AGREEMENT AND PLAN OF MERGER
dated May 1, 1996
by and among
OLSTEN CORPORATION
QHR ACQUISITION CORP.
and
QUANTUM HEALTH RESOURCES, INC.
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER 1
Section 1.1 Effective Time of the Merger 1
Section 1.2 Closing 2
Section 1.3 Effects of the Merger 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES 3
Section 2.1 Effect on Capital Stock 3
(a) Conversion Number for Quantum Common Stock;
Capital Stock of Merger Sub 3
(b) Cancellation of Treasury Stock and Other
Quantum Common Stock 4
(c) Dissenting Shares 4
Section 2.2 Exchange of Certificates 5
(a) Exchange Agent 5
(b) Exchange Procedures 5
(c) Distributions with Respect to Unexchanged Shares 6
(d) No Further Ownership Rights in Quantum Common
Stock 6
(e) No Fractional Shares 7
(f) Termination of Exchange Fund 7
(g) No Liability 7
(h) Investment of Exchange Fund 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF OLSTEN AND MERGER SUB 8
Section 3.1 Organization, Standing and Power 8
Section 3.2 Capital Structure 8
Section 3.3 Authority Relative to this Agreement 9
Section 3.4 SEC Documents; Financial Statements 11
Section 3.5 Information Supplied 12
Section 3.6 Absence of Certain Changes or Events 12
Section 3.7 Litigation 13
Section 3.8 Benefit Plans 13
Section 3.9 Compliance with Law 13
Section 3.10 Opinion of Financial Adviser 14
Section 3.11 Accounting Matters 14
Section 3.12 No Undisclosed Material Liabilities 15
Section 3.13 Vote Required; Voting Agreement 15
Section 3.14 Ownership of Quantum Common Stock 15
Section 3.15 Merger Sub 15
Section 3.16 Section 203 of the DGCL Not Applicable 15
Section 3.17 Affiliates 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF QUANTUM 16
Section 4.1 Organization, Standing and Power 16
Section 4.2 Capital Structure 16
Section 4.3 Authority Relative to this Agreement 17
Section 4.4 SEC Documents; Financial Statements 19
Section 4.4 SEC Documents; Financial Statements 19
Section 4.5 Information Supplied 19
Section 4.6 Absence of Certain Changes or Events 20
Section 4.7 Litigation 20
Section 4.8 Taxes 21
Section 4.9 Benefit Plans 22
Section 4.10 Labor Relations 24
Section 4.11 Compliance with Law 24
Section 4.12 Insurance 25
Section 4.13 Property 25
Section 4.14 Contracts 26
Section 4.15 Intellectual Property 26
Section 4.16 Related Party Transactions 27
Section 4.17 Opinion of Financial Adviser; Arrangements
with Financial Adviser and Others. 27
Section 4.18 Accounting Matters 27
Section 4.19 No Undisclosed Material Liabilities 27
Section 4.20 Vote Required 27
Section 4.21 Section 203 of the DGCL Not Applicable 28
Section 4.22 Quantum Rights Agreement 28
Section 4.23 Affiliates 28
Section 4.24 Certain Agreements 28
ARTICLE V
COVENANTS OF OLSTEN AND QUANTUM PENDING THE MERGER 28
Section 5.1 Ordinary Course 29
Section 5.2 Governing Documents; Quantum Rights Agreement 29
Section 5.3 Issuance of Securities 29
Section 5.4 Dividends; Changes in Stock 29
Section 5.5 No Solicitation 30
Section 5.6 No Acquisitions 31
Section 5.7 No Dispositions 31
Section 5.8 Indebtedness; Leases 31
Section 5.9 Advice of Changes; SEC Filings 31
Section 5.10 Employee Arrangements 32
Section 5.11 No Dissolution, Etc 32
Section 5.12 No Action 32
Section 5.13 Tax Returns. 32
Section 5.14 Class Action Litigation. 33
ARTICLE VI
ADDITIONAL AGREEMENTS 33
Section 6.1 Preparation of S-4 and Proxy Statement 33
Section 6.2 Letters of Accountants 34
Section 6.3 Accounting Matters 34
Section 6.4 Access to Information 35
Section 6.5 Meetings of Stockholders 35
Section 6.6 Legal Conditions to Merger 35
Section 6.7 Affiliates 36
Section 6.8 Stock Exchange Listing 36
Section 6.9 Stock Options; Quantum Stock Purchase Plan
Rights; Quantum Convertible Subordinated
Debentures 36
Section 6.10 Fees and Expenses 38
Section 6.11 Brokers or Finders 39
Section 6.12 Directors' and Officers' Insurance 39
Section 6.13 Appointment of Successor Directors 40
Section 6.14 Employee Benefit Plans 41
Section 6.15 Additional Agreements; Reasonable Efforts 41
Section 6.16 Reserved Shares of Olsten Common Stock
and Class B Stock 41
Section 6.17 Ownership of Class B Stock by Nominees 41
ARTICLE VII
CONDITIONS OF MERGER 42
Section 7.1 Conditions to Obligation of Each Party to
Effect the Merger 42
(a) Stockholder Approval 42
(b) NYSE Listing 42
(c) Other Approvals 42
(d) S-4 42
(e) No Injunction or Restraints 42
(f) Opinion of Accountants 43
(g) Tax Opinion 43
Section 7.2 Additional Conditions to Obligations of Olsten
and Merger Sub 43
(a) Representations and Warranties 43
(b) Agreements and Covenants 43
(c) Material Adverse Change 44
(d) No Pending Proceedings 44
(e) Inapplicability of Rights Agreement 44
(f) Affiliate Agreements 44
(g) Compliance Certificate. 44
(h) Appraisal Rights 44
Section 7.3 Additional Conditions to Obligation of
Quantum 44
(a) Representations and Warranties 45
(b) Agreements and Covenants 45
(c) Material Adverse Change 45
(d) Affiliate Agreements 45
(e) Compliance Certificate. 45
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER 45
Section 8.1 Termination 45
Section 8.2 Effect of Termination 47
Section 8.3 Amendment 47
Section 8.4 Extension; Waiver 47
ARTICLE IX
GENERAL PROVISIONS 47
Section 9.1 Non-Survival of Representations, Warranties
and Agreements 47
Section 9.2 Notices 48
Section 9.3 Interpretation; Certain Definitions 49
Section 9.4 Counterparts 50
Section 9.5 Entire Agreement; No Third Party
Beneficiaries; Rights of Ownership 50
Section 9.6 Governing Law 50
Section 9.7 No Remedy in Certain Circumstances 50
Section 9.8 Publicity 51
Section 9.9 Assignment 51
Section 9.10 Specific Performance 51
Section 9.11 Remedies Cumulative 51
EXHIBITS
Exhibit I --Certificate of Merger
AGREEMENT AND PLAN OF MERGER, dated May 1, 1996 (the
"Agreement"), by and among Olsten Corporation, a Delaware
corporation ("Olsten"), QHR Acquisition Corp., a Delaware
corporation that is a wholly-owned subsidiary of Olsten ("Merger
Sub"), and Quantum Health Resources, Inc., a Delaware corporation
("Quantum").
WHEREAS, the Boards of Directors of Olsten, Merger Sub and
Quantum have each determined that it is in the best interests of
their respective stockholders for Merger Sub to merge with and
into Quantum upon the terms and subject to the conditions set
forth herein (the "Merger"), and have approved the Merger;
WHEREAS, for accounting purposes, it is intended that the
Merger shall be accounted for as a "pooling of interests";
WHEREAS, for federal income tax purposes, it is intended
that the Merger shall qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986,
as amended;
WHEREAS, Olsten, Merger Sub and Quantum desire to make
certain representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various
conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending
to be legally bound hereby, subject to the terms and conditions
set forth herein, Olsten, Merger Sub and Quantum hereby agree as
follows:
ARTICLE I.
THE MERGER
Section 1.1 Effective Time of the Merger. Subject to the
provisions of this Agreement, a certificate of merger in the form
attached hereto as Exhibit I (the "Certificate of Merger") shall
be duly prepared, executed and acknowledged by the Surviving
Corporation (as defined in Section 1.3) and thereafter delivered
to the Secretary of State of the State of Delaware, for filing as
provided in the General Corporation Law of the State of Delaware
(the "DGCL"), as soon as practicable on or after the Closing Date
(as defined in Section 1.2). The Merger shall become effective
upon the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware or at such time thereafter as
is provided in the Certificate of Merger (the "Effective Time").
Section 1.2 Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m., New York City time, on
a date to be specified by the parties, which shall be no later
than the second Business Day (as defined below) after the latest
to occur of the conditions set forth in Article VII each having
been fulfilled or having been waived in accordance with this
Agreement (the "Closing Date"), at the offices of Gordon Altman
Butowsky Weitzen Shalov & Wein, 114 West 47th Street, New York,
New York 10036, unless another date or place is agreed to in
writing by the parties hereto. For purposes of this Agreement,
"Business Day" means any day other than: (i) a Saturday or
Sunday; and (ii) a day on which banks in the State of New York
are required or permitted to be closed.
Section 1.3 Effects of the Merger. (a) At the Effective
Time: (i) the separate existence of Merger Sub shall cease and
Merger Sub shall be merged with and into Quantum and Quantum
shall be the surviving corporation (Merger Sub and Quantum are
sometimes referred to herein as the "Constituent Corporations"
and Quantum is sometimes referred to herein as the "Surviving
Corporation"); (ii) all of the outstanding capital stock of
Quantum shall be converted as provided in Section 2.1; (iii) the
Certificate of Incorporation of the Surviving Corporation shall
be amended in its entirety to read as set forth in Exhibit A to
the Certificate of Merger; and (iv) the by-laws of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Corporation, until duly amended in
accordance with the terms thereof, of the certificate of
incorporation of the Surviving Corporation and of the DGCL.
(b) The directors and officers of Merger Sub at the
Effective Time shall, from and after the Effective Time, be the
directors and officers of the Surviving Corporation until the
successors of all such persons shall have been duly elected or
appointed and qualified or until their earlier death, resignation
or removal in accordance with the Surviving Corporation's
certificate of incorporation and by-laws.
(c) At and after the Effective Time, the corporate
existence of Quantum, with all its rights, privileges, powers and
franchises of a public as well as of a private nature, shall
continue unaffected and unimpaired by the Merger. The Merger
shall have the effects specified in the DGCL.
ARTICLE II
EFFECT OF THE MERGER ON THE
CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 2.1 Effect on Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part
of the holder of any shares of Quantum Common Stock, par value
$.01 per share ("Quantum Common Stock") or any capital stock of
Merger Sub:
(a) Conversion Number for Quantum Common Stock;
Capital Stock of Merger Sub. (i) Subject to Section 2.2(e),
each share of Quantum Common Stock which shall be issued and
outstanding immediately prior to the Effective Time (other than
any shares of Quantum Common Stock to be canceled pursuant to
Section 2.1(b) and any Dissenting Shares (as defined in Section
2.1(c)) shall be converted into the right to receive fifty-eight
one hundredths (.58) of one share (the "Conversion Number") of
Olsten's Class B Common Stock, par value $.10 per share ("Class B
Stock"). As of the Effective Time, all shares of Quantum Common
Stock which shall be issued and outstanding immediately prior to
the Effective Time shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing such shares of
Quantum Common Stock shall cease to have any rights with respect
thereto, except the right to receive the shares of Class B Stock
(and cash in lieu of fractional shares of Class B Stock as
contemplated by Section 2.2(e)) to be issued or paid in
consideration therefor upon surrender of such certificate in
accordance with Section 2.2, without interest. If, between the
date hereof and the Effective Time, the outstanding shares of
Class B Stock and/or Olsten Common Stock, par value $.10 per
share ("Olsten Common Stock") shall be changed into a different
number of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or
readjustment, or a stock dividend thereon shall be distributed as
of a date prior to the Effective Time, or declared with a record
date prior to the Effective Time and a distribution date after
the Effective Time, the Conversion Number set forth above shall
be appropriately adjusted to reflect such change; provided,
however, that the foregoing shall not apply to any issuance by
Olsten of Olsten Common Stock upon conversion of the Olsten
Convertible Debentures (as defined in Section 3.2(b)) as a result
of the redemption thereof.
(ii) Each share of the capital stock of Merger Sub
which shall be issued and outstanding immediately prior to the
Effective Time shall be converted into and become one fully paid
and nonassessable share of common stock, par value $.01 per
share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Other Quantum
Common Stock. All shares of Quantum Common Stock and all other
shares of capital stock of Quantum that are owned by Quantum as
treasury stock and any shares of Quantum Common Stock or other
shares of capital stock of Quantum owned by Quantum, Olsten or
any wholly-owned Subsidiary of Olsten, shall be canceled and
retired and shall cease to exist and no stock of Olsten or of
Merger Sub or other consideration shall be delivered in exchange
therefor. As used in this Agreement, the word "Subsidiary" of
any party means any corporation or other organization, whether
incorporated or unincorporated, of which (i) such party or any
other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by
such party or any Subsidiary of such party do not have a majority
of the voting interests in such partnership) or (ii) at least a
majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its
Subsidiaries.
(c) Dissenting Shares. (i) Notwithstanding any
provision of this Agreement to the contrary, any shares of
Quantum Common Stock held by a holder who has demanded and
perfected his demand for appraisal of such Quantum Common Stock
in accordance with the DGCL and as of the Effective Time has not
effectively withdrawn or lost such right to appraisal
("Dissenting Shares"), shall not be converted into or represent a
right to receive shares of Class B Stock (and cash in lieu of
fractional shares of Class B Stock as contemplated by Section
2.2(e)) for such shares of Quantum Common Stock pursuant to
Section 2.1(a), but the holder thereof shall only be entitled to
such rights as are granted by the DGCL.
(ii) Notwithstanding the provisions of Section
2.1(c)(i), if any holder of shares of Quantum Common Stock who
demands appraisal of such Quantum Common Stock under the DGCL
shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to appraisal, then, as of the Effective Time
or the occurrence of such event, whichever last occurs, such
holder's shares of Quantum Common Stock shall automatically be
converted into and represent only the right to receive the shares
of Class B Stock (and cash in lieu of fractional shares of Class
B Stock as contemplated by Section 2.2(e)) to be issued or paid
in consideration therefor for such Quantum Common Stock as
provided in Section 2.1(a), without interest thereon, upon
surrender of the certificate or certificates representing such
shares of Quantum Common Stock in accordance with Section 2.2.
(iii) Quantum shall give Olsten (A) prompt notice
of any written demands for appraisal of any shares of Quantum
Common Stock, withdrawals of such demands, and any other
instruments served pursuant to the DGCL and received by Quantum
and (B) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the DGCL.
Quantum shall not, except with the prior written consent of
Olsten, voluntarily make any payment with respect to any demands
for appraisal of any shares of Quantum Common Stock or offer to
settle or settle any such demands.
