<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 1999, OR
--- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM TO .
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Commission file number 0-25777
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 11-3476656
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1983 MARCUS AVENUE, LAKE SUCCESS, NEW YORK 11042
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(Address of principal executive offices) (Zip Code)
(516) 358-1000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No X
--- ---
The number of shares of common stock outstanding on October 20, 1999 were
11,809,694 shares.
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TENDER LOVING CARE HEALTH CARE SERVICES, INC.
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INDEX
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<TABLE>
<CAPTION>
PAGE NO.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
August 31, 1999 and February 28, 1999 2
Condensed Statements of Consolidated
Income - Three and six months ended
August 31, 1999 and 1998 3
Condensed Statements of Consolidated Cash
Flows - Six months ended August 31, 1999
and 1998 4
Notes to Condensed Consolidated Financial
Statements 5-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9-15
Factors Affecting the Company's Future
Performance 15-18
PART II OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Spin-off Transaction and Pro Forma Financial
Information 19-23
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 24-26
</TABLE>
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TENDER LOVING CARE HEALTH CARE SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AUGUST 31,
1999 FEBRUARY 28,
(UNAUDITED) 1999
--------- ---------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,867 $ 2,007
Accounts receivable, net of allowance
for doubtful accounts of $7,940
and $7,000, respectively 77,472 79,662
Income tax refund receivable -- 1,733
Prepaid expenses and other current assets 4,108 3,554
--------- ---------
Total current assets 83,447 86,956
Fixed Assets, net of accumulated depreciation
of $12,095 and $9,752, respectively 29,185 27,987
Intangible Assets, net of accumulated
amortization of $11,671 and $11,102,
respectively 26,845 27,091
Other Assets 3,580 4,471
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TOTAL $ 143,057 $ 146,505
========= =========
LIABILITIES:
Current Liabilities:
Accounts payable and accrued expenses $ 37,614 $ 34,899
Accrued payroll and related expenses 26,297 25,750
Current portion of long-term debt 46,307 43,460
Current portion of Medicare and
Medicaid liabilities 29,690 22,673
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Total current liabilities 139,908 126,782
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Long-Term Debt 16,911 19,749
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Long-Term Medicare and Medicaid Liabilities 24,934 34,608
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Other Liabilities 5,336 4,725
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A Common Stock - $.01 par value;
50,000,000 shares authorized; 23,311,825 and
23,307,129 shares outstanding at August 31,
1999 and February 28, 1999, respectively 233 233
Class B Common Stock - $.01 par value;
1,554,936 shares authorized; 307,563 and
312,251 shares outstanding at August 31,
1999 and February 28, 1999, respectively 3 3
Additional paid-in capital 69,055 69,055
Accumulated deficit (113,323) (108,650)
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Total stockholders' equity (deficit) (44,032) (39,359)
--------- ---------
TOTAL $ 143,057 $ 146,505
========= =========
</TABLE>
See notes to condensed consolidated financial statements
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TENDER LOVING CARE HEALTH CARE SERVICES, INC.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, AUGUST 31,
------------------------ ------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
(Restated- (Restated-
see Note 1) see Note 1)
<S> <C> <C> <C> <C>
REVENUES:
Service revenues:
Home health care $ 65,370 $ 79,539 $ 135,297 $ 163,146
Supplemental staffing 37,759 31,761 75,317 59,017
--------- --------- --------- ---------
Total service revenues 103,129 111,300 210,614 222,163
Sale of licensees and fees, net 362 368 542 783
--------- --------- --------- ---------
Total revenues 103,491 111,668 211,156 222,946
--------- --------- --------- ---------
COSTS AND EXPENSES:
Operating costs 70,679 74,185 144,529 150,568
General and administrative expenses 33,428 36,116 67,836 70,143
Amortization of intangible assets 345 318 569 630
Interest expense 1,924 852 3,167 1,904
Interest (income) (280) (214) (378) (562)
Other (income) expense, net (316) 168 (330) 195
--------- --------- --------- ---------
Total costs and expenses 105,780 111,425 215,393 222,878
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (2,289) 243 (4,237) 68
PROVISION FOR INCOME TAXES 277 108 436 32
--------- --------- --------- ---------
NET INCOME (LOSS) $ (2,566) $ 135 $ (4,673) $ 36
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES:
Basic 23,619 22,526 23,619 23,090
========= ========= ========= =========
Diluted 23,619 22,563 23,619 23,190
========= ========= ========= =========
INCOME (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE:
Basic $ (.11) $ .01 $ (.20) $ .00
========= ========= ========= =========
Diluted $ (.11) $ .01 $ (.20) $ .00
========= ========= ========= =========
</TABLE>
See notes to condensed consolidated financial statements.
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TENDER LOVING CARE HEALTH CARE SERVICES, INC.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
AUGUST 31,
----------------------
1999 1998
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(Restated-
CASH FLOWS FROM OPERATING ACTIVITIES: see Note 1)
NET INCOME (LOSS) $ (4,673) $ 36
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization of fixed assets 2,343 2,008
Amortization of intangibles and goodwill 569 630
Allowance for doubtful accounts 940 500
Income tax refund received 1,733 --
Gain on sale of assets (90) (121)
Increase in other long-term liabilities 33 126
Write-off of goodwill -- 297
Change in operating assets and liabilities:
Accounts receivable 1,250 3,123
Prepaid expenses and other current assets (554) (431)
Accounts payable and accrued expenses 1,145 (9,586)
Medicare and Medicaid liabilities (2,657) 27,665
Other assets 145 (1,624)
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Net cash provided by operating activities 184 22,623
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets 90 166
Additions to fixed assets, net (3,541) (138)
Acquisition of businesses -- (1,370)
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Net cash used in investing activities (3,451) (1,342)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Employee Stock Purchase Plan -- 188
Exercise of stock options -- 35
Purchase and retirement of common stock -- (3,120)
Increase (decrease) in borrowings under
revolving line of credit 4,014 (15,065)
Reduction in other long-term liabilities (887) (3,096)
-------- --------
Net cash used in financing activities 3,127 (21,058)
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NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (140) 223
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 2,007 2,757
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,867 $ 2,980
======== ========
SUPPLEMENTAL DATA:
Cash paid (received) for:
Interest $ 2,342 $ 1,928
======== ========
Income taxes, net $ (1,318) $ (1,389)
======== ========
Fixed assets purchased through
capital lease agreements $ -- $ 1,625
======== ========
Acquisition of businesses through
issuance of notes payable $ 310 $ 275
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
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TENDER LOVING CARE HEALTH CARE SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SPIN-OFF TRANSACTION AND FINANCIAL STATEMENTS - Staff Builders,Inc. ("Staff
Builders") will separate its home health care business from its existing
supplemental staffing business. To accomplish this separation of its
businesses, Staff Builders' Board of Directors established a new, wholly-
owned subsidiary, Tender Loving Care Health Care Services, Inc. ("TLC" or
"the Company"), which will acquire 100% of the outstanding capital stock of
the Staff Builders subsidiaries engaged in the home health care business.
The spin-off will be effected through a pro rata distribution to Staff
Builders' stockholders of all the shares of common stock of TLC owned by
Staff Builders ("the Distribution"). The Distribution will be made by
issuing one share of TLC common stock for every two shares of Staff
Builders Class A and Class B common stock outstanding on October 12, 1999
("the Record Date"). Based upon the 23,619,388 shares of Staff Builders
common stock which were outstanding on the Record Date, 11,809,694 shares
of TLC common stock will be distributed to holders of Staff Builders Class
A and Class B common stock on or about October 20, 1999. The supplemental
staffing business will remain with Staff Builders.
On October 13, 1999, Staff Builders received notice from the Securities and
Exchange Commission that TLC's Registration Statement on Form 10 was
cleared from further comments. Further, on October 20, 1999, Staff Builders
received consent from its current lending institution to complete the
spin-off transaction. Since after the Distribution TLC will own a majority
of the operations, employees and assets of the historical business of Staff
Builders, the Distribution will be treated as a "reverse spin-off" for
financial reporting purposes under generally accepted accounting
principles. Therefore, although TLC will be engaged exclusively in the home
health care business, and not in the supplemental staffing business, the
historical condensed consolidated financial statements contained in this
quarterly report include the financial position and results of operations
of both the home health care business and the supplemental staffing
business previously conducted by Staff Builders.
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of
only normal and recurring accruals) necessary to present fairly the
financial position of Staff Builders and its subsidiaries as of August 31,
1999 and February 28, 1999, the results of operations for the three and six
months ended August 31, 1999 and 1998 and the cash flows for the six months
ended August 31, 1999 and 1998. Certain prior period amounts have been
reclassified to conform with the August 1999 presentation.
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During the period October 20, 1997 through September 17, 1999, Staff
Builders owned 81.8% of the outstanding common stock of Chelsea Computer
Consultants, Inc. ("Chelsea") (see "Sale of Business"). Chelsea is a
provider of information technology staffing services. Prior to the Staff
Builders Board of Directors' approval in March 1999 of the spin-off of the
home health care business, Staff Builders had intended to dispose of its
investment in Chelsea and the accounts of Chelsea were originally accounted
for on the equity basis in its financial statements for the year ended
February 28, 1998 and in its condensed consolidated interim financial
statements as of August 31, 1998 and for the three and six months then
ended. In connection with Staff Builders' proposed spin-off of its home
health care business, management developed plans to retain its investment
in Chelsea by combining the Chelsea operations with its existing
supplemental staffing business. Accordingly, the accounts of Chelsea were
fully consolidated in Staff Builders' financial statements as of February
28, 1999 and for the year then ended and prior period financial statements
have been restated from amounts previously reported to properly consolidate
the accounts of Chelsea. The effects of this change represents a correction
of an error in its financial statements for the three and six months ended
August 31, 1998. As a result, total revenues and total expenses each
increased by $8.3 million for the three months ended August 31, 1998 and by
$14.9 million for the six months then ended from the amounts originally
reported. Net income (loss) and basic and diluted income (loss) per share
were not affected. Earnings attributable to the minority interest in
Chelsea, the amounts of which are not significant, are included in other
(income) expense in the accompanying statements of operations and accrued
expenses in the accompanying balance sheets.
The results for the three and six months ended August 31, 1999 and 1998 are
not necessarily indicative of the results for an entire year. It is
suggested that these condensed financial statements be read in conjunction
with Staff Builders' audited financial statements as of February 28, 1999
and for the year then ended. Further, refer to the pro forma financial
information contained within this report which gives effect to the
Distribution as if it occurred on August 31, 1999 with regard to balance
sheet information and on March 1, 1999 with regard to profit and loss
information.
2. EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE - Primary and fully
diluted earnings (loss) per share were calculated for all periods in
accordance with the requirements of Statement
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of Financial Accounting Standards No. 128, "Earnings per Share." As the
historical condensed consolidated financial statements contained in this
quarterly report include results of operations of both the home health care
business and the supplemental staffing business previously conducted by
Staff Builders, primary and fully diluted earnings (loss) per share were
calculated utilizing Staff Builders' share information.
The shares used in computing basic earnings (loss) per share were
23,619,388 and 23,090,458 shares for the six months ended August 31, 1999
and 1998, respectively. The shares used in computing diluted earnings per
share were 23,619,388 and 23,190,462 shares for the six months ended August
31, 1999 and 1998, respectively. The shares used in computing basic
earnings per share were 23,619,388 and 22,526,140 for the three months
ended August 31, 1999 and 1998, respectively. The shares used in computing
diluted earnings (loss) per share were 23,619,388 and 22,563,259 shares for
the three months ended August 31, 1999 and 1998, respectively.
3. PROVISION (BENEFIT) FOR INCOME TAXES - The provision (benefit) for income
taxes for the three and six months ended August 31, 1999 and 1998 is based
upon Staff Builders' estimated tax provision required for the full year.
4. CONTINGENCIES - On September 20, 1995, the United States Attorney for the
Eastern District of Pennsylvania alleged that (i) between 1987 and 1989, a
corporation, substantially all assets and liabilities of which were
acquired by a subsidiary of the Company in 1993, submitted false claims to
Medicare totaling approximately $1.5 million and (ii) officers and
employees of that corporation submitted false statements in support of such
claims; the U.S. Attorney has made a pre- complaint civil settlement demand
of approximately $4.5 million. The alleged false claims and false
statements were made before the Company acquired that corporation in 1993.
There have been significant discussions with the office of the United
States Attorney which the Company believes are likely to lead to an
arbitration within specified parameters.
On June 18, 1998, 6100 Cleveland, Inc., Orsinger Enterprises, Inc., and
First Choice Medical Staffing, Inc., three former home care and staffing
licensees (franchisees) of the Company in Ohio, commenced an action in the
United States District Court for the Northern District of Ohio, Eastern
Division against the Company's subsidiary, Staff Builders International,
Inc. The action sought to recover damages and other relief alleging unpaid
royalties, wrongful termination by the Company of the Franchise Agreement
between the Company and the Plaintiffs, breach of contract and other
damages. The Company answered the complaint and moved for a change of
venue. On December 1, 1998, Plaintiffs without permission of the Court,
filed a Second Amended Complaint alleging in addition to the allegations
contained in the prior Complaint, claims under the Racketeer Influenced and
Corrupt
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Organizations Act ("RICO"), claiming a series of deliberate and illegal
actions designed to put certain Staff Builders licensees (franchisees) out
of business, as well as claims arising under New York and Ohio business
opportunity statutes. The Court granted the Company's motion to dismiss the
RICO claims and other claims which allege violation of business law in New
York, including the claim for money damages of $25 million, treble damages
and all of the claims against the named executive officers of the Company.
The Court allowed to stand certain claims which allege violation of the
Ohio business opportunities statute relating to disclosure requirements.
The Court also denied Plaintiffs' motion attempting to dismiss all of
defendants' counter-claims and denied third party defendant's motion to
dismiss the Company's third party complaint. A companion case, 6100
Columbus Inc. v. Staff Builders International, Inc. was filed alleging
breach of contract only. Discovery is currently in progress.
On December 21, 1998, H.L.N. Corporation, Frontlines Homecare, Inc.,
E.T.H.L., Inc., Phoenix Homelife Nursing, Inc., and Pacific Rim Health Care
Services, Inc., former home care licensees (franchisees) of the Company for
the territory comprising certain counties in and around Los Angeles,
California and their holding company, instituted an action against the
Company's subsidiaries, Staff Builders, Inc., Staff Builders International,
Inc. and Staff Builders Services, Inc., and certain executive officers of
the Company in the Superior Court for the State of California, County of
Los Angeles. The action was removed to United States District Court for the
Central District of California on December 22, 1998. Plaintiffs filed a
First Amended Complaint in the Central District on January 8, 1999 to
challenge the termination of the four franchise agreements between the
Company and certain of the named plaintiffs, seeking damages for violations
of California franchise law, breach of contract, fraud and deceit, unfair
trade practices, claims under the RICO, negligence, intentional
interference with contractual rights, declaratory and injunctive relief and
a request for an accounting. Plaintiffs seek an unspecified amount of
damages. Discovery is currently in process.
On April 30, 1999, Nursing Services of Iowa, Inc., Helen Kelly, Geri-Care
Home Health, Inc. and Jacquelyn Klooster, two former home health care
licensees (franchisees) of the Company and their principals in Des Moines
and Sioux City, Iowa, respectively, commenced an action in the United
States District Court for the Southern District of Iowa, Central Division
against the Company's subsidiaries Staff Builders International, Inc.,
Staff Builders Services, Inc. Staff Builders, Inc., and certain executive
officers of the Company. The action alleges claims under the RICO, claiming
a series of deliberate and illegal actions designed to defraud Staff
Builders' licensees (franchisees), as well as claims for negligence, breach
of fiduciary duty, breach of contract, fraudulent misrepresentation and
violation of the Iowa franchise law. The complaint seeks unspecified money
damages,
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<PAGE> 10
a claim for treble damages on the RICO claims and punitive and exemplary
damages. The Company filed a motion to dismiss certain counts of the
Complaint relating to the RICO claims.
Although the Company cannot estimate the ultimate cost of its open legal
matters with precision, it maintains a loss contingency accrual for the
aggregate estimated amount to settle such matters. In management's opinion,
settlement of these matters will not have a material adverse effect on the
Company's consolidated financial position, liquidity or results of
operations.
5. SALE OF BUSINESS - On September 17, 1999, Staff Builders sold its entire
interest in Chelsea for total consideration of $17.5 million, subject to a
post-closing net asset book value adjustment. Such consideration included
$14.5 million received in cash and $3.0 million to be paid in cash upon
completion of the Distribution, $500 thousand of which is payable to a
former principal of Chelsea. The proceeds received of $14.5 million were
used to pay off $8.4 million of borrowings under Staff Builders'
acquisition line of credit and $6.1 million was used to pay down the
revolving line of credit, of which $4.6 million and $1.5 million paid down
the home health care and supplemental staffing division portions of the
revolving line of credit, respectively. There was no material gain or loss
from this transaction.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of Staff Builders'
results of operations and financial condition. This discussion should be read in
conjunction with the Condensed Consolidated Financial Statements appearing in
Item 1.
SPIN-OFF TRANSACTION AND FINANCIAL STATEMENTS
Staff Builders,Inc. ("Staff Builders") will separate its home health care
business from its existing supplemental staffing business. To accomplish this
separation of its businesses, Staff Builders' Board of Directors established a
new, wholly- owned subsidiary, Tender Loving Care Health Care Services, Inc.
("TLC" or "the Company"), which will acquire 100% of the outstanding capital
stock of the Staff Builders subsidiaries engaged in the home health care
business. The spin-off will be effected through a pro rata distribution to Staff
Builders' stockholders of all the shares of common stock of TLC owned by Staff
Builders ("the Distribution"). The Distribution will be made by issuing one
share of TLC common stock for every two shares of Staff Builders Class A and
Class B common stock outstanding on October 12, 1999 ("the Record Date"). Based
upon the 23,619,388 shares of Staff Builders common stock which were outstanding
on the Record Date, 11,809,694 shares of TLC common stock will be distributed to
holders of Staff Builders Class A and Class B common stock on or about October
20, 1999. The supplemental staffing business will remain with Staff Builders.
