Form Of Agreement Respecting Employee Benefits

EXHIBIT 10.49


AGREEMENT RESPECTING EMPLOYEE BENEFITS MATTERS


THIS AGREEMENT RESPECTING EMPLOYEE BENEFITS MATTERS is made as of the
day of January, 1997, by and between Scout, Inc., a California corporation - ---- ("Scout"), and SNFCo, Inc., a California corporation ("SNFCo").


W I T N E S S E T H:
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WHEREAS, SNFCo is presently a wholly-owned subsidiary of Scout;


WHEREAS, the Board of Directors of Scout has determined that it is appropriate and desirable to merge New Scout (as defined below) with and into Explorer, Inc., a Delaware corporation ("Explorer");


WHEREAS, pursuant to that certain Agreement and Plan of Distribution dated as of September 3, 1996, by and between Scout and SNFCo (the "Distribution Agreement") approved and adopted by the Scout Board of Directors, Scout contemplates the distribution to its shareholders of all of the outstanding shares of common stock, $.0001 par value, of SNFCo (the "Distribution") effective as of ______________, 1997 (the "Distribution Date")(Scout after such Distribution being referred to herein as "New Scout");


WHEREAS, as a result of the Distribution, those subsidiaries of Scout that are engaged in the conduct of the Institutional Pharmacy Business (as defined in the Distribution Agreement), shall remain subsidiaries of New Scout (the "Scout Affiliates") while existing subsidiaries of Scout engaged in the Skilled Nursing Business (as defined in the Distribution Agreement) shall cease to be affiliated with New Scout but shall remain or become subsidiaries of SNFCo (the "SNFCo Affiliates");


WHEREAS, following the Distribution, New Scout shall be merged (the "Merger") with and into Explorer pursuant to that certain Agreement and Plan of Merger dated as of September 3, 1996, by and between Scout and Explorer (the "Merger Agreement") and following the Effective Time (as defined in the Merger Agreement) all rights and obligations of New Scout hereunder shall become the rights and obligations of Explorer and all actions to be taken by New Scout after the Effective Time shall be taken by Explorer; and


WHEREAS, the parties desire to set forth their understanding regarding their respective rights and obligations concerning certain employee benefit and related matters relative to plans, programs and practices currently maintained by Scout for the benefit of employees, officers, directors and former employees, officers and directors of Scout and its affiliates;


NOW, THEREFORE, in consideration of the premises, covenants and agreements set forth herein, and intending to be legally bound (subject to shareholder approval of the Distribution Agreement and the Distribution) the parties hereto do hereby agree as follows:


1. TAX-QUALIFIED RETIREMENT PLANS.
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a. IN GENERAL. Scout currently maintains the American Medical Services
Employees' Pension Plan (the "Pension Plan") and the Scout 401(k) Savings
Plan (the "Savings Plan") (collectively, the "Tax-Qualified Retirement
Plans"). As soon as practicable, but no later than the day before the
Distribution Date, SNFCo shall adopt the Tax-Qualified Retirement Plans as
the primary sponsor and Scout shall withdraw and shall cause the Scout
Affiliates to withdraw their sponsorship of these plans. Prior to the
Distribution Date, SNFCo shall amend the Tax-Qualified Retirement Plans, as
necessary, to clarify that (i) the Distribution will not constitute a
termination of employment for benefit distribution or other related
purposes under the Tax-Qualified Retirement Plans so long as a participant
remains continuously employed by New Scout, a Scout Affiliate, SNFCo or a
SNFCo Affiliate from and after the Distribution Date; (ii) that, with
respect to the Savings Plan, no contributions shall be made for periods of
service after the Distribution Date by or on behalf of those participants
who do not continue in the employ of SNFCo or a SNFCo Affiliate thereafter;
(iii) that, with respect to the Savings Plan, SNFCo shall succeed Scout as
the "Company," as that term is defined in the plan document for the Savings
Plan; and (iv) that, with respect to the Pension Plan, SNFCo shall serve as
the "Employer," as that term is defined in the plan document for the
Pension Plan.


b. SAVINGS PLAN.


i. New Scout shall establish or otherwise maintain by, or as
soon as practicable after, the Distribution Date, but in no event
later than six (6) months following the Distribution Date, a defined
contribution savings plan designed to qualify under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and to
preserve "protected benefits", within the meaning of Code Section
411(d)(6), accrued by participants under the Savings Plan as of the
Distribution Date (the "Replacement Savings Plan"). Those
participants of the Savings Plan who remain as employees of New Scout
or a Scout Affiliate on the Distribution Date shall be eligible for
immediate participation in the Replacement Savings Plan, with full
credit for eligibility and vesting purposes with Scout or any Scout
affiliate prior to the Distribution Date.


ii. Subject to the conditions set forth in clause iii below, as
soon as practicable after the Distribution Date, New Scout shall
request that SNFCo cause a spin off and transfer from the Savings Plan
trust to the trust maintained under the Replacement Savings Plan an
amount in cash (and, to the extent that the Scout Plan holds
participant loans, in kind) equal to the aggregate account balances,
as of the date of any such transfer, of those Savings Plan
participants who, by the Distribution Date, have become employees of
New Scout or a Scout Affiliate. For purposes of the foregoing, the
transfer shall be made in two installments. The first installment
shall occur on the first valuation date under the Savings Plan on
which the transfer