Section 2.2 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Olsten
shall deposit, or shall cause to be deposited, with Chemical
Mellon Shareholder Services L.L.C., or such other bank or trust
company which shall be mutually acceptable to the parties hereto
(the "Exchange Agent"), for the benefit of holders of shares of
Quantum Common Stock, for exchange in accordance with this
Section 2.2, through the Exchange Agent, certificates
representing the shares of the Class B Stock (such shares of
Class B Stock, together with (i) any dividends or distributions
with respect thereto with a record date after the Effective Time
and (ii) any cash delivered to the Exchange Agent to be delivered
in lieu of fractional shares as contemplated by Section 2.2(e),
being hereinafter referred to as the "Exchange Fund") issuable
pursuant to Section 2.1 in exchange for outstanding shares of
Quantum Common Stock. The Exchange Agent shall deliver, pursuant
to irrevocable instructions, the shares of Class B Stock
contemplated to be issued pursuant to Section 2.1 out of the
Exchange Fund. The Exchange Fund shall not be used for any other
purpose.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall
mail to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented
outstanding shares of Quantum Common Stock (the "Certificates")
whose shares were converted into the right to receive shares of
Class B Stock pursuant to Section 2.1: (i) a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall
be in such form and have such other provisions as Olsten and
Quantum may reasonably specify); and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for
certificates representing shares of Class B Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Olsten,
together with such letter of transmittal, duly executed, and such
other documents as may be reasonably required by the Exchange
Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor certificates representing that
number of whole shares of Class B Stock which such holder has the
right to receive pursuant to this Article II, and the Certificate
so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Quantum Common Stock which is not
registered in the transfer records of Quantum, certificates
representing the proper number of shares of Class B Stock may be
issued to a transferee if the Certificate representing such
Quantum Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes
have been paid. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after
the Effective Time to represent only the right to receive upon
such surrender one or more certificates representing shares of
Class B Stock and cash in lieu of any fractional shares of Class
B Stock as contemplated by this Section 2.2. The Exchange Agent
shall not be entitled to vote or exercise any rights of ownership
with respect to the Class B Stock held by it from time to time
hereunder.
(c) Distributions with Respect to Unexchanged Shares.
No dividends or other distributions with respect to Class B Stock
with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the
shares of Class B Stock represented thereby and no cash payment
in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.2(e) until the surrender of such
Certificate in accordance with this Section 2.2. Subject to the
effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the
Certificates representing whole shares of Class B Stock issued in
exchange therefor, without interest: (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional
share of Class B Stock to which such holder is entitled pursuant
to Section 2.2(e) and the amount of dividends or other
distributions with a record date after the Effective Time
theretofore paid with respect to such whole shares of Class B
Stock; and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the
Effective Time but prior to such surrender and with a payment
date subsequent to such surrender payable with respect to such
whole shares of Class B Stock.
(d) No Further Ownership Rights in Quantum Common
Stock. All shares of the Class B Stock issued upon the surrender
for exchange of Certificates in accordance with the terms hereof
(including any cash paid pursuant to Section 2.2(c) or 2.2(e))
shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to such shares of Quantum
Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have
been declared or made by Quantum on such shares of Quantum Common
Stock in accordance with the terms of this Agreement or prior to
the date hereof and which remain unpaid at the Effective Time,
and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares
of Quantum Common Stock which were outstanding immediately prior
to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the
Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article II.
(e) No Fractional Shares. No certificate or scrip
representing fractional shares of Class B Stock shall be issued
upon the surrender for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to
vote or to any rights of a stockholder of Olsten.
Notwithstanding any other provision of this Agreement, each
holder of shares of Quantum Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a
fraction of a share of Class B Stock (after taking into account
all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such
fractional part of a share of Class B Stock multiplied by the
Average Price. For purposes of this Agreement, "Average Price"
means the average closing price of Olsten Common Stock on the New
York Stock Exchange (the "NYSE") during the ten (10) trading days
immediately prior to the Effective Time.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed for 180 days after the
Effective Time shall be delivered to Olsten, upon demand, and any
holders of the Certificates who have not theretofore complied
with this Article II shall thereafter look only to Olsten for
delivery of certificates representing Class B Stock and any cash
in lieu of fractional shares of Class B Stock and any dividends
or distributions with respect to Class B Stock.
(g) No Liability. None of Olsten, Merger Sub, Quantum
nor the Exchange Agent shall be liable to any holder of shares of
Quantum Common Stock or Class B Stock, as the case may be, for
such shares (or dividends or distributions with respect thereto)
or cash from the Exchange Fund (or by Olsten after the Exchange
Fund has terminated) delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. At
such time as any amounts remaining unclaimed by holders of any
such shares would otherwise escheat to or become property of any
Governmental Entity (as defined in Section 3.3(c)), such amounts
shall, to the extent permitted by applicable law, become the
property of Olsten free and clear of any claims or interest of
any such holders or their successors, assigns or personal
representatives previously entitled thereto.
(h) Investment of Exchange Fund. The Exchange Agent
shall invest any cash included in the Exchange Fund, as directed
by Olsten, on a daily basis. Any interest and other income
resulting from such investments shall be paid to Olsten.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF OLSTEN AND MERGER SUB
Except as set forth in Olsten's disclosure schedule
previously delivered to Quantum (the "Olsten Disclosure
Schedule"), Olsten and Merger Sub hereby represent and warrant to
Quantum as follows:
Section 3.1 Organization, Standing and Power. All
Subsidiaries of Olsten and their respective jurisdictions of
incorporation or organization are identified on the Olsten
Disclosure Schedule. Each of Olsten's Subsidiaries which has
operations, assets or liabilities which are material to Olsten
("Material Olsten Subsidiaries") is identified as such in the
Olsten Disclosure Schedule. Each of Olsten and Merger Sub: (i)
is a corporation duly organized, validly existing and in good
standing under the laws of Delaware; (ii) has all requisite
corporate power and corporate authority to own, lease and operate
its properties and to carry on its business as now being
conducted; and (iii) is duly qualified or licensed to do business
and in good standing in each jurisdiction in which the business
it is conducting, or the operation, ownership or leasing of its
properties, makes such qualification or licensing necessary,
other than in such jurisdictions where the failure so to be in
good standing, qualified or licensed does not, individually or in
the aggregate, have a Material Adverse Effect (as defined in
Section 9.3). Each of Olsten and Merger Sub has heretofore made
available to Quantum complete and correct copies of its presently
effective Certificate of Incorporation and By-Laws.
Section 3.2 Capital Structure. (a) The authorized capital
stock of Olsten consists of 110,000,000 shares of Olsten Common
Stock, 50,000,000 shares of Class B Stock and 250,000 shares of
Preferred Stock, par value $.10 per share ("Olsten Preferred
Stock").
(b) As of April 29, 1996: (i) 50,658,702 shares of
Olsten Common Stock and 14,056,406 shares of Class B Stock were
issued and outstanding and no shares of Olsten Preferred Stock
were issued or outstanding. As of April 29, 1996: (i) 1,585,121
shares of Olsten Common Stock were reserved for issuance upon the
exercise of options; (ii) 1,323,856 shares of Class B Stock were
reserved for issuance upon the exercise of warrants (and
1,323,856 shares of Olsten Common Stock were reserved for
issuance upon conversion of such Class B Stock); (iii) no shares
of either Olsten Common Stock or Class B Stock were held by
Olsten in its treasury or by its Subsidiaries; and (iv) no bonds,
debentures, notes or other indebtedness having the right to vote
(or convertible into securities having the right to vote) on any
matters on which stockholders may vote ("Voting Debt") were
outstanding, other than $125,000,000 principal amount of 4 7/8%
Convertible Subordinated Debentures due 2003 (the "Olsten
Convertible Debentures"), which are convertible solely into
Olsten Common Stock. The Olsten Disclosure Schedule sets forth
(x) all options granted to purchase shares of Olsten Common Stock
or Class B Stock that are outstanding as of the date hereof, the
number of shares of Olsten Common Stock or Class B Stock for
which such options are exercisable and the exercise price thereof
and (y) the material terms of the outstanding warrants to
purchase Class B Stock.
(c) All outstanding shares of Olsten Common Stock and
Class B Stock are, and all shares of Class B Stock which are to
be issued pursuant to the Merger, and, after the Effective Time,
(i) upon the exercise of options under the Quantum Stock Option
Plan and Quantum Acquisition Options and (ii) upon conversion of
the Quantum Convertible Subordinated Debentures (as such terms
are defined in Section 4.2) (and all shares of Olsten Common
Stock issuable upon conversion of such Class B Stock) will be,
when issued in accordance with the respective terms thereof,
validly issued, fully paid and nonassessable and not subject to
preemptive rights. Each share of Class B Stock to be issued in
the Merger will be immediately convertible into one share of
Olsten Common Stock, which Olsten Common Stock will be freely
transferable, except as limited by applicable law. All
outstanding shares of capital stock of the Material Olsten
Subsidiaries are owned by Olsten or a direct or indirect wholly-
owned Subsidiary of Olsten, free and clear of all liens, charges,
encumbrances, claims and options of any nature. Except as set
forth in this Section 3.2 and in the Olsten SEC Documents (as
defined in Section 3.4), there are outstanding: (i) no shares of
capital stock, Voting Debt or other voting securities of Olsten;
(ii) no securities of Olsten or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock,
Voting Debt or other voting securities of Olsten or any of its
Subsidiaries; and (iii) no options, warrants, calls, rights
(including preemptive rights), commitments or agreements to which
Olsten or any of its Subsidiaries is a party or by which it is
bound obligating Olsten or any of its Subsidiaries to issue,
deliver, sell, purchase, redeem or acquire or cause to be issued,
delivered, sold, purchased, redeemed or acquired, additional
shares of capital stock or any Voting Debt or other voting
securities of Olsten or any of its Subsidiaries or obligating
Olsten or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, call, right, commitment or agreement.
There are not, as of the date hereof, and there will not be at
the Effective Time, any stockholder agreements, voting trusts or
other agreements or understandings to which Olsten is a party or
by which it is bound relating to the voting of any shares of the
capital stock of Olsten.
(d) The authorized capital stock of Merger Sub
consists of 3,000 shares of common stock, par value $.01 per
share, all of which are validly issued, fully paid and
nonassessable and are owned by Olsten.
Section 3.3 Authority Relative to this Agreement. (a)
Olsten and Merger Sub have all necessary corporate power and
corporate authority to execute and deliver this Agreement and,
subject, with respect to consummation of the Merger, to approval
of the issuance of Class B Stock pursuant to the Merger in
accordance with this Agreement (and the issuance of Olsten Common
Stock upon conversion of such Class B Stock) (the "Olsten Vote
Matter") by the affirmative vote of a majority of the votes cast
by the holders of the outstanding shares of Olsten Common Stock
and Class B Stock entitled to vote thereon, voting as a single
class (the "Olsten Vote") as required by NYSE listing
requirements, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by Olsten and Merger
Sub and the consummation by Olsten and Merger Sub of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Olsten and Merger Sub,
subject with respect to consummation of the Merger, to approval
of the Olsten Vote Matter by the Olsten Vote as required by NYSE
listing requirements. This Agreement has been duly executed and
delivered by Olsten and Merger Sub and subject, with respect to
consummation of the Merger, to approval of the Olsten Vote Matter
by the Olsten Vote as required by NYSE listing requirements, and
assuming this Agreement constitutes the valid and binding
agreement of Quantum, constitutes the legal, valid and binding
obligation of Olsten and Merger Sub, enforceable against Olsten
and Merger Sub in accordance with its terms.
(b) The execution and delivery of this Agreement by
Olsten and Merger Sub do not, and the consummation of the
transactions contemplated hereby by Olsten and Merger Sub will
not: (i) conflict with, or result in any violation or breach of,
any provision of the Certificate of Incorporation or By-Laws of
Olsten or any of the Material Olsten Subsidiaries or (ii)
assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in Section 3.3(c) are duly
and timely obtained or made and the approval of the Olsten Vote
Matter by the Olsten Vote has been obtained as required by NYSE
listing requirements, result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of
any obligation or the loss of a material benefit under, or the
creation of a lien, pledge, security interest or other
encumbrance on assets or property, right of first refusal with
respect to any asset or property (any such conflict, violation,
default, right of termination, cancellation or acceleration,
loss, creation or right of first refusal, a "Violation"), any
loan or credit agreement, note, mortgage, indenture, Olsten
Benefit Plan (as defined in Section 3.8), lease, or other
agreement, obligation, instrument, concession, franchise,
license, permit, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Olsten or any of its
Subsidiaries or their respective properties or assets, except for
such Violations that, individually or in the aggregate, do not
have a Material Adverse Effect.
(c) No consent, approval, order or authorization of,
or registration, declaration or filing with, or permit from any
court, administrative agency, commission or other governmental
authority or instrumentality, domestic or foreign (a
"Governmental Entity"), is required by or with respect to Olsten
or any of its Subsidiaries to validly execute and deliver this
Agreement on behalf of Olsten or any of its Subsidiaries or to
effect the Merger, except for: (i) the filing of a premerger
notification report under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and the
expiration of the applicable waiting period; (ii) the filing with
the Securities and Exchange Commission ("SEC") of (A) a proxy
statement in definitive form relating to the meetings of Olsten's
and Quantum's stockholders to be held in connection with the
Merger, as amended or supplemented (such definitive proxy
statement, as it may be amended or supplemented from time to
time, the "Proxy Statement"); (B) the filing and effectiveness of
a registration statement on Form S-4 under the Securities Act of
1933, as amended (the "Securities Act"), in connection with the
issuance of the Class B Stock pursuant to this Agreement and the
Olsten Common Stock issuable upon conversion of such Class B
Stock, as amended or supplemented (such registration statement,
as it may be amended or supplemented from time to time, the
"S-4"); and (C) such reports under Section 13(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and such other compliance with the Securities Act, the Exchange
Act and the rules and regulations thereunder as may be required
in connection with this Agreement and the transactions contem-
plated hereby, and the obtaining from the SEC of such orders as
may be so required; (iii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware; (iv) such
filings and approvals as may be required by applicable state
securities, "blue sky" or takeover laws; (v) such filings and
approvals as may be required by applicable state laws for the
transfer of ownership and/or licensing of healthcare operations;
and (vi) filings with, and approval of, the NYSE for the listing
of the shares of Olsten Common Stock issuable upon conversion of
the Class B Stock to be issued pursuant to the Merger (and after
the Effective Time, upon the exercise of options under the
Quantum Stock Option Plan and Quantum Acquisition Options and
upon conversion of the Quantum Convertible Subordinated
Debentures), except where the failure to obtain such consents,
approvals, order, authorizations or permits or to make such
filings does not have a Material Adverse Effect.
Section 3.4 SEC Documents; Financial Statements. (a) The
Olsten Disclosure Schedule sets forth a true and complete list of
each report, schedule, registration statement and definitive
proxy statement filed by Olsten with the SEC since December 31,
1992 (the "Olsten SEC Documents"). As of their respective dates:
(i) the Olsten SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Olsten SEC Documents and (ii) none
of the Olsten SEC Documents contained any untrue statement of a
material fact or omitted 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.
(b) The financial statements of Olsten included in the
Olsten SEC Documents (including the audited consolidated
financial statements of Olsten for the fiscal year ended December
31, 1995, included in Olsten's Annual Report on Form 10-K for the
fiscal year ended December 31, 1995) complied as to form in all
material respects with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Rule 10-01 of Regulation S-X of the
SEC) and fairly present in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments) the
consolidated financial position of Olsten and its consolidated
Subsidiaries as at their respective dates and the consolidated
results of operations and the consolidated cash flows of Olsten
and its consolidated Subsidiaries for the periods then ended in
all material respects.