On October 13, 1999, Staff Builders received notice from the Securities and
Exchange Commission that TLC's Registration Statement on Form 10 was cleared
from further comments. Further, on October 20, 1999, Staff Builders received
consent from its current lending institution to complete the spin-off
transaction. Since after the Distribution TLC will own a majority of the
operations, employees and assets of the historical business of Staff Builders,
the Distribution will be treated as a "reverse spin-off" for financial reporting
purposes under generally accepted accounting principles. Therefore, although TLC
will be engaged exclusively in the home health care business, and not in the
supplemental staffing business, the historical condensed consolidated financial
statements contained in this quarterly report include the financial position and
results of operations of both the home health care business and the supplemental
staffing business previously conducted by Staff Builders.
RESULTS OF OPERATIONS
Total revenues decreased by $8.2 million or 7.3% for the three months ended
August 31, 1999 to $103.5 million from $111.7 million for the three months ended
August 31, 1998. For the six months ended August 31, 1999 ("the 1999 period"),
total revenues decreased by $11.8 million or 5.3% to $211.1 million from $222.9
million for the six months ended August 31, 1998 ("the 1998 period"). The
decrease in total revenues for the 1999 period was primarily due to a decrease
in home health care division service revenues of $27.8 million, or 17.1%, to
$135.3 million in the 1999 period from $163.1 million in the 1998 period. This
decrease was partially offset by an increase in the supplemental staffing
division service revenues of $16.3 million, or 27.6%, to $75.3 million in the
1999 period from $59.0 million in the 1998 period.
The decrease in home health care division service revenues to $135.3 million in
the 1999 period from $163.1 million in the 1998 period was primarily due to a
decrease in Medicare revenues. This decrease resulted from the negative impact
of the Medicare Interim
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Payment System ("IPS") enacted under the Balanced Budget Act of 1997 ("BBA").
Further, the decrease in revenues in the 1999 period as compared to the 1998
period reflects a decrease in the number of operating locations to 107 locations
as of August 31, 1999 as compared to 166 locations and 198 locations as of
August 31, 1998 and February 28, 1998, respectively.
The following are Staff Builders' home health care service revenues by payment
source:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, AUGUST 31,
----------------- ----------------
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Medicare 41.4% 48.5% 43.3% 48.2%
Medicaid and other local
government programs 38.9 31.0 37.3 30.9
Insurance and individuals 19.1 19.4 18.7 19.5
Other 0.6 1.1 0.7 1.4
------ ------ ------ ------
Total 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ======
</TABLE>
The increase in the supplemental staffing division service revenues to $75.3
million in the 1999 period as compared to $59.0 million in the 1998 period was
primarily due to the increase in the number of staffing offices to 57 locations
operated by 40 licensees as of August 31, 1999 as compared to 46 locations
operated by 35 licensees as of February 28, 1998. Included in these revenues is
an increase in the information technology staffing revenues generated by Chelsea
which were $17.1 million and $14.9 million in the 1999 and 1998 periods,
respectively.
Operating costs (the direct costs of providing services) were 68.5% and 66.7% of
service revenues for the three months ended August 31, 1999 and 1998, and 68.6%
and 67.8% for the six months ended August 31, 1999 and 1998, respectively. The
increase in operating costs as a percentage of service revenues for the three
and six months ended August 31, 1999 as compared to the same periods in the
prior year is primarily due to the increase in supplemental staffing revenues
which have higher direct operating costs as a percentage of revenues and a
decrease in home health care revenues which have a lower level of direct
operating costs as a percentage of revenues. Supplemental staffing direct
operating costs as a percentage of related revenues were 77.5% and 78.5% for the
1999 and 1998 periods, and home health care direct operating costs as a
percentage of related revenues were 63.7% and 63.9%, respectively. Supplemental
staffing direct operating costs were $58.1 million and $46.4 million and home
health care direct operating costs were $86.4 million and $104.2 million in the
1999 and 1998 periods, respectively.
General and administrative expenses decreased by $2.7 million, or 7.4%, to $33.4
million for the three months ended August 31, 1999 from $36.1 million for the
three months ended August 31, 1998. For the six months ended August 31, 1999,
general and administrative expenses decreased by $2.3 million, or 3.3%, to $67.8
million from $70.1 million for the six months ended August 31, 1998. The
decrease in general and administrative expenses for the three and
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<PAGE> 12
six months ended August 31, 1999 as compared to the same periods in the prior
year is primarily due to the reduction in the number of home health care
operating locations to 107 locations as of August 31, 1999 from 198 locations at
February 28, 1998. The decrease of $2.3 million in general and administrative
expenses for the 1999 period includes a reduction in home health care expenses
of $5.5 million offset by an increase in supplemental staffing division expenses
of $3.2 million due to expansion of that division. Home health care general and
administrative expenses were $55.1 million and $60.6 million and supplemental
staffing general and administrative expenses were $12.7 million and $9.5 million
in the 1999 and 1998 periods, respectively.
Interest expense was approximately $1.9 million and $850 thousand for the three
months ended August 31, 1999 and 1998, and $3.2 million and $1.9 million for the
six months ended August 31, 1999 and 1998, respectively. The increase in
interest expense for the three and six months ended August 31, 1999 as compared
to the same periods in the prior year is primarily due to increased borrowings
under the secured revolving lines of credit, together with higher interest rates
on such borrowings. The 1999 period interest expense of $3.2 million included
home health care and supplemental staffing interest expense of $1.4 million and
$1.8 million, respectively. The supplemental staffing interest expense included
approximately $400 thousand related to the acquisition line of credit which was
paid off in September 1999.
Amortization expense was approximately $300 thousand in each of the three month
periods ended August 31, 1999 and 1998, and was approximately $600 thousand in
each of the six month periods then ended. A decrease of approximately $100
thousand and $200 thousand for the three and six months ended August 31, 1999,
respectively, as compared to the same periods in the prior year resulted from
the write-off of home health care goodwill and intangible assets of $15.3
million in the fourth quarter of the year ended February 28, 1999. Offsetting
these increases was an increase in amortization expense due to the reduction in
the estimated useful lives of home health care goodwill and intangible assets
from 40 years to 20 years, effective March 1, 1999. The reduction in useful
lives results from Staff Builders' assessment of the factors related to the home
health care industry including industry consolidation, changing third-party
reimbursement requirements and an uncertain regulatory environment.
The provision for income taxes of $277 thousand and $436 thousand for the three
and six months ended August 31, 1999, respectively, primarily consists of state
income taxes attributable to the supplemental staffing division operations. In
the fourth quarter of the year ended February 28, 1999, a valuation allowance
was recorded aggregating $28.9 million. Such valuation allowance was recorded
because management does not believe that the utilization of the tax benefits
from operating losses and other temporary differences are "more likely than not"
to be required by Statement of Financial Accounting Standards No. 109. There has
been no change to this determination relative to the 1999 period.
-11-
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
Staff Builders has a secured credit facility which consists of a revolving line
of credit under which Staff Builders is permitted to borrow amounts based upon
certain percentages of eligible receivables, up to the maximum amount of the
credit facility. On September 17, 1999, Staff Builders paid off an acquisition
line of credit which prior thereto was also included as part of the secured
credit facility.
On September 24, 1999, the home health care business ("TLC" or "the Company")
entered into an amended and restated loan and security agreement which expires
on February 29, 2000. The TLC loan agreement provides for the home health care
business to borrow up to a maximum of $17.0 million which shall be reduced to
(i) $16.75 million on the earlier of : (A) October 29, 1999, or (B) the date of
the Distribution, (ii) $16.25 million thirty days after the date of the
reduction set forth in clause (i) above, and (iii) $16.0 million thirty days
after the date of the reduction set forth in clause (ii) above. TLC is permitted
to borrow up to 80% of eligible accounts receivable, up to the maximum amount of
the credit facility. Availability under the line of credit is reduced by a
reserve established by the bank of up to $2.0 million which shall be applied to
the TLC borrowing base in the event that ATC has an over advance outstanding
under its line of credit, through the date of Distribution. On the date of the
Distribution, all provisions for cross-defaults and cross-collateralization in
the loan agreements will be terminated. Availability is reduced by a separate
reserve in the amount of $750 thousand until such time that a more favorable
payment plan has been agreed upon in writing between TLC and the Federal Health
Care Finance Administration, under terms and conditions acceptable to the bank.
-12-
<PAGE> 14
During the period ending February 29, 2000 through which the Company may borrow
under the amended loan and security agreement, management is taking steps to
obtain new financing.
The TLC loan bears interest at 2.0% over the prevailing prime lending rate (such
rate being 8.25% as of October 20, 1999), a monthly collateral management fee of
$8 thousand and an unused fee of .375% per annum of the daily unused portion of
the facility. TLC paid bank fees of $170 thousand in connection with execution
of the amended and restated loan and security agreement. Subsequently, TLC is
required to pay facility fees of .875% of its then maximum revolving credit
amount on November 30, 1999 and on December 30, 1999, and .5% of its then
maximum revolving credit amount on January 31, 2000. If the loan is fully paid
on a date prior to any of the foregoing dates, then the Company will not be
required to make any of the payments on dates subsequent to the loan pay off
date.
On September 17, 1999, Staff Builders, Inc. sold its entire interest in Chelsea
for total consideration of $17.5 million, subject to a post-closing net asset
book value adjustment. Such consideration included $14.5 million received in
cash and $3.0 million which is to be paid in cash upon completion of the
Distribution, $2.5 million of which is payable to the Staff Builders
supplemental staffing business and $500 thousand of which is payable to a former
principal of Chelsea. The proceeds received of $14.5 million were used to pay
off the entire $8.4 million balance under Staff Builders' acquisition line of
credit, which prior thereto was included as part of the secured credit facility,
and $6.1 million was used to pay down the revolving line of credit, of which
$4.6 million and $1.5 million paid down the home health care and ATC
supplemental staffing division portions of the revolving line of credit,
respectively. There was no material gain or loss from this transaction.
Staff Builder's working capital deficiency was $56.5 million and $39.8 million
at August 31 and February 28, 1999, respectively. On a pro forma basis to
reflect the Distribution, the working capital deficiency of TLC was $54.2
million as of August 31, 1999. Staff Builder's current liabilities at August 31,
1999 include $29.7 million for Medicare and Medicaid liabilities, $39.4 million
of outstanding borrowings under the secured credit facility (of which $14.5
million was paid on September 17, 1999) and $6.9 million for the current portion
of other debt obligations. While the Company cannot accurately determine the
required payment dates for its total Medicare and Medicaid liabilities, it has
included $24.9 million in long term liabilities as of August 31, 1999 based upon
its present estimate of when payments would likely become due. In order to pay
its current liabilities in the normal course of business as well as to pay its
liabilities to the Medicare and Medicaid agencies as they become due, the
Company is investigating alternative sources of funding.
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<PAGE> 15
The above conditions raise substantial doubt about the ability of the Company to
continue as a going concern. As a result, management continues to pursue various
strategies, including but not limited to, negotiating with alternative lending
sources, deferred payment terms for Medicare and Medicaid audit liabilities as
well as for any repayments of Medicare periodic interim payment(s) ("PIP") and
further deferred payment terms for other creditors. Based upon a revised payment
schedule received in June 1999, the Company is required to pay 24 equal monthly
installments of approximately $1.3 million, including principal and interest.
The Company paid the first of these installments in July 1999. In August 1999,
the Company entered into a further revised payment agreement which required a
payment of $350 thousand in August 1999, monthly installments of approximately
$1.1 million from September 1999 through August 2000, monthly installments of
approximately $1.0 million from September 2000 through April 2001, and
approximately $650 thousand per month thereafter through March 2002. The August,
September and October 1999 payments have been made as required. Staff Builders
continues to negotiate more favorable payment terms for its Medicare and
Medicaid payment obligations. Additionally, the Company has obtained favorable
extended payment terms with some of its trade creditors and is continuing to
negotiate extended payment terms with other vendors. However, there can be no
assurance that these actions will be successful to provide adequate funds for
the Company's current level of operations and to pay the Company's past-due
obligations.
YEAR 2000
Many computer systems, applications, information technologies and
equipment containing computer related components (generally "computer systems
and equipment") are unable to differentiate between the year 2000 and the year
1900 because they were programmed with two-digit, rather than four digit, date
fields. Accordingly, older computer systems that have time-sensitive
applications may not properly recognize the year 2000 and beyond("Year 2000
issue"). This could cause system or equipment shut downs, failures or
miscalculations resulting in inaccuracies in computer output or disruptions of
operations, including, among other things, inaccurate processing of financial
information and/or temporary inabilities to process transactions, manufacture
products, or engage in similar normal business activities.
The Company has made upgrades to its computer systems and equipment
controlling its general ledger, accounts payable, payroll and human resources
systems and believes that these systems are largely Year 2000 compliant. The
Company is continuing its upgrades with respect to the front end systems, which
include clinical, scheduling and billing. The Company expects to complete such
upgrades by October 31, 1999. The Company believes that with these upgrades, the
Year 2000 issue will not pose significant operational problems for its computer
systems and equipment. However, if such upgrades are not made or are not
completed in a timely fashion, the Year 2000 issue might have an adverse impact
on
-14-
<PAGE> 16
the operations of the Company, the precise degree of which cannot be known at
this time.
In addition to risks associated with the Company's own computer systems
and equipment, the Company has relationships with, and is to varying degrees
dependent upon, a large number of third party vendors that provide information,
goods and services to the Company and third party customers to which the Company
provides its services. These include financial institutions, companies in
industry, and Federal and state government agencies. If significant numbers of
these third parties experience failures in their computer systems or equipment
due to the Year 2000 issue and if, in particular, the Federal government is not
Year 2000 compliant these failures could adversely affect the Company's ability
to process transactions or engage in similar normal business activities. While
some of these risks are outside of the Company's control, it has instituted
programs, including internal records review to identify key third parties,
assess their level of Year 2000 compliance, update contracts and address any
non-compliance issues.
The total cost of the Year 2000 systems assessment and upgrades is
funded through operating cash flows and leases and the Company is expensing
certain items and capitalizing others. The estimated cost to replace existing
software applications consisting of Lawson software and HBO Corporation systems,
including modifications to accommodate the Year 2000, is approximately $25
million, including the cost of implementation. The actual cost could, however,
exceed this estimate. The Company has not established a contingency plan to deal
with major Year 2000 failures, if any, and does not intend to establish a
contingency plan because it is comfortable with progress made to date, although
no assurances can be made.
FORWARD-LOOKING STATEMENTS
Certain statements in this report on Form 10-Q constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are typically identified by the
inclusion of phrases such as "the Company anticipates", "the Company believes"
and other phrases of similar meaning. These forward looking statements are based
on the Company's current expectations. Such forward-looking statements involve
known and unknown risks, uncertainties, and other factors that may cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. The potential risks and
uncertainties which could cause actual results to differ materially from the
Company's expectations include the impact of further changes in the Medicare
reimbursement system, including any changes to the current interim payment
system and/or the ultimate implementation of a prospective payment system;
government regulation; health care reform; pricing pressures from third-party
payors, including managed care organizations; retroactive Medicare audit
adjustments; Year 2000
-15-
<PAGE> 17
failures; changes in laws and interpretations of laws or regulations relating to
the health care industry; and inability to obtain financing on satisfactory
terms.
GOVERNMENT REGULATION. As a home health care provider, the Company is subject to
extensive and changing state and Federal regulations relating to the licensing
and certification of its offices and the sale and delivery of its products and
services. The Federal government and Medicare fiscal intermediaries have become
more vigilant in their review of Medicare reimbursements to home health care
providers generally, and are becoming more restrictive in their interpretation
of those costs for which reimbursement will be allowed to such providers.
Changes in the law and regulations as well as new interpretations enforced by
the relevant regulatory agencies could have an adverse effect on the Company's
operations and the cost of doing business.
THIRD-PARTY REIMBURSEMENT AND MANAGED CARE. Because the Company is reimbursed
for its services primarily by the Medicare/Medicaid programs, insurance
companies, managed care companies and other third-party payors, the
implementation of alternative payment methodologies for any of these payors
could have an impact on revenues and profit margins. Generally, managed care
companies have sought to contain costs by reducing payments to providers.
Continued cost reduction efforts by managed care companies could adversely
affect the Company's results of operations.
HEALTH CARE REFORM. The BBA resulted in significant changes to cost based
reimbursement for Medicare home health care providers. The BBA retains a cost
based reimbursement system, the cost limits have been reduced and a
per-beneficiary limit has been implemented. The BBA provides for IPS which
became applicable for the Company on March 1, 1998 and will remain in effect
until the adoption of a new prospective payment system scheduled to be effective
for all home health care agencies on October 1, 2000. The effect of the changes
under IPS is to reduce the limits for the amount of costs that are reimbursable
to home health care providers under the Medicare program. The Company cannot
quantify the full effect of IPS on the Company's future performance because
certain components of health care reform legislation, such as the
per-beneficiary limit, require annual data which will not be known until a final
assessment by Medicare and/or its fiscal intermediary is completed for each
annual period.
As Congress and state reimbursement entities assess alternative health
care delivery systems and payment methodologies, the Company cannot predict
which additional reforms may be adopted or what impact they may have on the
Company. Additionally, uncertainties relating to the nature and outcomes of
health care reforms have also generated numerous realignments, combinations and
consolidations in the health care industry which may also have an adverse impact
on the Company's business strategy and results of operations. The Company
expects that in addition to industry consolidation generally, there may be
consolidations within the
-16-
<PAGE> 18
Company's company-owned and licensed locations, with the likely result that
there will be fewer offices by the end of the next fiscal year.
BUSINESS CONDITIONS. The Company must continue to establish and maintain close
working relationships with physicians and physician groups, managed care
organizations, hospitals, clinics, nursing homes, social service agencies and
other health care providers. There can be no assurance that the Company will
continue to establish or maintain such relationships. The Company expects
additional competition will develop in future periods given the increasing
market demand for the type of services offered.
