which
is a Termination Without Cause or a Termination for Good Reason (in each case,
as defined in Section 5), then notwithstanding the provisions of Section 5.2 of
the SERP, the reduction for early commencement of his accrued benefits under
shall be 3% per annum. Notwithstanding the foregoing, if Executive's employment
with the Company is terminated by the Company in a Termination for Cause or by
Executive other than in a Termination for Good Reason prior to February 10,
2004, then, solely for purposes of determining the extent to which Executive is
vested in his accrued benefit pursuant to Section 5.7 of the SERP (but not for
purposes of determining the amount of such accrued benefit), Executive shall be
deemed to have only been credited with 5 years of additional service under this
Section 4(b). The following table illustrates the extent to which Executive
shall be vested if Executive's employment with the Company is terminated by the
Company in a Termination for Cause or by Executive other than in a Termination
for Good Reason prior to February 10, 2004:
|----------------------------------------------------------------------------|
| Date Employment Terminates | Percent Vested |
|------------------------------------|---------------------------------------|
| Before February 10, 2000 | At least 50% (based on |
| | 5 years of additional service) |
|------------------------------------|------------- -------------------------|
| On or after February 10, 2000 and | At least 60% (based on |
| before February 10, 2001 | 1 year of actual service, |
| | plus 5 years of additional service) |
|------------------------------------|------------- -------------------------|
| On or after February 10, 2001 and | At least 70% (based on |
| before February 10, 2002 | 2 years of actual service, |
| | plus 5 years of additional service) |
|------------------------------------|------------- -------------------------|
| On or after February 10, 2002 and | At least 80% (based on |
| before February 10, 2003 | 3 years of actual service, |
| | plus 5 years of additional service) |
|------------------------------------|------------- -------------------------|
| On or after February 10, 2003 and | At least 90% (based on |
| before February 10, 2004 | 4 years of actual service, |
| | plus 5 years of additional service) |
|------------------------------------|------------- -------------------------|
| On or after February 10, 2004 | 100% |
|----------------------------------------------------------------------------|
For purposes of determining Executive's benefit under the SERP with respect to
any calculation of Executive's benefits to be made prior to January 1, 2004,
Executive's Final Average Earnings determined using his actual compensation for
any full calendar year of service completed after 1998 and deeming Executive to
have been paid an amount equal to 180% of his Base Salary for that number of
additional years equal to the remainder of (i) five (5) and (ii) the actual
number of full years of service he has completed since 1998.
7
<PAGE>
(c) Perquisites. During the Employment Period, Executive shall be entitled
to at least four weeks' paid vacation annually and shall also be entitled to
receive such perquisites as are generally provided to other senior officers of
the Company in accordance with the then current policies and practices of the
Company, including leasing a car for Executive's use in accordance with the
Company's standard policy. The Company shall also pay or reimburse Executive for
the cost of a membership in a country club selected by Executive. The Company
shall also cause Executive's current residence (in which he resided prior to
joining the Company) to be purchased pursuant to a customary relocation program
with a third party relocation service selected by the Company.
(d) Business Expenses. During the Employment Period, the Company shall pay
or reimburse Executive for all reasonable expenses incurred or paid by Executive
in the performance of Executive's duties hereunder, upon presentation of expense
statements or vouchers and such other information as the Company may require and
in accordance with the generally applicable policies and procedures of the
Company.
(e) Indemnification. During the Employment Period, the Company shall
indemnify Executive and hold Executive harmless from and against any claim, loss
or cause of action arising from or out of Executive's performance as an officer,
director or employee of the Company or any of its subsidiaries or in any other
capacity, including any fiduciary capacity, in which Executive serves at the
request of the Company to the maximum extent permitted by applicable law and the
Company's Restated Certificate of Incorporation and By-Laws.
5. Termination of Employment.
(a) Early Termination of the Employment Period. Notwithstanding Section 1,
the Employment Period shall end upon the earliest to occur of (i) a termination
of Executive's employment on account of Executive's death, (ii) a termination
due to Executive's Disability, (iii) Termination for Cause, (iv) a Termination
Without Cause or (v) a Termination for Good Reason.
(b) Benefits Payable Upon Termination. Following the end of the Employment
Period pursuant to Section 5(a), Executive (or, in the event of his death, his
surviving spouse, if any, or his estate) shall be paid the type or types of
compensation determined to be payable in accordance with the following table at
the times established pursuant to Section 5(c):
|------------------------------------------------------------------------|
| | Earned | Vested | Severance | Additional |
| | Salary | Benefits | Benefits | Benefits |
|------------------|-----------|------------| ------------|--------------|
| Termination | Payable | Payable | Not | Available |
| due to death | | | Payable | |
|------------------|-----------|------------| ------------|--------------|
| Termination due | Payable | Payable | Not | Available |
| to Disability | | | Payable | |
|------------------|-----------|------------| ------------|--------------|
| Termination | Payable | Payable | Not | Not |
| for Cause | | | Payable | Available |
|------------------|-----------|------------| ------------|--------------|
| Termination for | Payable | Payable | Payable | Available |
| Good Reason | | | | |
|------------------|-----------|------------| ------------|--------------|
| Termination | Payable | Payable | Payable | Available |
| Without Cause | | | | |
|------------------------------------------------------------------------|
8
<PAGE>
(c) Timing of Payments. Earned Salary shall be paid in cash in a single
lump sum as soon as practicable, but in no event more than 10 days, following
the end of the Employment Period. Vested Benefits shall be payable in accordance
with the terms of the plan, policy, practice, program, contract or agreement
under which such benefits have been awarded or accrued. Severance Benefits shall
be paid in a single lump sum cash payment as soon as practicable, but in no
event later than 10 days after the Executive's termination. Additional Benefits
shall be provided or made available at the times specified below as to each such
Additional Benefit.
(d) Definitions. For purposes of Sections 5 and 6, capitalized terms have
the following meanings:
"Additional Benefits" means, if Executive's employment terminates due
to death or in a Termination due to Disability, the benefits described in
subclause (i) below, or if the Executive's employment is terminated in a
Termination Without Cause or a Termination for Good Reason, the benefits
described in subclauses (i) and (ii):
(i) Executive (or, in the event of Executive's death during the
90-day period following such termination, Executive's
beneficiary or estate) shall have the right, during the 90-day
period following Executive's termination of employment for any
reason other than death or the 270-day period following
Executive's termination of employment due to death, to exercise
any outstanding options to purchase shares of Common Stock of
the Company that have become exercisable prior to the date of
such termination and that would have become exercisable by
Executive in accordance with the applicable option agreement and
the applicable equity incentive plan of the Company assuming
that Executive continued in the employ of the Company for an
additional 18 months after the date of his termination of
employment;
(ii) Executive (and, to the extent applicable, his dependents) will
be entitled to continue participation in all of the Company's
medical, dental and vision care plans (the "Health Benefit
Plans"), until the 18-month anniversary of Executive's
termination of employment; provided that Executive's
participation in the Company's Health Benefit Plans shall cease
on any earlier date that Executive becomes eligible for
comparable benefits from a subsequent employer. Executive's
participation in the Health Benefit Plans will be on the same
terms and conditions (including, without limitation, any
contributions that would have been required from Executive) that
would have applied had Executive continued to be employed by the
Company. To the extent any such benefits cannot be provided
under the terms of the applicable plan, policy or program, the
Company shall provide a comparable benefit under another plan or
from the Company's general assets.
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"Change of Control" shall have the meaning ascribed thereto in
Section 9.2 of the SOP, as in effect on the date hereof, except that the
threshold for a change of control related to the acquisition of voting power in
subsection 9.2(a) shall be applied under this Section 5 by substituting 40% for
25%.
"Disability" means long-term disability within the meaning of the
Company's long-term disability plan or program.
"Earned Salary" means any Base Salary earned, but unpaid, for
services rendered to the Company on or prior to the date on which the Employment
Period ends pursuant to Section 5(a)(other than Base Salary deferred pursuant to
Executive's election, as provided in Section 3(a) or (b) hereof).
"Severance Benefit" means an amount equal to two times the sum of
(i) Executive's Base Salary plus
(ii) the average of
(X) Executive's Annual Target Bonus Opportunity payable under
Section 3(b) hereof for the calendar year in which
Executive's employment terminates and
(Y) the actual bonus payable to Executive in respect of the
calendar year ended immediately before the calendar year in
which such termination occurs;
provided that, in the event that any severance payment is to be
made subsequent to any Change of Control, the amount described
in subclause (ii) shall be deemed to be the greater of the
amount determined as calculated above or the amount described in
subclause (X) thereof.
"Termination for Cause" means a termination of Executive's employment
by the Company due to (i) Executive's conviction of a felony, (ii) Executive's
willful and continued failure to perform the material duties of his position
which has had (or is expected to have) a material adverse effect on the business
of the Company or its subsidiaries and which breach is not cured within a
reasonable period of time following such breach, or (iii) Executive's breach of
any material Company policy or procedure which has had (or is expected to have)
a material adverse effect on the business of the Company or its subsidiaries and
which breach is not cured within a reasonable period of time following such
breach.
"Termination for Good Reason" means a termination of Executive's
employment by Executive (i) within 90 days following (A) a material diminution
in Executive's positions, duties and responsibilities from those described in
Section 2 hereof, (B) the removal of Executive from, or the failure to re-elect
Executive as a member of, the Board, (C) a reduction in Executive's annual Base
Salary (other than any reduction therein which is in proportion to reductions in
the base salaries of all of the Company's executive officers, as contemplated by
Section 3(a) hereof), (iv) delivery by the Company of a notice that it does not
intend to renew the term of this Agreement as contemplated in Section 1 hereof,
or (D) a material breach by the Company of any other provision of this Agreement
or (ii) any voluntary termination by Executive occurring after a Change of
Control and prior to the first anniversary thereof.
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<PAGE>
"Termination Without Cause" means any termination of Executive's
employment by the Company other than a Termination for Cause.
"Vested Benefits" means amounts which are vested or which Executive
is otherwise entitled to receive under the terms of or in accordance with any
plan, policy, practice or program of, or any contract or agreement with, the
Company or any of its subsidiaries, at or subsequent to the date of his
termination without regard to the performance by Executive of further services
or the resolution of a contingency.
(e) Full Discharge of Company Obligations. Except as expressly provided in
the last sentence of this Section 5(e), the amounts payable to Executive
pursuant to this Section 5 following termination of his employment (including
amounts payable with respect to Vested Benefits) shall be in full and complete
satisfaction of Executive's rights under this Agreement and any other claims he
may have in respect of his employment by the Company or any of its subsidiaries.
Such amounts shall constitute liquidated damages with respect to any and all
such rights and claims and, upon Executive's receipt of such amounts, the
Company shall be released and discharged from any and all liability to Executive
in connection with this Agreement or otherwise in connection with Executive's
employment with the Company and its subsidiaries. If requested by the Company,
Executive shall execute a release following termination of his employment, in
form and substance satisfactory to the Company (but not inconsistent with the
terms of this Agreement), as a prior condition to the receipt of the benefits
payable pursuant to this Section 5. Nothing in this Section 5(e) shall be
construed to release the Company from its commitment to indemnify Executive and
hold Executive harmless from and against any claim, loss or cause of action as
described in Section 4(e).
(f) Certain Further Payments by the Company.
(i) In the event that any amount or benefit paid or distributed to
the Executive pursuant to this Agreement, taken together with any amounts or
benefits otherwise paid or distributed to the Executive by the Company or any
affiliated company (collectively, the "Covered Payments"), are or become subject
to the tax (the "Excise Tax") imposed under Section 4999 of the Code, or any
similar tax that may hereafter be imposed, the Company shall pay to the
Executive at the time specified in Section 5(f)(v) below an additional amount
(the "Tax Reimbursement Payment") such that the net amount retained by the
Executive with respect to such Covered Payments, after deduction of any Excise
Tax on the Covered Payments and any Federal, state and local income or
employment tax and Excise Tax on the Tax Reimbursement Payment provided for by
this Section 5(f), but before deduction for any Federal, state or local income
or employment tax withholding on such Covered Payments, shall be equal to the
amount of the Covered Payments.
(ii) For purposes of determining whether any of the Covered Payments
will be subject to the Excise Tax and the amount of such Excise Tax,
11
<PAGE>
(A) such Covered Payments will be treated as "parachute payments"
within the meaning of Section 280G of the Code, and all
"parachute payments" in excess of the "base amount" (as defined
under Section 280G(b)(3) of the Code) shall be treated as
subject to the Excise Tax, unless, and except to the extent
that, in the good faith judgment of the Company's independent
certified public accountants appointed prior to the Change of
Control or tax counsel selected by such Accountants (the
"Accountants"), the Company has a reasonable basis to conclude
that such Covered Payments (in whole or in part) either do not
constitute "parachute payments" or represent reasonable
compensation for personal services actually rendered (within the
meaning of Section 280G(b)(4)(B) of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise not
subject to such Excise Tax, and
(B) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Accountants in accordance
with the principles of Section 280G of the Code.
(iii)For purposes of determining the amount of the Tax Reimbursement
Payment, the Executive shall be deemed to pay:
(A) Federal income taxes at the highest applicable marginal rate of
Federal income taxation for the calendar year in which the Tax
Reimbursement Payment is to be made, and
(B) any applicable state and local income taxes at the highest
applicable marginal rate of taxation for the calendar year in
which the Tax Reimbursement Payment is to be made, net of the
maximum reduction in Federal income taxes which could be
obtained from the deduction of such state or local taxes if paid
in such year.
(iv) In the event that the Excise Tax is subsequently determined by
the Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to be less than the amount taken into account hereunder in
calculating the Tax Reimbursement Payment made, the Executive shall repay to the
Company, at the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of such prior Tax Reimbursement Payment that
would not have been paid if such Excise Tax had been applied in initially
calculating such Tax Reimbursement Payment, plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement
Payment to be refunded to the Company has been paid to any Federal, state or
local tax authority, repayment thereof shall not be required until actual refund
or credit of such portion has been made to the Executive, and interest payable
to the Company shall not exceed interest received or credited to the Executive
by such tax authority for the period it held such portion. The Executive and the
Company shall mutually agree upon the course of action to be pursued (and the
method of allocating the expenses thereof) if the Executive's good faith claim
for refund or credit is denied.
12
<PAGE>
In the event that the Excise Tax is later determined by the
Accountants or pursuant to any proceeding or negotiations with the Internal
Revenue Service to exceed the amount taken into account hereunder at the time
the Tax Reimbursement Payment is made (including, but not limited to, by reason
of any payment the existence or amount of which cannot be determined at the time
of the Tax Reimbursement Payment), the Company shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalty
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
(v) The Tax Reimbursement Payment (or portion thereof) provided for
in Section 5(f)(i) above shall be paid to the Executive not later than 10
business days following the payment of the Covered Payments; provided, however,
that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot
be finally determined on or before the date on which payment is due, the Company
shall pay to the Executive by such date an amount estimated in good faith by the
Accountants to be the minimum amount of such Tax Reimbursement Payment and shall
pay the remainder of such Tax Reimbursement Payment (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined, but in no event later than 45 calendar days after
payment of the related Covered Payment. In the event that the amount of the
estimated Tax Reimbursement Payment exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to the
Executive, payable on the fifth business day after written demand by the Company
for payment (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
6. Noncompetition and Confidentiality. By and in consideration of the salary and
benefits to be provided by the Company hereunder, including particularly the
severance arrangements set forth herein, Executive agrees that:
(a) Noncompetition. Executive acknowledges that the Company and its
subsidiaries conduct business throughout the United States, the District of
Columbia, Canada, Mexico, Latin America and Europe, and that his duties to
Company relate to some or all of these territories and to some or all business
lines of the Company. During the Employment Period and during the nine month
period following any termination of Executive's employment, other than a
Termination Without Cause or a Termination for Good Reason, Executive shall not
directly or indirectly: (i) perform or provide any services to any individual or
business which is engaged in the type of business(es) similar to the type of
business(es) conducted by Company or any of its subsidiaries; and/or (ii) own,
manage, operate, control, be employed by, participate in, provide services or
financial assistance to, or be connected in any manner with, the ownership,
management, operation or control of any business which directly competes with
Company or any of its subsidiaries or engages in the type of business(es)
principally conducted by the Company or any of its subsidiaries, except that
Executive may own for investment purposes up to 1% of the capital stock of any
such company whose stock is publicly traded.
(b) Confidentiality. Except as may be required by the lawful order of a
court or agency of competent jurisdiction, or applicable law, or except to the
extent that Executive has express authorization from the Company, Executive
agrees to keep secret and confidential indefinitely all non-public information
(including, without limitation, information regarding litigation and pending
13
<PAGE>
litigation and any information that may be subject to attorney-client privilege)
concerning the Company, its subsidiaries and affiliates (collectively, the
"Company Group") which was acquired by or disclosed to Executive during the
course of Executive's employment with the Company, and not to disclose the same,
either directly or indirectly, to any other person, firm, or business entity, or
to use it in any way. Such non-public information shall include, but not be
limited to, the following:
(i) information which the Company Group has compiled to identify,
develop and service its clients and customers, including
"negative research" to identify those entities who have not
subscribed to the services of the Company and its subsidiaries;
(ii) information which the Company Group has compiled concerning the
operations of the clients and customers of the Company and its
subsidiaries, including key contacts within the clients' and
customers' business, familiarity with special needs and customer
characteristics, workers' compensation information, billing
rates, profit margins, sales volumes, and other sensitive
financial information;
(iii)information which the Company Group has compiled concerning the
employees and labor force at the Company and its subsidiaries,
including compilations of their names, addresses, job skills,
employment histories and employment records.
Upon termination of Executive's employment, Executive shall promptly deliver to
the Company all materials of a confidential nature relating to the business of
the Company and its subsidiaries and which are Executive's possession or
control. To the extent that Executive obtained information on behalf of the
Company or any subsidiary or affiliate that may be subject to attorney-client
privilege, Executive shall take reasonable steps to maintain the confidentiality
of such information and to preserve such privilege.
(c) Non-Solicitation of Employees. During the Employment Period and the
one-year period following any termination of Executive's employment, Executive
shall not directly or indirectly, for his own benefit or that of any other
person, offer any employment in a similar field or business association to any
of the Company's employees, agents or representatives or suggest or in any way
encourage, any of the Company's employees, agents or representatives to
terminate their employment or business association with the Company.
(d) Non-Solicitation of Clients and Customers. During the Employment
Period and the one-year period following any termination of Executive's
employment, Executive shall not solicit or accept for Executive's own benefit or
the benefits of any other person any of the Company's customers and/or clients
with a view to sell or provide any product or service competitive with any
product or service sold or provided or under development by the Company. For the
purposes of this Section 6(d), the term "customers" shall include any person or
entity to whom the Company has sold, provided or been obligated to provide, any
service or product, or who has otherwise received any service or benefit from
the Company within the last 24 months or, during the Restriction Period, within
the 24-month period preceding the date Executive's employment terminates.
14
<PAGE>
(e) Company Property. Except as expressly provided herein, promptly
following Executive's termination of employment, Executive shall return to the
Company all property of the Company.
(f) Injunctive Relief and Other Remedies with Respect to Covenants.
Executive acknowledges and agrees that the covenants and obligations of
Executive with respect to noncompetition, nonsolicitation, confidentiality and
Company property, relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations may cause the
Company irreparable injury for which adequate remedies are not available at law.