Section 3.5 Information Supplied. None of the information
supplied or to be supplied by Olsten for inclusion or
incorporation by reference in (i) the S-4 will, at the time the
S-4 is filed with the SEC and at the time it becomes effective
under the Securities Act or at the Effective Time, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) the Proxy Statement
will, at the date mailed to stockholders of Olsten and Quantum
and at the times of any meetings of stockholders to be held in
connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made,
not misleading. The Proxy Statement, insofar as it relates to
Olsten or Merger Sub or other information supplied by Olsten for
inclusion therein, will comply as to form in all material
respects with the provisions of the Exchange Act and the rules
and regulations thereunder, and the S-4, insofar as it relates to
Olsten or Merger Sub or other information supplied by Olsten for
inclusion therein, will comply as to form in all material
respects with the provisions of the Securities Act and the rules
and regulations thereunder.
Section 3.6 Absence of Certain Changes or Events. From
December 31, 1995 to the date hereof, Olsten and the Material
Olsten Subsidiaries have conducted their businesses only in the
ordinary course in all material respects and in a manner
consistent with past practice and, since such date to the date
hereof, there has not been: (i) any change in the business,
results of operations, financial condition, assets or liabilities
of Olsten or any of its Subsidiaries having a Material Adverse
Effect; (ii) any material change in accounting methods,
principles or practices by Olsten; (iii) any revaluation in
material amounts by Olsten of any of its assets, including
writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of
business; or (iv) any declaration, setting aside or payment of
any dividends or distributions in respect of the shares of its
capital stock or any issuance, sale, transfer by Olsten, or
commitment to issue, sell or transfer any shares of its capital
stock or any redemption, purchase or other acquisition of any of
its securities, in each case except (w) pursuant to the exercise
of options and warrants outstanding as of December 31, 1995, (x)
as described in the Olsten SEC Documents, (y) the redemption of
the Olsten Convertible Subordinated Debentures and (z) for the
declaration and payment of regular quarterly cash dividends.
Section 3.7 Litigation. As of the date hereof, there are
(i) no actions, proceedings or claims pending, and (ii) to the
knowledge of Olsten, no investigations pending, or actions,
proceedings, claims or investigations threatened, in any case,
against Olsten or any of its Subsidiaries, before any
Governmental Entity which, if adversely decided, individually or
in the aggregate would have a Material Adverse Effect. As of the
date hereof, neither Olsten nor any of its Subsidiaries nor any
of their property is subject to any order, judgment, injunction,
decree which, individually or in the aggregate, has a Material
Adverse Effect.
Section 3.8 Benefit Plans. Each "employee benefit plan",
as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") ("Olsten Benefit
Plans"), maintained by Olsten and its Subsidiaries complies, in
form and operation, in all material respects, with all applicable
laws, except as such noncompliance does not have a Material
Adverse Effect. No "reportable event" or "prohibited
transaction" (as such terms are defined in ERISA) or termination
has occurred with respect to any Olsten Benefit Plan under
circumstances that present a risk of any material liability to
any Governmental Entity or other person.
Section 3.9 Compliance with Law. (a) To the knowledge of
Olsten, each of Olsten and the Material Olsten Subsidiaries: (i)
is in compliance with in all material respects all laws,
regulations, rules, reporting, licensing, certification,
registration, qualification, certificate of need, claims,
governmental payor and/or program requirements applicable to its
business or employees conducting its business (including, without
limitation, any federal, state or local laws, statutes,
regulations or ordinances, and any judicial or administrative
orders or judgments thereunder and the common law, pertaining to
all anti-kickback, self-referral, false claims, health,
industrial hygiene and environmental laws, including the
handling, storage, transportation and disposition of biomedical
waste, any regulated waste, hazardous or toxic substances or
other products or materials used by Olsten and its Subsidiaries
in the operations of their respective businesses) the breach or
violation of which, individually or in the aggregate, has a
Material Adverse Effect; and (ii) has received no notification or
communication from any Governmental Entity (A) asserting that
Olsten or any of the Material Olsten Subsidiaries is not or has
not been in compliance in all material respects with any of the
statutes, regulations or rules, or reporting, licensing,
certification, registration, qualification, certificate of need,
claims, governmental payor and/or program requirements that such
Governmental Entity enforces, which noncompliance has a Material
Adverse Effect, or (B) threatening to revoke any license,
franchise, permit or authorization of any Governmental Entity
(the "Olsten Permits"), which revocation has a Material Adverse
Effect.
(b) To the knowledge of Olsten, neither Olsten nor any
of its Subsidiaries has been in violation of any environmental
law with respect to any previously owned or leased or subleased
property during the period of time such properties were leased or
owned or occupied by Olsten or any of its Subsidiaries, including
any federal, state or local laws, statutes, regulations,
ordinances, and any judicial or administrative orders or
judgments thereunder and the common law, pertaining to health,
industrial hygiene, the handling, storage, transportation, and
disposition of biomedical waste, any regulated waste or hazardous
or toxic substances or other products or materials used by Olsten
and its Subsidiaries in the operations of their respective
businesses, the breach or violation of which would have a
Material Adverse Effect.
(c) To the knowledge of Olsten, no audit, inquiry,
action or proceeding in connection with Medicare, Medicaid or
other governmental third-party payor programs is pending or, to
the knowledge of Olsten, threatened that may result in the
revocation, modification, nonrenewal or suspension of any Olsten
Permits, the issuance of any cease-and-desist order, or the
imposition of any administrative or judicial sanction or the
recovery for overpayment, except as would not have a Material
Adverse Effect. Neither Olsten nor any of its Subsidiaries has
received notice of, or has knowledge of, any threatened or
impending investigation, government audit or inquiry in
connection with Medicare, Medicaid or other governmental
third-party payor programs, in any case that would have a
Material Adverse Effect.
Section 3.10 Opinion of Financial Adviser. Olsten has
received the opinion of Smith Barney Inc. dated the date of this
Agreement to the effect that, as of such date, the Conversion
Number is fair, from a financial point of view, to Olsten. Such
opinion has not been withdrawn, revoked or in any material
respect modified.
Section 3.11 Accounting Matters. To the knowledge of
Olsten, neither Olsten nor any of its affiliates has, through the
date of this Agreement, taken or agreed to take any action that
(without giving effect to any action taken or agreed to be taken
by Quantum or any of its affiliates) would prevent Olsten from
accounting for the business combination to be effected by the
Merger as a "pooling of interests." As used in this Agreement,
except as otherwise specifically provided herein, the term
"affiliate" has the meaning ascribed to it in Regulation 12b-2
promulgated under the Exchange Act. To the knowledge of Olsten,
there are no "tainted shares" as such term is described in APB
No. 16 with respect to Olsten and its Subsidiaries.
Section 3.12 No Undisclosed Material Liabilities. From
December 31, 1995 through the date hereof, neither Olsten nor any
of its Subsidiaries has incurred any liabilities of any kind
whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, other than: (i) liabilities disclosed
in the Olsten SEC Documents filed since December 31, 1995; (ii)
liabilities incurred in the ordinary course of business
consistent with past practice since December 31, 1995; (iii)
liabilities under this Agreement; and (iv) liabilities which,
individually or in the aggregate, do not have a Material Adverse
Effect.
Section 3.13 Vote Required; Voting Agreement. The only
vote of the holders of any classes or series of Olsten capital
stock necessary to approve and adopt this Agreement is approval
of the Olsten Vote Matter by the Olsten Vote. Pursuant to the
Voting Agreement (the "Voting Agreement") dated as of the date
hereof among certain beneficial owners of Class B Stock (the
"Majority Holders") and Quantum, the Majority Holders have agreed
to vote in favor of the Olsten Vote Matter votes that are
presently sufficient, and will be sufficient at the time of the
meeting to be held on the Olsten Vote Matter (the "Olsten
Meeting"), to approve the Olsten Vote Matter by the Olsten Vote.
Each of the Majority Holders is: (i) the beneficial owner of the
number of shares of Class B Stock shown as beneficially owned by
such Majority Holder in the Voting Agreement and (ii) has the
right to vote such shares of Class B Stock at the Olsten Meeting
with respect to the Olsten Vote Matter.
Section 3.14 Ownership of Quantum Common Stock. None of
Olsten nor, to the knowledge of Olsten, any affiliates of Olsten,
owns any Quantum Common Stock or other securities convertible
into Quantum Common Stock.
Section 3.15 Merger Sub. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby.
Merger Sub is, and shall be on the Closing Date, a wholly owned
subsidiary of Olsten. Except for obligations or liabilities
incurred in connection with its incorporation or organization and
the transactions contemplated hereby, Merger Sub has not incurred
any obligations or liabilities or engaged in any business or
activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person or entity.
Section 3.16 Section 203 of the DGCL Not Applicable.
Section 203 of the DGCL will not, prior to the termination of
this Agreement, apply to this Agreement, the Merger or the
transactions contemplated hereby.
Section 3.17 Affiliates. The Olsten Disclosure Schedule
sets forth a list of all persons who are, to the knowledge of
Olsten at the date hereof, "affiliates" of Olsten for purposes of
Rule 145 under the Securities Act ("Olsten Affiliates").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF QUANTUM
Except as set forth in Quantum's disclosure schedule
previously delivered to Olsten (the "Quantum Disclosure
Schedule"), Quantum hereby represents and warrants to Olsten and
to Merger Sub as follows:
Section 4.1 Organization, Standing and Power. All
Subsidiaries of Quantum and their respective jurisdictions of
incorporation or organization and the jurisdictions in which
Quantum or any of the Material Quantum Subsidiaries (as defined
below) are qualified or licensed to do business are identified in
the Quantum Disclosure Schedule. Each of Quantum's Subsidiaries
which has operations, assets or liabilities that are material to
Quantum ("Material Quantum Subsidiaries") is identified as such
in the Quantum Disclosure Schedule. Each of Quantum and the
Material Quantum Subsidiaries: (i) is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation; (ii) has all requisite
corporate power and corporate authority to own, lease and operate
its properties and to carry on its business as now being
conducted; and (iii) is duly qualified or licensed to do business
and in good standing in each jurisdiction in which the business
it is conducting, or the operation, ownership or leasing of its
properties, makes such qualification or licensing necessary,
other than in such jurisdictions where the failure so to be in
good standing, qualified or licensed does not, individually or in
the aggregate, have a Material Adverse Effect. Quantum has
heretofore made available to Olsten complete and correct copies
of the presently effective Certificate of Incorporation and
By-Laws of Quantum and the Material Quantum Subsidiaries.
Section 4.2 Capital Structure. (a) The authorized capital
stock of Quantum consists of 60,000,000 shares of Quantum Common
Stock and 6,277,778 shares of Preferred Stock, par value $.01 per
share (the "Quantum Preferred Stock").
(b) As of April 29, 1996, 15,821,163 shares of Quantum
Common Stock were issued and 15,152,163 were outstanding, no
shares of Quantum Preferred Stock were issued or outstanding and
3,600,000 shares of Quantum Common Stock were reserved for
issuance pursuant to Quantum's 1991 Restated Stock Option Plan
(the "Quantum Stock Option Plan") and Quantum's 1991 Employee
Stock Purchase Plan (the "Quantum Stock Purchase Plan", and
collectively with the Quantum Stock Option Plan, the "Quantum
Stock Plans"). As of April 29, 1996 (i) options for up to
1,065,303 shares of Quantum Common Stock were granted and
outstanding pursuant to the Quantum Stock Option Plan and the
special grants of options in connection with Quantum's
acquisitions of Factor Care Plus, Inc. and Commonwealth Care,
Inc., as disclosed in Section 4.2(c) of the Quantum Disclosure
Schedule (the "Quantum Acquisition Options"), and 363,129 shares
of Quantum Common Stock remain available for issuance pursuant to
the Quantum Stock Plans; (ii) 500,000 shares of Quantum Preferred
Stock are designated Series A Junior Participating Preferred
Stock ("Series A Preferred Stock") and are reserved for issuance
pursuant to the Rights Agreement dated as of February 24, 1994
between Quantum and U.S. Stock Transfer Corporation (the "Quantum
Rights Agreement"); (iii) 669,000 shares of Quantum Common Stock
were held by Quantum in its treasury or by its wholly-owned
Subsidiaries and (iv) no Voting Debt was issued or outstanding,
other than $86,250,000 principal amount of 4 3/4% Convertible
Subordinated Debentures due 2000 having a conversion price of
$30.31 per share (the "Quantum Convertible Subordinated
Debentures").
(c) All outstanding shares of Quantum Common Stock are
and all shares of Quantum Common Stock which may be issued
pursuant to the Quantum Stock Plans and the Quantum Acquisition
Options and upon conversion of the Quantum Convertible
Subordinated Debentures will be, when issued in accordance with
the respective terms thereof, validly issued, fully paid and
nonassessable and not subject to preemptive rights. All
outstanding shares of capital stock of the Material Quantum
Subsidiaries are owned by Quantum or a direct or indirect
wholly-owned Subsidiary of Quantum, free and clear of all liens,
charges, encumbrances, claims and options of any nature. The
Quantum Disclosure Schedule sets forth all options granted
pursuant to the Quantum Stock Option Plan which are outstanding
as of the date hereof, the number of shares of Quantum Common
Stock for which such options are exercisable, the option exercise
price, the identity of the optionee and which of such options are
incentive stock options and which are non-qualified stock
options. Except as set forth in this Section 4.2, there are
outstanding: (i) no shares of capital stock, Voting Debt or
other voting securities of Quantum; (ii) no securities of Quantum
or any of its Subsidiaries convertible into or exchangeable for
shares of capital stock, Voting Debt or other voting securities
of Quantum or any of its Subsidiaries and (iii) no options,
warrants, calls, rights (including preemptive rights),
commitments or agreements to which Quantum or any of its
Subsidiaries is a party or by which it is bound obligating
Quantum or any of its Subsidiaries to issue, deliver, sell,
purchase, redeem or acquire or cause to be issued, delivered,
sold, purchased, redeemed or acquired, additional shares of
capital stock or any Voting Debt or other voting securities of
Quantum or any of its Subsidiaries or obligating Quantum or any
of its Subsidiaries to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. There are
not as of the date hereof, and there will not be at the Effective
Time, any stockholder agreements, voting trusts or other
agreements or understandings to which Quantum is a party or by
which it is bound relating to the voting of any shares of the
capital stock of Quantum.
Section 4.3 Authority Relative to this Agreement. (a)
Quantum has all necessary corporate power and corporate authority
to execute and deliver this Agreement and, subject with respect
to consummation of the Merger, to approval of this Agreement by
the affirmative vote of the holders of a majority of the
outstanding shares of Quantum Common Stock entitled to vote
thereon (the "Quantum Vote"), to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate
action on the part of Quantum, subject, with respect to
consummation of the Merger, to approval of this Agreement by the
Quantum Vote. This Agreement has been duly executed and
delivered by Quantum and, subject, with respect to consummation
of the Merger, to approval of this Agreement by the Quantum Vote,
and assuming this Agreement constitutes the valid and binding
agreement of Olsten and Merger Sub, constitutes the valid and
binding obligation of Quantum, enforceable against Quantum in
accordance with its terms.
(b) The execution and delivery of this Agreement by
Quantum do not, and the consummation of the transactions
contemplated hereby by Quantum will not: (i) conflict with, or
result in any violation or breach of any provision of, the
Certificate of Incorporation or By-Laws of Quantum or any of the
Material Quantum Subsidiaries or (ii) assuming the consents,
approvals, authorizations or permits and filings or notifications
referred to in Section 4.3(c) are duly and timely obtained or
made and the approval of this Agreement by the Quantum Vote has
been obtained, result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, Quantum Benefit Plan
(as defined in Section 4.9) or other agreement, obligation,
instrument, concession, franchise, license, Quantum Permit (as
defined in Section 4.11) judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Quantum or any of its
Subsidiaries or their respective properties or assets, except for
such Violations that, individually or in the aggregate, do not
have a Material Adverse Effect.