ATTRACTION AND RETENTION OF LICENSEES AND EMPLOYEES. Maintaining quality
licensees, managers and branch administrators will play a significant part in
the future success of the Company. The Company's professional nurses and other
health care personnel are also key to the continued provision of quality care to
the Company's patients. The possible inability to attract and retain qualified
licensees, skilled management and sufficient numbers of credentialed health care
professionals and para-professionals could adversely affect the Company's
operations and quality of service.
SATISFACTORY FINANCING. On a pro forma basis to reflect the Distribution, the
working capital deficiency of TLC was $54.2 million as of August 31, 1999. On
September 24, 1999, the Company and its subsidiaries entered into a new loan
agreement with its existing bank. The Company will be in default under this new
facility if it does not produce a revised payment plan with The Health Care
Finance Administration of the Department of Health and Human Services ("HCFA")
satisfactory to the bank with respect to the repayment of Medicare overpayments
by October 29, 1999. Although the Company anticipates obtaining such a payment
plan, we cannot assure that it will be obtained by October 29, 1999 or at all.
We have also negotiated deferred payment terms for certain of our Medicare and
Medicaid liabilities and have made or are in the process of making arrangements
with many of our other creditors to either reduce our liability to them, defer
or extend payment of the liability or a combination of all. Management cannot
provide assurance that any or enough such arrangements can be attained. In such
event, or if our revenues do not meet expectations or our costs escalate, we may
be unable to pay our debts as they become due and an event of default may occur
under this new facility. The Company's credit facility expires February 29,
2000.
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<PAGE> 19
The Company's loan agreement permits borrowings up to a maximum of $17 million
which will be reduced to $16 million in December 1999. Although the Company is
currently seeking new financing, there can be no assurance that we will be able
to obtain new financing by February 29, 2000. Further, if cash provided from
operations is not adequate to cover the scheduled reductions in borrowing
capability under our credit facility, we may be unable to pay our debts as they
become due. Further, the Company is at or near its borrowing limit under its
existing credit facility.
COMPETITION - Although there are national home health care companies, the health
care personnel market is highly fragmented and competitors are often localized
in particular geographical markets. Some of the entities with which we compete
have substantially greater financial and other resources. In addition, our
operations depend, to a significant degree, on our ability to recruit qualified
health care personnel and we face competition from other companies in recruiting
qualified health care personnel. There can be no assurance that qualified
personnel will be available to us in the future. Our failure to recruit
qualified personnel could have a material adverse effect on our operations.
YEAR 2000. The Company believes that because of the upgrades it has made and is
making to its computer systems, the Year 2000 issue will not pose significant
operational problems for it. However, if the upgrades are not completed on time,
the Year 2000 issue might have an adverse effect. The Company has not
established a contingency plan to deal with major Year 2000 failures, if any,
and does not intend to establish a contingency plan because it is comfortable
with progress made to date, although no assurances can be made. The total cost
of the Company's Year 2000 systems enhancements and upgrades is funded through
operating cash flows and leases. If the financial condition of the Company
deteriorates, it may be unable to fund these systems enhancements and upgrades.
-18-
<PAGE> 20
PART II - OTHER INFORMATION
ITEM 5. - OTHER INFORMATION
SPIN-OFF TRANSACTION AND PRO FORMA FINANCIAL INFORMATION - Staff Builders
separated its home health care business from its existing supplemental staffing
business. To accomplish this separation of its businesses, Staff Builders' Board
of Directors established a new, wholly-owned subsidiary, Tender Loving Care
Health Care Services, Inc. ("TLC"), which acquired 100% of the outstanding
capital stock of the Staff Builders subsidiaries engaged in the home health care
business. The spin-off was effected through a pro rata distribution to Staff
Builders' stockholders of all the shares of common stock of TLC owned by Staff
Builders ("the Distribution"). The Distribution was made by issuing one share of
TLC common stock for every two shares of Staff Builders Class A and Class B
common stock outstanding on October 12, 1999 ("the Record Date"). Based upon the
23,619,388 shares of Staff Builders common stock which were outstanding on the
Record Date, 11,809,694 shares of TLC common stock were distributed to holders
of Staff Builders Class A and Class B common stock. The supplemental staffing
business will remain with Staff Builders.
The following unaudited pro forma consolidated balance sheet as of August 31,
1999 and unaudited pro forma consolidated statements of operations of the
Company for the six months ended August 31, 1999 and the fiscal year ended
February 28, 1999 (collectively, the "Pro Forma Statements") are based on the
historical Consolidated Financial Statements of Staff Builders included
elsewhere in this quarterly report as adjusted to give effect to the
Distribution. Since after the Distribution TLC will own a majority of the
operations, employees and assets of the historical business of Staff Builders,
the Distribution will be treated as a "reverse spin off" for financial reporting
purposes under GAAP. See assumptions and adjustments in the accompanying Notes
to the Pro Forma Statements. The pro forma consolidated balance sheet gives
effect to the Distribution as if it occurred on August 31, 1999 and the pro
forma consolidated statements of operations give effect to the Distribution as
if it occurred on the first day of each respective period. The pro forma
consolidated balance sheet also gives effect to the sale of Chelsea as if it
occurred on August 31, 1999.
The pro forma adjustments are based upon available information and certain
assumptions that the Company believes are reasonable. The Pro Forma Statements
do not purport to represent what the Company's financial position and result of
operations would actually have been had the Distribution occurred on such dates
or to project the Company's financial position or results of operations for any
future period.
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<PAGE> 21
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
AUGUST 31, 1999
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
TLC
STAFF PRO FORMA
BUILDERS ADJUSTS. PRO FORMA
HISTORICAL (A) CONSOLID.
---------- --------- ---------
<S> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,867 $ (666)(B) $ 1,201
Accounts receivable, net 77,472 (31,010)(B) 46,462
Prepaid expenses and
other current assets 4,108 (1,970)(B) 2,138
---------- --------- ---------
Total current assets 83,447 (33,646) 49,801
Fixed Assets, net 29,185 (1,301)(B) 27,884
Intangible Assets, net 26,845 (21,643)(B) 5,202
Other Assets 3,580 (302)(B) 3,278
---------- --------- ---------
Total Assets $ 143,057 $ (56,892) $ 86,165
========== ========= =========
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 37,614 $ (8,002)(B) $ 29,612
Accrued payroll and related expenses 26,297 (3,430)(B) 22,867
Current portion of long-term debt 46,307 (24,433)(B,F) 21,874
Current portion of Medicare and
Medicaid liabilities 29,690 -- 29,690
---------- --------- ---------
Total current liabilities 139,908 (35,865) 104,043
---------- --------- ---------
Long-Term Debt 16,911 -- 16,911
---------- --------- ---------
Long-Term Medicare and
Medicaid Liabilities 24,934 -- 24,934
---------- --------- ---------
Other Liabilities 5,336 (616) 4,720
---------- --------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A Common stock 236 (118)(E) 118
Class B Common stock -- -- --
Additional paid-in capital 69,055 (18,254)(E) 50,801
Accumulated deficit (113,323) (2,039)(B) (115,362)
---------- --------- ---------
Total stockholders' equity (deficit) (44,032) (20,411) (64,443)
---------- --------- ---------
Total Liabilities and Stockholder's
Equity $ 143,057 $ (56,892) $ 86,165
========== ========= =========
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements
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<PAGE> 22
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED AUGUST 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
TLC
STAFF PRO FORMA
BUILDERS ADJUSTS. PRO FORMA
HISTORICAL (A) CONSOLID.
---------- --------- ---------
<S> <C> <C> <C>
REVENUES:
Home health care $ 135,297 $ -- $ 135,297
Supplemental staffing 75,317 (75,317)(B) --
--------- --------- ---------
Total service revenues 210,614 (75,317) 135,297
Sale of licensees and fees, net 542 (12)(B) 530
--------- --------- ---------
Total revenues 211,156 (75,329) 135,827
--------- --------- ---------
Costs and Expenses:
Operating costs 144,529 (58,097)(B) 86,432
General and administrative expenses 67,836 (12,723)(B) 55,113
Amortization of intangible assets 569 (330)(B) 239
Interest expense 3,167 (1,815)(B) 1,352
Interest (income) (378) 5 (B) (373)
Other (income) expense, net (330) (199)(B) (529)
--------- --------- ---------
Total costs and expenses 215,393 (73,159) 142,234
--------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (4,237) (2,170) (6,407)
PROVISION FOR INCOME TAXES 436 (386)(C) 50
--------- --------- ---------
NET INCOME (LOSS) $ (4,673) $ (1,784) $ (6,457)
========= ========= =========
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ (0.20) $ (0.55)
========= =========
Diluted $ (0.20) $ (0.55)
========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic 23,619 (11,809)(D) 11,810
========= ========= =========
Diluted 23,619 (11,809)(D) 11,810
========= ========= =========
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements
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<PAGE> 23
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
TLC
STAFF PRO FORMA TLC
BUILDERS ADJUSTS. PRO FORMA
HISTORICAL (A) CONSOLID.
---------- --------- ---------
<S> <C> <C> <C>
REVENUES:
Home health care $ 310,297 $ -- $ 310,297
Supplemental staffing 124,867 (124,867)(B) --
--------- --------- ---------
Total service revenues 435,164 (124,867) 310,297
--------- --------- ---------
Sale of licensees and fee, net 2,424 (190)(B) 2,234
--------- --------- ---------
Total revenues 437,588 (125,057) 312,531
--------- --------- ---------
Costs and Expenses:
Operating costs 299,057 (99,048)(B) 200,009
General and administrative expenses 150,169 (22,610)(B) 127,559
Amortization of intangible assets 1,314 (696)(B) 618
Interest expense 4,233 (2,787)(B) 1,446
Interest (income) (1,061) 75 (B) (986)
Other (income) expense, net 464 (338)(B) 126
Medicare and Medicaid audit
adjustments 29,000 -- 29,000
Restructuring costs 20,464 (130)(B) 20,334
--------- --------- ---------
Total costs and expenses 503,640 (125,534) 378,106
INCOME (LOSS) BEFORE INCOME TAXES (66,052) 477 (65,575)
PROVISION FOR INCOME TAXES 7,034 (509)(C) 6,525
--------- --------- ---------
NET INCOME (LOSS) $ (73,086) $ 986 $ (72,100)
========= ========= =========
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ (3.16) $ (6.23)
========= =========
Diluted $ (3.16) $ (6.23)
========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic 23,162 (11,581)(D) 11,581
========= ========= =========
Diluted 23,162 (11,581)(D) 11,581
========= ========= =========
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements
-22-
<PAGE> 24
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(A) The following pro forma adjustments reflect the Distribution. Since
after the Distribution TLC will own a majority of the operations, employees and
assets of the historical businesses of Staff Builders, the Distribution will be
treated as a "reverse spin-off" for financial reporting purposes under GAAP.
(B) Pro forma adjustments to remove assets, liabilities, revenues and
expenses not part of the home health care operations of Staff Builders. Bank
borrowings and related interest expense have been accounted for in the pro forma
financial data based on the historical allocation of such borrowings by Staff
Builders to its home health care and supplemental staffing businesses.
(C) Pro forma adjustments to give effect to the computation of income taxes
as if separate income tax returns were filed.
(D) Pro forma adjustment to reflect the average outstanding shares of Staff
Builders adjusted for the one share of TLC which will be issued for each
previously outstanding two shares of Staff Builders.
(E) Pro forma adjustment to reflect the capitalization of TLC.
(F) Includes pro forma adjustment to reflect the proceeds of $14.5 million
for the sale of Chelsea which were used to pay off $8.4 million of borrowings
under Staff Builders' acquisition line of credit and $6.1 million was used to
pay down the revolving line of credit. There was no material gain or loss from
this transaction.
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<PAGE> 25
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
EXHIBIT NO.
3.1 Amended and Restated Certificate of Incorporation of the Company, filed
with the Secretary of State of Delaware on October 14, 1999.
3.2 Amended and Restated By-laws of the Company.
10.1 Distribution Agreement, dated as of October 20, 1999, between the
Company and Staff Builders, Inc., a Delaware corporation.
10.2 Tax Allocation Agreement, dated as of October 20, 1999, between the
Company and Staff Builders, Inc., a Delaware corporation.
10.3 Transitional Services Agreement, dated as of October 20, 1999, between
the Company and Staff Builders, Inc., a Delaware corporation.
10.4 Trademark License Agreement, dated as of October 20, 1999, between the
Company and Staff Builders, Inc., a Delaware corporation.
10.5 Sublease, dated as of October 20, 1999, between the Company and Staff
Builders, Inc., a Delaware corporation.
10.6 Employee Benefits Agreement, dated as of October 20, 1999 between the
Company and Staff Builders, Inc., a Delaware corporation.
10.7 [Intentionally Omitted]
- -------------------
See Notes to Exhibits
-24-
<PAGE> 26
10.8 [Intentionally Omitted]
10.9 Second Amended and Restated Loan and Security Agreement, dated as of
September 24, 1999, between the Company and Mellon Bank, N.A. (A)
10.10 Employment Agreement, dated as of October 20, 1999, between the Company
and Stephen Savitsky.
10.11 Employment Agreement, dated as of October 20, 1999, between the Company
and David Savitsky.
10.12 Employment Agreement, dated as of October 20, 1999, between the Company
and Dale R. Clift.
10.13 Employment Agreement, dated as of October 20, 1999, between the Company
and Sandra Parshall.
10.14 Employment Agreement, dated as of October 20, 1999, between the Company
and Willard T. Derr.
10.15 Employment Agreement, dated as of October 20, 1999, between the Company
and Renee J. Silver.
10.16 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Stephen Savitsky.
10.17 Indemnification Agreement, dated as of October 20, 1999, between the
Company and David Savitsky.
10.18 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Bernard J. Firestone.
10.19 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Jonathan J. Halpert.
10.20 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Dale R. Clift.
10.21 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Willard T. Derr.
10.22 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Renee J. Silver.
10.23 First Amendment to Second Amended and Restated Loan and Security
Agreement, dated as of October 20, 1999, between the Company and
Mellon Bank, N.A.
27 Financial Data Schedule.
- -----------------
See Notes to Exhibits
-25-
<PAGE> 27
NOTES TO EXHIBITS
(A) Incorporated by reference to the Company's Registration Statement on
Form 10 (File No. 0-25777).
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Registrant for the quarter ended August
31, 1999.
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<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Tender Loving Care Health
Care Services, Inc.
Dated: October 20, 1999 By: /s/ Stephen Savitsky
----------------------------------
Stephen Savitsky
Chairman of the Board
and Chief Executive Officer
Dated: October 20, 1999 By: /s/ Dale R. Clift
----------------------------------
Dale R. Clift
President and
Chief Operating Officer
Dated: October 20, 1999 By: /s/ Willard T. Derr
----------------------------------
Willard T. Derr
Sr. Vice President,
Corporate Controller and
Chief Financial Officer
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<PAGE> 29
TENDER LOVING CARE EXHIBIT LIST
ITEM 6. Exhibits and Reports on Form 8-K
(A) Exhibits
3.1 Amended and Restated Certificate of Incorporation of the Company,
filed with the Secretary of State of Delaware on October 14, 1999.
3.2 Amended and Restated By-laws of the Company.
10.1 Distribution Agreement, dated as of October 20, 1999, between the
Company and Staff Builders, Inc., a Delaware corporation.
10.2 Tax Allocation Agreement, dated as of October 20, 1999, between the
Company and Staff Builders, Inc., a Delaware corporation.
10.3 Transitional Services Agreement, dated as of October 20, 1999, between
the Company and Staff Builders, Inc., a Delaware corporation.
10.4 Trademark License Agreement, dated as of October 20, 1999, between the
Company and Staff Builders, Inc., as Delaware corporation.
10.5 Sublease, dated as of October 20, 1999, between the Company and Staff
Builders, Inc., a Delaware corporation.
10.6 Employee Benefits Agreement, dated as of October 20, 1999 between the
Company and Staff Builders, Inc., a Delaware corporation.
10.7 [Intentionally Omitted.]
10.8 [Intentionally Omitted.]
<PAGE> 30
10.9 Second Amended and Restated Loan and Security Agreement, dated as of
September 24, 1999, between the Company and Mellon Bank, N.A. (A)
10.10 Employment Agreement, dated as of October 20, 1999, between the
Company and Stephen Savitsky.
10.11 Employment Agreement, dated as of October 20, 1999, between the
Company and David Savitsky.
10.12 Employment Agreement, dated as of October 20, 1999, between the
Company and Dale R. Clift.
10.13 Employment Agreement, dated as of October 20, 1999, between the
Company and Sandra Parshall.
10.14 Employment Agreement, dated as of October 20, 1999, between the
Company and Willard T. Derr.
10.15 Employment Agreement, dated as of October 20, 1999, between the
Company and Renee J. Silver.
10.16 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Stephen Savitsky.
10.17 Indemnification Agreement, dated as of October 20, 1999, between the
Company and David Savitsky.
10.18 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Bernard J. Firestone.
10.19 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Jonathan J. Halpert.
10.20 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Dale R. Clift.
10.21 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Willard T. Derr.
10.22 Indemnification Agreement, dated as of October 20, 1999, between the
Company and Renee J. Silver.
10.23 First Amendment to Second Amended and Restated Loan and Security
Agreement, dated as of October 20, 1999, between the Company and
Mellon Bank, N.A.
27 Financial Data Schedule.
<PAGE> 31
NOTES TO EXHIBITS
(A) Incorporated by reference to the Company's Registration Statement on
Form 10 (File No. 0-25777).
(B) Reports on Form 8-K
No reports on Form 8-k were filed by the Company during the quarter ended August
31, 1999.
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
TENDER LOVING CARE HEALTH CARE SERVICES, INC., a corporation organized
and existing under the laws of the State of Delaware, hereby certifies as
follows:
1. The name of the corporation is TENDER LOVING CARE HEALTH CARE
SERVICES, INC. (the "CORPORATION"). The date of filing its original Certificate
of Incorporation with the Secretary of State was February 26, 1999.
2. This Amended and Restated Certificate of Incorporation amends and
restates in its entirety the original Certificate of Incorporation.