Therefore, Executive agrees that the Company shall be entitled to seek an
injunction, restraining order or such other equitable relief (without the
requirement to post bond) restraining Executive from committing any violation of
the covenants and obligations contained in this Section 6. This remedy is in
addition to any other rights and remedies the Company may have at law or in
equity.
7. Miscellaneous.
(a) Survival. Sections 5 (relating to early termination), 6 (relating to
noncompetition, nonsolicitation and confidentiality), 7(b) (relating to
arbitration), 7(c)(relating to legal fees) and 7(m) (relating to governing law)
shall survive the termination hereof.
(b) Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be resolved by binding arbitration. The arbitration
shall be held in New York City and except to the extent inconsistent with this
Agreement, shall be conducted in accordance with the Expedited Employment
Arbitration Rules of the American Arbitration Association then in effect at the
time of the arbitration, and otherwise in accordance with principles which would
be applied by a court of law or equity. The arbitrator shall be acceptable to
both the Company and Executive. If the parties cannot agree on an acceptable
arbitrator, the dispute shall be heard by a panel of three arbitrators one
appointed by each of the parties and the third appointed by the other two
arbitrators.
(c) Binding Effect. This Agreement shall be binding on, and shall inure to
the benefit of, the Company and any person or entity that succeeds to the
interest of the Company (regardless of whether such succession does or does not
occur by operation of law) by reason of the sale of all or a portion of the
Company's stock, a merger, consolidation or reorganization involving the Company
or, unless the Company otherwise elects in writing, a sale of the assets of the
business of the Company (or portion thereof) in which Executive performs a
majority of his services. This Agreement shall also inure to the benefit of
Executive's heirs, executors, administrators and legal representatives.
(d) Assignment. Except as provided under Section 7(c), neither this
Agreement nor any of the rights or obligations hereunder shall be assigned or
delegated by any party hereto without the prior written consent of the other
party.
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<PAGE>
(e) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein. No
other agreement (other than awards made in accordance with the terms of one of
the Company's applicable compensatory plans, programs or arrangements) relating
to the terms of Executive's employment by the Company, oral or otherwise,
including, without limitation, the Letter Agreement (other than the provisions
of Section 13 thereof, which relates to Executive's relocation to Long Island
from Villanova), shall be binding between the parties. There are no promises,
representations, inducements or statements between the parties other than those
that are expressly contained herein. Executive acknowledges that he is entering
into this Agreement of his own free will and accord, and with no duress, that he
has read this Agreement and that he understands it and its legal consequences.
(f) Severability; Reformation. In the event that one or more of the
provisions of this Agreement shall become invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event that any
of the provisions of any of Section 6(a), (b) or (c) is not enforceable in
accordance with its terms, Executive and the Company agree that such Section
shall be reformed to make such Section enforceable in a manner which provides
the Company the maximum rights permitted at law.
(g) Waiver. Waiver by any party hereto of any breach or default by the
other party of any of the terms of this Agreement shall not operate as a waiver
of any other breach or default, whether similar to or different from the breach
or default waived. No waiver of any provision of this Agreement shall be implied
from any course of dealing between the parties hereto or from any failure by
either party hereto to assert its or his rights hereunder on any occasion or
series of occasions.
(h) Notices. Any notice required or desired to be delivered under this
Agreement shall be in writing and shall be delivered personally, by courier
service, by certified mail, return receipt requested, or by telecopy and shall
be effective upon actual receipt by the party to which such notice shall be
directed, and shall be addressed as follows (or to such other address as the
party entitled to notice shall hereafter designate in accordance with the terms
hereof):
If to the Company:
Olsten Corporation
175 Broad Hollow Road
Melville, New York 11747-8905
Attention: General Counsel
If to Executive:
The home address of Executive
noted on the records of the Company
(i) Amendments. This Agreement may not be altered, modified or amended
except by a written instrument signed by each of the parties hereto.
16
<PAGE>
(j) Headings. Headings to sections in this Agreement are for the
convenience of the parties only and are not intended to be part of or to affect
the meaning or interpretation hereof.
(k) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
(l) Withholding. Any payments provided for herein shall be reduced by any
amounts required to be withheld by the Company from time to time under
applicable Federal, State or local income or employment tax laws or similar
statutes or other provisions of law then in effect.
(m) Governing Law. This Agreement shall be governed by the laws of the
State of New York, without reference to principles of conflicts or choice of law
under which the law of any other jurisdiction would apply.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and Executive has hereunto set his hand
as of the day and year first above written.
OLSTEN CORPORATION
By:________________________
William P. Costantini
Executive Vice President
_______________________
Edward A. Blechschmidt
17
OLSTEN CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Effective January 4, 1999
<PAGE>
OLSTEN CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Table of Contents
-----------------
Article I
Background and Purpose
1.1 Background........................................................1
1.2 Purpose...........................................................1
Article II
Definitions
2.1 Accrued Benefit...................................................1
2.2 Active Service....................................................2
2.3 Actuarial Equivalent..............................................2
2.4 Beneficiary.......................................................3
2.5 Benefit Objective.................................................3
2.6 Benefits Committee................................................3
2.7 Board of Directors................................................3
2.8 Break in Service..................................................3
2.9 Change in Control.................................................4
2.10 Code..............................................................4
2.11 Company...........................................................4
2.12 Disability (or "Disabled")........................................4
2.13 Early Retirement Age..............................................4
2.14 Early Retirement Date.............................................4
2.15 Effective Date....................................................4
2.16 Employee..........................................................4
2.17 Entry Date .......................................................4
2.18 ERISA.............................................................4
2.19 Final Average Earnings............................................4
2.20 Highly Compensated Employee.......................................5
2.21 Hours of Service..................................................5
2.22 Integrated Benefits...............................................6
2.23 Late Retirement Date..............................................7
2.24 Normal Retirement Age.............................................7
2.25 Normal Retirement Date............................................7
2.26 Participant.......................................................7
2.27 Participating Employer............................................7
2.28 Plan..............................................................7
2.29 Plan Administrator................................................7
2.30 Plan Year.........................................................7
2.31 Primary Social Security Benefit...................................7
2.32 Prior Plan........................................................7
2.33 Service...........................................................7
2.34 Subsidiary........................................................7
2.35 Termination of Service............................................8
2.36 Total Compensation................................................8
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2.37 Trust.............................................................8
2.38 Trustee...........................................................8
2.39 Year(s)of Participation...........................................8
2.40 Year(s)of Service.................................................9
Article III
Eligibility and Participation
3.1 Eligibility.......................................................9
3.2 Participation.....................................................9
3.3 Suspension of Participation.......................................9
Article IV
Funding
4.1 Funding..........................................................10
4.2 Insolvency.......................................................11
4.3 Amounts Not Made Available.......................................12
4.4 Contingent Nature of Accrued Benefits............................12
Article V
Entitlement to Benefits
5.1 Normal Retirement................................................12
5.2 Late Retirement..................................................12
5.3 Early Retirement.................................................12
5.4 Termination of Service...........................................12
5.5 Death............................................................13
5.6 Disability.......................................................13
5.7 Vesting and Forfeitures..........................................13
5.8 Distribution Elections...........................................13
5.9 Special Rule for Change in Control...............................14
5.10 Special Rules for Additional Benefits............................14
Article VI
Distributions
6.1 Forms of Payment.................................................15
6.2 Pre-Retirement Death Distributions...............................15
Article VII
Participating Employers
7.1 Adoption by Other Employers......................................16
7.2 Allocation of Plan and Trust Expenses............................16
7.3 Designation of Company as Agent..................................16
7.4 Employee Transfers...............................................16
7.5 Contributions and Forfeitures of Participating Employer..........17
7.6 Amendments by Participating Employers............................17
7.7 Discontinuance of Participation .................................17
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Article VIII
Amendment and Termination
8.1 Right to Amend or Terminate......................................17
8.2 Merger or Consolidation..........................................18
Article IX
Administration
9.1 Plan Administrator...............................................18
9.2 Binding Effect...................................................18
9.3 Delegation of Authority..........................................18
9.4 Plan Records.....................................................19
9.5 Limited Liability................................................19
Article X
Claims Procedure
10.1 Claims Submission................................................19
10.2 Claim Review.....................................................20
10.3 Right of Appeal..................................................20
10.4 Review of Appeal.................................................20
10.5 Designation......................................................20
Article XI
Miscellaneous
11.1 Headings.........................................................20
11.2 Uniformity.......................................................21
11.3 Obligations of the Company and Participating Employers...........21
11.4 Governing Law....................................................21
11.5 Gender and Number................................................21
11.6 Taxes............................................................21
11.7 Plan Benefits Nontransferable....................................21
11.8 Incompetence.....................................................21
11.9 Identity.........................................................21
11.10 Other Benefits...................................................22
11.11 Construction.....................................................22
11.12 No Guarantee of Employment.......................................22
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<PAGE>
OLSTEN CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I
Background And Purpose
----------------------
1.1 Background. The Olsten Corporation Supplemental Executive Retirement Plan
(the "Plan") was established effective January 4, 1999. The Plan is an
amendment, restatement and continuation of the Olsten Corporation Supplemental
Retirement Plan for Key Executives Designated by the Company (the "Prior Plan").
1.2 Purpose. The Plan was established for the purpose of providing unfunded
deferred compensation for a select group of management and highly compensated
employees as defined in Title I of the Employee Retirement Income Security Act
of 1974, as amended. All contributions to the Plan are made by the Company or
Participating Employers. Participants are not required or permitted to make any
contributions to the Plan. The Plan is not intended to qualify under Code
section 401(a).
ARTICLE II
Definitions
-----------
2.1 Accrued Benefit means the benefit payable to a Participant under the Plan
determined in accordance with this Section and the provisions of the Plan.
(a) A Participant's Accrued Benefit at his or her Normal
Retirement Date shall be equal to (i) the Participant's
Benefit Objective multiplied by a fraction, the numerator of
which is the Participant's actual Years of Participation upon
Termination of Service and the denominator of which is the
Participant's projected Years of Participation had the
Participant remained employed by the Company or a
Participating Employer until his or her Normal Retirement Date
minus (ii) the Participant's Integrated Benefits (calculated
as provided in paragraph (b) below).
(b) For purposes of paragraph (a) above, the Participant's
Benefit Objective minus the Participant's Integrated Benefits
shall be calculated as follows:
(i) The Participant's Benefit Objective shall first be
expressed as an Actuarially Equivalent lump sum.
(ii) Such lump sum shall then be reduced by the
Actuarially Equivalent lump sum of any Integrated
Benefits.
(iii) The resulting amount shall then be converted into
an Actuarially Equivalent single life annuity.
<PAGE>
(c) A Participant's Accrued Benefit at his or her Early
Retirement Date shall be equal to the Participant's Accrued
Benefit at his or her Normal Retirement date, adjusted as
follows:
(i) For Participants who terminate employment after
having attained their Early Retirement Age, the
Years of Participation in the denominator of the
fraction described in Section 2.1(a) shall be
limited to thirty (30) years; and
(ii) The Participant's Accrued Benefit at his or her
Normal Retirement Date shall be actuarially reduced
by six percent (6%) for each year by which the
Participant's Early Retirement Date precedes the
Participant's Normal Retirement Date.
(d) A Participant's Accrued Benefit payable at the
Participant's Late Retirement Date shall be calculated in the
same manner as the Participant's Accrued Benefit payable at the
Participant's Normal Retirement Age, except that all of a
Participant's Years of Participation through the Participant's
Late Retirement Date shall be included in both the numerator
and the denominator of the fraction described in paragraph (a)
above.
(e) In the case of any payments made before a Participant's
Early Retirement Date, the Participant's Accrued Benefit shall
be the Actuarial Equivalent of the Accrued Benefit available at
Early Retirement Date.
2.2 Active Service means the period during which an Employee is employed by the
Company or a Participating Employer and the Employee is actively at work with
the Company or Participating Employer. Active Service does not include periods
(i) for which the Employee receives severance benefits from the Company or a
Participating Employer; or (ii) during which the Employee performs services for
the Company or Participating Employer as a consultant or independent contractor.
2.3 Actuarial Equivalent means an amount determined using the following
mortality tables and interest factors:
(a) For determining the actuarial equivalent of a lump sum:
(i) the mortality table shall be the UP84 Unisex
Pension Mortality Table; and
(ii) the interest rate shall be based upon the rate
promulgated by the Pension Benefit Guaranty
Corporation (PBGC) for purposes of determining
settlements upon plan termination as of the
beginning of the Plan Year during which the
determination is being made, but in the event the
PBGC no longer promulgates such interest rates, the
Plan Administrator shall select an alternative
method of determining the applicable interest rate.
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(b) For determining the actuarial equivalent of any other
optional form of benefit:
(i) the mortality table shall be the 1983 Group Annuity
Mortality (GAM) Table (blended 50% of the male and
50% of the female rate); and
(ii) the interest rate shall be seven percent (7.00%).
2.4 Beneficiary means such beneficiary as the Participant may designate from
time to time on a form made available by the Company for such purpose (which may
be available in paper, facsimile, electronic or voice response format), to
receive any benefit payable in the event of the Participant's death. Unless
otherwise designated, the Beneficiary with respect to a married Participant
shall be the Participant's surviving spouse. If a Participant has no surviving
spouse and has not made a valid Beneficiary designation hereunder, the
Participant's death benefit shall be paid to the Participant's estate.
2.5 Benefit Objective means an amount equal to the value of a single life
annuity that will pay the Participant an annual amount equal to sixty percent
(60%) of the Participant's Final Average Earnings, subject to the adjustments
described in (a) and (b) below.
(a) A Participant who has fewer than twenty (20) projected
Years of Service at the Participant's Normal Retirement Date
will have his or her Benefit Objective reduced as provided in
this paragraph. The Benefit Objective will be multiplied by a
fraction (not to exceed one), the numerator of which is the
Participant's projected Years of Service at his or her Normal
Retirement Date and the denominator of which is twenty (20).
(b) Notwithstanding the preceding paragraph, a Participant with
fewer than ten (10) projected Years of Participation from the
Participant's Entry Date to his or her Normal Retirement Date
will have his or her Benefit Objective reduced as provided in
this paragraph. The Participant's Benefit Objective will be
multiplied by a fraction (not to exceed one), which produces
the lowest Benefit Objective, determined as follows:
(i) the Participant's Years of Service at his or her
Normal Retirement Date divided by twenty (20); or
(ii) the Participant's Years of Participation at his or
her Normal Retirement Date divided by ten (10).
2.6 Benefits Committee means the committee established by the Company to manage
its various employee benefit plans.
2.7 Board of Directors means the board of directors of the Company.
2.8 Break in Service means a Plan Year in which a Participant does not complete
at least 501 Hours of Service.
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2.9 Change in Control means the acquisition by a "person" (as such term is used
in sections 13(d) and 14(d) of the Securities Exchange Act of 1934) of more than
twenty-five percent (25%) of the then outstanding voting stock of the Company,
other than through a transaction arranged by, or with the consent of, the
Company or the Board, or the purchase of at least ten percent (10%) of the then
outstanding shares of voting stock of the Company pursuant to a tender offer or
exchange offer which is opposed by a majority of the members then serving on the
Board.
2.10 Code means the Internal Revenue Code of 1986, as amended.
2.11 Company means Olsten Corporation and its successors.
2.12 Disability (or Disabled) means a medically determinable physical or mental
impairment that renders a Participant totally disabled. If the Participant
qualifies to receive benefits under the Company's long term disability program,
the Participant shall be presumed Disabled for purposes of this Plan. If the
Participant does not qualify to receive benefits under the Company's long term
disability program, the Plan Administrator may nevertheless determine that the
Participant is Disabled for purposes of this Plan. Continued payment of benefits
under the Plan in the event of a Participant's Disability shall be conditioned
upon the Participant's continued Disability, which may be reviewed from time to
time by the insurance carrier for the Company's long term disability program or
by the Plan Administrator.
2.13 Early Retirement Age means age fifty-five (55).
2.14 Early Retirement Date means the first day of any calendar month after (i)
the Participant's Early Retirement Age but before the Participant's Normal
Retirement Age, regardless of whether the Participant is actively employed by
the Company or a Participating Employer on such date and (ii) the Participant's
completion of five (5) Years of Service.
2.15 Effective Date of the Plan means January 4, 1999.
2.16 Employee means the regular, full-time employees of the Company or a
Participating Employer who is designated as such on the books and records of the
Company or Participating Employer, as determined by the Plan Administrator.
2.17 Entry Date means the first day of the calendar month on or after the date
on which a key executive who is a Highly Compensated Employee is designated by
the Company as being eligible to participate in the Plan.
2.18 ERISA means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
2.19 Final Average Earnings means the annualized average of the Participant's
highest Total Compensation for the five (5) out of six (6) consecutive calendar
years in the ten (10) consecutive calendar years including and preceding a
Participant's Termination of Service with the Company or a Participating
Employer; provided, however, a Participant's Final Average Earnings may include
the projected amount that would have been paid to the Participant as base salary
for the calendar year in which the Participant terminated Service, added to any
bonus and incentive compensation actually paid to the Participant in the
calendar year in which the Participant terminated Service.
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2.20 Highly Compensated Employee means any Employee who is a management or
highly compensated employee (within the meaning of Title I of ERISA) and who:
(a) is a five percent (5%) owner of the Company or
Participating Employer at any time during the Plan Year or the
preceding Plan Year;
(b) for the preceding Plan Year received Total Compensation in
excess of the amount specified in Code section 414(q)(1)(B)(i);
or
(c) for the current Plan Year, the Plan Administrator
determines that the Employee's Total Compensation is expected
to exceed the amount specified in Code Section 414(q)(1)(B)(i).
2.21 Hours of Service
(a) Hours of Service includes each hour:
(i) for which an individual is paid, or entitled to
pay, by the Company or a Participating Employer for
the performance of duties, and
(ii) for which an individual is paid, or entitled to
pay, by the Company or Participating Employer with
respect to a period of time during which no duties
are performed due to vacation, holiday, or illness,
incapacity, disability, maternity leave, layoff,
jury duty, military duty, or leave of absence
(determined in accordance with Department of Labor
Regulations section 2530.200b-2(b) and (c)), and
(iii) for which back pay, irrespective of mitigation of
damages, is either awarded to an individual or
agreed to by the Company or Participating Employer.
(b) An Hour of Service shall not be credited under more than
one paragraph above. Only 501 Hours of Service will be credited
to an individual for any single continuous period of time
during which the individual was paid but rendered no services,
even where such period spans more than one computation period.
(c) An Employee will be credited with forty-five (45) Hours of
Service for each week for which he or she would be credited
with one Hour of Service under the Department of Labor
regulations.
(d) Hours of Service shall include employment with the Company
and with an affiliate of the Company within the meaning of Code
section 1563(a).
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(e) For purposes of determining whether a Break-in-Service for
participation or vesting purposes has occurred in a Plan Year,
an Employee who is absent from work for maternity or paternity
reasons shall receive credit for Hours of Service which would
otherwise have been credited to such individual but for such
absence, or, in any case in which such hours cannot be
determined, eight (8) Hours of Service per day of such absence.
For purposes of this paragraph, an absence from work for
maternity or paternity reasons means an absence:
(i) by reason of the pregnancy of the individual;
(ii) by reason of a birth of a child of the individual;
(iii) by reason of the placement of a child with the
individual in connection with the adoption of such
child by such individual; or
(iv) for purposes of caring for such child for a period
beginning immediately following such birth or
placement for adoption.