(c) No consent, approval, order or authorization of,
or registration, declaration or filing with, or permit from any
Governmental Entity, is required by or with respect to Quantum or
any of its Subsidiaries to validly execute and deliver this
Agreement on behalf of Quantum by Quantum or to effect the
Merger, except for: (i) the filing of a premerger notification
report under the HSR Act, and the expiration of the applicable
waiting period; (ii) the filing with the SEC of (A) the Proxy
Statement and (B) such reports under Section 13(a) of the
Exchange Act, and such other compliance with the Exchange Act and
the rules and regulations thereunder, as may be required in
connection with this Agreement and the transactions contemplated
hereby; (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware; (iv) such filings
and approvals as may be required by the applicable state
securities, "blue sky" or takeover laws; (v) such filings and
approvals as may be required by applicable state laws for the
transfer of ownership and/or licensing of healthcare operations;
and (vi) the satisfaction of the requirements of (including,
without limitation, the delivery of notices and instruments
required by the terms of) the Indenture dated as of October 8,
1993 between Quantum and First Trust National Association, as
Trustee (the "Quantum Indenture"), pursuant to which the Quantum
Convertible Subordinated Debentures were issued, except where the
failure to obtain such consents, approvals, orders,
authorizations or permits or to make such filings does not have a
Material Adverse Effect.
Section 4.4 SEC Documents; Financial Statements. (a) The
Quantum Disclosure Schedule sets forth a true and complete list
of each report, schedule, registration statement and definitive
proxy statement filed by Quantum with the SEC since December 31,
1992 (the "Quantum SEC Documents"). As of their respective
dates: (i) the Quantum SEC Documents complied in all material
respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations
of the SEC thereunder applicable to such Quantum SEC Documents
and (ii) none of the Quantum SEC Documents contained any untrue
statement of a material fact or omitted 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.
(b) The financial statements of Quantum included in
the Quantum SEC Documents (including the audited consolidated
financial statements of Quantum for the fiscal year ended
December 31, 1995, included in Quantum's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 (the "Quantum
10-K")) complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Rule 10-01 of Regulation S-X of the
SEC) and fairly present in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments) the
consolidated financial position of Quantum and its consolidated
Subsidiaries as at their respective dates and the consolidated
results of operations and the consolidated cash flows of Quantum
and its consolidated Subsidiaries for the periods then ended in
all material respects.
Section 4.5 Information Supplied. None of the information
supplied or to be supplied by Quantum for inclusion or
incorporation by reference in: (i) the S-4 will, at the time the
S-4 is filed with the SEC and at the time it becomes effective
under the Securities Act or at the Effective Time, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading; and (ii) the Proxy Statement
will, at the date mailed to Olsten's and Quantum's stockholders
and at the respective times of any meetings of stockholders to be
held in connection with the Merger or at the Effective Time,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The
Proxy Statement, insofar as it relates to Quantum or Subsidiaries
of Quantum or other information supplied by Quantum for inclusion
therein, will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations
thereunder, and the S-4, insofar as it relates to Quantum or its
Subsidiaries or other information supplied by Quantum for
inclusion therein, will comply as to form in all material
respects with the provisions of the Securities Act and the rules
and regulations thereunder.
Section 4.6 Absence of Certain Changes or Events. From
December 31, 1995 to the date hereof, Quantum and the Material
Quantum Subsidiaries have conducted their businesses only in the
ordinary course in all material respects and in a manner
consistent with past practice and, since such date to the date
hereof, except as set forth in the Quantum SEC Documents, there
has not been: (i) any change in the business, results of
operations, financial condition, assets or liabilities of Quantum
or any of its Subsidiaries having a Material Adverse Effect; (ii)
any material change in accounting methods, principles or
practices by Quantum; (iii) any revaluation in material amounts
by Quantum of any of its assets, including writing down the value
of inventory or writing off notes or accounts receivable other
than in the ordinary course of business; (iv) any declaration,
setting aside or payment of any dividends or distributions in
respect of the shares of its capital stock or any issuance, sale,
transfer by Quantum, or commitment to issue, sell or transfer any
shares of its capital stock or any redemption, purchase or other
acquisition of any of its securities other than pursuant to the
Quantum Stock Plans and the Quantum Acquisition Options, in each
case as set forth on the Quantum Disclosure Schedule; (v) any
increase in or establishment of any Quantum Benefit Plan (as
defined in Section 4.9 hereof), including, without limitation,
any bonus, insurance, severance, welfare, deferred compensation,
profit sharing, stock option (including the granting of stock
options, stock appreciation rights, performance awards, or
restricted stock awards), stock purchase or other employee
benefit plan; or (vi) except in the ordinary course of business
consistent with past practice, any other increase in the
compensation payable or to become payable to officers or
employees of Quantum or any of its Subsidiaries.
Section 4.7 Litigation. As of the date hereof, there are
(i) no actions, proceedings or claims pending and (ii) to the
knowledge of Quantum, no investigations pending, or actions,
proceedings, claims or investigations threatened, in any case,
against Quantum or any of its Subsidiaries, or any properties or
rights of Quantum or any of its Subsidiaries, before any
Governmental Entity which, if adversely decided, individually or
in the aggregate, would have a Material Adverse Effect. As of
the date hereof, neither Quantum nor any of its Subsidiaries nor
any of their property is subject to any order, judgment,
injunction or decree which, individually or in the aggregate, has
a Material Adverse Effect. With respect to the pending class
action lawsuits discussed in Item 3 of the Quantum 10-K other
than the lawsuit entitled Louis Goldstein v. Quantum Health
Resources, Inc., et al. (collectively, the "Class Action
Litigation"), Quantum has executed a memorandum of understanding
with all of the plaintiffs in the Class Action Litigation (the
"Memorandum"), a true, correct and complete copy of which has
been delivered to Olsten. Other than as set forth in the
Memorandum, there are no arrangements, agreements or
understandings between Quantum and any of such plaintiffs, any of
their counsel or any members of the putative classes they purport
to represent, with respect to the Class Action Litigation or the
subject matter thereof. The Memorandum has been duly approved by
Quantum's Board of Directors (the "Quantum Board"), has been
executed by all parties thereto and is a valid and binding
agreement of Quantum, enforceable in accordance with its terms.
Section 4.8 Taxes. Quantum and each of its Subsidiaries
have filed all tax returns required to be filed by any of them
(including estimated tax returns), have properly determined the
taxes due on such returns and have paid (or Quantum has paid on
its behalf) all taxes required to be paid as shown on such
returns, except as would not have a Material Adverse Effect. The
most recent financial statements contained in the Quantum SEC
Documents reflect an adequate reserve for all taxes payable by
Quantum and its Subsidiaries accrued through the date of such
financial statements. All deficiencies for any taxes which have
been proposed, asserted or assessed against Quantum or any of its
Subsidiaries have been fully paid, or are fully reflected as a
liability in such financial statements, or are being contested
and an adequate reserve therefor has been established and is
fully reflected in such financial statements. There are no liens
for taxes (other than for current taxes not yet due and payable)
on the assets of Quantum or its Subsidiaries. The federal, state
and foreign income tax returns of Quantum and each of its
Subsidiaries have been examined by and settled with the Internal
Revenue Service (the "IRS") or other applicable taxing authority,
or the statute of limitations with respect to such years has
expired, for all years through 1991. There has been no waiver or
extension of the statute of limitations for the assessment of any
tax for any taxable year. Neither Quantum nor any of the
Material Quantum Subsidiaries is a party to or bound by any
agreement providing for the allocation or sharing of taxes.
Neither Quantum nor, to its knowledge, any of the Material
Quantum Subsidiaries has filed a consent pursuant to or agreed to
the application of Section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code"). No deficiency for any taxes has
been proposed, asserted or assessed with respect to Quantum or
any of the Material Quantum Subsidiaries, no audit or other
examination of the tax returns of Quantum or any of the Material
Quantum Subsidiaries is currently in progress and no facts exist
to the knowledge of Quantum which constitute grounds for the
assessment of any additional taxes with respect to Quantum or any
of its affiliates. Each of Quantum and its Subsidiaries has
disclosed on its federal income tax returns all positions taken
therein that could give rise to a substantial understatement of
federal income tax within the meaning of Section 6662 of the
Code. All taxes which are required by the laws of the United
States, any state or political subdivision thereof or any foreign
country to be withheld or collected by Quantum or any of its
Subsidiaries have been duly withheld or collected and, to the
extent required, have been paid to the proper governmental
authorities or properly deposited as required by applicable laws,
except as would not have a Material Adverse Effect. None of
Quantum and its Subsidiaries (i) has been a member of an
affiliated group filing a consolidated federal income tax return
(other than a group the common parent of which was Quantum) or
(ii) has any liability for the taxes of any person (other than
any of Quantum and its Subsidiaries) under Treas. Reg. Section 1.1502-6
(or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise. For purposes
of this Agreement, the term tax (including, with correlative
meaning, the terms "taxes" and "taxable") shall include all
federal, state, local, and foreign income, profits, franchise,
gross receipts, payroll, sales, employment, use, property,
withholding, excise and other taxes, duties, or assessments of
any nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts.
Section 4.9 Benefit Plans. (a) The Quantum Disclosure
Schedule contains a true and complete list of each: (i) pension,
retirement, savings, profit sharing, stock bonus, deferred
compensation, bonus, incentive compensation, stock option,
restricted stock, stock purchase, stock appreciation right,
salary continuation, severance or termination pay, medical,
hospital, dental, cafeteria, flexible spending, dependent care,
life or other insurance, disability, fringe benefit, vacation
pay, sick pay, holiday, unemployment, employee loan, educational
assistance or other employee benefit plan or program, agreement
or arrangement and (ii) employment, consulting or severance
agreement, in each case, whether written or oral, covering
current or former employees, directors or agents of Quantum or
its Subsidiaries and maintained, sponsored or contributed to by
Quantum or any of its Subsidiaries, or with respect to which
Quantum or any of its Subsidiaries may be a party or otherwise
have any material liability (including, but not limited to, any
"employee benefit plans", as defined in Section 3(3) of ERISA
(all the foregoing being herein called "Quantum Benefit Plans")).
With respect to the Quantum Benefit Plans, individually and in
the aggregate, Quantum has made available to Olsten a true and
correct copy of (i) the most recent annual report (Form 5500)
filed with the IRS, (ii) such Quantum Benefit Plan, (iii) any
summary plan description relating to such Quantum Benefit Plan,
(iv) each trust agreement, insurance contract, annuity contract
or other funding vehicle or investment contract relating to a
Quantum Benefit Plan, (v) the most recent actuarial report or
valuation, (vi) the latest IRS determination letter and any other
IRS ruling relating to a Quantum Benefit Plan and (vii) the
premium expenses and claims experience for Quantum's medical plan
for the three most recent fiscal years.
(b) Each Quantum Benefit Plan complies, in form and
operation, in all material respects, with all applicable laws.
No event has occurred with respect to the Quantum Benefit Plans
(or, to the knowledge of Quantum, any "employee benefit plan" (as
defined in Section 3(3) of ERISA), whether or not terminated,
currently or formerly maintained or contributed to by any entity
which was at any time under common control, determined under
Section 414(b), (c), (m) or (o) of the Code, with Quantum or its
Subsidiaries), and there exists no condition or set of
circumstances with respect to such plans in connection with which
Quantum or any of its Subsidiaries could be subject to any
material liability under ERISA, the Code or any other applicable
statute, order or governmental rule or regulation.
(c) Each of the Quantum Benefit Plans and related
trusts that is intended to be qualified under Section 401(a) of
the Code and exempt from tax under Section 501(a) of the Code has
been determined by the IRS to be so qualified and exempt and, to
the knowledge of Quantum and its Subsidiaries, nothing has
occurred since such determination to cause any of such Quantum
Benefit Plans and related trusts not to qualify under Section
401(a) of the Code or be exempt under Section 501(a) of the Code.
(d) With respect to the Quantum Benefit Plans,
individually and in the aggregate, all required material returns,
reports and descriptions have been appropriately filed and
distributed.
(e) With respect to the Quantum Benefit Plans,
individually and in the aggregate, there has been no prohibited
transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code, or any liability for taxes or breach of
fiduciary duty and there is no action, suit, grievance,
arbitration or other claim with respect to the administration or
investment of assets of the Quantum Benefit Plans (other than
routine claims for benefits made in the ordinary course of plan
administration) pending, or to the knowledge of Quantum and its
Subsidiaries, threatened, that would result in material liability
to Quantum or its Subsidiaries, and Quantum and its Subsidiaries
have no knowledge of any facts which are reasonably likely to
give rise to any such action, suit, grievance or other claim.
(f) Neither Quantum nor any of its Subsidiaries
currently maintains, sponsors, or contributes to (or is required
to contribute to) any "defined benefit plan" as defined in
Section 3(35) of ERISA, "multiemployer plan" as defined in
Section 3(37) of ERISA, or "multiple employer plan" within the
meaning of Sections 4063 or 4064 of ERISA.
(g) With respect to the Quantum Benefit Plans,
individually and in the aggregate, there are no funded benefit
obligations for which contributions are due and have not been
made.
(h) No Quantum Benefit Plan or other contract or
agreement to which Quantum or any of its Subsidiaries is a party
provides life, medical, dental or hospital benefits to retirees
or other terminated employees of Quantum or its Subsidiaries or
their dependents, other than continuation coverage mandated by
Section 4980B of the Code or any state law requiring similar
continuation coverage.
Section 4.10 Labor Relations. None of the employees of
Quantum and its Subsidiaries is represented by any labor union.
To the knowledge of Quantum and its Subsidiaries, there is no
activity involving any employees of Quantum or any of the
Material Quantum Subsidiaries seeking to certify a collective
bargaining unit or engaging in any other organizational activity.
Section 4.11 Compliance with Law. (a) To the knowledge
of Quantum, each of Quantum and the Material Quantum
Subsidiaries: (i) is in compliance with in all material respects
all laws, regulations, rules, reporting, licensing,
certification, registration, qualification, certificate of need,
claims, governmental payor and/or program requirements applicable
to its business or employees conducting its business (including,
without limitation, any federal, state or local laws, statutes,
regulations or ordinances, and any judicial or administrative
orders or judgments thereunder and the common law, pertaining to
all anti-kickback, self-referral, false claims, health,
industrial hygiene and environmental laws, including the
handling, storage, transportation and disposition of biomedical
waste, any regulated waste, hazardous or toxic substances or
other products or materials used by Quantum and its Subsidiaries
in the operations of their respective businesses) the breach or
violation of which, individually or in the aggregate, has a
Material Adverse Effect; and (ii) has received no notification or
communication from any Governmental Entity (A) asserting that
Quantum or any of the Material Quantum Subsidiaries is not or has
not been in compliance in all material respects with any of the
statutes, regulations or rules, or reporting, licensing,
certification, registration, qualification, certificate of need,
claims, governmental payor and/or program requirements that such
Governmental Entity enforces, which noncompliance has a Material
Adverse Effect, or (B) threatening to revoke any license,
franchise, permit or authorization of any Governmental Entity
(the "Quantum Permits"), which revocation has a Material Adverse
Effect.