First: The name of the Corporation is:
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
Second: The registered office of the Corporation is located at 1013
Centre Road, City of Wilmington, County of New Castle, State of Delaware,
19805-1297. The name of its registered agent at that address is The
Prentice-Hall Corporation System, Inc.
Third: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
Fourth: The total number of shares of stock that the Corporation shall
have authority to issue 50,000,000 shares of Common Stock, par value $.01 per
share ("COMMON
<PAGE> 2
STOCK"), and 5,000,000 shares of Preferred Stock, par value $1.00 per share (the
"PREFERRED STOCK").
The designations, powers, preferences and rights, and the
qualifications and restrictions, of the Common Stock and the Preferred Stock are
as follows:
(a) Except as otherwise required by statute, as set forth in a
resolution or resolutions of the Board of Directors as hereinafter provided, or
as otherwise provided herein, the holders of shares of Common Stock of the
Corporation shall (i) possess the exclusive right to vote for the election of
directors and for all other corporate purposes, and (ii) vote together without
regard to class. Except as otherwise required by the General Corporation Law of
Delaware or as otherwise provided herein, each share of Common Stock shall have
identical powers, preferences and rights, including rights in liquidation and to
dividends and distributions. With respect to any proposed amendment to the
Amended and Restated Certificate of Incorporation of the Corporation that would
increase or decrease the number of authorized shares of Common Stock, increase
or decrease the par value of the shares of Common Stock, or alter or change the
powers, preferences, relative voting power or special rights of the shares of
the Common Stock so as to affect them adversely, the approval of a majority of
the votes entitled to be cast by the holders of the class adversely affected by
the proposed amendment, voting separately as a class, shall be obtained in
addition to the approval of a majority of the votes entitled to be cast by the
holders of the Common Stock voting together without regard to class as
hereinabove provided.
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<PAGE> 3
(b) A holder of the Common Stock shall be entitled to one (1) vote on
each matter submitted to a vote at a meeting of stockholders for each share of
Common Stock held of record by such holder as of the record date for such
meeting.
(c) The Preferred Stock of the Corporation shall be issued in whole or
in part, in series or otherwise, and the designations, powers, preferences,
qualifications, limitations or restrictions thereof, of the various classes or
series including such provisions as may be desired for the redemption of shares
of stock and/or the conversion of shares of stock into or exchanged for shares
of any other series or class of stock, and the time or times, price or prices,
rates of exchange, adjustments, and other conditions of such redemption,
conversion, and/or exchange, shall be designated from time to time by resolution
or resolutions duly adopted by the Board of Directors.
Fifth: (a) The following provisions are inserted for the management of
the business and for the conduct of the affairs of the Corporation, and for
further definition, limitation and regulation of the powers of the Corporation
and of its directors and stockholders:
1. The number of directors of the Corporation shall be fixed
as provided in the By-Laws. The directors shall be divided into three
classes, each class to contain as near as possible to one-third (1/3)
of the whole number of directors of the Board of Directors so fixed in
the By-Laws, and, except as otherwise provided by statute, in the case
of any increase in the number of directors fixed as provided in the
By-Laws, such increase shall be apportioned among the classes of
directors so as to maintain each class as near as possible to one-third
of the whole number
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<PAGE> 4
of directors as so increased. The initial term of office for members of
the first class shall expire at the annual meeting of stockholders next
following; the initial term for members of the second class shall
expire at the annual meeting of stockholders one year thereafter; and
the initial term for members of the third class shall expire at the
annual meeting of stockholders two years thereafter. At the expiration
of the initial term, and of each succeeding term of each class, the
directors of each class shall be elected to serve for a term of three
years. The By-Laws may contain any provision regarding classification
not inconsistent with the terms hereof.
2. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, newly created directorships resulting
from any increase in the authorized number of directors or any
vacancies in the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause shall
be filled by a majority vote of the directors then in office, and
directors so chosen shall hold office for a term expiring at the annual
meeting of stockholders at which the term of the class to which they
have been elected expires. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any
incumbent director.
3. Subject to the rights of the holders of any series of
Preferred Stock then outstanding, any director, or the entire Board of
Directors, may be removed from office at any time, but only for cause
and only by the affirmative vote of the
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<PAGE> 5
holders of at least 80% of the voting power of all of the shares of the
Corporation entitled to vote for the election of directors.
4. Notwithstanding anything contained in this Amended and
Restated Certificate of Incorporation to the contrary, the affirmative
vote of the holders of at least 80% of the voting power of all of the
shares of the Corporation entitled to vote for the election of
directors shall be required to amend or repeal, or to adopt any
provision inconsistent with, this Article FIFTH (a).
(b) The Board of Directors shall have power, without the assent or vote
of the stockholders:
1. To make, alter, amend, change, add to or repeal the By-Laws
of the Corporation; to fix and vary the amount to be reserved for any
proper purpose; to authorize and cause to be executed mortgages and
liens upon all or any part of the property of the Corporation; to
determine the use and disposition of any surplus or net profits; and to
fix the times for the declaration and payment of dividends.
2. To determine from time to time whether, and to what times
and places, and under what conditions the accounts and books of the
Corporation (other than the stockledger) or any of them, shall be open
to the inspection of the stockholders.
(c) The directors in their discretion may submit any contract or act
for approval or ratification at any annual meeting of the stockholders or at any
meeting of the stockholders called for the purpose of considering any such act
or contract, and any contract or act that shall be approved or be ratified by
the vote of the holders of a majority of the stock of the
-5-
<PAGE> 6
Corporation which is represented in person or by proxy at such meeting and
entitled to vote thereat (provided that a lawful quorum of stockholders be there
represented in person or by proxy) shall be as valid and as binding upon the
Corporation and upon all the stockholders as though it had been approved or
ratified by every stockholder of the Corporation, whether or not the contract or
act would otherwise be open to legal attack because of directors' interest, or
for any other reason.
(d) Any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders. Special meetings of stockholders of the
Corporation may be called only by the Board of Directors, upon not less than 10
nor more than 60 days written notice. Notwithstanding anything contained in this
Amended and Restated Certificate of Incorporation to the contrary, the
affirmative vote of the holders of at least 80% of the voting power of all of
the shares of the Corporation entitled to vote for the election of directors
shall be required to amend or repeal, or to adopt any provision inconsistent
with this Article FIFTH (d).
(e) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation; subject, nevertheless, to the provisions of the statutes of
Delaware, of this certificate, and to any By-Laws from time to time made by the
stockholders; provided, however, that no By-Laws so made shall
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<PAGE> 7
invalidate any prior act of the directors which would have been valid if such
By-law had not been made.
Sixth: The Corporation shall, to the full extent permitted by Section
145 of the Delaware General Corporation Law, as amended, from time to time,
indemnify all persons whom it may indemnify pursuant thereto.
Seventh: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Amended and Restated Certificate of
Incorporation in the manner now or hereafter prescribed by law, and all rights
and powers conferred herein on stockholders, directors and officers are subject
to this reserved power.
Eighth: (a) 1. In addition to any affirmative vote required by law or
this Amended and Restated Certificate of Incorporation, and except as otherwise
expressly provided in section (b) of this Article EIGHTH:
a. any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder) which is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an
Interested Stockholder; or
b. any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series
of transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder
-7-
<PAGE> 8
of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value of $1,000,000 or more; or
c. the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of transactions) of
any securities of the Corporation or any Subsidiary to any
Interested Stockholder or any Affiliate of any Interested
Stockholder in exchange for cash, securities or other property
(or combination thereof) having an aggregate Fair Market Value
of $1,000,000 or more; or
d. the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed by or
on behalf of an Interested Stockholder or any Affiliate of any
Interested Stockholder; or
e. any reclassification of securities (including any
reverse stock split), or recapitalization of the Corporation,
or any merger or consolidation of the Corporation with any of
its Subsidiaries or any transaction (whether or not with or
into or otherwise involving an Interested Stockholder) which
has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder or any Affiliate of any Interested
Stockholder;
shall require the affirmative vote of the holders of (i) at least 80% of the
then outstanding shares of Common Stock of the Corporation entitled to vote
generally in the election of directors voting together as a single class; and
(ii) at least 66% of the then outstanding shares of each series of
-8-
<PAGE> 9
Preferred Stock then issued and outstanding, each such series of Preferred Stock
voting separately and having one vote for each share of Preferred Stock issued
and outstanding. Such affirmative vote shall be required notwithstanding the
fact that no vote may be required, or that a lesser percentage may be specified,
by law or in any agreement with any national securities exchange or otherwise.
2. The Term "Business Combination" as used in this Article EIGHTH shall
mean any transaction which is referred to in any one or more of clauses (a)
through (e) of paragraph 1 of this Section (a).
(b) The provisions of Section (a) of this Article EIGHTH shall not be
applicable to any particular Business Combination, and such Business Combination
shall require only such affirmative vote as is required by law and any other
provision of this Amended and Restated Certificate of Incorporation, if the
Business Combination shall have been approved by a majority of the Continuing
Directors (as hereinafter defined).
(c) For the purposes of this Article EIGHTH:
1. A "person" shall mean any individual, firm, corporation or
other entity.
2. "Interested Stockholder" shall mean any person (other than
the Corporation or any Subsidiary) who or which:
a. is the beneficial owner, directly or indirectly,
of more than 10% of the voting power of the outstanding Voting
Stock; or
b. is an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the date in
question was the
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<PAGE> 10
beneficial owner, directly or indirectly, of 10% or more of
the voting power of the then outstanding Voting Stock; or
c. is an assignee of or has otherwise succeeded to
any shares of Voting Stock which were at any time within the
two-year period immediately prior to the date in question
beneficially owned by any Interested Stockholder, if such
assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
3. A person shall be a "beneficial owner" of any Voting Stock:
a. which such person or any of its Affiliates or
Associates (as hereinafter defined) beneficially owns,
directly or indirectly; or
b. which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding; or
c. which are beneficially owned, directly or
indirectly, by any person with which such person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Voting Stock.
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<PAGE> 11
4. For the purposes of determining whether a person is an Interested
Stockholder pursuant to paragraph 2 of this Section (c), the number of shares of
Voting Stock deemed to be outstanding shall include shares deemed owned through
application of paragraph 3 of this Section (c) but shall not include any of the
shares of Voting Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise.
5. "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Securities Exchange Act of 1934,
as amended.
6. "Subsidiary" means any corporation of which a majority of any class
of equity security is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Interested
Stockholder set forth in paragraph 2 of this Section (c), the term "Subsidiary"
shall mean only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
7. "Continuing Director" means any member of the Board of Directors of
the Corporation (the "Board") who is unaffiliated with the Interested
Stockholder and was a member of the Board prior to the time that the Interested
Stockholder became an Interested Stockholder, and any successor of a Continuing
Director who is unaffiliated with the Interested Stockholder and is recommended
to succeed a Continuing Director by a majority of Continuing Directors then on
the Board.
8. "Fair Market Value" means:
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<PAGE> 12
a. In the case of stock, the highest closing sale
price during the 30-day period immediately preceding the date
in question of a share of such stock on the Composite Tape for
New York Stock Exchange Listed Stocks, or, if such stock is
not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such Exchange, on
the principal United States securities exchange or, if such
stock is not listed on any such exchange, the highest closing
bid quotation with respect to a share of such stock during the
30-day period preceding the date in question on the Nasdaq
Market or the OTC Bulletin Board or any system then in use, or
if no such quotations are available, the fair market value on
the date in question of a share of such stock as determined by
the Board in good faith; and
b. In the case of property other than cash or stock,
the fair market value of such property on the date in question
as determined by the Board in good faith.
9. "Voting Stock" means stock of any class or series entitled to vote
generally in the election of directors.
(d) The directors of the Corporation shall have the power and duty to
determine for the purposes of this Article EIGHTH, on the basis of information
known to them after reasonable inquiry:
1. whether a person is an Interested Stockholder;
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<PAGE> 13
2. the number of shares of Voting Stock beneficially owned by
any person;
3. whether a person is an Affiliate or Associate of another;
4. whether the assets which are the subject of any Business
Combination have, or to be received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Business
Combination has, an aggregate Fair Market Value of $1,000,000 or more.
(e) Nothing contained in this Article EIGHTH shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by law.
(f) Notwithstanding any other provision of this Amended and Restated
Certificate of Incorporation or the By-Laws (and notwithstanding the fact that a
lesser percentage may be specified by law, this Amended and Restated Certificate
of Incorporation or the By-Laws), the affirmative vote of the holders of 80% or
more of the then outstanding shares of each class entitled to vote under Section
(a) hereof, voting separately, shall be required to amend or repeal, or adopt
any provisions inconsistent with, this Article EIGHTH of this Amended and
Restated Certificate of Incorporation.
Ninth: The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by Paragraph 7 of Subsection
(b) of Section 102 of the General Corporation Law of the State of Delaware as
the same may be amended or supplemented.
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<PAGE> 14
Tenth: In furtherance and not in limitation of the powers conferred by
law or in this Amended and Restated Certificate of Incorporation, the Board of
Directors (and any committee of the Board of Directors) is expressly authorized,
to the extent permitted by law, to take such action or actions as the Board or
such committee may determine to be reasonably necessary or desirable to (A)
encourage any person (as defined in Article EIGHTH of this Amended and Restated
Certificate of Incorporation) to enter into negotiations with the Board of
Directors and management of the Corporation with respect to any transaction
which may result in a change of control of the Corporation which is proposed or
initiated by such person or (B) contest or oppose any such transaction which the
Board of Directors or such committee determines to be unfair, abusive or
otherwise undesirable with respect to the Corporation and its business, assets
or properties or the stockholders of the Corporation, including, without
limitation, the adoption of such plans or the issuance of such rights, options,
capital stock, notes, debentures or other evidences of indebtedness or other
securities of the Corporation, which rights, options, capital stock, notes,
evidences of indebtedness and other securities (i) may be exchangeable for or
convertible into cash or other securities on such terms and conditions as may be
determined by the Board or such committee and (ii) may provide for the treatment
of any holder or class of holders thereof designated by the Board of Directors
or any such committee in respect of the terms, conditions, provisions and rights
of such securities which is different from, and unequal to, the terms,
conditions, provisions and rights applicable to all other holders thereof.
Eleventh: The name and mailing address of the incorporator is Edward B.
McNicholas, Staff Builders, Inc., 1983 Marcus Avenue, Lake Success, New York,
11042.
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<PAGE> 15
This Amended and Restated Certificate of Incorporation was duly adopted
by the Board of Directors in accordance with Section 245 of the General
Corporation Law of the State of Delaware.
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<PAGE> 16
IN WITNESS WHEREOF, said Tender Loving Care Health Services, Inc. has
caused this Certificate to be signed by Dale R. Clift, its President, and
attested by Renee J. Silver, Esq., its Secretary, this 14th day of October,
1999.
TENDER LOVING CARE HEALTH CARE
SERVICES, INC.
By:/s/ Dale R. Clift
----------------------------
Dale R. Clift, President
ATTEST:
By: /s/ Renee J. Silver
-------------------------------
Renee J. Silver, Esq., Secretary
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<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED
BY-LAWS
OF
TENDER LOVING CARE
HEALTH CARE SERVICES, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICE
Section 1.1. Registered Office. The registered office of TENDER LOVING
CARE HEALTH CARE SERVICES, INC. ("Corporation") in the State of Delaware shall
be located at 1013 Centre Road, City of Wilmington, County of New Castle, State
of Delaware, 19805-1297, or at such other place as the Board of Directors may at
any time or from time to time designate.
Section 1.2. Registered Agent. The registered agent of the Corporation
in the State of Delaware at its registered office is The Prentice-Hall
Corporation System, Inc., or such other person, firm or corporation as the Board
of Directors may at any time or from time to time designate.
Section 1.3. Principal Office. The principal place of business of the
Corporation shall be at 1983 Marcus Avenue, in the Town of Lake Success in the
State of New York, or at such other place as the Board of Directors may at any
time or from time to time designate.
Section 1.4. Other Offices. The Corporation may establish or
discontinue, from time to time, such other offices and places of business within
or without the State of Delaware as may be deemed proper for the conduct of the
business of the Corporation.
<PAGE> 2
ARTICLE II
MEETING OF STOCKHOLDERS
Section 2.1. Annual Meeting. The annual meeting of holders of capital
stock of the Corporation ("Stock") as are entitled to vote thereat ("Annual
Meeting of Stockholders") shall be held for the election of directors and
transaction of such other business as properly may come before it no more than
180 days after the close of the fiscal year of the Corporation.
Section 2.2. Special Meetings. In addition to such special meetings as
are provided for by law or by the Certificate of Incorporation, special meetings
of the stockholders of the Corporation may be called at any time only by the
Board of Directors. Special meetings shall be called by means of a notice as
provided in Section 2.4 hereof.
Section 2.3. Place of Meetings. All meetings of the stockholders shall
be held at such place within or without the State of Delaware as shall be
designated by the Board of Directors.
Section 2.4. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting and in case
of a special meeting, the purpose or purposes for which the meeting is called.
The notice of each annual Meeting of Stockholders shall identify each matter
intended to be acted upon at such meeting. If mailed, the notice shall be
addressed to each stockholder in a postage prepaid envelope at his address as it
appears on the records of the Corporation unless prior to the time of mailing
the Secretary shall have received from any such stockholder a written request
that notices intended for him be mailed to some other address. In such case the
notice intended for such stockholder shall be mailed to the address designated
in such request. Notice of each meeting of stockholders shall be delivered
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<PAGE> 3
personally or mailed not less than ten (10) nor more than sixty (60) days before
the date fixed for the meeting to each stockholder entitled to vote at such
meeting.