(f) The Hours of Service credited under this paragraph shall be
credited in the Plan Year in which the absence begins if the
crediting is necessary to prevent a Break-in-Service in that
period, or in all other cases, in the following Plan Year.
2.22 Integrated Benefits. Based on facts available to the Plan Administrator,
the Plan Administrator shall determine a Participant's Integrated Benefits,
which determination shall be binding and conclusive on all Participants and
Beneficiaries. A Participant's Integrated Benefit shall equal the sum of the
following:
(a) The Participant's account balances (as of the date of the
Participant's Termination of Service) from employer
contributions and the earnings thereon (other than matching
contributions and the earnings thereon) maintained in the
Olsten Corporation Retirement Savings Plan, the Olsten
Corporation Nonqualified Retirement and Savings Plan
(established effective January 1, 1999) (which includes the
Olsten Corporation Nonqualified Savings Plan for Selected
Management Employees and the Olsten Corporation Nonqualified
Retirement Plan for Selected Management Employees) or any other
plan of deferred compensation that includes employer
contributions on behalf of the Participant. In no event shall
accumulations in such other plans attributable to employee
contributions (whether pre-tax or after-tax) and the earnings
thereon or employer matching contributions and the earnings
thereon be considered as Integrated Benefits in this Plan.
(b) The Participant's Primary Social Security Benefit.
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2.23 Late Retirement Date means the first day of any calendar month after the
Participant's Normal Retirement Date.
2.24 Normal Retirement Age means the date that the Participant attains age
sixty-two (62).
2.25 Normal Retirement Date means the first day of the calendar month on or
immediately after the date that the Participant (i) attains his or her Normal
Retirement Age and (ii) has completed five (5) Years of Service.
2.26 Participant means any Highly Compensated Employee who is a key executive of
the Company or a Participating Employer and is designated by the Company as
eligible to participate in the Plan.
2.27 Participating Employer means any entity in the following group that
includes the Company: (i) a controlled group of corporations, within the meaning
of Code section 414(b); (ii) a group of trades or businesses under common
control, within the meaning of Code section 414(c); (iii) an affiliated service
group, within the meaning of Code section 414(m); or (iv) a trade or business
required to be aggregated pursuant to Code section 414(o), provided such entity
has adopted this Plan pursuant to Article VIII, with the permission of the Plan
Administrator.
2.28 Plan means the Olsten Corporation Supplemental Executive Retirement Plan,
which is intended to be an unfunded deferred compensation arrangement for a
select group of management or Highly Compensated Employees of the Company and
Participating Employers.
2.29 Plan Administrator means the Benefits Committee or its designated
representative.
2.30 Plan Year means the period of time beginning on January 1 and ending on the
following December 31.
2.31 Primary Social Security Benefit. Unless the Plan Administrator determines
otherwise, "Primary Social Security Benefit" means the Participant's primary
insurance amount under the United States or Canadian Social Security Act payable
at the disability retirement date or at age sixty-five (65), whichever applies
to the Participant, and/or any other comparable primary insurance amount payable
under another governmental retirement program.
2.32 Prior Plan means the Olsten Corporation Supplemental Retirement Plan for
Key Executives Designated by the Company.
2.33 Service means the period of full-time employment of a Participant with (i)
the Company or a Participating Employer or (ii) a Subsidiary of the Company (but
not counting any period during which such Subsidiary was not a Subsidiary of the
Company, unless specifically agreed to by the Company). For this purpose, all
periods of employment with the Company and any Subsidiary (both before and after
the adoption of the Plan and before and after the Employee became a Participant
in the Plan) shall be included as Service.
2.34 Subsidiary means any corporation, at least fifty percent (50%) of the
outstanding voting stock of which is beneficially owned directly or indirectly
by the Company.
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2.35 Termination of Service means the last day of the calendar month on or after
the termination of a Participant's Service whether by voluntary or involuntary
separation, retirement, disability or death.
2.36 Total Compensation means:
(a) All remuneration for services paid to an Employee by the
Company or a Participating Employer, as defined in Code section
3401(a) (for purposes of income tax withholding at the source),
but determined without regard to any rules that limit
remuneration included in wages based on the nature and location
of employment or the services performed.
(b) Total Compensation as defined in subsection (a) shall
exclude the following items (even if includable in gross
income):
(i) reimbursement or other expense allowances;
(ii) fringe benefits (cash and noncash);
(iii) moving expenses and gross up for taxes;
(iv) welfare benefits (including short term and long
term disability income from any insurance policies
offered through the Company or a Participating
Employer);
(v) payments on account of severance of the Participant
from employment with the Company or a Participating
Employer;
(vi) payments on account of early retirement;
(vii) income arising from the grant or exercise of stock
options or restricted stock awards;
(viii) Accrued Benefits under this Plan; and
(ix) distributions from the Olsten Corporation
Nonqualified Retirement and Savings Plan (but
pre-tax employee contributions to the Olsten
Corporation Nonqualified Retirement and Savings
Plan shall be included in the definition of Total
Compensation for purposes of this Plan).
2.37 Trust means one or more trust instruments designated to hold assets
associated with the Plan.
2.38 Trustee means the Trustee of the Trust and any successor Trustees.
2.39 Year(s) of Participation means the number of completed months of Service
during which the Participant has earned an Accrued Benefit under the Plan.
Participants whose participation has been suspended in accordance with Section
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3.3 shall not earn any Years of Participation for benefit accrual purposes
during the period of such suspension.
2.40 Year(s) of Service means the number of the Participant's completed months
of Service, whether or not consecutive, divided by twelve (12), counting each
twelve (12) months as a Year of Service and each additional full month as 1/12th
of a Year of Service.
ARTICLE III
Eligibility and Participation
-----------------------------
3.1 Eligibility.
(a) Except as provided in this Section 3.1(a), all participants
in the Prior Plan shall become Participants hereunder as of
January 4, 1999. To the extent an Employee participated in the
Prior Plan and did not perform any Service for the Company or a
Participating Employer on or after January 4, 1999, such
Employee's benefits shall be determined exclusively under the
terms of the Prior Plan. For Employees who first participate in
the Plan on or after January 4, 1999, the Prior Plan shall not
have any effect on the benefits payable under this Plan.
(b) Highly Compensated Employees who are age twenty-one (21) or
older, employed by the Company or a Participating Employer on
December 31, 1998 and designated by the Company as eligible to
participate in the Plan, shall become Participants as of
January 4, 1999.
(c) Highly Compensated Employees who are age twenty-one (21) or
older and who are employed by the Company or a Participating
Employer on or after January 4, 1999 and designated by the
Company as eligible to participate in the Plan, shall become
Participants as of their Entry Date.
(d) The Company shall have sole discretion to determine when
and if an Employee becomes eligible to participate in the Plan.
3.2 Participation. The Chief Executive Officer of the Company or his or her
designee will notify eligible Highly Compensated Employees in writing when they
have been selected for participation in the Plan.
3.3 Suspension of Participation.
(a) A Participant's participation in the Plan may be suspended
by the Company due to a diminution of responsibilities. The
Chief Executive Officer or his or her designee shall notify the
Participant in writing if his or her participation hereunder
shall be suspended, including the effective date of such
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suspension. Participants whose participation hereunder has been
suspended shall continue to earn Years of Service for vesting
purposes with respect to the Accrued Benefit earned by the
Participant prior to the effective date of such suspension.
However, Participants whose participation hereunder has been
suspended shall cease accumulating additional Accrued Benefits
as of the effective date of the suspension.
(b) A Participant whose participation in the Plan is suspended
under Section 3.3(a) shall be eligible to resume participation
in the Plan at such time as the Company may determine. Upon the
resumption of participation in the Plan, the Participant shall
earn additional Years of Participation for benefit accrual
purposes, but only with respect to those Years of Participation
occurring before the suspension and after the resumption of
participation. Unless the Company provides otherwise, Years of
Participation shall not be credited for the period during which
the suspension of the Participant's participation was
effective.
ARTICLE IV
Funding
-------
4.1 Funding.
(a) The Company or Participating Employer may deposit into a
Trust any amounts it deems appropriate to fund the Accrued
Benefits described in the Plan. To the extent the Trust is
unable or not required to pay such Accrued Benefits, the
Accrued Benefits shall be paid by the Company or Participating
Employer as and when they become due as provided herein.
(b) Nothing contained herein shall be deemed to create a trust
of any kind or create any fiduciary relationship. Funds
deposited into the Trust shall continue for all purposes to be
a part of the general funds of the Company or Participating
Employer and no person other than the Company or respective
Participating Employer shall, by virtue of the Plan, have any
interest in such funds. To the extent that any person acquires
a right to receive payments from the Company or a Participating
Employer under the Plan, such right shall be no greater than
the right of any unsecured general creditor of the Company or
the Participating Employer.
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(c) Should any insurance contract or other investment be
acquired in connection with the liabilities assumed under this
Plan, it is expressly understood and agreed that the
Participants and Beneficiaries shall not have any right with
respect to, or claim against, such assets nor shall any such
purchase be construed to create a trust of any kind or a
fiduciary relationship between the Company, Participating
Employers and the Participants, Beneficiaries or any other
person. The Company, Participating Employer or the Trust(s)
shall be designated owner and beneficiary of any insurance
contract acquired in connection with its obligation under this
Plan.
(d) Each Participant and Beneficiary shall be required to look
to the provisions of this Plan and to the Company or respective
Participating Employer for enforcement of any and all benefits
under this Plan. To the extent any such person acquires a right
to receive payment under this Plan, such right shall be no
greater than the right of any unsecured general creditor of the
Company or Participating Employer, respectively.
4.2 Insolvency.
(a) The Participant's interest in his or her benefits under the
Plan shall be payable under the Trust and shall be subject to
the solvency of the Company or Participating Employer.
(b) Should the Company or Participating Employer be considered
insolvent such that the Company or Participating Employer is
unable to pay current obligations as they come due or is
subject to a proceeding under the federal Bankruptcy Code or
should the Company or Participating Employer become aware of
its pending insolvency or bankruptcy, the affected entity,
acting through its board of directors or chief executive
officer shall give immediate written notice of such to the Plan
Administrator and the Trustee.
(c) Upon receipt of such notice, the Plan Administrator and the
Trustee shall cease to make any payments to Participants or
Beneficiaries of the affected entity and shall hold any and all
assets with respect to those Participants and Beneficiaries for
the benefit of the general unsecured creditors of such entity.
For this purpose, it is expressly provided that the assets of
the Company and each Participating Employer which are intended
for use in this Plan shall at all times be available to
creditors of such entity. The Plan shall be administered on an
employer-by-employer basis, such that the assets of each
Participating Employer (including the Company) that are
available to the creditors of that Participating Employer shall
equal the liabilities accrued on behalf of the employees of
that Participating Employer. Furthermore, the assets of other
Participating Employers (including the Company) shall not be
available to satisfy the claims of any creditor of any other
entity whose employees participate in this Plan.
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4.3 Amounts Not Made Available. No amounts held in the Trust or recorded as an
Accrued Benefit hereunder shall be made available to the Participant or
Beneficiaries, except as provided for distributions described in Article VII.
4.4 Contingent Nature of Accrued Benefits. Until the Accrued Benefits are
distributed under the Plan to the Participants or Beneficiaries, the interest of
each Participant and Beneficiary in this Plan is contingent only and is subject
to forfeiture as provided hereunder. Title to and beneficial ownership of any
assets, whether cash or investments, which the Company or a Participating
Employer may set aside to meet its contingent deferred obligation hereunder
shall at all times remain the property of the Company or Participating Employer
and no Participant or Beneficiary shall under any circumstances acquire any
property interest in any specific assets of the Company or Participating
Employer.
ARTICLE V
Entitlement to Benefits
-----------------------
5.1 Normal Retirement. If a Participant has a Termination of Service on his or
her Normal Retirement Date while in Active Service, the Participant shall be
entitled to receive his or her Accrued Benefit as of the Participant's Normal
Retirement Date, subject to the Participant's distribution election described in
Section 5.8.
5.2 Late Retirement. If a Participant has a Termination of Service after his or
her Normal Retirement Date while in Active Service, the Participant shall be
entitled to receive his or her Accrued Benefit as of the Participant's Late
Retirement Date, subject to the Participant's distribution election described in
Section 5.8.
5.3 Early Retirement. If a Participant has a Termination of Service after his or
her Early Retirement Date while in Active Service (other than by reason of death
or Disability), the Participant shall be entitled to receive a distribution of
the vested portion (as determined under Section 5.7(b)) of his or her Accrued
Benefit as of such date, subject to the Participant's distribution election
described in Section 5.8.
5.4 Termination of Service. If a Participant has a Termination of Service while
in Active Service after completing five (5) Years of Service but before his or
her death, Disability or Early Retirement Date, the Participant shall be
entitled to receive a distribution of the vested portion (as determined under
Section 5.7(b)) of his or her Accrued Benefit. Distributions due to Termination
of Service shall be made in accordance with the Participant's distribution
election described in Section 5.9, but distribution may not commence until the
Participant has attained his or her Early Retirement Date.
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5.5 Death. Notwithstanding Section 5.8, if a Participant dies before his or her
Normal Retirement Date or Late Retirement Date while in Active Service, then, in
accordance with Section 6.2, a pre-retirement survivor annuity shall be paid to
such Participant's Beneficiary as soon as practicable following the later of (i)
the Participant's death or (ii) the Participant's Early Retirement Date. The
amount of the Participant's death benefit shall be determined as if the
Participant had a Termination of Service on his or her date of death.
5.6 Disability. Notwithstanding Section 5.8, if a Participant becomes Disabled
before his or her Normal Retirement Date while in Active Service, the
Participant shall be entitled to receive his or her Accrued Benefit in the form
of a straight life annuity as soon as practicable after the Participant has been
determined to be Disabled. The amount of the Participant's Accrued Benefit shall
be reduced by the amount of payments that the Participant could have received
from any long term disability insurance program sponsored by the Company or a
Participating Employer, based on the highest long term disability benefit option
made available to the Participant by the Company or Participating Employer.
5.7 Vesting and Forfeitures.
(a) A Participant shall become fully vested in his or her
Accrued Benefit upon the occurrence of his or her Normal
Retirement Age, death or Disability.
(b) Except as provided in (a), a Participant shall become
vested in his or her Accrued Benefit as follows:
Years of Service
Following Entry
Into the Plan Percentage Vested
---------------- -----------------
Fewer than 5 0%
5 50%
6 60%
7 70%
8 80%
9 90%
10 100%
(c) Any non-vested Accrued Benefit shall be forfeited upon the
Participant's Termination of Service. The forfeited amount
shall be used to reduce future contributions otherwise required
from the Company or a Participating Employer.
5.8 Distribution Elections.
(a) Subject to the approval of the Plan Administrator, payment
of the Participant's vested Accrued Benefit shall be made at
the time and in the form selected by the Participant in
accordance with the last valid designation filed by the
Participant with the Plan Administrator; provided however, that
the only forms of benefit available under the Plan are those
forms which are described in Sections 6.1 and 6.2.
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(b) The designation of the time and form of payment shall only
be valid if (i) the designation is filed with the Plan
Administrator at least six (6) months before the distributions
begin and no later than the last day of the Plan Year before
the first Plan Year for which such designation is to apply;
(ii) the designation is filed with the Plan Administrator
during the first thirty (30) days that the Participant is
eligible to participate in the Plan and the distribution
commencement date begins not earlier than the first day of the
calendar year following the date the designation is filed with
the Plan Administrator; or (iii) thirty (30) days from the date
this Plan is effective for eligible employees.
(c) If the designation is not valid under Section 5.8(b), the
Participant's previous designation shall be reinstated.
(d) Except as provided in this section 5.8(d), in the event the
Participant does not have a valid designation of a distribution
commencement date and form of benefit under this section, then
the Participant shall be deemed to have elected to receive a
five (5) year installment payment beginning on the
Participant's Normal Retirement Date, as provided in Section
6.1, or in the case of the Participant's death while in Active
Service, a survivor annuity, as provided in Section 6.2.
Installment payments shall be made in a manner that distributes
at least fifty thousand dollars ($50,000) annually to
Participants (but no more than the Accrued Benefit), provided,
however, that the final installment may be less than fifty
thousand dollars ($50,000) if necessary in order to distribute
the remainder of the Participant's Accrued Benefit. For
example, if the Participant's Accrued Benefit is $230,000, the
Participant would receive installments of $50,000 over four (4)
years and the Participant's final installment would be $30,000.
(e) For purposes of this Section 5.8 only, the phrase "the date
this Plan is effective for eligible employees" shall mean the
date on which the Plan Administrator first provides a
distribution election form under this Plan to a Participant.
5.9 Special Rule for Change in Control. Notwithstanding anything herein to the
contrary, in the event of a Change in Control, Participants shall be fully
vested in the value of their Accrued Benefit.
5.10 Special Rules for Additional Benefits. Notwithstanding anything in the Plan
to the contrary, the Company, in its sole discretion, may instruct the Plan
Administrator to increase a Participant's Accrued Benefit hereunder.
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ARTICLE VI
Distributions
-------------
6.1 Forms of Payment.
(a) Except as provided in Section 6.2, the normal form of
payment under the Plan is a single life annuity. Under a single
life annuity, benefits will be paid on the first day of each
month to the Participant for the remainder of the Participant's
lifetime, with the last payment being made on the first day of
the month in which the Participant dies. Survivor benefits are
not payable under a single life annuity, regardless of when the
Participant dies. The Plan Administrator shall have sole
discretion to select the payor of the single life annuity.
(b) A Participant may elect, in accordance with Section 5.8, to
receive distribution of his or her Accrued Benefit in a form
that is an Actuarial Equivalent to a single life annuity and
payable as:
(i) a single, lump sum payment;
(ii) installments over five (5) or ten (10) years; or
(iii) a joint and survivor annuity.
(c) Installments shall be payable monthly, bi-weekly or more
frequently, at the discretion of the Plan Administrator. If a
Participant dies while receiving installment payments
hereunder, the Plan Administrator may elect to continue paying
such installments to the Participant's Beneficiary or to
convert the remaining installment payments to a lump sum
payment to the Participant's Beneficiary. The Plan
Administrator shall have sole discretion to select the payor of
installment benefits and whether to convert the remaining
installment payments to a lump sum.
(d) Periodic payments under a joint and survivor annuity may be
made from proceeds of a commercial annuity contract which the
Company or Participating Employer may establish with an annuity
provider whereby the Company or Participating Employer may be
the annuitant under the contract. The Plan Administrator shall
have sole discretion to select the payor of the joint and
survivor annuity and the frequency of the payments to be made
to the Participant and his or her Beneficiary.
6.2 Pre-Retirement Death Distributions.
(a) Unless the Plan Administrator provides otherwise, if a
Participant dies before beginning to receive distributions
under the Plan, the Participant's Beneficiary shall receive a
pre-retirement survivor annuity, equal to the Participant's
Accrued Benefit as of his or her date of death, payable in
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monthly installments over the Beneficiary's life expectancy
beginning on the later of (i) the Participant's death or (ii)
the Participant's Early Retirement Date. Unless the Plan
Administrator provides otherwise, if the Participant dies after
beginning to receive distributions under the Plan and has
elected other than a Straight Life Annuity, the Beneficiary
shall continue receiving the payments which would otherwise
have been made to the Participant, in accordance with their
distribution election under Section 5.8.