(b) To the knowledge of Quantum, neither Quantum nor
any of its Subsidiaries has been in violation of any
environmental law with respect to any previously owned or leased
or subleased property during the period of time such properties
were leased or owned or occupied by Quantum or any of its
Subsidiaries, including any federal, state or local laws,
statutes, regulations, ordinances, and any judicial or
administrative orders or judgments thereunder and the common law,
pertaining to health, industrial hygiene, the handling, storage,
transportation, and disposition of biomedical waste, any
regulated waste or hazardous or toxic substances or other
products or materials used by Quantum and its Subsidiaries in the
operations of their respective businesses, the breach or
violation of which would have a Material Adverse Effect.
(c) To the knowledge of Quantum, no audit, inquiry,
action or proceeding in connection with Medicare, Medicaid or
other governmental third-party payor programs, is pending or, to
the knowledge of Quantum, threatened that may result in the
revocation, modification, nonrenewal or suspension of any Quantum
Permits, the issuance of any cease-and-desist order, or the
imposition of any administrative or judicial sanction or the
recovery for overpayment, except as would not have a Material
Adverse Effect. Neither Quantum nor any of its Subsidiaries has
received notice of, or has knowledge of, any threatened or
impending investigation, government audit or inquiry in
connection with Medicare, Medicaid or other governmental
third-party payor programs, in any case that would have a
Material Adverse Effect.
Section 4.12 Insurance. Quantum and the Material Quantum
Subsidiaries maintain insurance against such risks and in such
amounts as Quantum reasonably believes are necessary to conduct
its business. Quantum and its Subsidiaries are not in default
with respect to any provisions or requirements of any such policy
nor have any of them failed to give notice or present any claim
thereunder in due and timely fashion, except for defaults or
failures which, individually or in the aggregate, do not have a
Material Adverse Effect. To the knowledge of Quantum, neither
Quantum nor any of its Subsidiaries have received any notice of
cancellation or termination in respect of any of its insurance
policies, except with respect to Subsidiaries of Quantum, other
than the Material Quantum Subsidiaries, as would not have a
Material Adverse Effect.
Section 4.13 Property. The Quantum Disclosure Schedule
sets forth a true, complete and accurate list and description of
all real property owned or leased by Quantum or any of its
Subsidiaries as of the date hereof, including any leasehold
estate which may been assigned by Quantum or any of it
Subsidiaries, as assignor. Such description includes, with
respect to each lease, the term thereof, the location and number
of square feet of the premises thereof and the amount of rent
payable thereunder. True, complete and accurate copies of the
leases (including, but not limited to any subleases or assignment
agreements, if any) set forth on the Quantum Disclosure Schedule
under the heading "Type I Leases" have been delivered to Olsten.
Except as described in the following sentence, each of Quantum
and the Material Quantum Subsidiaries has good, valid and
marketable title to, or a valid leasehold in, all of its
properties and assets (real, personal, mixed, tangible and
intangible), including, without limitation, all of the properties
and assets reflected in the consolidated balance sheet of Quantum
and its Subsidiaries at December 31, 1995 (except for properties
and assets disposed of in the ordinary course of business and
consistent with past practices since December 31, 1995). None of
such properties or assets are subject to any liability,
obligation, claim, lien, mortgage, pledge, security interest,
conditional sale agreement, charge or encumbrance of any kind
(whether absolute, accrued, contingent or otherwise), except for
statutory liens for payments not yet due and payable and
imperfections of title and encumbrances, if any, which are not
substantial in amount, do not materially detract from the value
of the property or assets subject thereto and do not impair the
operations of Quantum and its Subsidiaries, except as would not
have a Material Adverse Effect.
Section 4.14 Contracts. The Quantum Disclosure Schedule
lists all contracts, agreements and instruments to which Quantum
or any of its Subsidiaries is a party or by which any of them or
any of their properties or assets are bound which (a) if
terminated, canceled or materially modified, could reasonably be
expected to have a Material Adverse Effect or (b) grant
registration rights to any person or entity (collectively, the
"Quantum Contracts"). All Quantum Contracts are in full force
and effect, neither Quantum nor any of its Subsidiaries is in
breach, violation or default under any Quantum Contract, and, to
the knowledge of Quantum, no condition exists which constitutes a
breach, violation or default thereunder by Quantum or any of its
Subsidiaries or gives rise to any right of termination,
cancellation, prepayment or acceleration and Quantum is not aware
of any default by any other party to any Quantum Contract nor of
any event or condition which constitutes a breach thereunder,
except, in any such case, as would not have a Material Adverse
Effect. Quantum is not engaged in any material disputes with any
suppliers of Quantum nor are any of Quantum's Subsidiaries
engaged in any such disputes, which dispute has a Material
Adverse Effect. To the knowledge of Quantum, as of the date
hereof, no supplier is considering termination or any adverse
modification of its arrangements relating to Quantum's business
(other than terminations or modifications that occur in the
ordinary course of business as a result of supply orders being
filled).
Section 4.15 Intellectual Property. Quantum and its
Subsidiaries, other than OptimalCare, Inc. and InfoGen, Inc.,
own, possess or have the right to use (perpetually and without
payment of royalties), for the life of the proprietary right, all
franchises, patents, trademarks, service marks, tradenames,
licenses and authorizations which are necessary to their
respective businesses (collectively, "Intellectual Property
Rights"). The Quantum Disclosure Schedule sets forth a true,
correct and complete list and description of all Intellectual
Property Rights which are registered or pending registration.
Neither Quantum nor any of the Material Quantum Subsidiaries is a
licensor or licensee of any Intellectual Property Rights. All
filings and other actions necessary to perfect the rights of
Quantum and the Material Subsidiaries to its or their
Intellectual Property Rights have been duly made in all
jurisdictions where such rights are used by it or them except as
does not have a Material Adverse Effect. Neither Quantum nor any
of the Material Quantum Subsidiaries is infringing any
Intellectual Property Rights of any person or otherwise violating
the rights of any person which could subject Quantum or any of
the Material Quantum Subsidiaries to liabilities which would
prevent Quantum or any of the Material Quantum Subsidiaries from
conducting their respective businesses substantially in the
manner in which they are now being conducted and, as of the date
hereof, no claim has been made or threatened against Quantum or
any of the Material Quantum Subsidiaries alleging any such
violation, except, in each case, as does not have a Material
Adverse Effect.
Section 4.16 Related Party Transactions. Since December
31, 1995, there have been (i) no transactions between Quantum on
the one hand, and an affiliate of Quantum, on the other hand, or
(ii) no material transactions between Quantum or any of its
Subsidiaries on the one hand, and (A) a record or beneficial
owner of five percent or more of the voting securities of Quantum
or (B) an affiliate of Quantum or any such record or beneficial
owner, on the other hand, other than payment of compensation for
services rendered to Quantum or its Subsidiaries.
Section 4.17 Opinion of Financial Adviser; Arrangements
with Financial Adviser and Others. Quantum has received the
opinion of Lehman Brothers dated the date hereof to the effect
that the Conversion Number is fair, from a financial point of
view, to the holders of the Quantum Common Stock. Such opinion
has not been withdrawn, revoked or modified. Quantum does not
currently and will not in the future have any liability or
obligation (whether for the payment of fees or otherwise and
whether or not conditioned on the occurrence, existence or
absence of one or more events or circumstances), other than
pursuant to standard and customary billing arrangements, to any
person or entity arising from or relating to services provided to
Quantum or Quantum's affiliates in connection with any aspect of
the preparation or negotiation of, or the consummation of the
transactions contemplated by, this Agreement or the decision to
engage in such preparation, negotiation and consummation.
Section 4.18 Accounting Matters. To the knowledge of
Quantum, neither Quantum nor any of its affiliates has, through
the date of this Agreement, taken or agreed to take any action
that (without giving effect to any action taken or agreed to be
taken by Olsten or any of its affiliates) would prevent Olsten
from accounting for the business combination to be effected by
the Merger as a "pooling of interests".
Section 4.19 No Undisclosed Material Liabilities. From
December 31, 1995 to the date hereof, neither Quantum nor any of
its Subsidiaries has incurred any liabilities of any kind
whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, other than: (i) liabilities disclosed
in the Quantum SEC Documents filed since December 31, 1995; (ii)
liabilities incurred in the ordinary course of business
consistent with past practice since December 31, 1995; (iii)
liabilities under this Agreement; and (iv) liabilities which,
individually or in the aggregate, do not have a Material Adverse
Effect.
Section 4.20 Vote Required. The only vote of the holders
of any class or series of Quantum capital stock necessary to
approve and adopt this Agreement is the affirmative vote by the
holders of a majority of the outstanding shares of Quantum Common
Stock entitled to vote thereon.
Section 4.21 Section 203 of the DGCL Not Applicable.
Section 203 of the DGCL will not, prior to the termination of
this Agreement, apply to this Agreement, the Merger or the
transactions contemplated hereby.
Section 4.22 Quantum Rights Agreement. Neither the
execution nor delivery by Quantum of this Agreement nor the
consummation of the transactions contemplated hereby will result
in the grant to any person of any rights to purchase Series A
Preferred Stock pursuant to the Quantum Rights Agreement (the
"Quantum Stock Purchase Rights") or enable or require any Quantum
Stock Purchase Rights to be exercised, distributed or triggered.
Section 4.23 Affiliates. The Quantum Disclosure Schedule
sets forth a list of all persons who are, to the knowledge of
Quantum at the date hereof, "affiliates" of Quantum for purposes
of Rule 145 under the Securities Act ("Quantum Affiliates").
Section 4.24 Certain Agreements. Neither Quantum nor any
of its Subsidiaries is a party to any (i) agreement with any
executive officer or other employee of Quantum or any Subsidiary
the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction
involving Quantum of the nature contemplated by this Agreement or
(ii) agreement or plan (including Quantum Benefit Plans), any of
the benefits of or rights under which will be increased, or the
vesting or payment of the benefits of or rights under 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. No holder of any
option to purchase shares of Quantum Common Stock, or shares of
Quantum Common Stock granted in connection with the performance
of services for Quantum, is or will be entitled to receive cash
from Quantum in lieu of or in exchange for such option or shares
solely as a result of the transactions contemplated by this
Agreement, other than the receipt of cash in lieu of fractional
shares.
ARTICLE V.
COVENANTS OF OLSTEN AND QUANTUM PENDING THE MERGER
During the period from the date of this Agreement to the
Effective Time, Olsten and Quantum each agree as to itself and
its Subsidiaries that (except as contemplated or expressly
permitted by this Agreement or to the extent that the other party
shall otherwise agree in writing):
Section 5.1 Ordinary Course. Except as provided in Section
5.1 of the Quantum Disclosure Schedule, the businesses of Quantum
and its Subsidiaries shall be conducted only in the ordinary
course of business and in a manner consistent with past practice.
Quantum shall use all reasonable efforts to preserve
substantially intact the business organization of itself and its
Subsidiaries, to keep available the services of its present
officers, employees and consultants and to preserve its present
relationships with customers, suppliers and other persons with
which it has a significant business relationship.
Section 5.2 Governing Documents; Quantum Rights Agreement.
No party shall amend or propose to amend its certificate of
incorporation or by-laws or equivalent organizational documents,
provided that Olsten shall be permitted to make non-material
amendments to its by-laws. Quantum shall, upon not less than 10
business days' prior written notice from Olsten, redeem the
Quantum Stock Purchase Rights pursuant to the Quantum Rights
Agreement as in effect on the date hereof at a time no later than
immediately prior to the Effective Time.
Section 5.3 Issuance of Securities. Quantum shall not, nor
shall it permit any of its Subsidiaries to, issue, deliver or
sell, or authorize or propose to issue, deliver or sell, any
shares of its capital stock of any class, any Voting Debt or any
securities convertible into, or any rights, warrants or options
to acquire any such shares, Voting Debt or convertible securities
or other ownership interest, except for the issuance of Quantum
Common Stock (i) issuable pursuant to the exercise of currently
outstanding stock options, or purchase rights, as the case may
be, under the Quantum Stock Plans, as disclosed in the Quantum
Disclosure Schedule or (ii) upon the conversion of Quantum
Convertible Subordinated Debentures.
Section 5.4 Dividends; Changes in Stock. Except for the
redemption by Quantum of the Quantum Stock Purchase Rights, no
party shall, nor shall Quantum permit any of its Subsidiaries to,
nor shall any party propose to: (i) declare, set aside, make or
pay any dividend or other distribution, payable in cash, stock,
property or otherwise, with respect to any of its capital stock
(except (x) cash dividends or distributions paid on or with
respect to a class of common stock all of which shares of common
stock are owned directly or indirectly by a party and (y) in the
case of Olsten, it may continue the declaration and payment of
its regular quarterly cash dividends with usual record and
payment dates for such dividends in accordance with past dividend
practice) in an amount not to exceed $.07 per share; or (ii)
reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly any of its capital
stock. Notwithstanding anything to the contrary contained in
this Agreement, Olsten shall have the right to call for
redemption of the Olsten Convertible Debentures and to issue
Olsten Common Stock upon conversion thereof; provided, however,
that such actions shall not prevent Olsten from accounting for
the business combination to be effected by the Merger as a
"pooling of interests" under GAAP.
Section 5.5 No Solicitation. Quantum and its Subsidiaries
will not and they will use their reasonable best efforts to cause
their officers, directors, employees and any investment banker,
financial advisor, attorney, accountant or other representative
retained by Quantum or any of its Subsidiaries not to: (i)
solicit or otherwise encourage any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead
to, any Competing Transaction (as defined below in this Section
5.5), or agree to or endorse any Competing Transaction, provided
that solely the review and evaluation of a proposal that
constitutes a Competing Transaction which has not been solicited
or otherwise encouraged shall not constitute a violation of this
Section 5.5; or (ii) engage in negotiations concerning, provide
any nonpublic information to or have any discussions with, any
person relating to any Competing Transaction. As used in this
Agreement, "Competing Transaction" means any of the following
(other than the transactions between Olsten, Merger Sub and
Quantum contemplated hereunder) involving Quantum: (i) any
merger, consolidation, share exchange, recapitalization, business
combination or other similar transaction; (ii) any sale, lease,
exchange, transfer or other disposition of all or a substantial
portion of the assets of Quantum and its Subsidiaries, taken as a
whole, or of more than 25% of the equity securities of Quantum or
any of its Subsidiaries, in any case in a single transaction or
series of related transactions; (iii) any tender offer or
exchange offer for more than 25% of the outstanding shares of
capital stock of Quantum or the filing of a registration
statement under the Securities Act in connection therewith; or
(iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement by Quantum or any of its
Subsidiaries to engage in any of the foregoing. Quantum will
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, in
connection therewith, will request that confidential information
furnished by or on behalf of Quantum to any such parties be
returned to Quantum or destroyed immediately. Quantum shall
immediately notify Olsten of any negotiations, requests for
nonpublic information or discussions with respect to any
Competing Transaction and will keep Olsten fully informed of the
status and details of any such negotiations, requests or
discussions, unless the Quantum Board, after consultation with
and based upon the advice of independent legal counsel (who may
be Quantum's regularly engaged independent legal counsel),
determines in good faith that its refusal to take such action is
required for the Quantum Board to comply with its fiduciary
obligations to the holders of Quantum Common Stock under
applicable law. Notwithstanding any other provision of this
Agreement, nothing contained in this Agreement shall prohibit
Quantum or the Quantum Board: (A) from taking and disclosing to
Quantum's stockholders a position or making other disclosures
contemplated by Rule 14d-9 or 14e-2 promulgated under the
Exchange Act that, in the good faith judgment of the Quantum
Board, after consultation with and based upon the advice of
independent legal counsel (who may be Quantum's regularly engaged
independent legal counsel), is required under applicable law or
(B) from withdrawing, modifying or changing its recommendation to
Quantum's stockholders with respect to the Merger or taking,
authorizing or permitting any action or actions in response to or
in connection with any Competing Transaction, if and to the
extent that the Quantum Board determines in good faith, after
consultation with and based upon the advice of independent legal
counsel (who may be Quantum's regularly engaged independent legal
counsel), that withdrawing, modifying or changing its
recommendation to Quantum's stockholders with respect to the
Merger or taking, authorizing or permitting such action is
required for the Quantum Board to comply with its fiduciary
obligations to the holders of Quantum Common Stock under
applicable law.