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is administratively practical after the satisfaction of the conditions
set forth in clause iii hereof and the request by New Scout to proceed
with the spin off and transfer of assets and liabilities from the
Savings Plan to the Replacement Savings Plan (the "First Transfer
Date"). SNFCo shall cause the Savings Plan to transfer to the
Replacement Savings Plan, and New Scout shall cause the Replacement
Savings Plan to accept, an amount equal to at least eighty-five
percent (85%) of the aggregate account balances of the participants
for whom the transfer is then being made, determined as of the
valuation date under the Savings Plan immediately preceding the First
Transfer Date. As soon as practical after the receipt of information
by SNFCo of the actual account balances of the participants under the
Savings Plan as of the First Transfer Date (determined without regard
to the amount transferred as of the First Transfer Date), the excess
of such aggregate account balances of participants for whom assets and
liabilities were transferred over the amount transferred by the
Savings Plan to the Replacement Savings Plan as of the First transfer
Date, shall be transferred by the Savings Plan to the Replacement
Savings Plan. In the event that amount transferred by the Savings
Plan as of the First Transfer Date exceeded the account balances as so
determined on the First Transfer Date, New Scout shall cause the
Replacement Savings Plan to transfer such excess to the Savings Plan
as soon as possible after request by SNFCo.


iii. The transfer of assets shall occur as soon as practicable
following (a) the Distribution Date, (b) the establishment or other
designation of the Replacement Savings Plan, (c) either (i) the
receipt of a favorable determination letter issued by the Internal
Revenue Service with respect to such plan or (ii) the filing of a
favorable determination letter application with the Internal Revenue
Service and a written commitment from New Scout to exert its best
efforts to obtain such a favorable determination letter and (d) the
expiration of 30 days after SNFCo and New Scout have filed Form 5310-
A, if necessary, with the Internal Revenue Service. As a condition to
the receipt of such an asset transfer by the Replacement Savings Plan
trust, New Scout shall cause such plan to assume and fully perform,
pay and discharge all obligations and liabilities of SNFCo and the
Savings Plan for and with respect to the account balances under the
Savings Plan of those Savings Plan participants whose account balances
were so received by the Replacement Savings Plan.


iv. New Scout and SNFCo shall each make timely payment of their
respective portion of all contributions due and unpaid under the
Savings Plan for the period prior to the Distribution Date. For
purposes of the preceding sentence, the respective portions of any
contributions due to the Savings Plan for the period prior to the
Distribution Date shall be based on the following rules: (1) the
contributions attributable to active employees of New Scout or a Scout
Affiliate immediately after the Distribution Date shall be allocated
to New Scout, (2) the contributions attributable to active employees
of SNFCo or a SNFCo Affiliate immediately after the Distribution Date
shall be allocated to SNFCo, (3) the contributions attributable


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to former employees (whether deferred, vested or retirees) who were
last included on an Institutional Pharmacy Business payroll shall be
allocated to New Scout and (4) the contributions attributable to all
other former employees (whether deferred, vested or retirees) shall be
allocated to SNFCo.


2. NON-QUALIFIED DEFERRED COMPENSATION PLAN.
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a. Prior to the Distribution Date, Scout shall amend the Scout
Executive Deferred Compensation Plan (the "EDCP") and the Scout Leadership
Group Deferred Compensation Plan (the "LGDCP") (i) to provide that no
benefits shall be payable under the EDCP or the LGDCP in the case of an
employee of SNFCo or a SNFCo Affiliate who both elects immediate
participation in the Replacement EDCP (as defined below) and delivers the
release to New Scout as described below, and (ii) to clarify that salary
deferral under the EDCP and LGDCP and matching credits under the EDCP shall
cease as of the Distribution Date for those participants who do not
continue in the employ of New Scout or a Scout Affiliate thereafter. As of
the Distribution Date, SNFCo shall establish or otherwise make available
by, or as soon as practicable after, such date a non-qualified deferred
compensation plan substantially similar to the EDCP (the "Replacement
EDCP")(except that no termination of employment shall occur for purposes of
the Replacement EDCP so long as the employee remains continuously employed
by SNFCo or a SNFCo Affiliate). Employees of SNFCo or a SNFCo Affiliate
after the Distribution Date who are participants in the EDCP and/or the
LGDCP shall be given the opportunity for immediate participation in the
Replacement EDCP (with accrued benefits equal to those accrued for the
applicable participant under the EDCP and the LGDCP as of the Distribution
Date), but subject to the condition that any such participant deliver to
New Scout within ninety days (or any longer period acceptable to New Scout)
after the Distribution Date, an appropriate release, in form satisfactory
to New Scout, releasing New Scout and each Scout Affiliate from any
liability for benefits under the EDCP and the LGDCP. SNFCo shall pay on
behalf of New Scout any benefit payments under the EDCP and the LGDCP (i)
payable in respect of each person who is an employee of SNFCo or a SNFCo
Affiliate immediately after the Distribution Date and (ii) payable in
respect of each former employee on the Distribution Date with remaining
benefits under the EDCP and the LGDCP on the Distribution Date who were
last included on a Scout payroll other than those maintained by the
Institutional Pharmacy Business.


b. As soon as practical following the Distribution Date, SNFCo shall
establish a grantor trust to be used in connection with the Replacement
EDCP (the "Replacement Trust"). New Scout shall cause to be transferred to
the Replacement Trust a portion of the assets of the Trust Agreement
Pursuant to the Scout, Inc. Executive Deferred Compensation Plan (the "EDCP
Trust") determined by the following formula:


SNAB/TAB(FMV)


where SNAB equals the total accrued benefits as of the ...