(b) If the Plan has not purchased a commercial annuity to fund
the Beneficiary's pre-retirement death benefits, then upon the
death of the Beneficiary, if any amounts remain from the
Participant's Accrued Benefit, such amount shall be paid in a
lump sum to the Beneficiary's estate as soon as practicable
following the date of the Beneficiary's death. If the Plan
purchases a commercial annuity to fund the Beneficiary's
pre-retirement death benefits, payments shall cease upon the
Beneficiary's death. The Plan Administrator shall have sole
discretion to select the payor of the pre-retirement survivor
annuity.
ARTICLE VII
Participating Employers
-----------------------
7.1 Adoption by Other Employers. Notwithstanding anything herein to the
contrary, a Participating Employer may, with the consent of the Plan
Administrator and the Trustee, adopt the Plan and all of the provisions hereof
under such procedures as the Plan Administrator may determine. The Plan is not
intended to be a joint venture between the Company and any Participating
Employer. The Plan Administrator shall have the authority to make any and all
necessary rules or regulations to effectuate the purposes of this Section.
7.2 Allocation of Plan and Trust Expenses. Any expenses of the Plan and Trust
which are to be paid by the Company or borne by the Trust shall be allocated
among the Company and the Participating Employers in the proportion that the
total Accrued Benefits attributable to a Participating Employer's Participants
bears to the total assets of the Trust.
7.3 Designation of Company as Agent. Each Participating Employer shall be deemed
irrevocably to have designated the Company as its agent with respect to all
matters affecting the Plan and Trust.
7.4 Employee Transfers. The transfer of employment of a Participant from the
Company to a Participating Employer or from one Participating Employer to
another (or vice versa) shall not affect the Participant's rights under the Plan
and the number of the Participant's Years of Service shall not be deemed to be
interrupted for any purpose of the Plan. Transfer of employment between such
entities shall not be treated as a Termination of Service with the Company or
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<PAGE>
prior Participating Employer and distributions shall not be made from the Plan
based on such a transfer of employment. The entity to which the Participant is
transferred shall thereupon become obligated hereunder with respect to such
Participant in the same manner as was the organization from which the
Participant was transferred.
7.5 Contributions and Forfeitures of Participating Employer. All contributions
made by a Participating Employer may be determined separately and may be paid to
the bookkeeping accounts of such Participating Employer, subject to all of the
terms and conditions of the Plan.
7.6 Amendments by Participating Employers. Participating Employers do not have
the right to amend the Plan in any regard.
7.7 Discontinuance of Participation.
(a) A Participating Employer shall be permitted to discontinue
or terminate its participation in the Plan at any time, upon
giving reasonable advance notice to the Company. At the time of
any such discontinuance or termination, satisfactory evidence
thereof shall be delivered to the Trustee and distribution of
Accrued Benefits held in the Trust for the benefit of employees
of the withdrawing employer shall be distributed as soon as
administratively feasible, unless the Plan Administrator
provides otherwise.
(b) If the Plan Administrator elects not to distribute the
Accrued Benefits of affected Participants under (a) above, the
Plan Administrator may suspend the affected Participant's
participation in the Plan, in accordance with Section 3.3.
ARTICLE VIII
Amendment And Termination
-------------------------
8.1 Right to Amend or Terminate. Except as hereinafter provided, the Company
shall have the right to amend or terminate the Plan and Trust at any time and
from time to time to any extent that it may deem advisable. Upon termination of
the Plan, the rights of all affected Participants shall be limited to benefits
accrued as of the date of termination. Any amendment to the Plan shall not (i)
increase the responsibilities of the Plan Administrator or the Trustee without
their written consent; or (ii) directly or indirectly reduce any Participant's
Accrued Benefit. Notwithstanding anything herein to the contrary, this Plan may
be amended at any time if necessary or desirable to conform the Plan to the Code
or any federal statute with respect to employees' trusts or any regulations or
rulings issued pursuant thereto and no such amendment shall be considered
prejudicial to the rights of any Participant. Notice of all material amendments
shall be given to each Participant and Beneficiary.
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<PAGE>
8.2 Merger or Consolidation. The Plan may not be merged or consolidated with,
and its assets or liabilities may not be transferred to any other plan, unless
each person entitled to benefits under the Plan would, if the resulting plan
were then terminated, receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit he or
she would have been entitled to receive immediately before the merger,
consolidation or transfer if the Plan had then terminated.
ARTICLE IX
Administration
--------------
9.1 Plan Administrator. The Plan Administrator shall have the sole authority, in
its absolute discretion:
(a) to adopt, amend and rescind such rules and regulations as,
in its opinion, may be advisable in the administration of the
Plan;
(b) to prescribe the form or forms used in connection with the
Plan, (which forms shall be consistent with the terms of the
Plan but need not be identical and which may be in any format
acceptable to the Plan Administrator, including, but not
limited to, paper, facsimile, electronic record or voice
response record);
(c) to construe and interpret the Plan and any forms used in
the operation of the Plan and the rules and regulations of the
Plan;
(d) to employ actuaries, accountants, counsel and other persons
the Plan Administrator deems necessary in connection with the
administration of the Plan; and
(e) to take all other necessary and proper actions to fulfill
its duties under the Plan.
9.2 Binding Effect. All decisions, determinations and interpretations of the
Plan Administrator shall be final and binding on all Participants and
Beneficiaries.
9.3 Delegation of Authority. The Plan Administrator may delegate its authority
to administer the Plan to any individual(s) as the Plan Administrator may
determine and such individual(s) shall serve solely at the pleasure of the Plan
Administrator. Any individual(s) who are authorized by the Plan Administrator to
administer the Plan shall have the full power to act on behalf of the Plan
Administrator but shall at all times be subordinate to the Plan Administrator
and the Plan Administrator shall retain ultimate authority for the
administration of the Plan.
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<PAGE>
9.4 Plan Records. The books and records to be maintained for the purposes of the
Plan shall be maintained by the Company's officers and employees at the
Company's expense and subject to the supervision of the Plan Administrator. All
expenses of administering the Plan shall be paid by the Company, including any
annual fees imposed by financial institutions, brokerage firms or otherwise to
maintain the Trust.
9.5 Limited Liability. No member of the Company's Board of Directors, the board
of directors of a Participating Employer or the Benefits Committee and no
officer or employee of the Company or any Participating Employer shall be liable
to any person for any action taken or omitted in connection with the
establishment or administration of this Plan, including the receipt of benefits
thereunder, unless attributable to his or her own fraud or willful misconduct,
nor shall the Company or any Participating Employer be liable to any person for
any such action unless attributable to fraud or willful misconduct on the part
of a director, officer or employee of the Company or Participating Employer.
ARTICLE X
CLAIMS PROCEDURE
----------------
10.1 Claims Submission.
(a) All claims for benefits under the Plan by a Participant or
Beneficiary, regardless of the nature of the claim, shall be
initially submitted in writing to the Plan Administrator. Such
claims shall be submitted within a reasonable period of time
after the date such benefit was, or was purported to be,
available to the Participant or Beneficiary, with such
determination of reasonableness to be made by the Plan
Administrator in its sole discretion. All claims must
adequately state the basis for the claim including a statement
of all pertinent facts and applicable law, except to the extent
expressly waived by the Administrator. The Administrator may
prescribe additional procedural requirements for claims, not
inconsistent herewith.
(b) In the event that a Participant or Beneficiary does not
receive any Plan benefit that is claimed, such Participant or
Beneficiary shall be entitled to consideration and review as
provided in this Article. Such consideration and review shall
be conducted in a manner designed to comply with ERISA section
503.
(c) Failure to follow the requirements of this Article shall
result in the denial of the claim submitted. The Participant or
Beneficiary submitting such deficient claim shall be deemed to
have not exhausted his or her administrative remedies under the
Plan.
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<PAGE>
10.2 Claim Review. Upon receipt of any written claim for benefits, the Plan
Administrator shall be notified and shall give due consideration to the claim
presented. If the claim is denied to any extent by the Plan Administrator, the
Plan Administrator shall furnish the claimant with a written notice setting
forth (in a manner calculated to be understood by the claimant):
(a) the specific reason or reasons for denial of the claim;
(b) a specific reference to the Plan provisions on which the
denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary;
and
(d) an explanation of the provisions of this Article.
10.3 Right of Appeal. A claimant who has a claim denied under section 10.2 may
appeal for reconsideration of that claim. A request for reconsideration under
this section must be filed by written notice with the Plan Administrator within
sixty (60) days after receipt by the claimant of the notice of denial under
section 10.2.
10.4 Review of Appeal. Upon receipt of an appeal, the Company shall promptly
assign a committee or appropriate officer independent of the Plan Administrator
to review the Plan Administrator's denial of the claim. Such independent
committee or officer shall take action to give due consideration to the appeal.
Such consideration may include a hearing of the parties involved, if the
committee or officer feels such a hearing is necessary. In preparing for this
appeal the claimant shall be given the right to review pertinent documents and
the right to submit in writing a statement of issues and comments. After
consideration of the merits of the appeal, the committee or officer shall issue
a written decision which shall be binding on all parties. The decision shall be
written in a manner calculated to be understood by the claimant and shall
specifically state its reasons and pertinent Plan provisions on which it relies.
The decision on the appeal shall be issued within sixty (60) days after the
appeal is filed, except that if a hearing is held, the decision may be issued
within one hundred twenty (120) days after the appeal is filed.
10.5 Designation. The Plan Administrator may designate one or more of its
members or any other person of its choosing to make any determination otherwise
required to be made by the Plan Administrator under this Article.
ARTICLE XI
Miscellaneous
-------------
11.1 Headings. The headings in this Plan are for convenience of reference only
and are not to be considered as constructions of the provisions.
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<PAGE>
11.2 Uniformity. In the exercise of any discretionary power of authority
hereunder, all Participants under similar circumstances shall be treated in a
uniform and non-discriminatory manner.
11.3 Obligations of the Company and Participating Employers. The Company and the
Participating Employers expect to continue the Plan in force indefinitely, but
continuance of the Plan is completely voluntary and is not assumed as a
contractual obligation of the Company or the Participating Employers.
11.4 Governing Law. This Plan is made under, and shall be subject to and
governed by, the laws of the State of New York.
11.5 Gender and Number. Words used in the masculine shall be read and construed
in the feminine where applicable. Wherever required, the singular of the word
used in this Plan shall include the plural and the Plural may be read in the
singular.
11.6 Taxes. The Company and Participating Employers have the right to deduct
from all benefits paid under the Plan any taxes required by law to be withheld
with respect to such benefits. The Company and Participating Employers do not
represent or guarantee that any particular federal or state income, payroll,
personal property or other tax consequence will result from participation in
this Plan. Participants should consult their personal tax advisors to determine
the tax consequences of his or her participation in the Plan.
11.7 Plan Benefits Nontransferable. The right of any Participant or Beneficiary
in any benefit or payment hereunder shall not be subject to attachment or other
legal process for the debts of such Participant or Beneficiary and any such
benefit or payment shall not be subject to anticipation, alienation, sale,
transfer, assignment, pledge or encumbrance. Any attempt to subject any benefit
or payment in whole or in part to the debts, contracts, liabilities engagements
or torts of the Participant or Beneficiary or any other person, entitled to any
such benefit or payment pursuant to the terms of the Plan shall result in the
termination of such benefit or payment in the discretion of the Plan
Administrator.
11.8 Incompetence. If the Plan Administrator determines that any person to whom
a benefit is payable under the Plan is incompetent by reason of a physical or
mental Disability, the Plan Administrator shall have the power to cause the
payments becoming due to such person to be made to another person for his or her
benefit without the responsibility of the Plan Administrator, the Company,
Participating Employer or Trustee to see to the application of such payments.
Any payment made pursuant to such power shall, as to such payment, operate as a
complete discharge of the Plan Administrator, the Company, Participating
Employer and any Trustee.
11.9 Identity. If, at any time, any doubt exists as to the identity of any
person entitled to any payment hereunder or the amount of time of such payment,
the Plan Administrator shall be entitled to hold such sum until such identity or
amount of time is determined or until an order of a court of competent
jurisdiction is obtained. The Plan Administrator shall also be entitled to pay
such sum into court in accordance with the appropriate rules of law. Any
expenses incurred by the Company, Participating Employer, the Plan Administrator
and any Trustee incident to such proceeding or litigation shall be charged
against the account of the affected Participant.
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<PAGE>
11.10 Other Benefits. The benefits of each Participant or Beneficiary hereunder
shall be in addition to any benefits paid or payable to or on account of the
Participant or Beneficiary under any other pension, disability, annuity or
retirement plan of policy whatsoever.
11.11 Construction. All questions of interpretation, construction or application
arising under this Plan shall be decided by the Plan Administrator whose
decision shall be final and conclusive upon all persons.
11.12 No Guarantee of Employment. Nothing contained herein shall be construed as
a contract of employment or deemed to give any Participant the right to be
retained in the employ of the Company or a Participating Employer, or to
interfere with the rights of any such employer to discharge any individual at
any time, with or without cause, except as may be otherwise agreed to in writing
or provided by applicable law.
IN WITNESS WHEREOF, this Plan has been executed effective January 4, 1999.
OLSTEN CORPORATION
By:___________________________
Member, Benefits Committee
-22-
SEPARATION, CONSULTING AND NON-COMPETITION AGREEMENT
----------------------------------------------------
THIS SEPARATION, CONSULTING AND NON-COMPETITION AGREEMENT (this
"Agreement") is made and entered into this 17th day of August, 1999, by and
among Stuart Olsten (the "Executive"), Adecco SA, a societe anonyme organized
under the laws of Switzerland ("Adecco"), and Olsten Corporation, a Delaware
corporation ("the Company").
RECITALS
--------
WHEREAS, the Boards of Directors of the Company and Adecco have each
approved the merger (the "Merger") of Staffing Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of Adecco ("Merger Sub"),
with and into certain businesses of the Company pursuant to an Agreement and
Plan of Merger (the "Merger Agreement"), dated as of August 17, 1999, by and
among Adecco, Merger Sub and the Company;
WHEREAS, Adecco, the Company and the Executive desire that the
Terminating Prior Agreements (as defined herein) terminate at the "Effective
Time" of the Merger, as defined in the Merger Agreement (the "Effective Time"),
and that the Executive will become a consultant to Adecco and its subsidiaries
immediately at the Effective Time pursuant to this Agreement;
WHEREAS, this Agreement will become effective only if the Merger is
consummated;
WHEREAS, the covenants provided herein, including the Executive's
noncompetition and nonsolicitation covenants set forth in Sections 6.1 and 6.2
are material, significant and essential to effecting the transactions
contemplated by the Merger Agreement; and
WHEREAS, Adecco, the Executive and the Company desire to enter into
this Agreement on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
AGREEMENT
---------
1. TERMINATION OF EMPLOYMENT
-------------------------
1.1. Termination of Employment. Effective at the Effective Time, the
Executive's employment with the Company and its subsidiaries and affiliates
shall terminate. The Executive shall resign from all positions with or relating
to the Company and its subsidiaries and affiliates, effective at the Effective
Time; provided, however, that the Executive shall continue as the non-executive
Chairman of the Board of Directors of the Company and shall not resign as
Chairman and a member of the Board of Directors of the Company. Effective at the
Effective Time, the Executive shall become a consultant to Adecco and its
subsidiaries on the terms and subject to the conditions set forth herein.
<PAGE>
1.2. Termination of Certain Prior Agreements. Effective at the
Effective Time, the agreement or agreements listed on Exhibit A hereto (the
"Terminating Prior Agreements") shall terminate and the Executive shall waive
any and all rights under the Terminating Prior Agreements, whether arising prior
to, at or following the Effective Time, and Adecco, the Company and their
subsidiaries and affiliates shall have no further obligation or liability under
such Terminating Prior Agreements.
1.3. Termination of Other Rights to Compensation and Benefits.
Effective at the Effective Time, the Executive shall waive any and all rights to
compensation or benefits from Adecco, the Company and their subsidiaries and
affiliates (including, without limitation, any and all rights under any plan,
program, agreement or arrangement (whether or not in writing) maintained by
Adecco, the Company or any of their subsidiaries or affiliates or under which
Adecco, the Company or any of their subsidiaries or affiliates has any
obligation or liability), and Adecco, the Company and their subsidiaries and
affiliates shall have no further obligation or liability to the Executive with
respect to any such compensation or benefits, except for: (a) any rights of the
Executive to accrued, unpaid salary from the Company at the Effective Time, (b)
any rights of the Executive to reimbursement of business expenses, incurred by
the Executive prior to the Effective Time, in accordance with the Company's
executive reimbursement policies, (c) any rights of Executive with respect to
options or restricted stock awards granted to the Executive under the Company's
1994 Stock Incentive Plan or Incentive Restricted Stock Plan, that are
outstanding at the Effective Time, subject to the terms and conditions of the
agreements governing such options or restricted stock awards, such Plans and the
Merger Agreement, (d) any rights to benefits to which the Executive (or the
Executive's beneficiaries) shall be entitled in accordance with the employee
benefit plans of the Company (as in effect from time to time) (other than any
rights to benefits pursuant to the Terminating Prior Agreements) or in
accordance with applicable law, (e) Executive's rights to indemnification or
similar reimbursement pursuant to the certificate of incorporation or by-laws of
the Company and its subsidiaries, by contract or otherwise; and (f) Executive's
rights under this Agreement.
2. CONSULTING ARRANGEMENT
----------------------
2.1. Consulting Services. From and after the Effective Time, the
Executive shall provide services as a consultant to Adecco and its subsidiaries
as contemplated by this Agreement, and the Executive hereby agrees to provide
such consulting services and to comply with the other provisions of this
Agreement, upon the terms and subject to the conditions hereinafter set forth.
2.2. Nature of Consulting and Other Services. In his rendering of
consulting services for the benefit of Adecco and its subsidiaries hereunder,
the Executive shall from time to time provide Adecco, Adecco's Board of
Directors, and Adecco's executive officers with such advice as any of them may
reasonably request in connection with the business and operations of Adecco and
its subsidiaries and affiliates. The Executive shall provide such advice only at
the request of Adecco's Board of Directors or its executive officers. The
Executive shall hold himself available at reasonable times and on reasonable
notice to render such consulting and advisory services as may be so assigned to
him by Adecco, Adecco's Board of Directors, or Adecco's executive officers
2
<PAGE>
during the Consulting Term (as defined below); provided, however, that, unless
the parties otherwise agree, the consulting and advisory services rendered by
the Executive during the Consulting Term shall not exceed fifteen (15) hours
each calendar month. Without limiting the foregoing, the Executive shall, upon
the reasonable request of the persons specified above, (a) consult with Adecco
and its subsidiaries with respect to all matters concerning the Company or
Adecco in which the Executive had personal involvement during his period of
employment and/or directorship with the Company or Adecco, (b) assist Adecco and
its subsidiaries in the negotiation and consummation of business matters and
prospects pending at the time of the termination of his employment and
thereafter, and (c) cooperate with and assist Adecco and its subsidiaries in
undertaking and preparing for legal and other proceedings relating to the
affairs of Adecco and its subsidiaries. In connection with the consulting
services rendered by him hereunder, the Executive shall (i) undertake such
travel on Adecco's or Adecco's subsidiaries' behalf (and at Adecco's or Adecco's
subsidiaries' expense) as Adecco and the Executive shall agree, and (ii)
negotiate as Adecco's or its subsidiaries' representative when and as reasonably
requested to do so by Adecco's Board of Directors or its executive officers.