Section 5.6 No Acquisitions. Quantum shall not, nor shall
it permit any of its Subsidiaries to, acquire or agree to acquire
by merging or consolidating with, or by purchasing a substantial
equity interest in or a substantial portion of the assets of, or
by any other manner, any business or any corporation, partner-
ship, association or other business organization or division
thereof or otherwise acquire or agree to acquire any material
amount of assets other than in the ordinary course of business.
Section 5.7 No Dispositions. Other than (i) as may be
required by law to consummate the transactions contemplated
hereby or (ii) dispositions in the ordinary course of business
consistent with prior practice which are not material,
individually or in the aggregate, to Quantum and its Subsidiaries
taken as a whole, Quantum shall not, nor shall it permit any of
its Subsidiaries to, sell, lease, encumber or otherwise dispose
of, or agree to sell, lease (whether such lease is an operating
or capital lease), encumber or otherwise dispose of any material
portion of its assets.
Section 5.8 Indebtedness; Leases. Quantum shall not, nor
shall it permit any of its Subsidiaries to, incur any
indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of Quantum or any of its
Subsidiaries or guarantee any debt securities of others or enter
into, cancel, surrender, amend or modify any lease or sublease
(whether such lease or sublease is an operating or capital lease)
other than in each case in the ordinary course of business.
Section 5.9 Advice of Changes; SEC Filings. Each party
shall confer on a regular and frequent basis with the other,
report on operational matters and promptly advise the other
orally and in writing of: (i) any material inaccuracy or breach
of any of its representations, warranties or covenants contained
in this Agreement and (ii) any material failure of a party or any
officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to complied with or
satisfied by it hereunder; provided, however, that the failure to
provide any such advice shall not be taken into account in
determining whether any of the conditions contained in Article
VII has been satisfied. Each party shall promptly provide the
other (or its counsel) copies of all filings made by such party
with any Governmental Entity in connection with this Agreement
and the transactions contemplated hereby.
Section 5.10 Employee Arrangements. Neither Quantum nor
any of its Subsidiaries shall: (i) increase or agree to increase
the compensation (whether cash or non-cash) payable or to become
payable or the benefits provided or to be provided to its or its
Subsidiaries' directors, officers or employees, except for: (a)
increases in salary or wages of employees other than officers of
Quantum or any of its Subsidiaries (whether in such capacity or
otherwise) in accordance with past practices and not to exceed 5%
on an annual basis; or (b) increases required by the provisions
of any Quantum Benefit Plan as in effect on the date hereof; (ii)
grant or increase the amount of any severance or termination pay
to, or enter into any employment or severance agreements with,
any officers or employees of Quantum or any of its Subsidiaries;
(iii) enter into or amend any collective bargaining agreement; or
(iv) establish, adopt, enter into or amend any employee benefit
or fringe benefit plans or arrangements for the benefit of any
directors, officers or employees, including, without limitation,
any plans or arrangements of the type set forth in Section 4.9
hereof (except for amendments to Quantum Benefit Plans (A)
necessary or appropriate to cause such Quantum Benefit Plans to
remain in compliance with applicable law, including, without
limitation, the qualification requirements of Section 401(a) of
the Code) and (B) required to comply with the terms of this
Agreement; provided, however, that nothing in this Section 5.10
shall prevent the payment or other performance of any award,
grant or commitment made prior to the date hereof and disclosed
in the Quantum SEC Documents, the Quantum Disclosure Schedule or
pursuant to this Agreement. For the purposes of this Section
5.10, the term "officer" shall mean only those persons who are
required to file Form 3 or 4 under Section 16(a) of the Exchange
Act.
Section 5.11 No Dissolution, Etc. Neither Quantum nor the
Material Quantum Subsidiaries shall authorize, recommend, propose
or announce an intention to adopt a plan of complete or partial
liquidation or dissolution.
Section 5.12 No Action. No party hereto will, nor will
either such party permit any of its Subsidiaries to, take or
agree or commit to take any action that is reasonably likely to
make any of its representations or warranties hereunder
inaccurate in any material respect at the date made (to the
extent so limited) or as of the Effective Time.
Section 5.13 Tax Returns. Quantum and the Material Quantum
Subsidiaries will file all tax returns required to be filed by
any of them (including estimated tax returns) and will pay (or
Quantum will pay on its behalf) all taxes shown as due on all
such returns prior to the Effective Time.
Section 5.14 Class Action Litigation. Quantum shall use
all reasonable efforts: (i) to finalize as soon as practicable a
definitive settlement agreement pursuant to, consistent with and
as set forth in the Memorandum (the "Settlement Agreement"),
which shall be acceptable to Olsten in all material respects;
(ii) to cause the Settlement Agreement to be filed with the court
in which the Class Action Litigation is pending, accompanied by
an appropriate motion seeking preliminary court approval of the
Settlement Agreement and (iii) to obtain preliminary court
approval of the Settlement Agreement. In connection with the
foregoing, Quantum shall consult with Olsten and its counsel on a
regular basis and shall respond promptly to all reasonable
inquiries from Olsten or its counsel.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Preparation of S-4 and Proxy Statement. Olsten
and Quantum shall as promptly as practicable prepare and file
with the SEC the Proxy Statement and Olsten shall prepare and
file with the SEC the S-4, in which the Proxy Statement will be
included as a prospectus. Olsten shall use all reasonable
efforts, and Quantum shall cooperate with Olsten, to have the S-4
declared effective by the SEC as promptly as practicable and to
keep the S-4 effective as long as is necessary to consummate the
Merger. Olsten shall, as promptly as practicable, provide copies
of any written comments received from the SEC with respect to the
S-4 to Quantum and advise Quantum of any verbal comments with
respect to the S-4 received from the SEC. Each of Olsten and
Quantum shall use all reasonable efforts to cause the Proxy
Statement to be mailed to their respective stockholders at the
earliest practicable date. Olsten shall use all reasonable
efforts to obtain all necessary state securities laws or "blue
sky" permits, approvals and registrations in connection with the
issuance of Class B Stock pursuant to this Agreement and under
the Quantum Stock Plans and the Quantum Acquisition Options. If
at any time prior to the Effective Time, any event with respect
to Olsten or any of its Subsidiaries or with respect to other
information supplied by Olsten or for inclusion in the Proxy
Statement or S-4 shall occur which is required to be described in
an amendment of, or a supplement to, the Proxy Statement or the
S-4, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required
by law, disseminated to the stockholders of Olsten and Quantum.
If at any time prior to the Effective Time, any event with
respect to Quantum or any of its Subsidiaries or with respect to
other information supplied by Quantum for inclusion in the Proxy
Statement or S-4 shall occur which is required to be described in
an amendment of, or a supplement to, the Proxy Statement or the
S-4, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required
by law, disseminated to the stockholders of Olsten and Quantum.
No amendment or supplement to the S-4 shall be made by Olsten
without the prior written approval of Quantum, such approval not
to be unreasonably withheld or delayed. Olsten shall advise
Quantum, promptly after it receives notice thereof, of the time
when the S-4 has become effective or any supplement or amendment
thereto has been filed, the issuance of any stop order, the
denial or suspension of the qualification of Class B Stock
issuable in connection with the Merger for offering or sale in
any jurisdiction or any request by the SEC for any amendment or
supplement to the S-4 or comments thereon and responses thereto
or requests by the SEC for additional information.
Section 6.2 Letters of Accountants. (a) Quantum shall use
all reasonable efforts to cause to be delivered to Olsten a
letter of Ernst & Young L.L.P., Quantum's independent auditors,
dated a date within two Business Days before the date on which
the S-4 shall become effective and addressed to Olsten, of the
kind contemplated by the Statement of Auditing Standards with
respect to Letters to Underwriters promulgated by the American
Institute of Certified Public Accountants (the "AICPA Statement")
in form and substance reasonably acceptable to Olsten and
customary in scope and substance for letters delivered by
independent public accountants in connection with registration
statements similar to the S-4. Quantum shall, and shall use its
reasonable best efforts to cause Ernst & Young L.L.P. and its
other representatives to, cooperate fully with Olsten, Coopers &
Lybrand L.L.P. and its other representatives in seeking to obtain
confirmation from the SEC that the Merger should be accounted for
as a "pooling of interests."
(b) Olsten shall use all reasonable efforts to cause
to be delivered to Quantum a letter of Coopers & Lybrand L.L.P.,
Olsten's independent auditors, dated a date within two Business
Days before the date on which the S-4 shall become effective and
addressed to Quantum, of the kind contemplated by the AICPA
Statement, in form and substance reasonably acceptable to Quantum
and customary in scope and substance for letters delivered by
independent public accountants in connection with registration
statements similar to the S-4.
Section 6.3 Accounting Matters. None of Olsten, Quantum
and any of their respective affiliates shall take or agree to
take any action or fail to take any action that would prevent
Olsten from accounting for the business combination to be
effected by the Merger as a "pooling of interests" under GAAP.
Without limitation of the foregoing, each party agrees that
neither it nor its affiliates will, and it will direct its
accountants not to, discuss with or make any written
presentations to the SEC concerning the application of pooling
accounting treatment to the business combination to be effected
by the Merger, unless such party has provided to the other party
a reasonable opportunity to participate fully in any such
discussion or presentation. Each party shall promptly notify the
other parties if at any time such party has knowledge of any fact
or circumstance which causes such party to believe that Coopers &
Lybrand will not be able to deliver the opinion letter referred
to in Section 7.1(f).
Section 6.4 Access to Information. From the date hereof to
the Effective Time, Olsten and Quantum shall each (and shall
cause each of their respective Subsidiaries to) afford to the
other, and the officers, employees, accountants, counsel and
other representatives of the other, access at all reasonable
times to its officers, employees, agents, properties, offices,
plants, other facilities and to all books and records (including
tax returns), and shall furnish to the other party all financial,
operating and other data and information as the other party,
through its officers, employees or agents, may reasonably
request; provided, however, that any such access and all such
requests shall be reasonably related to the transactions
contemplated hereby and shall not interfere unnecessarily with
normal operations. Each of Quantum and Olsten agrees that it
will not, and will cause its respective representatives not to,
use any information obtained pursuant to this Section 6.4 for any
purpose unrelated to the consummation of the transaction
contemplated by this Agreement. The Confidentiality Agreement
dated October 4, 1995 between Olsten and Quantum ("Quantum
Confidentiality Agreement") shall apply with respect to
information furnished by Quantum or its Subsidiaries and
Quantum's representatives thereunder or hereunder and any other
activities contemplated thereby. The Confidentiality Agreement
dated November 9, 1995 between Olsten and Quantum ("Olsten
Confidentiality Agreement") shall apply to information furnished
by Olsten or its Subsidiaries and Olsten's representatives
thereunder or hereunder and any other activities contemplated
thereby. The parties agree that this Agreement and the
transactions contemplated hereby shall not constitute a violation
of either the Quantum Confidentiality Agreement or the Olsten
Confidentiality Agreement.
Section 6.5 Meetings of Stockholders. Olsten and Quantum
each shall promptly take all action necessary in accordance with
the DGCL and its certificate of incorporation and by-laws to
convene meetings of their respective stockholders: (i) with
respect to Olsten, for the purpose of voting on the Olsten Vote
Matter and (ii) with respect to Quantum, for the purpose of
approving this Agreement. Olsten and Quantum will, through their
respective Boards of Directors, recommend to their respective
stockholders approval of such matters and shall use their respec-
tive reasonable best efforts to obtain approval and adoption of
this Agreement by their respective stockholders (except to the
extent the Quantum Board, after consultation with and based upon
the advice of independent legal counsel (who may be Quantum's
regularly engaged independent legal counsel), determines in good
faith that its refusal to make such recommendation is required
for the Quantum Board to comply with its fiduciary obligations to
the holders of Quantum Common Stock under applicable law).
Quantum and Olsten shall coordinate and cooperate with respect to
the timing of such meetings and shall use all reasonable efforts
to hold such meetings on the same day and as soon as practicable
after the date hereof.
Section 6.6 Legal Conditions to Merger. Each of Quantum
and Olsten will take all reasonable actions necessary to comply
promptly with all legal requirements which may be imposed on
itself with respect to the Merger (including furnishing all
information required under the HSR Act and in connection with
approvals of or filings with any Governmental Entity) and will
promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or
any of their Subsidiaries in connection with the Merger;
provided, however, that neither Olsten nor Quantum, nor their
respective Subsidiaries, shall be required by the Department of
Justice, the Federal Trade Commission or any other Governmental
Entity to hold separate, sell or otherwise dispose of any
Subsidiaries or assets or properties, the effect of any of which
would be to impair materially the value of the Merger to Olsten
or prevent the Merger from being accounted for as a "pooling of
interests".
Section 6.7 Affiliates. Prior to the Closing Date, Quantum
and Olsten shall notify each other in writing regarding any
changes in the identity of the Quantum Affiliates or the Olsten
Affiliates, as the case may be. Each of Quantum and Olsten shall
use all reasonable efforts to cause each Quantum Affiliate or
Olsten Affiliate, as the case may be, to deliver to Olsten or
Quantum, as the case may be, on or prior to the Closing Date an
agreement in substantially the form previously agreed upon (each,
an "Affiliate Agreement").
Section 6.8 Stock Exchange Listing. Prior to the Effective
Time, Olsten shall use all reasonable efforts to permit it to
issue the number of shares of Class B Stock required to be issued
pursuant to this Agreement or upon exercise of the Quantum Stock
Options or upon conversion of the Quantum Convertible
Subordinated Debentures (and to issue Olsten Common Stock upon
conversion of such authorized Class B Stock). Olsten shall use
all reasonable efforts to cause the shares of Olsten Common Stock
issuable upon conversion of the Class B Stock to be issued
pursuant to the Merger and, after the Effective Time, upon
exercise of options under the Quantum Stock Option Plan and the
Quantum Acquisition Options and upon conversion of the Quantum
Convertible Subordinated Debentures, to be approved for listing
on the NYSE, subject to official notice of issuance, prior to the
Closing Date.
Section 6.9 Stock Options; Quantum Stock Purchase Plan
Rights; Quantum Convertible Subordinated Debentures. (a) At the
Effective Time, each outstanding option to purchase Quantum
Common Stock which has been granted pursuant to the Quantum Stock
Option Plan and the Quantum Acquisition Options (collectively,
the "Quantum Stock Options"), whether vested or unvested, shall
be assumed by Olsten. After the Effective Time, each Quantum
Stock Option shall automatically be deemed to constitute an
option to acquire, on the same terms and conditions as were
applicable under such Quantum Stock Option, the number of shares
of Class B Stock equal to the product obtained by multiplying (i)
the number of shares of Quantum Common Stock subject to the
Quantum Stock Option, by (ii) the Conversion Number, at a price
per share equal to the quotient obtained by dividing (x) the
exercise price for the shares of Quantum Common Stock subject to
such Quantum Stock Option by (y) the Conversion Number; provided,
however, that in the case of any option or portion of an option
to which Section 421 of the Code applies by reason of its
qualification under any of Sections 422-424 of the Code
("incentive stock options"), the option price, the number of
shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in
order to comply with Section 424(a) of the Code and any portion
of an option which does not so comply shall be a "nonqualified
option"; and provided further, that the number of shares of Class
B Stock that may be purchased upon exercise of such Quantum Stock
Option shall not include any fractional share and, upon exercise
of such Quantum Stock Option, a cash payment shall be made for
any fractional share based upon the closing price of a share of
Olsten Common Stock on the NYSE on the trading day immediately
preceding the date of exercise.