Section 2.5. Waiver of Notice. Whenever notice is required to be given,
a written waiver thereof signed by the person entitled to notice or by his proxy
or attorney duly authorized, whether before or after the time stated therein for
such meeting, shall be deemed equivalent to notice. Attendance of a person at a
meeting of stockholders shall constitute a waiver of notice of such meeting,
except as otherwise provided by law. Neither the business to be transacted at
nor the purpose of any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
Section 2.6. Organization of Meetings. The Chairman of the Board, if
any, shall act as chairman at all meetings of stockholders at which he is
present and, as such chairman, shall call such meetings of stockholders to order
and shall preside thereat. If the Chairman of the Board shall be absent from any
meeting of stockholders, the duties otherwise provided in this Section to be
performed by him at such meeting shall be performed at such meeting by the
President. If both the Chairman of the Board and the President shall be absent,
such duties shall be performed by a Vice President designated by the President
to preside at such meeting. If no such officer is present at such meeting, any
stockholder or the proxy of any stockholder entitled to vote at the meeting may
call the meeting to order and a chairman to preside thereat shall be elected by
a majority of those present and entitled to vote. The Secretary of the
Corporation shall act as secretary at all meetings of the stockholders but, in
his absence, the chairman of the meeting may appoint any person present to act
as secretary of the meeting.
Section 2.7. Stockholders Entitled to Vote. The Board of Directors may
fix a date not less than ten (10) no more than sixty (60) days preceding the
date of any meeting of
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stockholders, or preceding the last day on which the consent of stockholders may
be effectively expressed for any purpose without a meeting, as a record date for
the determination of the stockholders entitled: (a) To notice of, and to vote
at, such meeting and any adjournment thereof; or (b) to express such consent. In
such case such stockholders of record on the date so fixed shall be entitled to
notice of, and to vote at, such meeting and any adjournment thereof or to
express such consent, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date is so fixed.
Section 2.8. List of Stockholders Entitled to Vote. The Secretary shall
prepare and make or cause to be prepared and made, at least ten (10) days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at such meeting, arranged in alphabetical order and showing the address of
each such stockholder as it appears on the records of the Corporation and the
number of shares registered in the name of each such stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten (10)
days prior to the meeting, either at a place specified in the notice of meeting
within the city where the meeting is to be held or, if not so specified, at the
place where the meeting is to be held, and a duplicate list shall be similarly
open to examination of the principal place of business of the Corporation. Such
list shall be produced and kept at the time and place of the meeting during the
whole time thereof and may be inspected by any stockholder who is present.
Section 2.9. Quorum and Adjournment. Except as otherwise provided by
law and in the Certificate of Incorporation, the holders of 33 1/3% of the
shares of Stock entitled to vote at the meeting, shall constitute a quorum at
each meeting of the stockholders. Where a separate vote by class is required, 33
1/3% of the shares of each such class or series of Stock
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entitled to vote at such meeting shall constitute a quorum at such meeting. In
the absence of a quorum, the holders of a majority of the shares of Stock
present in person or by proxy may adjourn any meeting from time to time until a
quorum shall attend. At any such adjourned meeting at which a quorum may he
present, any business may be transacted which might have been transacted at the
meeting as originally called. Notice of an adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 2.10. Order of Business. The order of business at all meetings
of stockholders shall be as determined by the chairman of the meeting.
Section 2.11. Vote of Stockholders. Except as otherwise permitted by
law or by the Certificate of Incorporation, all action by stockholders shall be
taken at a meeting of the stockholders. Except as otherwise provided in the
Certificate of Incorporation, every stockholder of record, as determined
pursuant to Section 2.7 hereof, who is entitled to vote shall at every meeting
of the stockholders be entitled to one vote for each share of Stock entitled to
participate in such vote held by such stockholder on the record date. Each
Stockholder entitled to vote shall have the right to vote in person or by proxy.
Except as otherwise provided by law, no vote on any question upon which a vote
of the stockholders may be taken need be by ballot unless the chairman of the
meeting shall determine that it shall be by ballot or the holders of a majority
of the shares of Stock present in person or by proxy and entitled to participate
in such vote shall so demand. In a vote by ballot each ballot shall state the
number of shares voted and the name of the stockholder or proxy voting. Unless
otherwise provided by law or by the Certificate of Incorporation, each director
shall be elected and all other questions shall be decided by the vote of the
holders of a majority of all shares of Stock present in person or by proxy at
the meeting and entitled to vote on the question; provided, however, that the
Board of Directors may require
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on any question a vote of the holders of a majority of the shares of Stock
outstanding and entitled to vote thereon. Notwithstanding anything contained in
these By-Laws to the contrary, the affirmative vote of at least 80% of the
shares of the Corporation entitled to vote for the election of directors shall
be required to amend or repeal, or to adopt any provision inconsistent with this
Section.
Section 2.12. Proxies. Each stockholder entitled to vote at a meeting
of stockholders or to express consent to corporate action in writing without a
meeting may authorize another person or persons to act for him by proxy. A proxy
acting for any stockholder shall be duly appointed by an instrument in writing
subscribed by such stockholder.
Section 2.13. Attendance at Meetings of Stockholders. Any stockholder
of the Corporation not entitled to notice of the meeting or to vote at such
meeting shall nevertheless be entitled to attend any meeting of stockholders of
the Corporation.
Section 2.14. Nominations of Directors. Nominations for the election of
a Director made by a stockholder must be submitted in writing to the Secretary
of the Corporation not less than 30 nor more than 60 days prior to any
stockholders meeting called for the election of Directors. Such notice shall set
forth the following information with respect to each nominee and each
stockholder making a nomination: (1) name, age and business address; (2)
business experience during the last five years and other directorships presently
held; and (3) number of shares and percentage of the Corporation's capital stock
beneficially owned (or securities convertible into or exchangeable for capital
stock). Within such time period, the Secretary of the Corporation must also
receive from each nominee a written consent to being a nominee and a statement
of intention to serve as a Director, if elected.
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ARTICLE III
BOARD OF DIRECTORS
Section 3.1. Number, Qualifications, Election and Term of Office. The
number of directors of the Corporation shall be fixed from time to time by the
vote of a majority of the entire Board then in office and the number thereof may
thereafter by like vote be increased or decreased to such greater or lesser
number (not less than three) as may be so provided, subject to the provisions of
3.12. All of the directors shall be of full age and need not be shareholders.
The directors shall be divided into three classes, each class to contain as near
as possible to one-third (1/3) of the whole number of directors of the Board of
Directors so fixed in the By-Laws, and, except as otherwise provided by statute,
in the case of any increase in the number of directors fixed in the By-Laws,
such increase shall be appointed among the classes of directors so as to
maintain each class as near as possible to one-third of the whole number of
directors as so increased. The initial term of office for members of the first
class shall expire at the annual meeting of stockholders next following; the
initial term for members of the second class shall expire at the annual meeting
of stockholders one year thereafter; and the initial term for members of the
third class shall expire at the annual meeting of stockholders two years
thereafter. At the expiration of the initial term, and of each succeeding term
of each class, the directors of each class shall be elected to serve for a term
of three years.
Section 3.2. General Powers. The business, properties and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors which, without limiting the generality of the foregoing, shall have
the power to appoint the officers and agents of the Corporation, to fix and
alter the salaries of officers, employees and agents of the Corporation, to
grant general or limited authority (including authority to delegate and
sub-delegate) to
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officers, employees and agents of the Corporation to make, execute, affix the
corporate seal to and deliver contracts and other instruments and documents
including bills, notes, checks or other instruments for the payment of money, in
the name and on behalf of the Corporation without specific authority in each
case and to appoint committees in addition to those provided for in Articles IV
and V hereof with such powers and duties as the Board of Directors may
determine. The membership of such committees shall consist of such persons as
are designated by the Board of Directors whether or not any such person is then
a director of the Corporation, provided that each such committee shall consist
of at least one (1) director of the Corporation. In addition, the Board of
Directors may exercise all the powers of the Corporation and do all lawful acts
and things which are not reserved to the stockholders by laws by the Certificate
of Incorporation or by the By-Laws.
Section 3.3. Place of Meetings. Meetings of the Board of Directors may
be held at the principal place of business of the Corporation in the Town of
Lake Success, County of Nassau, State of New York or at any other place, within
or without the State of Delaware, from time to time as designated by the Board
of Directors.
Section 3.4. Organization Meeting. A newly elected Board of Directors
shall meet and organize without notice as soon an practicable after each Annual
Meeting of Stockholders at the place at which such meeting of stockholders took
place. If a quorum is not present, such organization meeting may be held at any
other time or place which may be specified for special meetings of the Board of
Directors in a notice given in the manner provided in Section 3.6 hereof or in a
waiver of notice thereof.
Section 3.5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times as may be determined by resolution of the
Board of Directors. No
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notice shall be required for any regular meeting. Except as otherwise provided
by law, any business may be transacted at any regular meeting of the Board of
Directors.
Section 3.6. Special Meetings; Notice; and Waiver of Notice. Special
meetings of the Board of Directors shall be called by the Secretary or an
Assistant Secretary at the request of the Chairman of the Board, if any, the
President, a Vice President or at the request in writing of one or more of the
whole Board of Directors stating the purpose or purposes of such meeting.
Notices of special meetings shall be mailed to each director addressed to him at
his residence or usual place of business not later than three (3) days before
the day on which the meeting is to be held or shall be sent to him at either of
such places by facsimile or shall be communicated to him personally or by
telephone, not later than the day before the date fixed for the meeting. Notice
of any meeting of the Board of Directors shall not be required to be given to
any director if he shall sign a written waiver thereof either before or after
the time stated therein for such meeting or if he shall be present at the
meeting and participate in the business transacted thereat. Any and all business
transacted at any meeting of the Board of Directors shall be fully effective
without any notice thereof having been given if all the members shall be present
thereat. Unless limited by law, the Certificate of Incorporation, the By-Laws or
by the terms of the notice thereof, any and all business may be transacted at
any special meeting without the notice thereof having so specifically enumerated
the matters to be acted upon.
Section 3.7. Organization. The Chairman of the Board, if any, shall
preside at all meetings of the Board of Directors at which he in present. If the
Chairman of the Board shall be absent from any meeting of the Board of
Directors, the duties otherwise provided in this Section 3.7 to be performed by
him at such meeting shall be performed by the President. If both the Chairman of
the Board and the President shall be absent, such duties shall be performed by a
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director designated by the President to preside at such meeting. If no such
officer or director is present at such meeting, one of the directors present
shall be chosen to preside by the members of the Board of Directors present at
such meeting. The Secretary of the Corporation shall act as the secretary at all
meetings of the Board of Directors and, in his absence, a temporary secretary
shall be appointed by the chairman of the meeting.
Section 3.8. Quorum and Adjournment. Except as otherwise provided by
Section 3.13 hereof and in the Certificate of Incorporation, at every meeting of
the Board of Directors a majority of the total number of directors shall
constitute a quorum. In no event shall a quorum consist of less than two
directors. Except as otherwise provided by law, by the Certificate of
Incorporation, by Sections 3.13, 4.1, 4.8, 5.1 and 6.3 hereof, the vote of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors. In the absence of a quorum, any
meeting may be adjourned from time to time until a quorum is present. Notice of
an adjourned meeting shall be required to be given if notice was required to be
given of the meeting as originally called.
Section 3.9. Voting. On any question on which the Board of Directors
shall vote, the names of those voting and their votes shall be entered in the
minutes of the meeting when any member of the Board of Directors present at the
meeting so requests.
Section 3.10. Acting Without a Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if all members of the Board of
Directors or of such committee, as the case may be, consent thereto in writing
and such written consents are filed with the minutes of such proceeding.
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Section 3.11. Resignations. Any director may resign at any time by
written notice thereof to the Corporation. Any resignation shall be effective
immediately unless some other time is specified for it to take effect.
Acceptance of any resignation shall not be necessary to make it effective unless
such resignation is tendered subject to such acceptance.
Section 3.12. Removal of Directors. Subject to the rights of the
holders of any series of Preferred Stock then outstanding, any director, or the
entire Board of Directors, may be removed at any time, but only for cause and
only by the affirmative vote of the holders of at least 80% of the shares of the
Corporation entitled to vote for the election of directors.
Section 3.13. Filling of Vacancies. Subject to the rights of the
holders of any series of Preferred Stock then outstanding, newly created
directorships resulting from any increase in the authorized number of directors
or any vacancy created by death, resignation, retirement, disqualification,
removal from office or other cause shall be filled by the affirmative vote of a
majority of the remaining directors or by a sole remaining director though the
remaining director or directors be less than the quorum provided for in Section
3.8 hereof. Each director so chosen shall hold office for a term expiring at the
next annual meeting of stockholders at which the term of the class which he has
been elected expires. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.
Section 3.14. Amendment and Repeal. Notwithstanding anything contained
in these By-Laws to the contrary, the affirmative vote of the holders of at
least 80% of the shares of the Corporation entitled to vote for the election of
directors shall be required to amend or repeal, or to adopt any provision
inconsistent with this Article.
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ARTICLE IV
EXECUTIVE COMMITTEE
Section 4.1. Appointment and Powers. The Board of Directors may, by
resolution adopted by affirmative vote of a majority of the whole Board of
Directors, appoint an Executive Committee and the members thereof consisting of
one or more members which shall have and may exercise, during the intervals
between the meetings of the Board of Directors, all of the powers of the Board
of Directors in the management of the business, properties and affairs of the
Corporation; provided, however, that the foregoing is subject to the applicable
provisions of law and the Certificate of Incorporation and shall not be
construed as authorizing action by the Executive Committee with respect to any
action which is required to be taken by vote of a specified proportion of the
whole Board of Directors. The Executive Committee shall consist of the President
and such directors as may from time to time be designated by the Board of
Directors. So far an practicable, the members of the Executive Committee shall
be appointed at the organization meeting of the Board of Directors in each year
and, unless sooner discharged by affirmative vote of a majority of the whole
Board of Directors, shall hold office until the next annual organization meeting
of the Board of Directors and until their respective successors are appointed or
until they sooner die, resign or are removed. All acts done and powers conferred
by the Executive Committee shall be deemed to be, and may be certified as being,
done or conferred under authority of the Board of Directors.
Section 4.2. Place of Meetings. Meetings of the Executive Committee may
be held at the principal place of business of the Corporation in the Town of
Lake Success, County of Nassau or at any other place within or without the State
of Delaware from time to time designated by the Board of Directors or the
Executive Committee.
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Section 4.3. Meetings; Notice; and Waiver of Notice. Regular meetings
of the Executive Committee shall be held at such times as may be determined by
resolution either of the Board of Directors or the Executive Committee and no
notice shall be required for any regular meeting. Special meetings of the
Executive Committee shall be called by the Secretary or an Assistant Secretary
upon the request of any member thereof. Notices of special meetings shall be
mailed to each member, addressed to him at his residence or usual place of
business not later than three days before the day on which the meeting is to be
held or shall be sent to him at either of such places by facsimile, or shall be
delivered to him personally or by telephone, not later than the day before the
date fixed for the meeting. Notice of any such meeting shall not be required to
be given to any member of the Executive Committee if he shall sign a written
waiver thereof either before or after the time stated therein for such meeting
or if he shall be present at the meeting and participate in the business
transacted thereat, and all business transacted at any meeting of the Executive
Committee shall be fully effective without any notice thereof having been given
if all the members shall be present thereat. Unless limited by law, the
Certificate of Incorporation, the By-Laws or the terms of the notice thereof,
any and all business may be transacted at any special meeting without the notice
thereof having specifically enumerated the matters to be acted upon.
Section 4.4. Organization. The Chairman of the Executive Committee
shall preside at all meetings of the Executive Committee at which he is present.
In the absence of the Chairman of the Executive Committee, the Chairman of the
Board shall preside at meetings of the Executive Committee at which he is
present. In the absence of the Chairman of the
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Executive Committee and the Chairman of the Board, the President shall preside
at meetings of the Executive Committee at which he is present. In the absence of
the Chairman of the Executive Committee, the Chairman of the Board, and the
President, one of the members present shall be chosen by the members of the
Executive Committee present to preside at such meeting. The Secretary of the
Corporation shall act as secretary at all meetings of the Executive Committee
and, in his absence, a temporary secretary shall be appointed by the chairman of
the meeting.
Section 4.5. Quorum and Adjournment. A majority of the members of the
Executive Committee shall constitute a quorum for the transaction of business.
The act of a majority of those present at any meeting at which a quorum is
present shall be the act of the Executive Committee. In the absence of a quorum,
any meeting may be adjourned from time to time until a quorum is present. No
notice of any adjourned meeting shall be required to be given other than by
announcement at the meeting that is being adjourned.
Section 4.6. Voting. On any question on which the Executive Committee
shall vote, the names of those voting and their votes shall be entered in the
minutes of the meeting when any member of the Executive Committee present at the
meeting so requests.
Section 4.7. Records. The Executive Committee shall keep minutes of its
acts and proceedings which shall be submitted at the next regular meeting of the
Board of Directors. Any action taken by the Board of Directors with respect
thereto shall be entered in the minutes of the Board of Directors.
Section 4.8. Vacancies; Alternate Members; and Absences. Any vacancy
among the appointed members of the Executive Committee may be filled by
affirmative vote of a majority of the whole Board of Directors. By similar vote,
the Board of Directors may designate one or more directors as alternate members
of the Executive Committee who may replace any absent or disqualified member at
any meeting of the Executive Committee.
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Section 4.9. Compensation. No compensation shall be paid to directors,
as such, for their services, but by resolution of the Board a fixed sum and
expenses for actual attendance, at each regular or special meeting of the Board
may be authorized. Nothing herein shall be construed to preclude any director
from serving the Corporation in any other capacity and receiving compensation
therefor.
ARTICLE V
OTHER COMMITTEES OF THE BOARD
Section 5.1. Appointing Other Committees of the Board. The Board of
Directors may from time to time by resolution adopted by affirmative vote of a
majority of the whole Board of Directors appoint other committees of the Board
of Directors and the members thereof which shall have such powers of the Board
of Directors and such duties as the Board of Directors may properly determine.
Such other committee of the Board of Directors shall consist of one or more
directors. By similar vote, the Board of Directors may designate one or more
directors as alternate members of any such committee who may replace any absent
or disqualified member at any meeting of any such committee. In the absence or
disqualification of any member of any such committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member.