2.3. Nature of Consulting and Other Services. It is understood that
the Executive is to act as a consultant and advisor to Adecco and its
subsidiaries, and is not an employee or agent of, or co-venturer with, Adecco or
any of its subsidiaries in any respect. The Executive shall have no right,
authority, or power to act for or on Adecco's behalf other than as described in
Section 2.2 above. The relationship between Adecco and its subsidiaries, on the
one hand, and the Executive, on the other, hereunder shall be that of
independent contractor.
3. TERM
----
The Executive hereby agrees to provide the consulting services
contemplated by this Agreement for a term of five (5) years, commencing at the
Effective Time and terminating on the fifth anniversary of the Effective Time
(the "Consulting Term."). In the event of the death or permanent disability of
the Executive after the Effective Time and prior to the end of the Consulting
Term, the remaining fees under Sections 4.1 and 4.2 that would have been payable
through the end of the Consulting Term shall continue to be paid through the end
of the Consulting Term to the Executive or, in the event of the Executive's
death, to the beneficiary designated in writing by the Executive (or, in the
absence of a designated beneficiary who survives the Executive, Executive's
estate).
4. CONSULTING, NON-COMPETITION AND NON-SOLICITATION FEES
-----------------------------------------------------
4.1. Consulting Fees. In consideration of the consulting services
provided hereunder, the Company shall pay the Executive an annual consulting
fee, in cash, in the amount of Two Hundred Thousand Dollars ($200,000) (less
amounts required to be withheld under applicable law) payable during the
Consulting Term. Such annual consulting fee shall be payable in advance on a
quarterly basis. The fees payable to the Executive hereunder shall, subject to
the other terms and provisions of this Agreement, continue for the full period
of the Consulting Term even if the Executive obtains income from any other
source, including other full-time employment.
3
<PAGE>
4.2. Non-Competition and Non-Solicitation Fees. In consideration of
the covenants undertaken by the Executive under Sections 6.1 and 6.2 hereof, the
Company shall pay the Executive: (a) a one-time non-competition and
non-solicitation fee, in cash, in the amount of Eight Million Dollars
($8,000,000) (less amounts required to be withheld under applicable law),
payable at the Effective Time, and (b) an annual non-competition and
non-solicitation fee, in cash, in the amount of Two Hundred Thousand Dollars
($200,000) (less amounts required to be withheld under applicable law), payable
during the Consulting Term. Such annual non-competition and non-solicitation fee
shall be payable in advance on a quarterly basis. The fees payable to the
Executive hereunder shall, subject to the other terms and provisions of this
Agreement, continue for the full period of the Consulting Term even if the
Executive obtains income from any other source, including other full-time
employment.
4.3. Business Expenses. During the Consulting Term, the Executive
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by the Executive in connection with the performance of
Executive's consulting and advisory services for the Company in accordance with
the policies and practices of the Company as in effect from time to time with
respect to employees of the Company.
4.4. Director Compensation. In the event that the Executive is a
member of Adecco's or the Company's Board of Directors, the Executive shall be
entitled to receive all compensation and fees as are payable by Adecco or the
Company, as applicable, to its directors from time to time. Notwithstanding
anything contained herein, time spent by the Executive in the performance of his
services as a member of Adecco's or the Company's Board of Directors shall not
be deemed to be the performance of consulting services hereunder.
4.5. Automobile Lease. The Company shall pay or reimburse the
Executive for the lease payments (in a monthly amount not to exceed $1,000) with
respect to the automobile leased by the Executive, or by the Company for the
Executive's benefit, under the lease that is in effect on the date hereof. The
Company shall make such payments or reimbursement until the end of the term of
such lease (or, if earlier, until the end of the Consulting Term.)
4.6. Medical Benefits. During the Consulting Term, the Company shall
provide the Executive (and the Executive's dependents) with the coverage under
the Company's group medical plan or plans that is provided to executive officers
of the Company (and their dependents) under the terms of such plan or plans, as
in effect from time to time.
5. CONFIDENTIALITY
---------------
5.1. Confidentiality. The Executive acknowledges that, during the
course of his employment with the Company, the Executive has had, and during the
course of his engagement under this Agreement the Executive will have, access to
Confidential Information (as defined below) owned by the Company and/or Adecco
or used or involved in or incidental to their operations, business and affairs.
All such Confidential Information has been and will be disclosed to the
Executive in confidence. The Executive covenants that from and after the
Effective Time, he (a) will keep confidential all Confidential Information of
4
<PAGE>
Adecco and its subsidiaries and affiliates which is known to him and, except
with the specific prior written consent of Adecco or as required to be disclosed
by law or the order of any agency, court or other governmental authority, will
not disclose any Confidential Information to any person other than Adecco, its
subsidiaries and affiliates, or their respective employees accountants, counsel
and other designated representatives as is appropriate in the course of his
consulting relationship, and (b) will not make any public statement which
disparages Adecco or any of its subsidiaries or any of their respective
employees, officers or directors, which is materially damaging to Adecco and its
subsidiaries taken as a whole. For purposes of this Agreement, "Confidential
Information" shall mean all know-how, trade secrets and other confidential
nonpublic information prepared for, by or on behalf of, or in the possession of,
the Company, Adecco or any of their subsidiaries or affiliates, including
without limitation (i) nonpublic proprietary information; (ii) other information
derived from reports, investigations, research, studies, work in progress,
codes, marketing, sales or service programs, capital expenditure projects, cost
summaries, equipment, product or system designs or drawings, pricing or other
formulae, contract analyses, financial information, projections, agreements with
vendors, joint venture agreements, confidential filings with any agency, court
or other governmental authority; and (iii) all other concepts, methods,
techniques and processes of doing business, ideas or information that can be
used in the operation of a business or other enterprise and is sufficiently
valuable, or potentially valuable, and secret to afford an actual or potential
economic advantage over others; provided, however, that Confidential Information
shall not include any information that is currently generally available to and
generally known by the public or, through no fault of the Executive, hereafter
becomes generally available to and generally known by the public.
5.2. Business Property. All records, files, drawings, documents and
the like relating to Adecco's or the Company's business or the business of any
of their subsidiaries or affiliates which the Executive shall prepare, use or
come into contact with, shall be and remain Adecco's sole property and shall not
be removed from the premises of Adecco, the Company or their subsidiaries and
affiliates without its written consent except as required in the course of the
Executive's consulting engagement. Upon the termination of the Consulting Term,
all such records, files, drawings, documents and the like that are in the
Executive's custody or control shall immediately be delivered by the Executive
to Adecco or its designee. The Executive acknowledges that his obligations in
this Section are of a unique character that gives them a special value to
Adecco, the loss of which cannot reasonably or adequately be compensated in
damages in an action at law, that a breach thereof will result in irreparable
and continuing harm to Adecco and its subsidiaries and that therefore, in
addition to any other remedy that Adecco or the Company may have at law or in
equity, Adecco and/or the Company shall be entitled to injunctive relief for a
breach thereof by the Executive.
6. NONCOMPETITION AND NONSOLICITATION
----------------------------------
6.1. Noncompetition. The Executive covenants that he will not, during
the period commencing at the Effective Time and terminating on the fifth
anniversary of the Effective Time (the "Restricted Period"), (a) accept
employment with or render service to any person, firm or corporation that is
engaged in the business(es) conducted by Adecco or any of its subsidiaries or
5
<PAGE>
affiliates (as determined from time to time) in any market in which Adecco or
any of such subsidiaries or affiliates is then conducting such business(es); or
(b) own, manage, operate, or control, or participate in the ownership,
management, operation, or control of, or be connected as a principal, agent,
representative, consultant, advisor, investor, owner, partner, financier,
contractor, manager or joint venturer with, or permit his name to be used by or
in connection or association with, any person, firm or corporation that is
engaged in the business(es) conducted by Adecco or any of its subsidiaries or
affiliates in any market in which Adecco or any of its subsidiaries or
affiliates is then conducting such business(es); provided, however, that the
Executive may invest as an investor in the voting securities of any person that
is a reporting company under the Securities Exchange Act of 1934, as amended, so
long as the aggregate amount of the securities the Executive owns directly or
indirectly is less than five percent (5%) of the total outstanding voting
securities of that person. Notwithstanding anything contained herein to the
contrary, the Executive shall not be prohibited from accepting employment with,
rendering services to or otherwise engaging in any activity or capacity with any
entity engaged in the Health Services Business (as defined in the Merger
Agreement).
6.2. Nonsolicitation. The Executive covenants that he will not, during
the Restricted Period, otherwise than on behalf of Adecco or any of its
subsidiaries or affiliates (as determined from time to time), solicit the
employment of any person, or induce or advise any person to leave the employ of
Adecco or any of such subsidiaries or affiliates, if such person is, as of the
date of such solicitation, inducement or advisement, employed on a full- or
part-time basis by Adecco or any of its subsidiaries or affiliates.
6.3. Breach by Executive. Notwithstanding anything contained herein,
in the event that the Executive materially breaches any of the covenants
undertaken by him under Section 6.1 or 6.2, the Company's obligation to make the
compensation payments and benefits provided for in Section 4.1, 4.2, 4.5 or 4.6
hereof shall automatically terminate (other than with respect to any such
payments earned by the Executive through the date of breach which have not
theretofore been paid), and the Executive shall automatically forfeit all of his
right to and interest in such payments.
6.4. Modification. If the noncompetition and/or nonsolicitation
covenants contained in the foregoing Sections 6.1 and 6.2 are, in the view of
any court or arbitrator asked to rule upon the issue, deemed unenforceable by
reason of covering too large an area, too long a period of time, too large a
number of entities or too many business activities, then the same shall be
deemed to cover only the largest area, the longest period, the largest number of
entities or the most business activities, as the case may be, that will not
render it unenforceable.
6.5. Specific Performance. The Executive acknowledges and agrees that
Adecco and the Company cannot be fully or adequately compensated in damages for
a violation of Section 6.1 or 6.2 hereof, and that, in addition to any other
relief to which Adecco or the Company may be entitled, it shall be entitled to
injunctive and equitable relief.
6
<PAGE>
7. EXCISE TAX GROSS-UP
-------------------
(a) Anything in this Agreement to the contrary notwithstanding, if it
shall be determined that any payment, distribution or benefit provided
(including, without limitation, the acceleration of any payment, distribution or
benefit and the acceleration of exercisability of any stock option) to the
Executive or for his benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject, in whole or in part, to the excise tax imposed by
section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (the
"Excise Tax"), then the Executive shall be entitled to receive from the Company
an additional payment (the "Gross-Up Payment") in an amount such that the net
amount of the Payment and the Gross-Up Payment retained by Executive after the
calculation and deduction of all Excise Taxes (including any interest or
penalties imposed with respect to such taxes) on the Payment and all federal,
state and local income tax, employment tax, self employment tax and Excise Tax
(including any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 7 and taking into account any lost
or reduced tax deductions on account of the Gross-Up Payment, shall be equal to
the Payment;
(b) All determinations required to be made under this Section 7,
including whether and when the Gross-Up Payment is required and the amount of
such Gross-Up Payment, and the assumptions to be used in arriving at such
determinations shall be made by the Accountants (as defined below) which shall
provide the Executive, Adecco and the Company with detailed supporting
calculations with respect to such Gross-Up Payment within ninety (90) days after
the Effective Time. For the purposes of this Section 7, the "Accountants" shall
mean PriceWaterhouseCoopers. For purposes of determining the amount of the
Gross-Up Payment, Executive shall be deemed to pay Federal income taxes at the
applicable marginal rate of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the applicable marginal rate of taxation for the calendar
year in which the Gross-Up Payment is to be made, net of the reduction in
federal income taxes which could be obtained from the deduction of such state or
local taxes if paid in such year (determined with regard to limitations on
deductions based upon the amount of Executive's adjusted gross income). To the
extent practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Company at the time Executive is entitled to receive the Payment and
in no event shall any Gross-Up Payment be paid later than 30 days after the
receipt by the Executive of the Accountants' determination. Any determination by
the Accountants shall be binding upon the Company and Executive, including for
purposes of withholding on amounts payable under this Agreement. As a result of
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accountants hereunder, it is possible that the
Gross-Up Payment made will have been an amount that is greater or less than the
Company should have paid pursuant to this Section 7 (an "Overpayment" or
"Underpayment," respectively). In the event that the Gross-Up Payment is
determined by the Accountants or pursuant to any proceeding or negotiations with
the Internal Revenue Service to be less than the amount initially determined by
the Accountants, the Executive shall promptly repay the Overpayment to the
Company; provided, however, that in the event any portion of the Gross-Up
Payment to be repaid to the Company has been paid to any Federal, state or local
7
<PAGE>
tax authority, repayment thereof shall not be required until actual refund or
credit of such portion has been made to the Executive. In the event that the
Company exhausts its remedies pursuant to Section 7(c) and the Executive is
required to make a payment of any Excise Tax, the Underpayment shall be promptly
paid by the Company to or for the Executive's benefit; and
(c) The Executive shall notify Adecco and the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable after the Executive is informed in writing of such claim
and shall apprise Adecco and the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on
which the Executive gives such notice to Adecco and the Company (or such shorter
period ending on the date that any payment of taxes, interest and/or penalties
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company;
(iii) cooperate with the Company in good faith in order to
effectively contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claims;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify Executive for and hold Executive harmless
from, on an after-tax basis, any Excise Tax, income tax, employment tax or self
employment tax (including interest and penalties with respect thereto) imposed
as a result of such representation and payment of all related costs and
expenses. Without limiting the foregoing provisions of this Section 7, the
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine. The Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
8
<PAGE>
8. DISPUTE RESOLUTION
------------------
8.1. Arbitration. Except as provided in Section 6.5 hereof, in the
event that any disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the interpretation of this Agreement or any
arrangements relating to this Agreement or contemplated in this Agreement or the
breach, termination or invalidity thereof (collectively, a "Dispute") cannot be
resolved by the parties, and the parties do not agree to an alternate procedure
for resolving the Dispute, the Dispute shall be resolved by final and binding
arbitration, before a panel of three arbitrators in New York, New York
administered by the American Arbitration Association ("AAA"). The parties agree
to arbitration as an alternative to court proceedings in order (i) to obtain a
prompt evidentiary hearing and an arbitrator's final award resolving any
dispute, (ii) to do so expeditiously, and (iii) to do so economically. During
the arbitration proceeding, the arbitrator, in the arbitrator's sole discretion,
shall have the right to grant requests for discovery of documents, the taking of
depositions, and the issuance of subpoenas in accordance with rules of the AAA.
The Company and the Executive shall each have the right to designate one of such
arbitrators, and the two arbitrators shall together designate the third such
arbitrator. The forum for any such action shall be New York, New York. Each
party hereby promises to cooperate in the arbitration process to effectuate
these purposes. The arbitration shall be conducted in accordance with the rules
of the AAA which are in effect at the time of the arbitration. Judgment rendered
by the arbitrator may be entered in any court having competent jurisdiction in
accordance with Delaware law.
8.2. Waiver of Jury Trial. By submitting a Dispute to arbitration, the
parties hereto understand that they will not enjoy the benefits of a jury trial.
Accordingly, the parties hereto expressly waive the right to a jury trial.
9. MISCELLANEOUS
-------------
9.1. Termination of Merger Agreement. In the event that the Merger
Agreement terminates prior to the Merger, this Agreement shall thereupon
terminate and be of no further force or effect.
9.2. Assignment. This Agreement is personal to the Executive and
without the prior written consent of Adecco shall not be assignable by the
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. Adecco shall require any successor
to all or substantially all of the business and/or assets of Adecco, whether
direct or indirect, by purchase, merger, consolidation, acquisition of stock, or
otherwise, by an agreement in form and substance reasonably satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as Adecco would be required to perform if no such
succession had taken place. At the Effective Time, this Agreement shall be
assumed by, and hereby is assigned to Adecco.
9
<PAGE>
9.3. Final and Entire Agreement; Amendment. The Executive acknowledges
and agrees that this Agreement represents the final and entire agreement among
the parties with respect to the subject matter hereof and, except as provided in
Section 1.3, supersedes all prior agreements (including, without limitation, the
Terminating Prior Agreements), negotiations and discussions between the parties
hereto and/or their respective counsel with respect to the subject matter
hereof. Accordingly, except for the rights of the Executive described in Section
1.3(a) through (f), upon the Company's fulfilling its obligations to the
Executive hereunder, the Executive agrees that Adecco, the Company and their
subsidiaries and affiliates shall have no further obligations or liability to or
in respect of the Executive under the Terminating Prior Agreements or any other
plan, program, agreement or arrangement. This Agreement may be amended, modified
or changed only by a written instrument executed by the Executive and the
Company, provided that no such amendment, modification or change shall be made
prior to the Effective Time without Adecco's prior written consent. No provision
of this Agreement may be waived except by a writing executed and delivered by
the party sought to be charged. Any such written waiver will be effective only
with respect to the event or circumstance described therein and not with respect
to any other event or circumstance, unless such waiver expressly provides to the
contrary.
9.4. Severability and Construction. In construing this Agreement, if
any portion of this Agreement shall be found to be invalid or unenforceable, the
remaining terms and provisions of this Agreement shall be given effect to the
maximum extent permitted without considering the void, invalid or unenforceable
provision. In construing this Agreement, the singular shall include the plural,
the masculine shall include the feminine and neuter genders as appropriate, and
no meaning or effect shall be given to the captions of the sections in this
Agreement, which are inserted for convenience of reference only.
9.5. Consultation With Counsel. The Executive represents and
acknowledges that he has discussed all aspects of this Agreement with his
attorney and that he has carefully read and fully understands all of its
provisions.
9.6. Expenses. Each of the Company, on one hand, and the Executive, on
the other, shall be liable for their own respective costs and expenses incident
to the execution of this Agreement and the consummation of the transactions
contemplated hereby. Should the Executive or his successors retain counsel for
the purpose of enforcing, or preventing the breach of, any provision hereof
(including, but not limited to, by instituting any action or proceeding in
arbitration or court to enforce any provision hereof or to enjoin a breach of
any provision of this Agreement) or for a declaration of such party's rights or
obligations under this Agreement, or any other remedy, whether in arbitration or
in a court of law, then, the Executive shall be entitled to be reimbursed by the
Company for all reasonable fees and expenses of attorneys and expert witnesses
and court costs (including such fees, expenses and costs of appeal), if the
Executive prevails with respect to a majority of his material claims in a
nonappealable judgment of a court of competent jurisdiction.
10
<PAGE>
9.7. Cooperation in Legal Proceedings. Without limitation of Section
2.2(c) hereof, the Executive agrees, after the expiration of the Consulting
Term, upon the reasonable request of Adecco, to cooperate with and assist Adecco
and its subsidiaries in undertaking and preparing for legal and other
proceedings relating to the affairs of Adecco and its subsidiaries. The
Executive shall be reimbursed for the reasonable expenses he incurs in
connection with any such cooperation and/or assistance, and shall receive from
the Company reasonable per diem compensation in connection therewith, such per
diem to be mutually agreed upon by the Executive and the Company.
9.8. Notices. All notices and other communications provided to any
party under this Agreement shall be in writing and delivered by a reputable
overnight courier or other personal delivery to such party at its address set
forth below its signature hereto, or at such other address as may be designated
by such party in a notice to the other party. Any notice, if so delivered and
properly addressed with postage prepaid, shall be deemed given when received.
9.9. Withholding. Adecco or the Company, as applicable, may withhold
from any amounts payable under this Agreement such federal, state or local taxes
as shall be required to be withheld pursuant to any applicable law or
regulation.