(b) As soon as practicable after the Effective Time,
Olsten shall deliver to each then holder of a Quantum Stock
Option an appropriate notice setting forth such holder's rights
to acquire Class B Stock, and the Quantum Stock Option agreements
of each such holder shall be deemed to be appropriately amended
so that such option continues in effect on the same terms and
conditions as contained in the outstanding Quantum Stock Options
(subject to the adjustments required by this Section 6.9 after
giving effect to the Merger).
(c) As soon as practicable after the Effective Time,
Olsten shall file a registration statement on Form S-8 (or any
successor form) or another appropriate form with respect to the
shares of Class B Stock subject to the Quantum Stock Plans (and
the shares of Olsten Common Stock into which such shares of Class
B Stock are convertible) and shall use all reasonable efforts to
maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as any
options or awards issuable under the Quantum Stock Plans remain
outstanding. Except as may be required by Sections 422 to 424 of
the Code, Olsten shall take no action to disqualify any
outstanding Quantum Stock Options which are incentive stock
options as of the Effective Time.
(d) The Quantum Stock Purchase Plan shall be suspended
by the Quantum Board effective May 31, 1996 and discontinued by
the Quantum Board no later than immediately prior to the
Effective Time; provided, however, that the shares of Quantum
Common Stock issuable thereunder in consideration of payroll
deductions made on or prior to May 31, 1996 shall be issued in
accordance with the Quantum Stock Purchase Plan as in effect on
the date hereof.
(e) From and after the Effective Time, each Quantum
Convertible Subordinated Debenture shall entitle the holder
thereof to convert such Quantum Convertible Subordinated
Debenture into the same number of shares of Class B Stock as such
holder would have been entitled to convert such Quantum
Convertible Subordinated Debenture into Quantum Common Stock if
such conversion had been effected in full immediately prior to
the Effective Time (subject to adjustment after the Effective
Time as provided in the Quantum Indenture). Quantum agrees to
take all actions in connection with the Merger which are required
pursuant to the Quantum Indenture to be taken by Quantum prior to
the Effective Time. Olsten and Merger Sub each agree to take all
actions in connection with the Merger which are required pursuant
to the Quantum Indenture to be taken by Olsten or Merger Sub, as
the case may be, prior to, at and following the Effective Time,
including, without limitation, the execution and delivery of a
supplemental indenture pursuant to the terms thereof.
Section 6.10 Fees and Expenses. (a) Except as otherwise
provided in this Section, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, except
that the filing fee for registering Class B Stock and Olsten
Common Stock on the S-4 and expenses incurred in connection with
printing and mailing the Proxy Statement and the S-4 shall be
shared equally by Quantum and Olsten.
(b) If Olsten terminates this Agreement as permitted
under Section 8.1(d) or Quantum terminates this Agreement as
permitted under Section 8.1(g), in either case as a result of the
occurrence of any event described in clause (i) of Section
6.10(d), then Quantum shall pay to Olsten promptly, but in no
event later than two Business Days, after such termination, an
amount in immediately available funds equal to $5,000,000.
(c) If Olsten terminates this Agreement as permitted
under Section 8.1(d) or Quantum terminates this Agreement as
permitted under Section 8.1(g), in either case as a result of the
occurrence of any event described in clause (ii) of Section
6.10(d) (so long as no event described in clause (i) of Section
6.10(d) has occurred), then Quantum shall pay Olsten promptly,
but in no event later than two Business Days after Olsten's
demand therefor, an amount in immediately available funds equal
to Olsten's reasonable, documented out-of-pocket expenses
incurred in connection with the negotiation, execution, delivery
and performance of this Agreement and the transactions
contemplated hereby (including, without limitation, costs and
disbursements of attorneys, accountants and investment bankers,
filing fees and the expenses incurred in connection with printing
and mailing the Proxy Statement and the S-4) up to $1,500,000;
provided, however, that if within one year after such
termination, Quantum or any of its Subsidiaries has effected or
has entered into an agreement to effect any Competing
Transaction, then Quantum shall pay to Olsten promptly, but in no
event later than two Business Days, after the consummation of, or
execution of any agreement relating to, such Competing
Transaction, in addition to the amount paid to Olsten in
reimbursement of its expenses as provided above, an amount in
immediately available funds equal to the difference between
$5,000,000 and the amount of such expenses previously paid by
Quantum to Olsten pursuant to this Section 6.10(c).
(d) Each of the events described in the following
clauses (i) and (ii) is hereinafter referred to as a "Trigger
Event":
(i) The Quantum Board shall have (A) withdrawn or
modified, in a manner materially adverse to Olsten, its approval
or recommendation of this Agreement for any reason other than the
occurrence of an event relating to Olsten which has a Material
Adverse Effect or (B) postponed the date scheduled for the
meeting of Quantum's stockholders to be called for the purpose of
voting on this Agreement (the "Quantum Meeting") beyond September
30, 1996, without Olsten's prior written consent, which consent
shall not be unreasonably delayed or withheld; or
(ii) This Agreement shall have been voted on by
Quantum's stockholders at the Quantum Meeting and shall not have
been approved by the requisite vote of Quantum stockholders in
circumstances where an offer or proposal to effect a Competing
Transaction (which was not encouraged or solicited by Olsten) has
been publicly announced and has not been publicly withdrawn at
least five Business Days prior to the latest scheduled date for
the Quantum Meeting.
Section 6.11 Brokers or Finders. Each of Olsten and
Quantum represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this
Agreement, except Smith Barney Inc., all of whose fees and
expenses will be paid by Olsten in accordance with Olsten's
agreement with such firm (a true, correct and complete copy of
which has been delivered by Olsten to Quantum), and Lehman
Brothers, all of whose fees and expenses will be paid by Quantum
in accordance with Quantum's agreement with such firm (a true,
correct and complete copy of which has been delivered by Quantum
to Olsten), and each of Olsten and Quantum respectively agree to
indemnify and hold the other harmless from and against any and
all claims, liabilities or obligations with respect to any other
fees, commissions or expenses asserted by any person or the basis
of any act or statement alleged to have been made by such party
or its affiliate.
Section 6.12 Directors' and Officers' Insurance. (a)
Olsten agrees to, and to cause the Surviving Corporation to,
indemnify and hold harmless all past and present officers,
directors and employees of Quantum or any of its Subsidiaries and
present or former directors, officers and employees of Quantum or
any of its Subsidiaries serving or who served at Quantum's or any
of its Subsidiaries' request as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, to the same extent
such persons are indemnified as of the date of this Agreement by
Quantum pursuant to Quantum's Certificate of Incorporation and
By-laws and indemnification agreements in existence on the date
hereof with any officers and directors of Quantum and its
Subsidiaries for acts or omissions occurring at or prior to the
Effective Time, for a period of not less than the statutes of
limitations applicable to such matters. In no event shall Olsten
permit Article Seventh of the Certificate of Incorporation of the
Surviving Corporation, in the form attached as Exhibit A to the
Certificate of Merger, to be amended in any manner which would
adversely affect the rights granted thereunder following the
Effective Time, except as required by applicable law. Without
limiting the foregoing, Quantum shall, and after the Effective
Time, Olsten shall cause the Surviving Corporation to,
periodically advance expenses as incurred with respect to the
foregoing to the fullest extent permitted under applicable law;
provided, however, that the person to whom the expenses are
advanced provides an undertaking to repay such advance if it is
ultimately determined that such person is not entitled to
indemnification (but no bond or other security shall be
required).
(b) For a period of six years after the Effective
Time, Olsten shall cause to be maintained policies of directors'
and officers' liability insurance of at least the same coverage
and amounts and containing terms and conditions which are no less
advantageous in any material respect to the parties covered by
the current policies of directors' and officers' liability
insurance maintained by Quantum and its Subsidiaries with respect
to claims arising from facts or events which occurred before the
Effective Time, provided that Olsten shall not be required to pay
an annual premium for such insurance in excess of two times the
last annual premium paid by Quantum prior to the date hereof, but
in such case shall purchase as much coverage as possible for such
amount. The provisions of this Section 6.12 are intended to be
for the benefit of, and shall be enforceable by each person who
is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, an
officer, director or employee of Quantum or any of its
Subsidiaries (and their heirs and representatives).
(c) If, after the Effective Time, Olsten or any of its
successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger, or (ii)
transfers all or substantially all of its property and assets to
any person, then, in each such case, proper provision shall be
made so that the successors and assigns of Olsten assume all of
the obligations set forth in this Section 6.12.
Section 6.13 Appointment of Successor Directors. The
Quantum Board shall approve the appointment or election of the
directors of Merger Sub as directors of Quantum effective as of
immediately following to the Effective Time, which approval shall
be made in a manner such that such approval or election or the
removal or resignation of the approving members of the Quantum
Board will not constitute a Risk Event (as defined in the Quantum
Indenture) under the Quantum Indenture.
Section 6.14 Employee Benefit Plans. (a) It is the current
intention of Olsten to make available, after the Effective Time,
to employees of Quantum and its Subsidiaries, benefit plans which
are, when considered in the aggregate, reasonably comparable to
the benefit plans provided to either (at Olsten's option) non-
executive employees of Olsten and its Subsidiaries or Quantum and
its Subsidiaries. Nothing in this Section 6.14 shall be
construed as requiring Olsten to make available any specific
benefit plans, including, without limitation, an employee stock
purchase plan.
(b) Following the Effective Time, Olsten shall, or
shall cause the Surviving Corporation to, honor the terms of all
consulting, employment, severance and similar agreements listed
on the Quantum Disclosure Schedule and provided to Olsten prior
to the date hereof.
Section 6.15 Additional Agreements; Reasonable Efforts.
Subject to the terms and conditions of this Agreement, each of
the parties hereto agrees to use all reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions
contemplated by this Agreement, subject to the appropriate vote
of stockholders of Quantum and Olsten described in Section 6.1,
including cooperating fully with the other party, including by
provision of information and making of all necessary filings
under the HSR Act. Except as otherwise contemplated herein, in
any case at any time after the Effective Date, any further action
is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to
all properties, assets, rights, approvals, immunities and
franchises of either of the Constituent Corporations, the proper
officers and directors of each party to this Agreement shall take
all such necessary action.
Section 6.16 Reserved Shares of Olsten Common Stock and
Class B Stock. On the date hereof, Olsten has, and at and
following the Effective Time, Olsten shall have (i) sufficient
shares of Class B Stock reserved for issuance (A) upon conversion
of shares of Quantum Common Stock in the Merger, (B) upon the
exercise of all options and warrants to acquire shares of Class B
Stock (including, after the Effective Time, all options to
acquire Quantum Common Stock assumed by Olsten pursuant to
Section 6.9 hereof) and (C) upon conversion of all Quantum
Convertible Subordinated Debentures, and (ii) sufficient shares
of Olsten Common Stock reserved for issuance (A) upon conversion
of all issued and outstanding Class B Stock and all Class B Stock
issuable pursuant to clause (i) of this Section, (B) upon the
exercise of all options to acquire Olsten Common Stock and (C)
upon conversion of all Olsten Convertible Debentures.
Section 6.17 Ownership of Class B Stock by Nominees. Olsten
shall take all such action necessary to permit the recipients of
Class B Stock upon (i) the conversion of Quantum Common Stock and
Quantum Convertible Subordinated Debentures and (ii) the exercise
of options to purchase Quantum Common Stock assumed by Olsten
pursuant to Section 6.9 hereof to hold such Class B Stock in
nominee form for a period ending not later than 30 days from the
Effective Time.
ARTICLE VII
CONDITIONS OF MERGER
Section 7.1 Conditions to Obligation of Each Party to
Effect the Merger. The respective obligations of each party to
effect the Merger shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions:
(a) Stockholder Approval. The Olsten Vote Matter
shall have been approved and adopted by the Olsten Vote. This
Agreement shall have been approved by the Quantum Vote.
(b) NYSE Listing. The shares of Olsten Common Stock
issuable to Quantum stockholders upon conversion of Class B Stock
to be issued pursuant to the Merger (and, after the Effective
Time, under the Quantum Stock Option Plan and the Quantum
Acquisition Options or upon conversion of the Quantum Convertible
Subordinated Debentures) shall have been authorized for listing
on the NYSE upon official notice of issuance.
(c) Other Approvals. Other than the filing provided
for by Section 1.1, all authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity (including
all filings under the HSR Act and the expiration of all waiting
periods thereunder) required in connection with the consummation
of the Merger, the failure to obtain which has a Material Adverse
Effect on Olsten and its Subsidiaries, taken as a whole (assuming
the Merger had taken place), shall have been filed, occurred or
been obtained. Olsten shall have received all state securities
laws or "blue sky" permits and authorizations necessary to issue
Class B Stock pursuant to the Merger (and, after the Effective
Time, under the Quantum Stock Option Plan and the Quantum
Acquisition Options or pursuant to conversion of the Quantum
Convertible Subordinated Debentures) and to issue Olsten Common
Stock upon conversion of such Class B Stock.
(d) S-4. The S-4 shall have become effective under
the Securities Act and shall not be the subject of any stop order
or proceedings seeking a stop order.
(e) No Injunction or Restraints. No temporary
restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction (an
"Injunction") prohibiting the consummation of the Merger shall be
in effect; provided, however, that prior to invoking this
condition, each party shall use all reasonable efforts to have
any such decree, ruling, injunction or order vacated, except as
otherwise contemplated by this Agreement.
(f) Opinion of Accountants. Olsten and Quantum shall
each have received an opinion from Coopers & Lybrand L.L.P., in
form reasonably satisfactory to Olsten, to the effect that the
business combination to be effected by the Merger would be
properly accounted for as a "pooling of interests" in accordance
with GAAP and all published rules, regulations and policies of
the SEC.
(g) Tax Opinion. Quantum shall have received an
opinion from its counsel, dated the Effective Time, to the effect
that (i) the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a)
of the Code; (ii) each of Olsten, Merger Sub and Quantum will be
a party to the reorganization within the meaning of Section
368(b) of the Code; (iii) no gain or loss will be recognized by
Quantum, Olsten or Merger Sub as a result of the Merger; and (iv)
no gain or loss will be recognized by any stockholder of Quantum
as a result of the Merger with respect to the Quantum Common
Stock converted solely into Class B Stock. In rendering such
opinion, such counsel may rely upon representations contained in
certificates of Quantum, Olsten, Merger Sub and others.