Section 5.2. Place and Time of Meetings; Notice; Waiver of Notice; and
Records. Meetings of such committees of the Board of Directors may be held at
any place, within or without the State of Delaware, from time to time designated
by the Board of Directors or the committee. Regular meetings of any such
committee shall be held at such times as may be
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determined by resolution of the Board of Directors or the committee and no
notice shall be required for any regular meeting. A special meeting of any such
committee shall be called by resolution of the Board of Directors or by the
Secretary or an Assistant Secretary upon the request of any member of the
committee. The provisions of Section 4.3 hereof with respect to notice and
waiver of notice of special meetings of the Executive Committee shall also apply
to all special meetings of other committees of the Board of Directors. Any such
committee may make rules for holding and conducting its meetings and shall keep
minutes of all meetings.
ARTICLE VI
THE OFFICERS
Section 6.1. Officers. The officers of the Corporation shall be a Chief
Executive Officer, President, one or more Vice Presidents, a Secretary and a
Treasurer. The officers shall be elected by the Board of Directors. The Board of
Directors may also elect a Chairman of the Board, a Vice Chairman of the Board,
an Executive Vice President, one or more Senior Vice Presidents, a Chairman of
the Executive Committee, a Controller, one or more Second Vice Presidents,
Assistant Secretaries, Assistant Treasurers, Assistants Controllers and such
other officers and agents as in their judgment may be necessary or desirable.
The Chairman of the Board, the Vice Chairman of the Board, and the Chairman of
the Executive Committee shall be selected from the directors.
Section 6.2. Terms of Office and Vacancies. So far as is practicable,
all officers shall be appointed at the organizational meeting of the Board of
Directors in each year and, except as otherwise provided in Sections 6.1, 6.3
and 6.4 hereof, shall hold office until the organization meeting of the Board of
Directors in the next subsequent year and until their respective successors are
elected and qualify or until they sooner die, retire, resign or are
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removed. If any vacancy shall occur in any office, the Board of Directors may
elect a successor to fill such vacancy for the remainder of the term.
Section 6.3. Removal of Officers. Any officer may be removed at any
time, either with or without cause, by affirmative vote of a majority of the
whole Board of Directors at any regular meeting or at any special meeting called
for that purpose.
Section 6.4. Resignations. Any officer may resign at any time by giving
written notice thereof to the Corporation. Any resignation shall be effective
immediately unless some other date is specified for it to take effect.
Acceptance of any resignation shall not be necessary to make it effective unless
such resignation is tendered subject to such acceptance.
Section 6.5. Officers Holding More Than One Office. Any officer may
hold two or more offices so long as the duties of such offices can be
consistently performed by the same person.
Section 6.6. The Chairman of the Board. The Chairman of the Board shall
be a member of the Board of Directors and the Executive Committee, and he shall
be the Chief Executive Officer of the Corporation. As provided in Section 2.6
hereof, he shall act as chairman at all meetings of the stockholders at which he
is present; as provided in Section 3.7 hereof, he shall preside at all meetings
of the Board of Directors at which he is present; and as provided in Section 4.4
hereof, in the absence of the Chairman of the Executive Committee, he shall
preside at all meetings of the Executive Committee at which he is present. He
shall manage the business, property and affairs of the Corporation and shall see
that all of the orders and resolutions of the Board of Directors are carried
out. He shall also perform such other duties and shall have such other powers as
may form time to time be assigned to him by the Board of Directors. In the
absence or disability of the President, the duties of the President shall be
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performed and his powers may be exercised by the Chairman of the Board. In the
absence or disability of the Chairman of the Board and the President, the powers
of the Chairman of the Board may be exercised by such member of the Board of
Directors as may be designated by the Chairman of the Board and, failing such
designation or in the absence of the person so designated, by such member of the
Board of Directors as may be designated by the President.
Section 6.7. The President. The President shall be a member of the
Board of Directors and a member of the Executive Committee. He shall be subject
to the control of the Board of Directors and shall formulate recommendations to
the Board of Directors for its action and decision. As provided in Section 4.4
hereof, in the absence of the Chairman of the Executive Committee and the
Chairman of the Board, he shall preside at all meetings of the Executive
Committee at which he is present. In the absence or disability of the Chairman
of the Board, the duties of the Chairman of the Board, including those duties
set forth in Sections 2.6, 3.7 and 4.4 hereof, shall be performed and his powers
may be exercised by the President. If neither the President nor the Chairman of
the Board is available, the duties of the President shall be performed and his
powers may be exercised by such member of the Board of Directors as may be
designated by the President and, failing such designation or in the absence of
the person so designated, by such member of the Board of Directors as may be
designated by the Chairman of the Board.
Section 6.8. The Vice Chairman of the Board. The Vice Chairman of the
Board shall perform such duties and have such powers as may from time to time be
assigned to him by the Board of Directors, the Chairman of the Board or the
President.
Section 6.9. The Vice President. The Vice Presidents, including the
Executive Vice President and any Senior Vice Presidents, shall perform such
duties and have such powers
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as may from time to time be assigned to them by the Board of Directors, the
Chairman of the Board or the President.
Section 6.10. The Secretary. The Secretary shall attend to the giving
of notice of each meeting of stockholders, the Board of Directors and committees
thereof and, as provided in Sections 2.6, 3.7 and 4.4 hereof, shall act as
secretary at each meeting of stockholders, directors and the Executive
Committee. He shall keep minutes of all proceedings at such meetings as well as
of all proceedings at all meetings of such other committees of the Board of
Directors as any such committee shall direct him to so keep. The Secretary shall
have charge of the corporate seal and he or any officer of the Corporation shall
have authority to attest to any and all instruments or writings to which the
same may be affixed. He shall keep and account for all books, documents, papers
and records of the Corporation except those for which some other officer or
agent is properly accountable. He shall generally perform all the duties usually
appertaining to the office of secretary of a corporation. In the absence of the
Secretary, such person as shall be designated by the chairman of any meeting
shall perform his duties.
Section 6.11. The Treasurer. The Treasurer shall have the care and
custody of all the funds of the Corporation and shall deposit such funds in such
banks or other depositories as the Board of Directors or any officer or officers
thereunto duly authorized by the Board of Directors shall from time to time
direct or approve. In the absence of a Controller, he shall perform all duties
appertaining to the office of Controller of the Corporation. He shall generally
perform all the duties usually appertaining to the office of treasurer of a
corporation. When required by the Board of Directors, he shall give bonds for
the faithful discharge of his duties in such sums and with such sureties as the
Board of Directors shall approve. In the absence of the
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Treasurer, such person as shall be designated by the Chairman of the Board or
President shall perform his duties.
Section 6.12. The Controller. The Controller shall prepare and have the
care and custody of the books of account of the Corporation. He shall keep a
full and accurate account of all moneys received and paid on account of the
Corporation. He shall render a statement of his accounts whenever the Board of
Directors shall require. He shall generally perform all the duties usually
pertaining to the office of controller of a corporation. When required by the
Board of Directors, he shall give bonds for the faithful discharge of his duties
in such sums and with such sureties as the Board of Directors shall approve.
Section 6.13. Additional Powers and Duties. In addition to the
foregoing specifically enumerated duties and powers, the several officers of the
Corporation shall perform such other duties and exercise such further powers as
the Board of Directors may from time to time determine or as may be assigned to
them by any superior officer.
ARTICLE VII
STOCK AND TRANSFERS OF STOCK
Section 7.1. Stock Certificates. The Stock of the Corporation shall be
represented by certificates signed by two officers of the Corporation, one the
Chairman of the Board, the President or a Vice President and the other the
Secretary or an Assistant Secretary. Such certificates shall be sealed with the
seal of the Corporation. Such seal may be a facsimile, engraved or printed. In
case any officer who has signed any such certificate shall have ceased to be
such officer before such certificate is issued, it may nevertheless be issued by
the Corporation with the same effect an if he were such officer at the date of
issue Certificates representing the Stock of the Corporation shall be in such
form as shall be approved by the Board of Directors.
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Section 7.2. Registration of Transfers of Stock. Registration of a
transfer of Stock shall be made on the books of the Corporation only upon
presentation by the person named in the certificate evidencing such stock, or by
an attorney lawfully authorized in writing, upon surrender and cancellation of
such certificate, with duly executed assignment and power of transfer endorsed
thereon or attached thereto, and with such proof of the authenticity of the
signature thereon as the Corporation or its agents may reasonably require.
Section 7.3. Lost Certificates. In case any certificate representing
Stock shall be lost, stolen or destroyed, the Board of Directors in its
discretion or any officer or officers thereunto duly authorized by the Board of
Directors may authorize the issuance of a substitute certificate in the place of
the certificate so lost, stolen or destroyed; provided, however, in each such
case the Corporation may require the owner of the lost, stolen or destroyed
certificate or his legal representative to give the Corporation evidence which
the Corporation determines in its discretion satisfactory of the loss, theft or
destruction of such certificate and of the ownership thereof and may also
require a bond sufficient to indemnify it against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 7.4. Determination of Stockholders of Record for Certain
Purposes. In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action the Board of
Directors may fix in advance a record date which shall not be more than sixty
(60) days prior to any such action.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1. Seal. The seal of the Corporation shall have inscribed
thereon the name of the Corporation, the year of its organization and the state
of its incorporation.
Section 8.2. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 8.3. Signatures on Negotiable Instruments. All bills, notes,
checks or other instruments for the payment of money shall be signed or
countersigned by such officers or agents of Corporation and in such manner as
from time to time may be prescribed by resolution (whether general or special)
of the Board of Directors or as may be prescribed by any officer or officers or
any officer and agent jointly thereunto duly authorized by the Board of
Directors.
Section 8.4. Indemnification. The terms and conditions upon which the
Corporation is required or permitted to grant indemnification to individuals
connected with the Corporation and its business are set forth in the Certificate
of Incorporation of the Corporation.
Section 8.5. Books of the Corporation. Except as otherwise provided by
law, the books of the Corporation shall be kept at the principal place of
business of the Corporation and at such other locations an the Board of
Directors may from time to time determine.
Section 8.6. References to Gender. Whenever in the By-laws reference is
made to the masculine gender, such reference shall where the context so requires
be deemed to include the feminine gender, and the By-laws shall be read
accordingly.
Section 8.7. References to Article and Section Numbers and to the
By-Laws and the Certificate of Incorporation. Whenever in the By-Laws reference
in made to an Article or Section number, such reference is to the number of an
Article or Section of the By-Laws.
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Whenever in the By-Laws reference is made to the By-Laws, such reference is to
these By-Laws of the Corporation as the same may from time to time be amended.
Whenever reference in made to the Certificate of Incorporation, such reference
is to the Certificate of Incorporation of the Corporation as the same may from
time to time be amended.
ARTICLE IX
AMENDMENTS
Section 9.1. Shareholders. Except as provided in these By-Laws or in
the Certificate of Incorporation these By-Laws may be amended or repealed, or
new By-Laws may be adopted, at any annual or special meeting of the
shareholders, if holders of shares representing 80% of the shares of the
Corporation entitled to vote in the election of Directors, voting as a single
class, vote in the affirmative; provided, however, that the notice of such
meeting shall have been given as provided in these By-Laws, which notice shall
mention that amendment or repeal of these By-Laws, or the adoption of new
By-Laws, is one of the purposes of such meeting.
Section 9.2. Board of Directors. Except as provided in the Certificate
of Incorporation or these By-Laws, these By-Laws may also be amended or repealed
or new By-Laws may be adopted by the Board at any meeting thereof; provided,
however that notice of such meeting shall have been given as provided in these
By-Laws, which notice shall mention that amendment or repeal of the By-Laws, or
the adoption of new By-Laws, is one of the purposes of such meetings. By-Laws
adopted by the Board may be amended or repealed by the shareholders as provided
in Section 1 of this Article IX.
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EXHIBIT 10.1
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (the "AGREEMENT") is made as of the 20th day of
October,1999 between STAFF BUILDERS, INC., a Delaware corporation ("STAFF
BUILDERS"), and TENDER LOVING CARE HEALTH CARE SERVICES, INC., a Delaware
corporation ("TLC").
RECITALS
WHEREAS, the Board of Directors of Staff Builders has determined that it is
in the best interest of Staff Builders and its shareholders to separate its home
health care business (the "HOME HEALTH CARE BUSINESS") from the remainder of its
business;
WHEREAS, Staff Builders and TLC have determined that it is necessary and
desirable, on the terms and conditions contemplated hereby, for Staff Builders
to distribute to shareholders of Staff Builders all of the outstanding shares of
TLC Common Stock (as defined below) held by Staff Builders;
WHEREAS, the Distribution (as defined below) is intended to qualify as a
tax-free spin-off under Sections 355 and 368 of the Code (as defined below);
WHEREAS, Staff Builders and TLC have further determined that it is
necessary and desirable to set forth the principal corporate transactions
required to effect the Distribution and to set forth other agreements that will
govern certain other matters following the Distribution;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
made herein, the parties hereto agree as follows:
DEFINITIONS
General.
As used in this Agreement and the Exhibits hereto, the following terms shall
have the following meanings:
AAA: The American Arbitration Association.
ACTION: Any action, suit, arbitration, inquiry, proceeding or investigation
by or before any court, governmental or other regulatory or administrative
agency or commission or arbitration tribunal.
AFFILIATE: An Affiliate of any Person means a Person that controls, is
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controlled by, or is under common control with such Person. As used herein,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and polices of such entity, whether
through ownership of voting securities or other interests, by contract or
otherwise.
AGENT: The distribution agent to be appointed by Staff Builders to
distribute to the shareholders of Staff Builders the shares of TLC Common Stock
held by Staff Builders pursuant to the Distribution.
ANCILLARY AGREEMENTS: All of the agreements, instruments, understandings,
assignments or other arrangements entered into in connection with the
transactions contemplated hereby, including, without limitation, the
Transitional Services Agreement, the Tax Allocation Agreement, the Employee
Benefits Agreement, the Sublease and the Trademark License Agreement.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: The Securities and Exchange Commission.
CONVEYANCE AND ASSUMPTION INSTRUMENTS: Collectively, the various
agreements, instruments and other documents entered into or to be entered into
to effect the transfer, prior to the Distribution Date and in the manner
contemplated by this Agreement or any other agreement or document contemplated
by this Agreement or otherwise, of TLC Assets to TLC (including, without
limitation, the intellectual property rights and other assets described in the
Information Statement) and the assumption of TLC Liabilities by TLC, in both
cases relating to the business of TLC as described in the Information Statement.
DISTRIBUTION: The distribution by Staff Builders on a pro rata basis to
holders of Staff Builders Common Stock of all of the outstanding shares of TLC
Common Stock owned by Staff Builders on the Distribution Date as set forth in
Article II.
DISTRIBUTION DATE: The date hereof.
EMPLOYEE BENEFITS AGREEMENT: the Employee Benefits Agreement between Staff
Builders and TLC providing for, among other things, the employee benefit plan
arrangements that will apply to certain employees of Staff Builders who are
expected to become employees of TLC as of the Distribution Date.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXISTING STAFF BUILDERS OPTIONS: Options to acquire shares of Staff
Builders Common Stock held by employees of Staff Builders and/or its
Subsidiaries.
FORM 10: The General Form for Registration of Securities on Form 10,
including the Information Statement, pursuant to which all of the outstanding
TLC Common Stock will be registered under the Exchange Act, together with all
amendments thereto.
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GOVERNMENTAL APPROVALS: Any notices, reports or other filings to be made,
or any consents, registrations, approvals, permits or authorizations to be
obtained from any Governmental Authority.
GOVERNMENTAL AUTHORITY: Any federal, state, local, foreign or international
court, government, department, commission, board, bureau, agency, official or
other regulatory, administrative or governmental authority.
INFORMATION STATEMENT: The Information Statement portion of the Form 10
prepared in accordance with Regulation 14C under the Exchange Act.
LIABILITIES: Any and all debts, liabilities and obligations, absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising (unless otherwise specified in
this Agreement), including all costs and expenses relating thereto, and those
debts, liabilities and obligations arising under any law, rule, regulation,
Action, threatened Action, order or consent decree of any Governmental Authority
or any award of any arbitrator of any kind, and those arising under any
contract, commitment or undertaking.
PERSON: An individual, a general or limited partnership, a corporation, a
trust, a joint venture, an unincorporated organization, a limited liability
entity, any other entity and any Governmental Authority.
RECORD DATE: The close of business on the date to be determined by the
Staff Builders Board of Directors as the record date for determining
shareholders of Staff Builders entitled to receive shares of TLC Common Stock.
REORGANIZATION AGREEMENT: The Reorganization Agreement between Staff
Builders and TLC providing for the transfer from Staff Builders to TLC of the
shares of all direct and indirect subsidiaries which engage in the Home Health
Care Business.
STAFF BUILDERS COMMON STOCK: the Class A Common Stock, par value $.01 per
share, and the Class B Common Stock, par value $.01 per share, of Staff
Builders.
SUBLEASE: The Sublease Agreement between a subsidiary of Staff Builders and
a subsidiary of TLC pursuant to which a subsidiary of TLC subleases to a
subsidiary of Staff Builders certain premises located at 1983 Marcus Avenue,
Lake Success, New York.
SUBSIDIARY: A Subsidiary of any Person means any corporation or other
organization whether incorporated or unincorporated of which at least a majority
of the securities or interests having by their terms ordinary voting power to
elect at least a majority of the board of directors or other body or persons
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or
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controlled by such Person or by any one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries; provided, however, that no Person
that is not directly or indirectly wholly-owned by any other Person shall be a
Subsidiary of such other Person unless such other Person controls, or has the
right, power or ability to control, that Person.
TAX ALLOCATION AGREEMENT: the Tax Allocation Agreement between Staff
Builders and TLC, providing for, among other things, the allocation of
liabilities with respect to federal, state and local income taxes and the
procedures for filing returns with respect to such taxes.
TLC ASSETS:
any and all assets that are expressly contemplated by the TLC Contracts or this
Agreement or any other agreement or document contemplated by this Agreement (or
any Schedule hereto or thereto) as assets to be transferred to TLC or a
Subsidiary designated by TLC;
any assets reflected in TLC's consolidated balance sheet dated February 28, 1999
as assets of TLC or any of its Subsidiaries, subject to any dispositions of such
assets subsequent to the date of such balance sheet; and
any and all assets owned or held immediately prior to the Distribution Date by
Staff Builders or any of its Subsidiaries that are used primarily in the Home
Health Care Business. The intention of this clause (c) is only to rectify any
inadvertent omission of transfer or conveyance of any assets that, had the
parties given specific consideration to such asset as of the date hereof, would
have otherwise been classified as a TLC Asset. No asset shall be deemed to be a
TLC Asset solely as a result of this clause (c) if such asset is within the
category or type of asset expressly covered by the subject matter of an
Ancillary Agreement.