9.10. Unfunded Obligation. Except as expressly provided otherwise in
this Agreement, the obligation to pay amounts under this Agreement is an
unfunded obligation of the Company, and no such obligation shall create a trust
or be deemed to be secured by any pledge or encumbrance on any property of
Adecco, the Company or any of their subsidiaries.
9.11. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the internal laws of the State of
New York (without giving effect to the principles of conflict of laws thereof),
as at the time in effect.
9.12. Survival. The provisions of Sections 5.1, 5.2, 6.1, 6.2, 6.3,
6.4, 6.5, 7, 8.1, 8.2 and 9.1 through 9.13 shall survive any termination of this
Agreement in accordance with their respective terms.
9.13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which taken
together shall constitute one instrument.
[SIGNATURE PAGE TO FOLLOW]
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each executed this
Agreement as of the date first above written.
"EXECUTIVE"
___________________________________
Stuart Olsten
Home Address:
OLSTEN CORPORATION
By: ________________________________
Name:
Title:
Address:
ADECCO SA
By: _______________________________
Name:
Title:
Address:
By: ________________________________
Name:
Title:
Address:
12
<PAGE>
SEPARATION, CONSULTING AND NON-COMPETITION AGREEMENT
(Chairman)
Terminating Prior Agreements
----------------------------
None
SEPARATION, CONSULTING AND NON-COMPETITION AGREEMENT
----------------------------------------------------
THIS SEPARATION, CONSULTING AND NON-COMPETITION AGREEMENT (this
"Agreement") is made and entered into this 17th day of August, 1999, by and
among Edward A. Blechschmidt (the "Executive"), Adecco SA, a societe anonyme
organized under the laws of Switzerland ("Adecco"), and Olsten Corporation, a
Delaware corporation ("the Company").
RECITALS
--------
WHEREAS, the Boards of Directors of the Company and Adecco have each
approved the merger (the "Merger") of Staffing Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of Adecco ("Merger Sub"),
with and into certain businesses of the Company pursuant to an Agreement and
Plan of Merger (the "Merger Agreement"), dated as of August 17, 1999, by and
among Adecco, Merger Sub and the Company;
WHEREAS, Adecco, the Company and the Executive desire that the
Terminating Prior Agreements (as defined herein) terminate at the "Effective
Time" of the Merger, as defined in the Merger Agreement (the "Effective Time"),
and that the Executive will become a consultant to Adecco and its subsidiaries
immediately at the Effective Time pursuant to this Agreement;
WHEREAS, this Agreement will become effective only if the Merger is
consummated;
WHEREAS, the covenants provided herein, including the Executive's
noncompetition and nonsolicitation covenants set forth in Sections 6.1 and 6.2
are material, significant and essential to effecting the transactions
contemplated by the Merger Agreement; and
WHEREAS, Adecco, the Executive and the Company desire to enter into
this Agreement on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
AGREEMENT
---------
1. TERMINATION OF EMPLOYMENT
-------------------------
1.1. Termination of Employment. Effective at the Effective Time, the
Executive's employment with the Company and its subsidiaries and affiliates
shall terminate. The Executive shall resign from all positions with or relating
to the Company and its subsidiaries and affiliates, effective at the Effective
Time. Effective at the Effective Time, the Executive shall become a consultant
to Adecco and its subsidiaries on the terms and subject to the conditions set
forth herein.
<PAGE>
1.2. Termination of Certain Prior Agreements. Effective at the
Effective Time, the agreement or agreements listed on Exhibit A hereto (the
"Terminating Prior Agreements") shall terminate and the Executive shall waive
any and all rights under the Terminating Prior Agreements, whether arising prior
to, at or following the Effective Time, and Adecco, the Company and their
subsidiaries and affiliates shall have no further obligation or liability under
such Terminating Prior Agreements. In consideration of the termination of the
Terminating Prior Agreements and the Executive's waiver of any and all rights
under the Terminating Prior Agreements, the Company shall pay to the Executive a
lump sum payment, in cash, in the amount of Four Million Four Hundred Seven
Thousand Three Hundred Twenty-Four Dollars ($4,407,324) (less amounts required
to be withheld under applicable law), payable at the Effective Time.
1.3. Termination of Other Rights to Compensation and Benefits.
Effective at the Effective Time, the Executive shall waive any and all rights to
compensation or benefits from Adecco, the Company and their subsidiaries and
affiliates (including, without limitation, any and all rights under any plan,
program, agreement or arrangement (whether or not in writing) maintained by
Adecco, the Company or any of their subsidiaries or affiliates or under which
Adecco, the Company or any of their subsidiaries or affiliates has any
obligation or liability), and Adecco, the Company and their subsidiaries and
affiliates shall have no further obligation or liability to the Executive with
respect to any such compensation or benefits, except for: (a) any rights of the
Executive to accrued, unpaid salary from the Company at the Effective Time, (b)
any rights of the Executive to reimbursement of business expenses, incurred by
the Executive prior to the Effective Time, in accordance with the Company's
executive reimbursement policies, (c) any rights of Executive with respect to
options or restricted stock awards granted to the Executive under the Company's
1994 Stock Incentive Plan or Incentive Restricted Stock Plan, that are
outstanding at the Effective Time, subject to the terms and conditions of the
agreements governing such options or restricted stock awards, such Plans and the
Merger Agreement, (d) any rights to benefits to which the Executive (or the
Executive's beneficiaries) shall be entitled in accordance with the employee
benefit plans of the Company (as in effect from time to time) (other than any
rights to benefits pursuant to the Terminating Prior Agreements) or in
accordance with applicable law, (e) Executive's rights to indemnification or
similar reimbursement pursuant to the certificate of incorporation or by-laws of
the Company and its subsidiaries, by contract or otherwise; and (f) Executive's
rights under this Agreement. Subject to the terms of any applicable trust
agreement, the Company may recover any assets held in trust in connection with
the Executive's rights to benefits pursuant to any Terminating Prior Agreement
that are waived in accordance with Section 1.2.
2. CONSULTING ARRANGEMENT
----------------------
2.1. Consulting Services. From and after the Effective Time, the
Executive shall provide services as a consultant to Adecco and its subsidiaries
as contemplated by this Agreement, and the Executive hereby agrees to provide
such consulting services and to comply with the other provisions of this
Agreement, upon the terms and subject to the conditions hereinafter set forth.
2
<PAGE>
2.2. Nature of Consulting and Other Services. In his rendering of
consulting services for the benefit of Adecco and its subsidiaries hereunder,
the Executive shall from time to time provide Adecco, Adecco's Board of
Directors, and Adecco's executive officers with such advice as any of them may
reasonably request in connection with the business and operations of Adecco and
its subsidiaries and affiliates. The Executive shall provide such advice only at
the request of Adecco's Board of Directors or its executive officers. The
Executive shall hold himself available at reasonable times and on reasonable
notice to render such consulting and advisory services as may be so assigned to
him by Adecco, Adecco's Board of Directors, or Adecco's executive officers
during the Consulting Term (as defined below); provided, however, that, unless
the parties otherwise agree, the consulting and advisory services rendered by
the Executive during the Consulting Term shall not exceed fifteen (15) hours
each calendar month. Without limiting the foregoing, the Executive shall, upon
the reasonable request of the persons specified above, (a) consult with Adecco
and its subsidiaries with respect to all matters concerning the Company or
Adecco in which the Executive had personal involvement during his period of
employment and/or directorship with the Company or Adecco, (b) assist Adecco and
its subsidiaries in the negotiation and consummation of business matters and
prospects pending at the time of the termination of his employment and
thereafter, and (c) cooperate with and assist Adecco and its subsidiaries in
undertaking and preparing for legal and other proceedings relating to the
affairs of Adecco and its subsidiaries. In connection with the consulting
services rendered by him hereunder, the Executive shall (i) undertake such
travel on Adecco's or Adecco's subsidiaries' behalf (and at Adecco's or Adecco's
subsidiaries' expense) as Adecco and the Executive shall agree, and (ii)
negotiate as Adecco's or its subsidiaries' representative when and as reasonably
requested to do so by Adecco's Board of Directors or its executive officers.
2.3. Nature of Consulting and Other Services. It is understood that
the Executive is to act as a consultant and advisor to Adecco and its
subsidiaries, and is not an employee or agent of, or co-venturer with, Adecco or
any of its subsidiaries in any respect. The Executive shall have no right,
authority, or power to act for or on Adecco's behalf other than as described in
Section 2.2 above. The relationship between Adecco and its subsidiaries, on the
one hand, and the Executive, on the other, hereunder shall be that of
independent contractor.
3. TERM
----
The Executive hereby agrees to provide the consulting services
contemplated by this Agreement for a term of four (4) years, commencing at the
Effective Time and terminating on the fourth anniversary of the Effective Time
(the "Consulting Term"). In the event of the death or permanent disability of
the Executive after the Effective Time and prior to the end of the Consulting
Term, the remaining fees under Sections 4.1 and 4.2 that would have been payable
through the end of the Consulting Term shall continue to be paid through the end
of the Consulting Term to the Executive or, in the event of the Executive's
death, to the beneficiary designated in writing by the Executive (or, in the
absence of a designated beneficiary who survives the Executive, Executive's
estate).
3
<PAGE>
4. CONSULTING, NON-COMPETITION AND NON-SOLICITATION FEES
-----------------------------------------------------
4.1. Consulting Fees. In consideration of the consulting services
provided hereunder, the Company shall pay the Executive an annual consulting
fee, in cash, in the amount of Two Hundred Twenty-five Thousand Dollars
($225,000) (less amounts required to be withheld under applicable law) payable
during the Consulting Term. Such annual consulting fee shall be payable in
advance on a quarterly basis. The fees payable to the Executive hereunder shall,
subject to the other terms and provisions of this Agreement, continue for the
full period of the Consulting Term even if the Executive obtains income from any
other source, including other full-time employment.
4.2. Non-Competition and Non-Solicitation Fees. In consideration of
the covenants undertaken by the Executive under Sections 6.1 and 6.2 hereof, the
Company shall pay the Executive: (a) a one-time non-competition and
non-solicitation fee, in cash, in the amount of Three Million Nine Hundred
Thousand Dollars ($3,900,000) (less amounts required to be withheld by
applicable law), payable at the Effective Time and (b) an annual non-competition
and non-solicitation fee, in cash, in the amount of Two Hundred Seventy-Five
Thousand Dollars ($275,000) (less amounts required to be withheld under
applicable law), payable during the Consulting Term. Such annual non-competition
and non-solicitation fee shall be payable in advance on a quarterly basis. The
fees payable to the Executive hereunder shall, subject to the other terms and
provisions of this Agreement, continue for the full period of the Consulting
Term even if the Executive obtains income from any other source, including other
full-time employment.
4.3. Business Expenses. During the Consulting Term, the Executive
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by the Executive in accordance with the policies and practices
of the Company as in effect from time to time with respect to employees of the
Company.
4.4. Director Compensation. In the event that the Executive is a
member of Adecco's or the Company's Board of Directors, the Executive shall be
entitled to receive all compensation and fees as are payable by Adecco or the
Company, as applicable, to its directors from time to time. Notwithstanding
anything contained herein, time spent by the Executive in the performance of his
services as a member of Adecco's or the Company's Board of Directors shall not
be deemed to be the performance of consulting services hereunder.
4.5. Medical Benefits. During the period ending on the third
anniversary of the Effective Time, the Company shall provide the Executive (and
the Executive's dependents) with the coverage under the Company's group medical
plan or plans that is provided to executive officers of the Company (and their
dependents) under the terms of such plan or plans, as in effect from time to
time; provided, however, that, the Company's obligation hereunder shall
terminate upon the date the Executive becomes covered under any group medical
plan of the Executive's subsequent employer.
4
<PAGE>
5. CONFIDENTIALITY
---------------
5.1. Confidentiality. The Executive acknowledges that, during the
course of his employment with the Company, the Executive has had, and during the
course of his engagement under this Agreement the Executive will have, access to
Confidential Information (as defined below) owned by the Company and/or Adecco
or used or involved in or incidental to their operations, business and affairs.
All such Confidential Information has been and will be disclosed to the
Executive in confidence. The Executive covenants that from and after the
Effective Time, he (a) will keep confidential all Confidential Information of
Adecco and its subsidiaries and affiliates which is known to him and, except
with the specific prior written consent of Adecco or as required to be disclosed
by law or the order of any agency, court or other governmental authority, will
not disclose any Confidential Information to any person other than Adecco, its
subsidiaries and affiliates, or their respective employees accountants, counsel
and other designated representatives as is appropriate in the course of his
consulting relationship, and (b) will not make any public statement which
disparages Adecco or any of its subsidiaries or any of their respective
employees, officers or directors, which is materially damaging to Adecco and its
subsidiaries taken as a whole. For purposes of this Agreement, "Confidential
Information" shall mean all know-how, trade secrets and other confidential
nonpublic information prepared for, by or on behalf of, or in the possession of,
the Company, Adecco or any of their subsidiaries or affiliates, including
without limitation (i) nonpublic proprietary information; (ii) other information
derived from reports, investigations, research, studies, work in progress,
codes, marketing, sales or service programs, capital expenditure projects, cost
summaries, equipment, product or system designs or drawings, pricing or other
formulae, contract analyses, financial information, projections, agreements with
vendors, joint venture agreements, confidential filings with any agency, court
or other governmental authority; and (iii) all other concepts, methods,
techniques and processes of doing business, ideas or information that can be
used in the operation of a business or other enterprise and is sufficiently
valuable, or potentially valuable, and secret to afford an actual or potential
economic advantage over others; provided, however, that Confidential Information
shall not include any information that is currently generally available to and
generally known by the public or, through no fault of the Executive, hereafter
becomes generally available to and generally known by the public.
5.2. Business Property. All records, files, drawings, documents and
the like relating to Adecco's or the Company's business or the business of any
of their subsidiaries or affiliates which the Executive shall prepare, use or
come into contact with, shall be and remain Adecco's sole property and shall not
be removed from the premises of Adecco, the Company or their subsidiaries and
affiliates without its written consent except as required in the course of the
Executive's consulting engagement. Upon the termination of the Consulting Term,
all such records, files, drawings, documents and the like that are in the
Executive's custody or control shall immediately be delivered by the Executive
to Adecco or its designee. The Executive acknowledges that his obligations in
this Section are of a unique character that gives them a special value to
Adecco, the loss of which cannot reasonably or adequately be compensated in
damages in an action at law, that a breach thereof will result in irreparable
and continuing harm to Adecco and its subsidiaries and that therefore, in
addition to any other remedy that Adecco or the Company may have at law or in
equity, Adecco and/or the Company shall be entitled to injunctive relief for a
breach thereof by the Executive.
5
<PAGE>
6. NONCOMPETITION AND NONSOLICITATION
----------------------------------
6.1. Noncompetition. The Executive covenants that he will not, during
the period commencing at the Effective Time and terminating on the fourth
anniversary of the Effective Time (the "Restricted Period"), (a) accept
employment with or render service to any person, firm or corporation that is
engaged in the business(es) conducted by Adecco or any of its subsidiaries or
affiliates (as determined from time to time) in any market in which Adecco or
any of such subsidiaries or affiliates is then conducting such business(es); or
(b) own, manage, operate, or control, or participate in the ownership,
management, operation, or control of, or be connected as a principal, agent,
representative, consultant, advisor, investor, owner, partner, financier,
contractor, manager or joint venturer with, or permit his name to be used by or
in connection or association with, any person, firm or corporation that is
engaged in the business(es) conducted by Adecco or any of its subsidiaries or
affiliates in any market in which Adecco or any of its subsidiaries or
affiliates is then conducting such business(es); provided, however, that the
Executive may invest as an investor in the voting securities of any person that
is a reporting company under the Securities Exchange Act of 1934, as amended, so
long as the aggregate amount of the securities the Executive owns directly or
indirectly is less than five percent (5%) of the total outstanding voting
securities of that person. Notwithstanding anything contained herein to the
contrary, the Executive shall not be prohibited from accepting employment with,
rendering services to or otherwise engaging in any activity or capacity with any
entity engaged in the Health Services Business (as defined in the Merger
Agreement).
6.2. Nonsolicitation. The Executive covenants that he will not, during
the Restricted Period, otherwise than on behalf of Adecco or any of its
subsidiaries or affiliates (as determined from time to time), solicit the
employment of any person, or induce or advise any person to leave the employ of
Adecco or any of such subsidiaries or affiliates, if such person is, as of the
date of such solicitation, inducement or advisement, employed on a full- or
part-time basis by Adecco or any of its subsidiaries or affiliates.
6.3. Breach by Executive. Notwithstanding anything contained herein,
in the event that the Executive materially breaches any of the covenants
undertaken by him under Section 6.1 or 6.2, the Company's obligation to make the
compensation payments provided for in Section 4.1 or 4.2 hereof shall
automatically terminate (other than with respect to any such payments earned by
the Executive through the date of breach which have not theretofore been paid),
and the Executive shall automatically forfeit all of his right to and interest
in such payments.
6.4. Modification. If the noncompetition and/or nonsolicitation
covenants contained in the foregoing Sections 6.1 and 6.2 are, in the view of
any court or arbitrator asked to rule upon the issue, deemed unenforceable by
reason of covering too large an area, too long a period of time, too large a
number of entities or too many business activities, then the same shall be
deemed to cover only the largest area, the longest period, the largest number of
entities or the most business activities, as the case may be, that will not
render it unenforceable.
6
<PAGE>
6.5. Specific Performance. The Executive acknowledges and agrees that
Adecco and the Company cannot be fully or adequately compensated in damages for
a violation of Section 6.1 or 6.2 hereof, and that, in addition to any other
relief to which Adecco or the Company may be entitled, it shall be entitled to
injunctive and equitable relief.