Section 7.2 Additional Conditions to Obligations of Olsten
and Merger Sub. The obligations of Olsten and Merger Sub to
effect the Merger are also subject to the following conditions
(any one or more of which may be waived by Olsten and Merger Sub,
but only in a writing signed by Olsten and Merger Sub):
(a) Representations and Warranties. The
representations and warranties of Quantum contained in this
Agreement shall be true and correct in all respects on and as of
the Effective Time, except to the extent that any such
representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true
and correct as of such specified date, and for changes
contemplated by this Agreement, with the same force and effect as
if made on and as of the Effective Time (or as of such specified
date in the case of a representation or warranty made as of a
specified date), except to the extent that the failure of such
representations and warranties to be so true and correct,
individually or in the aggregate, does not have a Material
Adverse Effect; provided, however, that any inaccuracy of a
representation or warranty, as of a specified date or the
Effective Time, shall not result in the non-satisfaction of this
Section 7.2(a) unless any such inaccuracy or inaccuracies,
individually or in the aggregate, constitute facts or
circumstances having a Material Adverse Effect (it being
understood that such facts or circumstances shall be deemed to be
constituted if the particular representation or warranty which is
inaccurate contains a Material Adverse Effect standard).
(b) Agreements and Covenants. Quantum shall have
performed or complied in all material respects with all of its
agreements and covenants contained in this Agreement to be
performed or complied with by it at or prior to the Effective
Time.
(c) Material Adverse Change. Since the date of this
Agreement, there shall have been no change in the business,
financial condition, results of operations, assets or liabilities
of Quantum which, individually or in the aggregate, has a
Material Adverse Effect with respect to Quantum.
(d) No Pending Proceedings. Neither Olsten nor
Quantum, nor their respective Subsidiaries shall be required by
the Department of Justice, the Federal Trade Commission or any
other Governmental Entity to hold separate, sell or otherwise
dispose of any Subsidiary or assets or properties, the effect of
any of which would be to materially impair the value of the
Merger to Olsten.
(e) Inapplicability of Rights Agreement. No event
shall have occurred under the Quantum Rights Agreement which
would give the holder of any Quantum Stock Purchase Rights any
right to acquire any equity securities of Quantum or Olsten as a
result of the transactions contemplated by this Agreement or
otherwise impair the ability of the parties to consummate the
transactions contemplated by this Agreement, and the Quantum
Board of Directors shall have the power, and nothing shall impair
its ability, to redeem the Quantum Stock Purchase Rights
immediately prior to the Effective Time.
(f) Affiliate Agreements. Olsten shall have received
from each Quantum Affiliate (as defined in Section 4.23) an
executed copy of an Affiliate Agreement.
(g) Compliance Certificate. Quantum shall have
delivered to Olsten a certificate, dated as of the Closing Date,
signed on behalf of Quantum by the President or any Vice
President of Quantum, certifying as to the fulfillment of the
conditions specified in paragraphs (a), (b) and (c) of this
Section 7.2.
(h) Appraisal Rights. Shareholders holding no more
than 4% of the outstanding Quantum Common Stock shall have
demanded their appraisal rights under the DGCL.
Section 7.3 Additional Conditions to Obligation of Quantum.
The obligation of Quantum to effect the Merger are also subject
to the following conditions (any one or more of which may be
waived by Quantum, but only in a writing signed by Quantum):
(a) Representations and Warranties. The
representations and warranties of Olsten contained in this
Agreement shall be true and correct in all respects on and as of
the Effective Time, except to the extent that any such
representation or warranty is made as of a specified date, in
which case such representation or warranty shall have been true
and correct as of such specified date, and for changes
contemplated by this Agreement, with the same force and effect as
if made on and as of the Effective Time (or as of such specified
date in the case of a representation or warranty made as of a
specified date), except to the extent that the failure of such
representations and warranties to be so true and correct,
individually or in the aggregate, does not have a Material
Adverse Effect; provided, however, that any inaccuracy of a
representation or warranty, as of a specified date or the
Effective Time, shall not result in the non-satisfaction of this
Section 7.3(a) unless any such inaccuracy or inaccuracies,
individually or in the aggregate, constitute facts or
circumstances having a Material Adverse Effect (it being
understood that such facts or circumstances shall be deemed to be
constituted if the particular representation or warranty which is
inaccurate contains a Material Adverse Effect standard).
(b) Agreements and Covenants. Olsten shall have
performed or complied in all material respects with all of its
agreements and covenants contained in this Agreement to be
performed or complied with by it at or prior to the Effective
Time.
(c) Material Adverse Change. Since the date of this
Agreement, there shall have been no change in the business,
financial condition, results of operations, assets or liabilities
of Olsten which, individually or in the aggregate, has a Material
Adverse Effect with respect to Olsten.
(d) Affiliate Agreements. Quantum shall have received
from each Olsten Affiliate (as defined in Section 3.17) an
executed copy of an Affiliate Agreement.
(e) Compliance Certificate. Olsten shall have
delivered to Quantum a certificate, dated the Closing Date,
signed on behalf of Olsten by the Chairman, President or any Vice
President of Olsten, certifying as to the fulfillment of the
conditions specified in paragraphs (a), (b) and (c) of this
Section 7.3.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated
at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger
by the stockholders of Olsten or Quantum:
(a) By mutual consent of the Board of Directors of
Olsten and the Quantum Board of Directors; or
(b) By either Olsten or Quantum, if the Merger shall
not have been consummated by September 30, 1996 (provided that
the right to terminate this Agreement under this Section 8.1(b)
shall not be available to any party whose failure to fulfill any
obligation hereunder has been the cause of or resulted in the
failure of the Merger to occur on or before such date); or
(c) By either Olsten or Quantum, if there has been a
breach of any representation or warranty by the other party, the
breach of which, when taken together with all other breaches by
such party, would have a Material Adverse Effect, or a material
breach of a covenant or agreement on the part of the other set
forth in this Agreement, which breach has not been cured within
fifteen (15) Business Days following receipt by the breaching
party of notice of such breach, or if a court of competent
jurisdiction or governmental regulatory or administrative agency
or commission having proper jurisdiction and authority thereof
shall have issued an order, decree or ruling (which order, decree
or ruling the parties hereto shall use their best efforts to
lift) prohibiting the transactions contemplated by this Agreement
and such order, decree or ruling shall have become final and non-
appealable; or
(d) By Olsten, if a Trigger Event shall have occurred;
or
(e) By Quantum, if the average closing price of Olsten
Common Stock on the NYSE during the 20 trading days immediately
preceding the later of (i) the Quantum Meeting or (ii) the Olsten
Meeting is less than $22.00 per share; or
(f) By either Olsten or Quantum, if the Quantum Vote
or the Olsten Vote shall not have been obtained by reason of the
failure to obtain the required vote upon a vote held at a duly
held meeting of stockholders or at any adjournment thereof; or
(g) By Quantum, if Quantum receives from any person
other than Olsten or its affiliates an offer with respect to a
Competing Transaction and the Quantum Board, after consultation
with and based upon the advice of independent legal counsel (who
may be Quantum's regularly engaged independent legal counsel),
determines in good faith that such termination is required for
the Quantum Board to comply with its fiduciary obligations to the
holders of Quantum Common Stock under applicable law; or
(h) By Olsten, if any person or group (as defined in
Section 13(d)(3) of the Exchange Act) shall have become a
beneficial owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of in excess of 50% of the outstanding shares of
Quantum Common Stock; or
(i) By Quantum, if any Majority Holder breaches any of
the material terms of the Voting Agreement, or if, prior to the
approval of the Olsten Vote Matter by the Olsten Vote, the Voting
Agreement is not in full force and effect and enforceable in all
material respects against each Majority Holder.
Section 8.2 Effect of Termination. (a) In the event of
termination of this Agreement as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no
liability on the part of a party hereto or their respective
directors or officers except for liability of a party (but not
its officers or directors) (i) with respect to this Section 8.2,
the second, third and fourth sentences of Section 6.4, and
Sections 6.10 and 6.11 and (ii) to the extent that such
termination results from the willful breach by a party hereto of
any of its representations, warranties, covenants or agreements,
in each case, as set forth in this Agreement except as provided
in Section 9.7.
(b) In the event of a termination of this Agreement as a
result of a failure of any conditions set forth in Section 7.2(a)
or 7.2(c) hereof, Olsten and its Subsidiaries shall each use
their best efforts to use Quantum and its Subsidiaries for the
services described in Section 8.2(b) of the Quantum Disclosure
Schedule (the "Quantum Services") for a period of two years
following the date of such termination, provided that (i) the
Quantum Services are competitively priced by Quantum and its
Subsidiaries and (ii) the Quantum Services provided by Quantum
and its Subsidiaries are and remain at a level of service
reasonably satisfactory to Olsten and its Subsidiaries.
Section 8.3 Amendment. This Agreement may be amended by
the parties hereto by action taken by or on behalf of their
respective Boards of Directors at a time prior to the Effective
Time; provided, however, that, after approval of this Agreement
by the stockholders of Olsten and Quantum under the DGCL, no
amendment may be made which would require further approval by
such stockholders under the DGCL without such further approval.
This Agreement may not be amended except by an instrument in
writing signed on behalf of the parties hereto.
Section 8.4 Extension; Waiver. At any time prior to the
Effective Time, any party hereto, by action taken or authorized
by their respective Boards of Directors, may, to the extent
legally allowed, (a) extend the time for the performance of any
of the obligations or other acts of the other parties hereto, (b)
waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be valid
only if set forth in an instrument in writing signed by the party
to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties and
agreements in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time
except for the agreements set forth in Sections 2.1, 2.2, 6.9,
6.11 through 6.17, 8.2 and 8.3 and Article IX, and the agreements
of the Quantum Affiliates and the Olsten Affiliates delivered
pursuant to Section 6.7. The Olsten Confidentiality Agreement
and the Quantum Confidentiality Agreement shall survive the
execution and delivery of this Agreement, and the provisions of
such Confidentiality Agreements shall apply to all information
and material delivered by any party hereunder.
Section 9.2 Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made upon receipt, if made or
given by hand delivery, telecopier or facsimile transmission
(electronically confirmed), or upon receipt by registered or
certified mail (postage prepaid, return receipt requested) at the
following addresses (or at such other address for a party as
shall be specified by like notice):
(a) if to Olsten:
Olsten Corporation
175 Broad Hollow Road
Melville, New York 11747
Attn: Mr. Robert A. Fusco
(516) 844-7800 (telephone)
(516) 844-7266 (telecopier)
with copies to:
Olsten Corporation
175 Broad Hollow Road
Melville, New York 11747
Attn: William P. Costantini, Esq.
(516) 844-7800 (telephone)
(516) 844-7266 (telecopier)
- and -
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
Attn: Marjorie Sybul Adams, Esq.
212-626-0861 (telephone)
212-626-0799 (telecopier)
(b) if to Quantum:
Quantum Health Resources, Inc.
Two Parkwood Crossing
310 East 96th Street, Suite 500
Indianapolis, IN 46240
Attn: Mr. Douglas H. Stickney
317-580-6830 (telephone)
317-580-6843 (telecopier)
with copies to:
Quantum Health Resources, Inc.
Two Parkwood Crossing, Suite 500
310 East 96th Street, Suite 500
Indianapolis, IN 46240
Attn: John C. McIlwraith, Esq.
317-580-6830 (telephone)
317-580-6843 (telecopier)
- and -
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attn: Lyle G. Ganske, Esq.
(216) 586-7264 (telephone)
(216) 579-0212 (telecopier)
Section 9.3 Interpretation; Certain Definitions. When a
reference is made in this agreement to Sections, such reference
shall be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
Whenever the word "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the
words "without limitation". The term "Material Adverse Effect"
shall mean with respect to Olsten or Quantum, as the case may be,
any effect on the business of Olsten or Quantum, as the case may
be, or any of its Subsidiaries that is, or likely will be (viewed
at the time of determination), materially adverse to the
business, results of operations, financial condition, assets or
liabilities of Olsten or Quantum, as the case may be, and its
Subsidiaries, taken as a whole, other than any effect thereon
resulting from or related to (i) deterioration in general
economic conditions, (ii) changes or trends in the healthcare
industry (such as changes in Medicaid or other governmental
programs) or (iii) the matters disclosed on the Quantum
Disclosure Schedule. The phrase "made available" in this
Agreement shall mean that the information referred to has been
made available if requested by the party to whom such information
is to be made available. Any reference to "the knowledge of"
Quantum or Olsten, as applicable, shall be deemed to refer to (a)
in the case of Olsten, to the actual knowledge of any of its
executive officers set forth in Section 9.3 of the Olsten
Disclosure Schedule and (b) in the case of Quantum, to the actual
knowledge of any of its executive officers set forth in Section
9.3 of the Quantum Disclosure Schedule.
Section 9.4 Counterparts. This Agreement may be executed
in two or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when two or
more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 9.5 Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership. This Agreement (including the documents and
the instruments referred to herein) constitutes the entire
agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the
subject matter hereof. Except as provided in Section 6.9, 6.12,
6.14, 6.16 and 6.17, this Agreement is not intended to confer
upon any person other than the parties hereto any rights or
remedies hereunder. The parties hereby acknowledge that no party
shall have the right to acquire or shall be deemed to have
acquired shares of common stock of the other party pursuant to
the Merger until consummation thereof.
Section 9.6 Governing Law. This Agreement shall be
governed by, and interpreted under, the laws of the State of
Delaware applicable to contracts made and to be performed therein
without regard to conflicts of law principles.
Section 9.7 No Remedy in Certain Circumstances. Each party
agrees that, should any court or other competent authority hold
any provision of this Agreement or part hereof to be null, void
or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and
enforceability of the remaining provisions and obligations con-
tained or set forth herein shall not in any way be affected or
impaired thereby, unless the foregoing inconsistent action or the
failure to take an action makes the Agreement impossible to
perform, in which case this Agreement shall terminate pursuant to
Article VIII hereof. Except as otherwise contemplated by this
Agreement, to the extent that a party hereto took an action
inconsistent herewith or failed to take action consistent
herewith or required hereby pursuant to an order or judgment of a
court or other competent authority, such party shall incur no
liability or obligation unless such party did not in good faith
seek to resist or object to the imposition or entering of such
order or judgment.
Section 9.8 Publicity. The initial press release relating
to this Agreement shall be a joint press release mutually
satisfactory to the parties, and thereafter Quantum and Olsten
shall, subject to their respective legal obligations (including
requirements of stock exchanges and other similar regulatory
bodies), consult with each other and use their reasonable efforts
to agree upon the text of any press release before issuing any
such press release or otherwise making public statements with
respect to the transactions contemplated hereby and in making any
filings with any Governmental Entity or with any national
securities exchange with respect thereto.
Section 9.9 Assignment. Except as expressly provided in
this Agreement, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
Section 9.10 Specific Performance. The parties acknowledge
that money damages are not an adequate remedy for violations of
this Agreement and that any party may, in its sole discretion,
apply to a court of competent jurisdiction for specific
performance or injunctive or such other relief as such court may
deem just and proper in order to enforce this Agreement or
prevent any violation hereof and, to the extent permitted by
applicable law, each party waives any objection to the imposition
of such relief.
Section 9.11 Remedies Cumulative. All rights, powers and
remedies provided under this Agreement or otherwise available in
respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later
exercise of any other such right, power or remedy by such party.
IN WITNESS WHEREOF, Olsten, Merger Sub and Quantum have
caused this Agreement and Plan of Merger to be executed on May 1,
1996, by the respective officers thereunto duly authorized.
OLSTEN CORPORATION
By:/s/ William P. Costantini
William P. Costantini
Senior Vice President
QHR ACQUISITION CORP.
By:/s/ William P. Costantini
William P. Costantini
Senior Vice President
QUANTUM HEALTH RESOURCES, INC.
By:/s/ Douglas H. Stickney
Douglas H. Stickney
Chairman, President and
Chief Executive Officer