TLC COMMON STOCK: the Common Stock, par value $.01 per share, of TLC.
TLC CONTRACTS: the following contracts and agreements to which Staff
Builders is a party or by which its or any of its Subsidiaries' assets are
bound, whether or not in writing:
any contract or agreement entered into by Staff Builders or any of its
Subsidiaries or TLC or any of its Subsidiaries that relates primarily to the
Home Health Care Business;
any contract or agreement that is otherwise expressly contemplated pursuant to
this Agreement or any of the Ancillary Agreements to be assigned to TLC; and
any guarantee, indemnity, representation, warranty or other Liability of Staff
Builders or any of its Subsidiaries in respect of any other TLC Contract, any
TLC Liability or the Home Health Care Business;
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TLC EMPLOYEES: TLC Employees include current employees of TLC or any of its
Subsidiaries and any other employees who are hired by TLC or any of its
subsidiaries prior to the Distribution Date.
TLC LIABILITIES:
any and all Liabilities that are expressly contemplated by this Agreement or any
other agreement or document contemplated by this Agreement or otherwise (or the
Schedules hereto or thereto) as Liabilities to be assumed by TLC;
all Liabilities (other than taxes based on, or measured by reference to, net
income), including any Liabilities related to TLC Employees and Liabilities,
primarily relating to, arising out of or resulting from:
the operation of the Home Health Care Business, as conducted at any time prior
to, on or after the Distribution Date (including any Liability relating to,
arising out of or resulting from any act or failure to act or any statement made
by any director, officer, employee, agent or representative (whether or not such
act or failure to act or statement is or was within such Person's authority);
any TLC Assets (including any TLC Contracts); in any such case whether arising
before, on or after the Distribution Date;
the offer or sale of franchises with respect to the Home Health Care Business or
all Liabilities, excluding any intercompany indebtedness forgiven pursuant to
Section 2.4 of this Agreement, reflected as liabilities or obligations of TLC or
any of its Subsidiaries in TLC's consolidated balance sheet, subject to any
discharge of such Liabilities subsequent to the date of such balance sheet.
TRADEMARK LICENSE AGREEMENT: the Trademark License Agreement between Staff
Builders and TLC, providing for, among other things, the licensing by Staff
Builders to TLC of certain trademarks and related rights.
TRANSITIONAL SERVICES AGREEMENT: the Transitional Services Agreement
between Staff Builders and TLC providing for, among other things, the provision
by TLC to Staff Builders of certain administrative and other services on a
transitional basis.
THE DISTRIBUTION
The Distribution.
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Following the completion of the actions and the occurrence of the events set
forth in Section 2.2 hereof, or the mutual agreement of Staff Builders and TLC
that one or more of such actions need not be completed or one or more of such
events need not occur prior to the Distribution, and provided that this
Agreement shall not have been terminated at Staff Builders' election pursuant to
Section 7.2, on or prior to the Distribution Date, Staff Builders will deliver
to the Agent for the benefit of holders of record of Staff Builders Common Stock
on the Record Date, a single stock certificate, endorsed by Staff Builders in
blank, representing all of the outstanding shares of TLC Common Stock then owned
by Staff Builders, and shall cause the transfer agent for the shares of Staff
Builders Common Stock to instruct the Agent to distribute (or if the Agent and
the transfer agent for the shares of Staff Builders Common Stock are the same,
the Agent shall distribute) on the Distribution Date the appropriate number of
such shares of TLC Common Stock to each such holder or designated transferee or
transferees of such holder.
Subject to Section 2.6 hereof, each holder of Staff Builders Common Stock on the
Record Date (or such holder's designated transferee or transferees) shall be
entitled to receive, in the Distribution, a number of shares of TLC Common Stock
equal to the number of outstanding shares of TLC Common Stock owned by Staff
Builders on the Record Date multiplied by a fraction, the numerator of which is
the number of shares of Staff Builders Common Stock held by such holder on the
Record Date, and the denominator of which is the number of shares of Staff
Builders Common Stock outstanding on the Record Date.
TLC and Staff Builders, as the case may be, will provide to the Agent all share
certificates and any information required in order to complete the Distribution
on the basis specified above.
Actions and Events Prior to the Distribution.
TLC shall prepare and file the Form 10, and such amendments or supplements
thereto, as may be necessary in order to cause the same to become and remain
effective as required by law, including, but not limited to, filing such
amendments to the Form 10 as may be required by the Commission or federal or
state securities laws. The Form 10 shall have become effective on or prior to
the Distribution Date, and there shall be no stop-order in effect with respect
thereto.
Staff Builders and TLC shall cooperate in preparing and filing with the
appropriate Governmental Authority any documents or statements which are
required to reflect the establishment of, or amendments to, any employee benefit
and other plans necessary or appropriate in connection with the Distribution or
the other transactions contemplated by this Agreement or any other agreement or
document contemplated by this Agreement or otherwise.
Staff Builders and TLC shall prepare and mail, prior to the Distribution Date,
to the holders of Staff Builders Common Stock, the Information Statement and
such other information concerning TLC, its business, operations and management,
the Distribution and such other matters
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as Staff Builders and TLC shall reasonably determine and as may be required by
law.
Staff Builders and TLC shall take all other actions as may be necessary or
appropriate under the securities or blue sky laws of the United States in
connection with the Distribution and such actions and filings, where applicable,
shall have become effective or been accepted.
Staff Builders and TLC shall have executed the Reorganization Agreement and
shall have consummated the transactions contemplated thereby.
With respect to the TLC Assets and TLC Liabilities not reflected in TLC's
consolidated balance sheet dated as of the Distribution Date, Staff Builders
shall take or cause to be taken all actions necessary to cause the transfer,
assignment, delivery and conveyance to TLC (or if directed by TLC, to one or
more Subsidiaries of TLC) of all of Staff Builders' right, title and interest in
any TLC Assets, and TLC shall take or cause to be taken all action necessary to
assume and agree faithfully to perform and fulfill all TLC Liabilities,
regardless of when or where such liabilities arose, in accordance with their
respective terms. Staff Builders and TLC shall execute and deliver all necessary
Conveyance and Assumption Instruments in order to comply with this Section
2.2(f).
TLC shall use its reasonable best efforts to have a Form 211 filed with NASD
Regulation, Inc. by a market maker in TLC Common Stock such that the TLC Common
Stock to be distributed in the Distribution is quoted on the OTC Bulletin Board.
A written opinion from Richards & O'Neil, LLP shall have been delivered to the
effect that, among other things, it appears that there is substantial authority
for viewing the Distribution as a tax-free distribution for federal income tax
purposes under Sections 355 and 368 of the Code, and such opinion shall be in
form and substance satisfactory to Staff Builders in its sole discretion.
Any material Governmental Approvals and consents necessary to consummate the
Distribution shall have been obtained and shall be in full force and effect.
No order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of the Distribution shall be in effect and no other event outside the control of
Staff Builders shall have occurred or failed to occur that prevents the
consummation of the Distribution.
The transactions contemplated hereby shall be in compliance with applicable
federal and state securities laws.
Each of TLC and Staff Builders shall have received such consents, and shall have
received executed copies of such agreements or amendments of agreements, as they
shall deem necessary in connection with the completion of the transactions
contemplated by this Agreement or any other agreement or document contemplated
by this Agreement or otherwise.
All action and other documents and instruments deemed necessary or advisable in
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connection with the transactions contemplated hereby shall have been taken or
executed, as the case may be, in form and substance satisfactory to Staff
Builders and TLC.
Ancillary Agreements.
Each of Staff Builders and TLC will execute and deliver (or, if appropriate, its
Subsidiary to execute and deliver, as the case may be, all Ancillary Agreements
to which it is a party, including but not limited to, the Transitional Services
Agreement, the Tax Allocation Agreement, the Employee Benefits Agreement, the
Trademark License Agreement and the Sublease. All such Ancillary Documents shall
become effective on the Distribution Date.
Forgiveness of Intercompany Debt. Effective immediately prior to the
distribution date, staff builders hereby forgives all existing remaining
intercompany indebtedness owed by TLC to staff builders in order to provide an
appropriate level of working capital and equity at TLC as it is established as a
separate stand alone company. Each of staff builders and TLC shall execute any
documents and instruments necessary or appropriate to confirm such loan
forgiveness. Staff builders and TLC agree that staff builders shall treat the
loan forgiveness as a contribution to the capital of TLC in constructive
exchange for TLC common stock, provided that no additional shares of TLC common
stock shall be issued or issuable in connection with or as a result of such
contributions.
Consents.
Each party hereto understands and agrees that no party hereto is, in this
Agreement or in any other agreement or document contemplated by this Agreement
or otherwise, representing or warranting in any way that the obtaining of any
consents or approvals, the execution and delivery of any agreements or the
making of any filings or applications contemplated by this Agreement will
satisfy the provisions of any or all applicable agreements or the requirements
of any or all applicable laws or judgments, it being agreed and understood that
the party to which any assets were or are transferred shall bear the economic
and legal risk that any necessary consents or approvals are not obtained or that
any requirements of laws or judgments are not complied with. Notwithstanding the
foregoing, the parties shall use reasonable best efforts to obtain all consents
and approvals, to enter into all agreements and to make all filings and
applications which may be required for the consummation of the transactions
contemplated by this Agreement or any other agreement or document contemplated
by this Agreement or otherwise, including, without limitation, all applicable
regulatory filings or consents under federal or state laws and all necessary
consents, approvals, agreements, filings and applications.
Fractional Shares.
As soon as practicable after the Distribution Date, Staff Builders shall direct
the Agent
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to determine the number of whole shares and fractional shares of TLC Common
Stock allocable to each holder of record of Staff Builders Common Stock as of
the Record Date, to aggregate all such fractional shares and sell the whole
shares obtained thereby in open-market transactions in the Agent's sole
discretion as to when, how, through which broker-dealer and at what price to
make such sales, and to cause to be distributed to each such holder or for the
benefit of each such holder, in lieu of any fractional share, such holder's
ratable share of the proceeds of such sale, after making appropriate deductions
of the amount required to be withheld for federal income tax purposes and after
deducting an amount equal to all brokerage charges, commissions and transfer
taxes attributed to such sale. Staff Builders and the Agent shall use their
reasonable best efforts to aggregate the shares of Staff Builders Common Stock
that may be held by any holder of record thereof through more than one account
in determining the fractional share allocable to such holder.
ACKNOWLEDGEMENT OF MATERIAL FACTS
Organization.
Staff Builders and TLC acknowledge that each is duly organized, validly existing
and in good standing under the laws of the State of Delaware, with requisite
corporate power to own their properties and assets and to carry on their
respective businesses as presently conducted or contemplated.
MISCELLANEOUS LIABILITIES AND INDEMNIFICATION
TLC Liabilities; Indemnification.
TLC shall indemnify, defend and hold harmless Staff Builders and its
Subsidiaries from and against any and all Liabilities arising out of or
resulting from any of the following items (without duplication):
the employment of TLC Employees;
the business of TLC and its Subsidiaries, including, without limitation, the
Home Health Care Business, and the TLC Assets;
purchase orders, accounts payable, accrued compensation and other accrued TLC
Liabilities and other agreements which relate to the business of TLC or any
Subsidiary of TLC, including, without limitation, the Home Health Care Business,
or the TLC Assets; and
any misstatement or omission of a material fact other than misstatements or
omissions with respect to Staff Builders or its Subsidiaries based on
information supplied in writing by
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Staff Builders in any documents or filings prepared for purposes of compliance
or qualification under applicable securities laws in connection with the
Distribution and related transactions, including, without limitation, the Form
10.
Staff Builders Liabilities; Indemnification.
Staff Builders shall indemnify, defend and hold harmless TLC and its
Subsidiaries from and against any and all Liabilities arising out of or
resulting from any of the following items (without duplication):
the business of Staff Builders and its Subsidiaries and the Liabilities not
assumed by TLC under the terms of this Agreement or any other agreement or
document contemplated by this Agreement; and
any misstatement or omission of a material fact with respect to Staff Builders
or its Subsidiaries based on information supplied in writing by Staff Builders
in any documents or filings prepared for purposes of compliance or qualification
under applicable securities laws in connection with the Distribution and related
transactions, including, without limitation, the Form 10.
Procedures for Indemnification of Third Party Claims.
If any Person entitled to indemnification hereunder (an "Indemnitee") shall
receive notice or otherwise learn of the assertion by a Person (including any
Governmental Authority) of any claim or of the commencement by any such Person
of any Action (collectively, a "Third Party Claim") with respect to which any
party (an "Indemnifying Party") may be obligated to provide indemnification to
such Indemnitee pursuant to Section 4.1 or 4.2, or any other Section of this
Agreement or any other agreement or document contemplated by this Agreement or
otherwise, such Indemnitee shall give such Indemnifying Party written notice
thereof within twenty (20) days after becoming aware of such Third Party Claim.
Any such notice shall describe the Third Party Claim in reasonable detail.
Notwithstanding the foregoing, the failure of any Indemnitee or other Person to
give notice as provided in this Section 4.3(a) shall not relieve the
Indemnifying Party of its obligations under this Article IV, except to the
extent that such Indemnifying Party is actually prejudiced by such failure to
give notice.
An Indemnifying Party may elect to defend (and, unless the Indemnifying Party
has specified any reservations or exceptions, to seek to settle or compromise),
at such Indemnifying Party's own expense and by such Indemnifying Party's own
counsel, any Third Party Claim. Within thirty (30) days after the receipt of
notice from an Indemnitee in accordance with Section 4.3(a) (or sooner, if the
nature of such Third Party Claim so requires), the Indemnifying Party shall
notify the Indemnitee of its election whether the Indemnifying Party will assume
responsibility for defending such Third Party Claim, which election shall
specify any reservations or exceptions. After notice from an Indemnifying Party
to an Indemnitee of its election to assume the defense of a Third Party Claim,
such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee except as set forth in Section 4.3(c).
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If an Indemnifying Party elects not to assume responsibility for defending a
Third Party Claim, or fails to notify an Indemnitee of its election as provided
in Section 4.3(b), such Indemnitee may defend such Third Party Claim at the cost
and expense (including allocated costs of in-house counsel and other personnel)
of the Indemnifying Party.
Unless the Indemnifying Party has failed to assume the defense of the Third
Party Claim in accordance with the terms of this Agreement, no Indemnitee may
settle or compromise any Third Party Claim without the consent of the
Indemnifying Party.
No Indemnifying Party shall consent to entry of any judgment or enter into any
settlement of the Third Party Claim without the consent of the Indemnitee if the
effect thereof is to permit any injunction, declaratory judgment, other order or
other nonmonetary relief to be entered, directly or indirectly, against any
Indemnitee.
Tax Liabilities.
Notwithstanding the provisions of Sections 4.1 and 4.2, all tax Liabilities
relating to the business of TLC and the TLC Assets including, without
limitation, income taxes, franchise taxes, sales taxes, use taxes, payroll taxes
and employment taxes, shall be assumed by the party to whom the Liability has
been allocated in the Tax Allocation Agreement.
Additional Matters.
Any claim on account of a Liability which does not result from a Third Party
Claim shall be asserted by written notice given by the Indemnitee to the
Indemnifying Party. Such Indemnifying Party shall have a period of thirty (30)
days after the receipt of such notice within which to respond thereto. If such
Indemnifying Party does not respond within such thirty (30)-day period, such
Indemnifying Party shall be deemed to have refused to accept responsibility to
make payment. If such Indemnifying Party does not respond within such thirty
(30)-day period or rejects such claim in whole or in part, such Indemnitee shall
be free to pursue such remedies as may be available to such party as
contemplated by this Agreement.
In the event of payment by or on behalf of any Indemnifying Party to any
Indemnitee in connection with any Third Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have the right,
defense or claim relating to such Third Party Claim against any claimant or
plaintiff asserting such Third Party Claim or against any other person. Such
Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner,
and at the cost and expense (including allocated costs of in-house counsel and
other personnel) of such Indemnifying Party, in prosecuting any subrogated
right, defense or claim.
In the event of an Action in which the Indemnifying Party is not a named
defendant, if either the Indemnitee or Indemnifying Party shall so request, the
parties shall endeavor to substitute the Indemnifying Party for the named
defendant. If such substitution or addition cannot be achieved for any reason or
is not requested, the named defendant
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shall allow the Indemnifying Party to manage the Action as set forth in this
Section and the Indemnifying Party shall fully indemnify the named defendant
against all costs of defending the Action (including court costs, sanctions
imposed by a court, attorneys' fees, experts' fees and all other external
expenses, and the allocated costs of in-house counsel and other personnel), the
costs of any judgment or settlement, and the cost of any interest or penalties
relating to any judgment or settlement.
If for any reason, the indemnification provisions of Section 4.1 or 4.2 are
unavailable to an Indemnified Party otherwise subject thereto, the Indemnifying
Party shall contribute to the amount paid by the Indemnified Party as a result
of such Liability in such proportion to reflect the relative economic interests
of the matter giving rise to the Liability.
Remedies Cumulative.
The remedies provided in this Article IV shall be cumulative and shall not
preclude assertion by an Indemnitee of any other rights or the seeking of any
and all other remedies against any Indemnifying Party.
ACCESS TO INFORMATION AND SERVICES
Provision of Corporate Records.
Upon TLC's request, Staff Builders shall arrange as soon as practicable
following the date hereof for the delivery to TLC of existing corporate records
in the possession of Staff Builders relating to the business of TLC or TLC
Assets, together with all active agreements and active litigation files relating
to the businesses of TLC and its Subsidiaries, except to the extent such items
are already in the possession of TLC or its Subsidiaries. Such records shall be
the property of TLC but shall be available to Staff Builders for review and
duplication until Staff Builders shall notify TLC in writing that such records
are no longer of use to Staff Builders.