7. EXCISE TAX Gross-Up
-------------------
(a) Anything in this Agreement to the contrary notwithstanding, if it
shall be determined that any payment, distribution (or benefit provided
(including, without limitation, the acceleration of any payment, distribution or
benefit and the acceleration of exercisability of any stock option) to the
Executive or for his benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject, in whole or in part, to the excise tax imposed by
section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (the
"Excise Tax"), then the Executive shall be entitled to receive from the Company
an additional payment (the "Gross-Up Payment") in an amount such that the net
amount of the Payment and the Gross-Up Payment retained by Executive after the
calculation and deduction of all Excise Taxes (including any interest or
penalties imposed with respect to such taxes) on the Payment and all federal,
state and local income tax, employment tax, self employment tax and Excise Tax
(including any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 7 and taking into account any lost
or reduced tax deductions on account of the Gross-Up Payment, shall be equal to
the Payment;
(b) All determinations required to be made under this Section 7,
including whether and when the Gross-Up Payment is required and the amount of
such Gross-Up Payment, and the assumptions to be used in arriving at such
determinations shall be made by the Accountants (as defined below) which shall
provide the Executive, Adecco and the Company with detailed supporting
calculations with respect to such Gross-Up Payment within ninety (90) days after
the Effective Time. For the purposes of this Section 7, the "Accountants" shall
mean PriceWaterhouseCoopers. For purposes of determining the amount of the
Gross-Up Payment, Executive shall be deemed to pay Federal income taxes at the
applicable marginal rate of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the applicable marginal rate of taxation for the calendar
year in which the Gross-Up Payment is to be made, net of the reduction in
federal income taxes which could be obtained from the deduction of such state or
local taxes if paid in such year (determined with regard to limitations on
deductions based upon the amount of Executive's adjusted gross income). To the
extent practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Company at the time Executive is entitled to receive the Payment and
in no event shall any Gross-Up Payment be paid later than 30 days after the
receipt by the Executive of the Accountants' determination. Any determination by
the Accountants shall be binding upon the Company and the Executive, including
for purposes of withholding on amounts payable under this Agreement. As a result
of uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accountants hereunder, it is possible that the
Gross-Up Payment made will have been an amount that is greater or less than the
Company should have paid pursuant to this Section 7 (an "Overpayment" or
7
<PAGE>
"Underpayment," respectively). In the event that the Gross-Up Payment is
determined by the Accountants or pursuant to any proceeding or negotiations with
the Internal Revenue Service to be less than the amount initially determined by
the Accountants, the Executive shall promptly repay the Overpayment to the
Company; provided, however, that in the event any portion of the Gross-Up
Payment to be repaid to the Company has been paid to any Federal, state or local
tax authority, repayment thereof shall not be required until actual refund or
credit of such portion has been made to the Executive. In the event that the
Company exhausts its remedies pursuant to Section 7 ( c ) and the Executive is
required to make a payment of any Excise Tax, the Underpayment shall be promptly
paid by the Company to or for the Executive's benefit; and
(c) The Executive shall notify Adecco and the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable after the Executive is informed in writing of such claim
and shall apprise Adecco and the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on
which the Executive gives such notice to Adecco and the Company (or such shorter
period ending on the date that any payment of taxes, interest and/or penalties
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company;
(iii) cooperate with the Company in good faith in order to
effectively contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claims;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify Executive for and hold Executive harmless
from, on an after-tax basis, any Excise Tax, income tax, employment tax or self
employment tax (including interest and penalties with respect thereto) imposed
as a result of such representation and payment of all related costs and
expenses. Without limiting the foregoing provisions of this Section 7, the
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
8
<PAGE>
appellate courts, as the Company shall determine. The Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
8. DISPUTE RESOLUTION
------------------
8.1. Arbitration. Except as provided in Section 6.5 hereof, in the
event that any disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the interpretation of this Agreement or any
arrangements relating to this Agreement or contemplated in this Agreement or the
breach, termination or invalidity thereof (collectively, a "Dispute") cannot be
resolved by the parties, and the parties do not agree to an alternate procedure
for resolving the Dispute, the Dispute shall be resolved by final and binding
arbitration, before a panel of three arbitrators in New York, New York
administered by the American Arbitration Association ("AAA"). The parties agree
to arbitration as an alternative to court proceedings in order (i) to obtain a
prompt evidentiary hearing and an arbitrator's final award resolving any
dispute, (ii) to do so expeditiously, and (iii) to do so economically. During
the arbitration proceeding, the arbitrator, in the arbitrator's sole discretion,
shall have the right to grant requests for discovery of documents, the taking of
depositions, and the issuance of subpoenas in accordance with rules of the AAA.
The Company and the Executive shall each have the right to designate one of such
arbitrators, and the two arbitrators shall together designate the third such
arbitrator. The forum for any such action shall be New York, New York. Each
party hereby promises to cooperate in the arbitration process to effectuate
these purposes. The arbitration shall be conducted in accordance with the rules
of the AAA which are in effect at the time of the arbitration. Judgment rendered
by the arbitrator may be entered in any court having competent jurisdiction in
accordance with Delaware law.
8.2. Waiver of Jury Trial. By submitting a Dispute to arbitration, the
parties hereto understand that they will not enjoy the benefits of a jury trial.
Accordingly, the parties hereto expressly waive the right to a jury trial.
9. MISCELLANEOUS
-------------
9.1. Termination of Merger Agreement. In the event that the Merger
Agreement terminates prior to the Merger, this Agreement shall thereupon
terminate and be of no further force or effect.
9.2. Assignment. This Agreement is personal to the Executive and
without the prior written consent of Adecco shall not be assignable by the
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. Adecco shall require any successor
to all or substantially all of the business and/or assets of Adecco, whether
direct or indirect, by purchase, merger, consolidation, acquisition of stock, or
otherwise, by an agreement in form and substance reasonably satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as Adecco would be required to perform if no such
succession had taken place. At the Effective Time, this Agreement shall be
assumed by, and hereby is assigned to Adecco.
9
<PAGE>
9.3. Final and Entire Agreement; Amendment. The Executive acknowledges
and agrees that this Agreement represents the final and entire agreement among
the parties with respect to the subject matter hereof and, except as provided in
Section 1.3, supersedes all prior agreements (including, without limitation, the
Terminating Prior Agreements), negotiations and discussions between the parties
hereto and/or their respective counsel with respect to the subject matter
hereof. Accordingly, except for the rights of the Executive described in Section
1.3(a) through (f), upon the Company's fulfilling its obligations to the
Executive hereunder, the Executive agrees that Adecco, the Company and their
subsidiaries and affiliates shall have no further obligations or liability to or
in respect of the Executive under the Terminating Prior Agreements or any other
plan, program, agreement or arrangement. This Agreement may be amended, modified
or changed only by a written instrument executed by the Executive and the
Company, provided that no such amendment, modification or change shall be made
prior to the Effective Time without Adecco's prior written consent. No provision
of this Agreement may be waived except by a writing executed and delivered by
the party sought to be charged. Any such written waiver will be effective only
with respect to the event or circumstance described therein and not with respect
to any other event or circumstance, unless such waiver expressly provides to the
contrary.
9.4. Severability and Construction. In construing this Agreement, if
any portion of this Agreement shall be found to be invalid or unenforceable, the
remaining terms and provisions of this Agreement shall be given effect to the
maximum extent permitted without considering the void, invalid or unenforceable
provision. In construing this Agreement, the singular shall include the plural,
the masculine shall include the feminine and neuter genders as appropriate, and
no meaning or effect shall be given to the captions of the sections in this
Agreement, which are inserted for convenience of reference only.
9.5. Consultation With Counsel. The Executive represents and
acknowledges that he has discussed all aspects of this Agreement with his
attorney and that he has carefully read and fully understands all of its
provisions.
9.6. Expenses. Each of the Company, on one hand, and the Executive, on
the other, shall be liable for their own respective costs and expenses incident
to the execution of this Agreement and the consummation of the transactions
contemplated hereby. Should the Executive or his successors retain counsel for
the purpose of enforcing, or preventing the breach of, any provision hereof
(including, but not limited to, by instituting any action or proceeding in
arbitration or court to enforce any provision hereof or to enjoin a breach of
any provision of this Agreement) or for a declaration of such party's rights or
obligations under this Agreement, or any other remedy, whether in arbitration or
in a court of law, then, the Executive shall be entitled to be reimbursed by the
Company for all reasonable fees and expenses of attorneys and expert witnesses
and court costs (including such fees, expenses and costs of appeal), if the
Executive prevails with respect to a majority of his material claims in a
nonappealable judgment of a court of competent jurisdiction.
10
<PAGE>
9.7. Cooperation in Legal Proceedings. Without limitation of Section
2.2(c) hereof, the Executive agrees, after the expiration of the Consulting
Term, upon the reasonable request of Adecco, to cooperate with and assist Adecco
and its subsidiaries in undertaking and preparing for legal and other
proceedings relating to the affairs of Adecco and its subsidiaries. The
Executive shall be reimbursed for the reasonable expenses he incurs in
connection with any such cooperation and/or assistance, and shall receive from
the Company reasonable per diem compensation in connection therewith, such per
diem to be mutually agreed upon by the Executive and the Company.
9.8. Notices. All notices and other communications provided to any
party under this Agreement shall be in writing and delivered by a reputable
overnight courier or other personal delivery to such party at its address set
forth below its signature hereto, or at such other address as may be designated
by such party in a notice to the other party. Any notice, if so delivered and
properly addressed with postage prepaid, shall be deemed given when received.
9.9. Withholding. Adecco or the Company, as applicable, may withhold
from any amounts payable under this Agreement such federal, state or local taxes
as shall be required to be withheld pursuant to any applicable law or
regulation.
9.10. Unfunded Obligation. Except as expressly provided otherwise in
this Agreement, the obligation to pay amounts under this Agreement is an
unfunded obligation of the Company, and no such obligation shall create a trust
or be deemed to be secured by any pledge or encumbrance on any property of
Adecco, the Company or any of their subsidiaries.
9.11. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the internal laws of the State of
New York (without giving effect to the principles of conflict of laws thereof),
as at the time in effect.
9.12. Survival. The provisions of Sections 5.1, 5.2, 6.1, 6.2, 6.3,
6.4, 6.5, 7, 8.1, 8.2 and 9.1 through 9.13 shall survive any termination of this
Agreement in accordance with their respective terms.
9.13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which taken
together shall constitute one instrument.
[SIGNATURE PAGE TO FOLLOW]
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each executed this
Agreement as of the date first above written.
"EXECUTIVE"
________________________________
Edward A. Blechschmidt
Home Address:
OLSTEN CORPORATION
By: ___________________________
Name:
Title:
Address:
ADECCO SA
By: ___________________________
Name:
Title:
Address:
By: ___________________________
Name:
Title:
Address:
12
<PAGE>
EXHIBIT A
SEPARATION, CONSULTING AND NON-COMPETITION AGREEMENT
EDWARD A. BLECHSCHMIDT
Terminating Prior Agreements
----------------------------
1. Any benefits payable to or in respect of the Executive under the
Olsten Corporation Supplemental Retirement Plan for Key Executives Designated by
the Company, or any trust agreement maintained in connection therewith.
2. Employment Agreement, dated as of February 10, 1999, by and between
the Company and Edward A. Blechschmidt.
3. Employment Letter Agreement, dated as of February 10, 1998, by and
between the Company and Edward A. Blechschmidt.
4. Employment Letter Agreement, dated as of September 11, 1998, by and
between the Company and Edward A. Blechschmidt.
SEPARATION, CONSULTING AND NON-COMPETITION AGREEMENT
----------------------------------------------------
THIS SEPARATION, CONSULTING AND NON-COMPETITION AGREEMENT (this
"Agreement") is made and entered into this 17th day of August, 1999, by and
among Anthony Puglisi (the "Executive"), Adecco SA, a societe anonyme organized
under the laws of Switzerland ("Adecco"), and Olsten Corporation, a Delaware
corporation ("the Company").
RECITALS
--------
WHEREAS, the Boards of Directors of the Company and Adecco have each
approved the merger (the "Merger") of Staffing Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of Adecco ("Merger Sub"),
with and into certain businesses of the Company pursuant to an Agreement and
Plan of Merger (the "Merger Agreement"), dated as of August 17, 1999, by and
among Adecco, Merger Sub and the Company;
WHEREAS, Adecco, the Company and the Executive desire that the
Terminating Prior Agreements (as defined herein) terminate at the "Effective
Time" of the Merger, as defined in the Merger Agreement (the "Effective Time"),
and that the Executive will become a consultant to Adecco and its subsidiaries
immediately at the Effective Time pursuant to this Agreement;
WHEREAS, this Agreement will become effective only if the Merger is
consummated;
WHEREAS, the covenants provided herein, including the Executive's
noncompetition and nonsolicitation covenants set forth in Sections 6.1 and 6.2
are material, significant and essential to effecting the transactions
contemplated by the Merger Agreement; and
WHEREAS, Adecco, the Executive and the Company desire to enter into
this Agreement on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
AGREEMENT
---------
1. TERMINATION OF EMPLOYMENT
-------------------------
1.1. Termination of Employment. Effective at the Effective Time, the
Executive's employment with the Company and its subsidiaries and affiliates
shall terminate. The Executive shall resign from all positions with or relating
to the Company and its subsidiaries and affiliates, effective at the Effective
Time. Effective at the Effective Time, the Executive shall become a consultant
to Adecco and its subsidiaries on the terms and subject to the conditions set
forth herein.
<PAGE>
1.2. Termination of Certain Prior Agreements. Effective at the
Effective Time, the agreement or agreements listed on Exhibit A hereto (the
"Terminating Prior Agreements") shall terminate and the Executive shall waive
any and all rights under the Terminating Prior Agreements, whether arising prior
to, at or following the Effective Time, and Adecco, the Company and their
subsidiaries and affiliates shall have no further obligation or liability under
such Terminating Prior Agreements. In consideration of the termination of the
Terminating Prior Agreements and the Executive's waiver of any and all rights
under the Terminating Prior Agreements, the Company shall pay to the Executive a
lump sum payment, in cash, in the amount of One Million Sixteen Thousand Four
Hundred Thirty-Six Dollars ($1,016,436) (less amounts required to be withheld
under applicable law), payable at the Effective Time.
1.3. Termination of Other Rights to Compensation and Benefits.
Effective at the Effective Time, the Executive shall waive any and all rights to
compensation or benefits from Adecco, the Company and their subsidiaries and
affiliates (including, without limitation, any and all rights under any plan,
program, agreement or arrangement (whether or not in writing) maintained by
Adecco, the Company or any of their subsidiaries or affiliates or under which
Adecco, the Company or any of their subsidiaries or affiliates has any
obligation or liability), and Adecco, the Company and their subsidiaries and
affiliates shall have no further obligation or liability to the Executive with
respect to any such compensation or benefits, except for: (a) any rights of the
Executive to accrued, unpaid salary from the Company at the Effective Time, (b)
any rights of the Executive to reimbursement of business expenses, incurred by
the Executive prior to the Effective Time, in accordance with the Company's
executive reimbursement policies, (c) any rights of Executive with respect to
options or restricted stock awards granted to the Executive under the Company's
1994 Stock Incentive Plan or Incentive Restricted Stock Plan, that are
outstanding at the Effective Time, subject to the terms and conditions of the
agreements governing such options or restricted stock awards, such Plans and the
Merger Agreement, (d) any rights to benefits to which the Executive (or the
Executive's beneficiaries) shall be entitled in accordance with the employee
benefit plans of the Company (as in effect from time to time) (other than any
rights to benefits pursuant to the Terminating Prior Agreements) or in
accordance with applicable law, (e) Executive's rights to indemnification or
similar reimbursement pursuant to the certificate of incorporation or by-laws of
the Company and its subsidiaries, by contract or otherwise; and (f) Executive's
rights under this Agreement. Subject to the terms of any applicable trust
agreement, the Company may recover any assets held in trust in connection with
the Executive's rights to benefits pursuant to any Terminating Prior Agreement
that are waived in accordance with Section 1.2.
2. CONSULTING ARRANGEMENT
----------------------
2.1. Consulting Services. From and after the Effective Time, the
Executive shall provide services as a consultant to Adecco and its subsidiaries
as contemplated by this Agreement, and the Executive hereby agrees to provide
such consulting services and to comply with the other provisions of this
Agreement, upon the terms and subject to the conditions hereinafter set forth.
2
<PAGE>
2.2. Nature of Consulting and Other Services. In his rendering of
consulting services for the benefit of Adecco and its subsidiaries hereunder,
the Executive shall from time to time provide Adecco, Adecco's Board of
Directors, and Adecco's executive officers with such advice as any of them may
reasonably request in connection with the business and operations of Adecco and
its subsidiaries and affiliates. The Executive shall provide such advice only at
the request of Adecco's Board of Directors or its executive officers. The
Executive shall hold himself available at reasonable times and on reasonable
notice to render such consulting and advisory services as may be so assigned to
him by Adecco, Adecco's Board of Directors, or Adecco's executive officers
during the Consulting Term (as defined below); provided, however, that, unless
the parties otherwise agree, the consulting and advisory services rendered by
the Executive during the Consulting Term shall not exceed fifteen (15) hours
each calendar month. Without limiting the foregoing, the Executive shall, upon
the reasonable request of the persons specified above, (a) consult with Adecco
and its subsidiaries with respect to all matters concerning the Company or
Adecco in which the Executive had personal involvement during his period of
employment and/or directorship with the Company or Adecco, (b) assist Adecco and
its subsidiaries in the negotiation and consummation of business matters and
prospects pending at the time of the termination of his employment and
thereafter, and (c) cooperate with and assist Adecco and its subsidiaries in
undertaking and preparing for legal and other proceedings relating to the
affairs of Adecco and its subsidiaries. In connection with the consulting
services rendered by him hereunder, the Executive shall (i) undertake such
travel on Adecco's or Adecco's subsidiaries' behalf (and at Adecco's or Adecco's
subsidiaries' expense) as Adecco and the Executive shall agree, and (ii)
negotiate as Adecco's or its subsidiaries' representative when and as reasonably
requested to do so by Adecco's Board of Directors or its executive officers.
2.3. Nature of Consulting and Other Services. It is understood that
the Executive is to act as a consultant and advisor to Adecco and its
subsidiaries, and is not an employee or agent of, or co-venturer with, Adecco or
any of its subsidiaries in any respect. The Executive shall have no right,
authority, or power to act for or on Adecco's behalf other than as described in
Section 2.2 above. The relationship between Adecco and its subsidiaries, on the
one hand, and the Executive, on the other, hereunder shall be that of
independent contractor.
3. TERM
----
The Executive hereby agrees to provide the consulting services
contemplated by this Agreement for a term of four (4) years, commencing at the
Effective Time and terminating on the fourth anniversary of the Effective Time
(the "Consulting Term"). In the event of the death or permanent disability of
the Executive after the Effective Time and prior to the end of the Consulting
Term, the remaining fees under Sections 4.1 and 4.2 that would have been payable
through the end of the Consulting Term shall continue to be paid through the end
of the Consulting Term to the Executive or, in the event of the Executive's
death, to the beneficiary designated in writing by the Executive (or, in the
absence of a designated beneficiary who survives the Executive, Executive's
estate).
3
<PAGE>
4. CONSULTING, NON-COMPETITION AND NON-SOLICITATION FEES
-----------------------------------------------------
4.1. Consulting Fees. In consideration of the consulting services
provided hereunder, the Company shall pay the Executive an annual consulting
fee, in cash, in the amount of Fifty Thousand Dollars ($50,000) (less amounts
required to be withheld under applicable law) payable during the Consulting
Term. Such annual consulting fee shall be payable in advance on a quarterly
basis. The fees payable to the Executive hereunder shall, subject to the other
terms and provisions of this Agreement, continue for the full period of the
Consulting Term even if the Executive obtains income from any other source,
including other full-time employment.
4.2. Non-Competition and Non-Solicitation Fees. In consideration of
the covenants undertaken by the Executive under Sections 6.1 and 6.2 hereof, the
Company shall pay the Executive: (a) a one-time non-competition and
non-solicitation fee, in cash, in the amount of Two Million Seven Hundred
Thousand Dollars ($2,700,000) (less amounts required to be withheld by
applicable law), payable at the Effective Time and (b) an annual non-competition
and non-solicitation fee, in cash, in the amount of Four Hundred Fifty Thousand
Dollars ($450,000) (less amounts required to be withheld under applicable law),
payable during the Consulting Term. Such annual non-competition and
non-solicitation fee shall be payable in advance on a quarterly basis. The fees
payable to the Executive hereunder shall, subject to the other terms and
provisions of this Agreement, continue for the full period of the Consulting
Term even if the Executive obtains income from any other source, including other
full-time employment.
4.3. Business Expenses. During the Consulting Term, the Executive
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by the Executive in accordance with the policies and practices
of the Company as in effect from time to time with respect to employees of the
Company.
4.4. Director Compensation. In the event that the Executive is a
member of Adecco's or the Company's Board of Directors, the Executive shall be
entitled to receive all compensation and fees as are payable by Adecco or the
Company, as applicable, to its directors from time to time. Notwithstanding
anything contained herein, time spent by the Executive in the performance of his
services as a member of Adecco's or the Company's Board of Directors shall not
be deemed to be the performance of consulting services hereunder.
4.5. Medical Benefits. During the period ending on the third
anniversary of the Effective Time, the Company shall provide the Executive (and
the Executive's dependents) with the coverage under the Company's group medical
plan or plans that is provided to executive officers of the Company (and their
dependents) under the terms of such plan or plans, as in effect from time to
time; provided, however, that, the Company's obligation hereunder shall
terminate upon the date the Executive becomes covered under any group medical
plan of the Executive's subsequent employer.
4
<PAGE>
5. CONFIDENTIALITY
---------------
5.1. Confidentiality. The Executive acknowledges that, during the
course of his employment with the Company, the Executive has had, and during the
course of his engagement under this Agreement the Executive will have, access to
Confidential Information (as defined below) owned by the Company and/or Adecco
or used or involved in or incidental to their operations, business and affairs.
All such Confidential Information has been and will be disclosed to the
Executive in confidence. The Executive covenants that from and after the
Effective Time, he (a) will keep confidential all Confidential Information of
Adecco and its subsidiaries and affiliates which is known to him and, except
with the specific prior written consent of Adecco or as required to be disclosed
by law or the order of any agency, court or other governmental authority, will
not disclose any Confidential Information to any person other than Adecco, its
subsidiaries and affiliates, or their respective employees accountants, counsel
and other designated representatives as is appropriate in the course of his
consulting relationship, and (b) will not make any public statement which
disparages Adecco or any of its subsidiaries or any of their respective
employees, officers or directors, which is materially damaging to Adecco and its
subsidiaries taken as a whole. For purposes of this Agreement, "Confidential
Information" shall mean all know-how, trade secrets and other confidential
nonpublic information prepared for, by or on behalf of, or in the possession of,
the Company, Adecco or any of their subsidiaries or affiliates, including
without limitation (i) nonpublic proprietary information; (ii) other information
derived from reports, investigations, research, studies, work in progress,
codes, marketing, sales or service programs, capital expenditure projects, cost
summaries, equipment, product or system designs or drawings, pricing or other
formulae, contract analyses, financial information, projections, agreements with
vendors, joint venture agreements, confidential filings with any agency, court
or other governmental authority; and (iii) all other concepts, methods,
techniques and processes of doing business, ideas or information that can be
used in the operation of a business or other enterprise and is sufficiently
valuable, or potentially valuable, and secret to afford an actual or potential
economic advantage over others; provided, however, that Confidential Information
shall not include any information that is currently generally available to and
generally known by the public or, through no fault of the Executive, hereafter
becomes generally available to and generally known by the public.
5.2. Business Property. All records, files, drawings, documents and
the like relating to Adecco's or the Company's business or the business of any
of their subsidiaries or affiliates which the Executive shall prepare, use or
come into contact with, shall be and remain Adecco's sole property and shall not
be removed from the premises of Adecco, the Company or their subsidiaries and
affiliates without its written consent except as required in the course of the
Executive's consulting engagement. Upon the termination of the Consulting Term,
all such records, files, drawings, documents and the like that are in the
Executive's custody or control shall immediately be delivered by the Executive
to Adecco or its designee. The Executive acknowledges that his obligations in
this Section are of a unique character that gives them a special value to
Adecco, the loss of which cannot reasonably or adequately be compensated in
damages in an action at law, that a breach thereof will result in irreparable
and continuing harm to Adecco and its subsidiaries and that therefore, in
addition to any other remedy that Adecco or the Company may have at law or in
equity, Adecco and/or the Company shall be entitled to injunctive relief for a
breach thereof by the Executive.
5
<PAGE>
6. NONCOMPETITION AND NONSOLICITATION
----------------------------------
6.1. Noncompetition. The Executive covenants that he will not, during
the period commencing at the Effective Time and terminating on the fourth
anniversary of the Effective Time (the "Restricted Period"), (a) accept
employment with or render service to any person, firm or corporation that is
engaged in the business(es) conducted by Adecco or any of its subsidiaries or
affiliates (as determined from time to time) in any market in which Adecco or
any of such subsidiaries or affiliates is then conducting such business(es); or
(b) own, manage, operate, or control, or participate in the ownership,
management, operation, or control of, or be connected as a principal, agent,
representative, consultant, advisor, investor, owner, partner, financier,
contractor, manager or joint venturer with, or permit his name to be used by or
in connection or association with, any person, firm or corporation that is
engaged in the business(es) conducted by Adecco or any of its subsidiaries or
affiliates in any market in which Adecco or any of its subsidiaries or
affiliates is then conducting such business(es); provided, however, that the
Executive may invest as an investor in the voting securities of any person that
is a reporting company under the Securities Exchange Act of 1934, as amended, so
long as the aggregate amount of the securities the Executive owns directly or
indirectly is less than five percent (5%) of the total outstanding voting
securities of that person. Notwithstanding anything contained herein to the
contrary, the Executive shall not be prohibited from accepting employment with,
rendering services to or otherwise engaging in any activity or capacity with any
entity engaged in the Health Services Business (as defined in the Merger
Agreement).
6.2. Nonsolicitation. The Executive covenants that he will not, during
the Restricted Period, otherwise than on behalf of Adecco or any of its
subsidiaries or affiliates (as determined from time to time), solicit the
employment of any person, or induce or advise any person to leave the employ of
Adecco or any of such subsidiaries or affiliates, if such person is, as of the
date of such solicitation, inducement or advisement, employed on a full- or
part-time basis by Adecco or any of its subsidiaries or affiliates.
6.3. Breach by Executive. Notwithstanding anything contained herein,
in the event that the Executive materially breaches any of the covenants
undertaken by him under Section 6.1 or 6.2, the Company's obligation to make the
compensation payments provided for in Section 4.1 or 4.2 hereof shall
automatically terminate (other than with respect to any such payments earned by
the Executive through the date of breach which have not theretofore been paid),
and the Executive shall automatically forfeit all of his right to and interest
in such payments.
6.4. Modification. If the noncompetition and/or nonsolicitation
covenants contained in the foregoing Sections 6.1 and 6.2 are, in the view of
any court or arbitrator asked to rule upon the issue, deemed unenforceable by
reason of covering too large an area, too long a period of time, too large a
number of entities or too many business activities, then the same shall be
deemed to cover only the largest area, the longest period, the largest number of
entities or the most business activities, as the case may be, that will not
render it unenforceable.
6
<PAGE>
6.5. Specific Performance. The Executive acknowledges and agrees that
Adecco and the Company cannot be fully or adequately compensated in damages for
a violation of Section 6.1 or 6.2 hereof, and that, in addition to any other
relief to which Adecco or the Company may be entitled, it shall be entitled to
injunctive and equitable relief.
7. EXCISE TAX Gross-Up
-------------------
(a) Anything in this Agreement to the contrary notwithstanding, if it
shall be determined that any payment, distribution (or benefit provided
(including, without limitation, the acceleration of any payment, distribution or
benefit and the acceleration of exercisability of any stock option) to the
Executive or for his benefit (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise (the
"Payment") would be subject, in whole or in part, to the excise tax imposed by
section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (the
"Excise Tax"), then the Executive shall be entitled to receive from the Company
an additional payment (the "Gross-Up Payment") in an amount such that the net
amount of the Payment and the Gross-Up Payment retained by Executive after the
calculation and deduction of all Excise Taxes (including any interest or
penalties imposed with respect to such taxes) on the Payment and all federal,
state and local income tax, employment tax, self employment tax and Excise Tax
(including any interest or penalties imposed with respect to such taxes) on the
Gross-Up Payment provided for in this Section 7 and taking into account any lost
or reduced tax deductions on account of the Gross-Up Payment, shall be equal to
the Payment;
(b) All determinations required to be made under this Section 7,
including whether and when the Gross-Up Payment is required and the amount of
such Gross-Up Payment, and the assumptions to be used in arriving at such
determinations shall be made by the Accountants (as defined below) which shall
provide the Executive, Adecco and the Company with detailed supporting
calculations with respect to such Gross-Up Payment within ninety (90) days after
the Effective Time. For the purposes of this Section 7, the "Accountants" shall
mean PriceWaterhouseCoopers. For purposes of determining the amount of the
Gross-Up Payment, Executive shall be deemed to pay Federal income taxes at the
applicable marginal rate of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made and to pay any applicable state and
local income taxes at the applicable marginal rate of taxation for the calendar
year in which the Gross-Up Payment is to be made, net of the reduction in
federal income taxes which could be obtained from the deduction of such state or
local taxes if paid in such year (determined with regard to limitations on
deductions based upon the amount of Executive's adjusted gross income). To the
extent practicable, any Gross-Up Payment with respect to any Payment shall be
paid by the Company at the time Executive is entitled to receive the Payment and
in no event shall any Gross-Up Payment be paid later than 30 days after the
receipt by the Executive of the Accountants' determination. Any determination by
the Accountants shall be binding upon the Company and the Executive, including
for purposes of withholding on amounts payable under this Agreement. As a result
of uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accountants hereunder, it is possible that the
Gross-Up Payment made will have been an amount that is greater or less than the
Company should have paid pursuant to this Section 7 (an "Overpayment" or
7
<PAGE>
"Underpayment," respectively). In the event that the Gross-Up Payment is
determined by the Accountants or pursuant to any proceeding or negotiations with
the Internal Revenue Service to be less than the amount initially determined by
the Accountants, the Executive shall promptly repay the Overpayment to the
Company; provided, however, that in the event any portion of the Gross-Up
Payment to be repaid to the Company has been paid to any Federal, state or local
tax authority, repayment thereof shall not be required until actual refund or
credit of such portion has been made to the Executive. In the event that the
Company exhausts its remedies pursuant to Section 7 ( c ) and the Executive is
required to make a payment of any Excise Tax, the Underpayment shall be promptly
paid by the Company to or for the Executive's benefit; and
(c) The Executive shall notify Adecco and the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable after the Executive is informed in writing of such claim
and shall apprise Adecco and the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on
which the Executive gives such notice to Adecco and the Company (or such shorter
period ending on the date that any payment of taxes, interest and/or penalties
with respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company;
(iii) cooperate with the Company in good faith in order to
effectively contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claims;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify Executive for and hold Executive harmless
from, on an after-tax basis, any Excise Tax, income tax, employment tax or self
employment tax (including interest and penalties with respect thereto) imposed
as a result of such representation and payment of all related costs and
expenses. Without limiting the foregoing provisions of this Section 7, the
Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
8
<PAGE>
appellate courts, as the Company shall determine. The Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
8. DISPUTE RESOLUTION
------------------
8.1. Arbitration. Except as provided in Section 6.5 hereof, in the
event that any disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the interpretation of this Agreement or any
arrangements relating to this Agreement or contemplated in this Agreement or the
breach, termination or invalidity thereof (collectively, a "Dispute") cannot be
resolved by the parties, and the parties do not agree to an alternate procedure
for resolving the Dispute, the Dispute shall be resolved by final and binding
arbitration, before a panel of three arbitrators in New York, New York
administered by the American Arbitration Association ("AAA"). The parties agree
to arbitration as an alternative to court proceedings in order (i) to obtain a
prompt evidentiary hearing and an arbitrator's final award resolving any
dispute, (ii) to do so expeditiously, and (iii) to do so economically. During
the arbitration proceeding, the arbitrator, in the arbitrator's sole discretion,
shall have the right to grant requests for discovery of documents, the taking of
depositions, and the issuance of subpoenas in accordance with rules of the AAA.
The Company and the Executive shall each have the right to designate one of such
arbitrators, and the two arbitrators shall together designate the third such
arbitrator. The forum for any such action shall be New York, New York. Each
party hereby promises to cooperate in the arbitration process to effectuate
these purposes. The arbitration shall be conducted in accordance with the rules
of the AAA which are in effect at the time of the arbitration. Judgment rendered
by the arbitrator may be entered in any court having competent jurisdiction in
accordance with Delaware law.
8.2. Waiver of Jury Trial. By submitting a Dispute to arbitration, the
parties hereto understand that they will not enjoy the benefits of a jury trial.
Accordingly, the parties hereto expressly waive the right to a jury trial.
9. MISCELLANEOUS
-------------
9.1. Termination of Merger Agreement. In the event that the Merger
Agreement terminates prior to the Merger, this Agreement shall thereupon
terminate and be of no further force or effect.
9.2. Assignment. This Agreement is personal to the Executive and
without the prior written consent of Adecco shall not be assignable by the
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. Adecco shall require any successor
to all or substantially all of the business and/or assets of Adecco, whether
direct or indirect, by purchase, merger, consolidation, acquisition of stock, or
otherwise, by an agreement in form and substance reasonably satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as Adecco would be required to perform if no such
succession had taken place. At the Effective Time, this Agreement shall be
assumed by, and hereby is assigned to Adecco.
9
<PAGE>
9.3. Final and Entire Agreement; Amendment. The Executive acknowledges
and agrees that this Agreement represents the final and entire agreement among
the parties with respect to the subject matter hereof and, except as provided in
Section 1.3, supersedes all prior agreements (including, without limitation, the
Terminating Prior Agreements), negotiations and discussions between the parties
hereto and/or their respective counsel with respect to the subject matter
hereof. Accordingly, except for the rights of the Executive described in Section
1.3(a) through (f), upon the Company's fulfilling its obligations to the
Executive hereunder, the Executive agrees that Adecco, the Company and their
subsidiaries and affiliates shall have no further obligations or liability to or
in respect of the Executive under the Terminating Prior Agreements or any other
plan, program, agreement or arrangement. This Agreement may be amended, modified
or changed only by a written instrument executed by the Executive and the
Company, provided that no such amendment, modification or change shall be made
prior to the Effective Time without Adecco's prior written consent. No provision
of this Agreement may be waived except by a writing executed and delivered by
the party sought to be charged. Any such written waiver will be effective only
with respect to the event or circumstance described therein and not with respect
to any other event or circumstance, unless such waiver expressly provides to the
contrary.
9.4. Severability and Construction. In construing this Agreement, if
any portion of this Agreement shall be found to be invalid or unenforceable, the
remaining terms and provisions of this Agreement shall be given effect to the
maximum extent permitted without considering the void, invalid or unenforceable
provision. In construing this Agreement, the singular shall include the plural,
the masculine shall include the feminine and neuter genders as appropriate, and
no meaning or effect shall be given to the captions of the sections in this
Agreement, which are inserted for convenience of reference only.
9.5. Consultation With Counsel. The Executive represents and
acknowledges that he has discussed all aspects of this Agreement with his
attorney and that he has carefully read and fully understands all of its
provisions.
9.6. Expenses. Each of the Company, on one hand, and the Executive, on
the other, shall be liable for their own respective costs and expenses incident
to the execution of this Agreement and the consummation of the transactions
contemplated hereby. Should the Executive or his successors retain counsel for
the purpose of enforcing, or preventing the breach of, any provision hereof
(including, but not limited to, by instituting any action or proceeding in
arbitration or court to enforce any provision hereof or to enjoin a breach of
any provision of this Agreement) or for a declaration of such party's rights or
obligations under this Agreement, or any other remedy, whether in arbitration or
in a court of law, then, the Executive shall be entitled to be reimbursed by the
Company for all reasonable fees and expenses of attorneys and expert witnesses
and court costs (including such fees, expenses and costs of appeal), if the
Executive prevails with respect to a majority of his material claims in a
nonappealable judgment of a court of competent jurisdiction.
10
<PAGE>
9.7. Cooperation in Legal Proceedings. Without limitation of Section
2.2(c) hereof, the Executive agrees, after the expiration of the Consulting
Term, upon the reasonable request of Adecco, to cooperate with and assist Adecco
and its subsidiaries in undertaking and preparing for legal and other
proceedings relating to the affairs of Adecco and its subsidiaries. The
Executive shall be reimbursed for the reasonable expenses he incurs in
connection with any such cooperation and/or assistance, and shall receive from
the Company reasonable per diem compensation in connection therewith, such per
diem to be mutually agreed upon by the Executive and the Company.
9.8. Notices. All notices and other communications provided to any
party under this Agreement shall be in writing and delivered by a reputable
overnight courier or other personal delivery to such party at its address set
forth below its signature hereto, or at such other address as may be designated
by such party in a notice to the other party. Any notice, if so delivered and
properly addressed with postage prepaid, shall be deemed given when received.
9.9. Withholding. Adecco or the Company, as applicable, may withhold
from any amounts payable under this Agreement such federal, state or local taxes
as shall be required to be withheld pursuant to any applicable law or
regulation.
9.10. Unfunded Obligation. Except as expressly provided otherwise in
this Agreement, the obligation to pay amounts under this Agreement is an
unfunded obligation of the Company, and no such obligation shall create a trust
or be deemed to be secured by any pledge or encumbrance on any property of
Adecco, the Company or any of their subsidiaries.
9.11. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the internal laws of the State of
New York (without giving effect to the principles of conflict of laws thereof),
as at the time in effect.
9.12. Survival. The provisions of Sections 5.1, 5.2, 6.1, 6.2, 6.3,
6.4, 6.5, 7, 8.1, 8.2 and 9.1 through 9.13 shall survive any termination of this
Agreement in accordance with their respective terms.
9.13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which taken
together shall constitute one instrument.
[SIGNATURE PAGE TO FOLLOW]
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each executed this
Agreement as of the date first above written.
"EXECUTIVE"
________________________________
Anthony Puglisi
Home Address:
OLSTEN CORPORATION
By: ____________________________
Name:
Title:
Address:
ADECCO SA
By: ____________________________
Name:
Title:
Address:
By: ___________________________
Name:
Title:
Address:
12
<PAGE>
SEPARATION, CONSULTING AND NON-COMPETITION AGREEMENT
ANTHONY PUGLISI
Terminating Prior Agreements
----------------------------
1. Any benefits payable to or in respect of the Executive under the
Olsten Corporation Supplemental Retirement Plan for Key Executives Designated by
the Company, or any trust agreement maintained in connection therewith.
2. Change in Control Letter Agreement, dated as of August 10, 1994 by
and between the Company and Anthony Puglisi.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Olsten
Corporation and Subsidiaries Consolidated Balance Sheets at July 4, 1999
(unaudited) and Olsten Corporation and Subsidiaries Consolidated Statements of
Income for the six months ended July 4, 1999 (unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-02-2000
<PERIOD-END> JUL-04-1999
<CASH> 14,991
<SECURITIES> 0
<RECEIVABLES> 1,186,747
<ALLOWANCES> (40,201)
<INVENTORY> 0
<CURRENT-ASSETS> 1,302,936
<PP&E> 400,554
<DEPRECIATION> (162,473)
<TOTAL-ASSETS> 2,146,452
<CURRENT-LIABILITIES> 528,501
<BONDS> 0
0
0
<COMMON> 8,132
<OTHER-SE> 758,679
<TOTAL-LIABILITY-AND-EQUITY> 2,146,452
<SALES> 2,446,589
<TOTAL-REVENUES> 2,446,589
<CGS> 1,848,309
<TOTAL-COSTS> 1,848,309
<OTHER-EXPENSES> 102,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,117
<INCOME-PRETAX> (60,134)
<INCOME-TAX> (15,774)
<INCOME-CONTINUING> (48,744)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,744)
<EPS-BASIC> (.60)
<EPS-DILUTED> (.60)
</TABLE>