Access to Information.
From and after the date hereof, Staff Builders shall afford to TLC and its
authorized accountants, counsel and other designated representatives reasonable
access (including using reasonable best efforts to give access to persons or
firms possessing information) and duplicating rights during normal business
hours to all records, books, contracts, instruments, computer data and other
data and information (collectively, "Information") within Staff Builders' or its
Subsidiaries' possession relating to the businesses of TLC or its Subsidiaries,
insofar as such access is reasonably required by TLC. TLC shall afford to Staff
Builders and its authorized accountants, counsel and other designated
representatives reasonable access (including using reasonable best efforts to
give access to persons or firms possessing Information) and duplicating rights
during normal business hours to Information within TLC's or its Subsidiaries'
possession relating to the business of TLC or its Subsidiaries prior to the
Distribution or
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to the business of Staff Builders or its Subsidiaries, insofar as such access is
reasonably required by Staff Builders. Information may be requested under this
Article V for, without limitation, audit, accounting, claims, litigation and tax
purposes, as well as for purposes of fulfilling disclosure and reporting
obligations and for performing the transactions contemplated in this Agreement
or any other agreement or document contemplated by this Agreement or otherwise.
Production of Witnesses.
At all times from and after the date hereof, each of Staff Builders and TLC
shall use reasonable best efforts to make available to the other, upon written
request, its and its Subsidiaries' officers, directors, employees and agents as
witnesses to the extent that such persons may reasonably be required, in
connection with legal, administrative or other proceedings in which the
requesting party may from time to time be involved.
Reimbursement.
Except to the extent otherwise contemplated by any Ancillary Agreement, a party
providing information to the other party under this Article V shall be entitled
to receive from the recipient, upon the presentation of invoices therefor,
payments for such amounts, relating to supplies, disbursements and other
out-of-pocket expenses, as may be reasonably incurred in providing such
information.
Retention of Records.
For a period of six (6) years following the date hereof, each of Staff Builders
and TLC shall retain all Information relating to the other and the other's
Subsidiaries as of the Distribution Date, except as otherwise required by law or
set forth in an Ancillary Agreement or except to the extent that such
Information is in the public domain or in the possession of the other party.
Confidentiality.
Subject to any contrary requirement of law and the right of each party to
enforce its rights hereunder in any legal action, each party shall keep strictly
confidential, and shall cause its employees and agents to keep strictly
confidential, any Information of or concerning the other party or any of its
Subsidiaries which it or any of its agents or employees may acquire pursuant to,
or in the course of performing its obligations under, any provisions of this
Agreement or any Ancillary Agreement; provided, however, that such obligation to
maintain confidentiality shall not apply to Information which (i) at the time of
disclosure was in the public domain or (ii) was received by the receiving party
from a third party who did not receive such Information from the disclosing
party under an obligation of confidentiality.
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COVENANTS
OTC BULLETIN BOARD.
TLC hereby agrees to use its reasonable efforts to cooperate with one or more
market makers to effect and maintain the quotation of the TLC Common Stock on
the OTC Bulletin Board; provided, that nothing contained herein shall restrict
TLC from listing its shares on NASDAQ or a national securities exchange instead
of the OTC Bulletin Board.
Ancillary Agreements.
The parties agree that they shall comply with and provide all services and take
any and all actions required to be provided or taken by the terms of any and all
of the Ancillary Agreements following the effectiveness thereof.
Mutual Assurances.
In addition to the actions specifically provided for elsewhere in this Agreement
or any other agreement or document contemplated by this Agreement or otherwise,
Staff Builders and TLC agree to cooperate with respect to the implementation of
this Agreement or any other agreement or document contemplated by this Agreement
or otherwise, and to execute such further documents and instruments as may be
necessary to consummate and make effective the transactions contemplated by this
Agreement or any other agreement or document contemplated by this Agreement or
otherwise;
Staff Builders and TLC shall arrange, attend and participate in joint meetings
with corporate collaborators, suppliers, customers and others to the extent
necessary to assure the orderly transition of the business and assets
contemplated hereby, provided that nothing herein shall be deemed to obligate
either Staff Builders or TLC to take any action or reach any understandings
which may violate any applicable laws.
Staff Builders and TLC agree to take any reasonable actions necessary in order
for the Distribution to qualify as a tax-free distribution pursuant to Sections
355 and 368 of the Code.
TERMINATION
Termination by Mutual Consent.
This Agreement may be terminated at any time prior to the Distribution Date by
the mutual consent of Staff Builders and TLC.
Termination by Staff Builders.
Prior to the Record Date, Staff Builders may terminate this Agreement at its
election if its Board of Directors determines that the consummation of the
Distribution would, in
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light of the circumstances at the time, not be in the best interests of the
shareholders of Staff Builders.
Other Termination.
This Agreement shall terminate if the Distribution Date shall not have occurred
on or prior to December 31, 1999.
Effect of Termination.
In the event of any termination of this Agreement, no party to this Agreement
(or any of its directors or officers) shall have any Liability or further
obligation to any other party.
MISCELLANEOUS
Governing Law.
This Agreement shall be governed by the laws of the State of New York.
Construction.
Each provision of this Agreement shall be interpreted in a manner to be
effective and valid to the fullest extent permissible under applicable law. The
invalidity or unenforceability of any particular provision of this Agreement
shall not affect the other provisions of this Agreement which shall remain in
full force and effect.
Counterparts.
This Agreement may be executed in one or more counterparts, all of which shall
be considered one and the same agreement.
Exhibits.
Exhibits to this Agreement shall be deemed to be an integral part hereof, and
schedules or exhibits to such Exhibits shall be deemed to be an integral part
thereof.
Amendments; Waivers.
This Agreement may be amended or modified only in a writing executed on behalf
of Staff Builders and TLC. No waiver shall operate to waive any further or
future act and no failure to object of forbearance shall operate as a waiver.
Notices.
Notices hereunder shall be effective if given in writing and delivered or
mailed, postage prepaid, by registered or certified mail to:
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STAFF BUILDERS, INC.
1983 Marcus Avenue
Lake Success, NY 11042
Attention: David Savitsky, President
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
1983 Marcus Avenue
Lake Success, NY 11042
Attention: Dale R. Clift, President
Successors and Assigns.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns, provided that this
Agreement and the rights and obligations contained herein or in any exhibit or
schedule hereto shall not be assignable, in whole or in part, without the prior
written consent of the parties hereto and any attempt to effect any such
assignment without such consent shall be void.
Publicity.
Prior to the Distribution, each of TLC and Staff Builders shall consult with
each other prior to issuing any press releases or otherwise making public
statements with respect to the Distribution and prior to making any filings with
any Governmental Authority with respect thereto.
Expenses.
Except as expressly set forth in this Agreement or in any other agreement or
document contemplated by this Agreement or otherwise, (i) if the Distribution is
not consummated, all third party fees, costs and expenses paid or incurred in
connection with the Distribution will be paid by Staff Builders; and (ii) if the
Distribution is consummated, all third party fees, costs and expenses paid and
incurred in connection with the Distribution will be paid 50% by Staff Builders
and 50% by TLC and to the extent a party has paid more than its required share
of expenses the other party shall promptly reimburse it upon request therefor
supported by appropriate documentation.
Headings.
The article, section and paragraph headings contained in this Agreement and in
the Ancillary Agreements are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement or any Ancillary
Agreement.
arbitration.
All disputes or differences of any kind or nature between or among the parties
(such
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parties being referred to individually as a "DISPUTING PARTY," and,
together, as the "DISPUTING PARTIES") arising out of or in any way relating to
this Agreement or the transactions contemplated hereby, including issues of
arbitrability, and including, without limitation, any dispute between the
parties under Article IV, which the parties are unable to resolve themselves
shall be submitted to and resolved by arbitration before a single arbitrator in
accordance with the commercial arbitration rules of the AAA. Such arbitrator
shall have substantial professional experience with regard to corporate legal
matters.
The arbitrator shall consider the dispute at issue in New York, New York, at a
mutually agreed upon time within sixty (60) days (or such longer period as may
be acceptable to the Disputing Parties or as directed by the arbitrator) of the
designation of the arbitrator. The arbitration proceeding shall be held in
accordance with the rules for commercial arbitration of the AAA in effect on the
date of the initial request by the Disputing Party, that gave rise to the
dispute to be arbitrated (as such rules are modified by the terms of this
Agreement or may be further modified by mutual agreement of the Disputing
Parties) and shall include an opportunity for the parties to conduct discovery
in advance of the proceeding. Notwithstanding the foregoing, the Disputing
Parties shall agree that they will attempt, and they intend that they and the
arbitrator should use their best efforts in that attempt, to conclude the
arbitration proceeding and have a final decision from the arbitrator within one
hundred twenty (120) days from the date of selection of the arbitrator;
provided, however, that the arbitrator shall be entitled to extend such one
hundred twenty (120) day period for a total of two one hundred twenty (120) day
periods. The arbitrator shall deliver a written award with respect to the
dispute to each of the parties, who shall promptly act in accordance therewith.
Each Disputing Party to such arbitration agrees that any award of the arbitrator
shall be final, conclusive and binding and that it will not contest any action
by any other party thereto in accordance with an award of the arbitrator. It is
specifically understood and agreed that any party may enforce any award rendered
pursuant to the arbitration provisions of this Section 8.11 by bringing suit in
any court of competent jurisdiction.
All costs and expenses attributable to the arbitrator shall be allocated among
the parties to the arbitration in such manner as the arbitrator shall determine
to be appropriate under the circumstances.
The parties hereto recognize and agree that in the event of a breach by a party
of this Section 8.11, money damages would not be an adequate remedy to the
injured party for such breach and it would be impossible to ascertain or measure
with any degree of accuracy the damages sustained by such injured party
therefrom. Accordingly, if there should be a breach or threatened breach by a
party of the provisions of this Section 8.11, the injured party shall be
entitled to an injunction restraining the breaching party from any breach
without showing or proving actual damage sustained by the injured party.
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Entire Agreement.
This Agreement contains the full understanding of the parties with respect to
the subject matter hereof and supersedes all prior understandings and writings
relating thereto. No waiver, alteration or modification of any of the provisions
hereof shall be binding unless made in writing and signed by the parties.
[Remainder of Page Intentionally Omitted]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
STAFF BUILDERS, INC.
By: /s/ Stephen Savitsky
-------------------------------------
Title: Chairman of the Board and Chief
Executive Officer
TENDER LOVING CARE HEALTH CARE
SERVICES, INC.
By: /s/ Dale R. Clift
-------------------------------------
Title: President and Chief Operating
Officer
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<PAGE> 1
EXHIBIT 10.2
TAX ALLOCATION AGREEMENT
THIS TAX ALLOCATION AGREEMENT (the "AGREEMENT") is made on October 20,
1999, by and among STAFF BUILDERS, INC., a Delaware corporation ("PARENT" and,
together with its subsidiaries existing immediately following the Distribution,
the "PARENT GROUP"), and TENDER LOVING CARE HEALTH CARE SERVICES, INC., a
Delaware corporation ("TLC" and, together with its subsidiaries existing
immediately following the Distribution, the "TLC GROUP").
WHEREAS, on the date hereof, Parent and TLC have entered into the
Distribution Agreement (as defined below) providing for the distribution of all
of the TLC stock owned by Parent to Parent's shareholders in accordance with the
Distribution Agreement; and
WHEREAS, Parent and TLC desire to set forth their agreement regarding
the allocation between the Parent Group and the TLC Group of all
responsibilities, liabilities and benefits affecting Taxes (as defined below)
paid or payable by either of them for all taxable periods.
NOW, THEREFORE, in consideration of their mutual promises, the parties
hereby agree as follows:
DEFINITIONS.
Capitalized terms used herein and not otherwise defined shall have the meanings
given them in the Distribution Agreement. As used in this Agreement, the
following terms shall have the following meanings:
"Affiliate" of any person means any person, corporation, partnership or other
entity directly or indirectly controlling, controlled by or under common control
with such person.
"Code" means the Internal Revenue Code of 1986, as amended or, as the context
may require, the Internal Revenue Code applicable to the taxable year in
question.
"Distribution" has the meaning set forth in the Distribution Agreement.
"Distribution Agreement " means the Distribution Agreement dated the date hereof
between Parent and TLC providing for the Distribution.
"Distribution Date" has the meaning set forth in the Distribution Agreement.
"Final Determination" shall mean the final resolution of liability for any Tax
for a taxable period, (i) on Internal Revenue Service Form 870 or 870-AD (or any
successor forms thereto), on the
<PAGE> 2
date of acceptance by or on behalf of the taxpayer, or by comparable form under
the laws of other jurisdictions; except that a Form 870 or 870-AD or comparable
form that reserves (whether by its terms or by operation of law) the right of
the taxpayer to file a claim for refund and/or the right of the taxing authority
to assert a further deficiency shall not constitute a Final Determination; (ii)
by a decision, judgment, decree, or other order by a court of competent
jurisdiction, which has become final and unappealable; (iii) by a closing
agreement or accepted offer in compromise under Section 7121 or 7122 of the
Code, or comparable agreements under the laws of other jurisdictions; (iv) by
any allowance of a refund or credit in respect of an overpayment of Tax, but
only after the expiration of all periods during which such refund may be
recovered (including by way of offset) by the Tax imposing jurisdiction; or (v)
by any other final disposition, including by reason of the expiration of the
applicable statute of limitations or by mutual agreement of the parties.
"Post-Distribution Act" means any event or transaction (or the execution of an
agreement, letter of intent or option providing for a transaction) in which TLC
participates and in which any of the following occurs:
TLC transfers (whether or not in liquidation) a material portion of its assets
(other than a transfer of assets in the ordinary course of business) within one
year following the Distribution Date;
TLC merges with another corporation within one year following the Distribution
Date;
Within two years of following the Distribution Date TLC discontinues a material
portion of its historic business activities; or
Within one year following the Distribution Date TLC Common Stock distributed in
the Distribution is converted into (or redeemed or exchanged for) any other
stock, any security, any property or cash.
"Post-Distribution Taxes" means any and all liability for Taxes of the TLC Group
or the Parent Group, as appropriate, other than for Pre-Distribution Taxes.
"Pre-Distribution Taxes" means any and all Taxes of the Parent Group or the TLC
Group for all periods that ended on or prior to the Distribution Date. For
purposes of computing the amount of Pre-Distribution Taxes in the case of a Tax
period that begins before and ends after the Distribution Date, the amount of
Taxes considered to have accrued with respect to the portion of the Tax period
that ended on the Distribution Date shall be determined as follows:
In the case of any ad valorem, personal property and real property Taxes, an
amount of such Tax for the entire Tax period multiplied by a fraction the
numerator of which is the number of days in the portion of the Tax period ended
on the Distribution Date and the denominator of which is the number of days in
the entire Tax period;
In the case of any Tax other than ad valorem, personal property and real
property Taxes, the amount that would be payable if the relevant Tax period
ended on the Distribution Date; and
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In the case of any withholding Tax, the amount of Taxes required to be held
which relates to any payment by any member of the Parent Group or the TLC Group
on or before the Distribution Date.
Any credits relating to a Tax period that begins before and ends after
the Distribution Date shall be taken into account as though the relevant Tax
period ended on the Distribution Date.
"Returns" means all returns, reports and information statements (including all
exhibits and schedules thereto) required to be filed with a Taxing Authority
with respect to any Taxes.
"Taxes" means any income, alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment, environmental excise, severance, stamp, transfer, recording
occupation, premium, property, value added, windfall profit tax, custom duty, or
other tax of any kind whatsoever, together with any interest and any penalty,
addition to tax or additional amount imposed by any governmental authority (a
"Taxing Authority") responsible for the imposition of any such tax (domestic or
foreign).
"TLC" has the meaning set forth in the preamble hereto.
"TLC Group" has the meaning set forth in the preamble hereto.
OPERATIVE PROVISIONS.
Parent shall indemnify TLC against and be responsible for all Post-Distribution
Taxes attributable to any member of the Parent Group and all Pre-Distribution
Taxes.
TLC shall indemnify Parent against and shall be responsible for all
Post-Distribution Taxes attributable to any member of the TLC Group.
With respect to the tax year of the Parent Consolidated Group that includes the
Distribution Date and the tax year of TLC that commences immediately following
the Distribution Date, the Parent Consolidated Group shall claim on its federal
income tax returns the benefit of (i) the graduated tax rates of Code Section
11, (ii) the $25,000 bracket amount in Code Section 38, (iii) the $40,000
exemption amount and the $150,000 bracket amount in Section 55, and (iv) the
$2,000,000 bracket amount in Section 59A and TLC shall claim none of such
benefits.
RETURNS; REFUNDS; CONTEST PROVISIONS.
Parent shall have the obligation and the sole right and full discretion to
control (i) the preparation of all Returns with respect to Pre-Distribution
Taxes and (ii) the defense, settlement or compromise of any audit, examination,
investigation suit, action or other proceeding relating to Pre-Distribution
Taxes. Parent shall not be entitled to all refunds of Pre-Distribution Taxes.
Notwithstanding the foregoing, in the event that Parent
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<PAGE> 4
decides to abandon the defense of, or settle or compromise any claim relating to
any Pre-Distribution Taxes and such claim may have an effect on
Post-Distribution Taxes, Parent shall notify TLC of such decision and TLC shall
have ten days to notify Parent that it assumes all liability with respect to the
Pre-Distribution Taxes under dispute and wishes to assume the defense of such
audit or other proceedings at its own expense. In the event that Parent timely
receives such notice from TLC, it shall use all reasonable efforts to cooperate
so as to facilitate TLC's handling of such proceedings.
Except as otherwise provided for herein, TLC shall have the obligation and the
sole right and full discretion to control (i) the preparation of all Returns
with respect to Post-Distribution Taxes attributable to any member of the TLC
Group and (ii) the defense, settlement or compromise of any audit, examination,
investigation suit, action or other proceeding relating to Post-Distribution
Taxes attributable to any member of the TLC Group. TLC shall have the right to
all refunds of Pre-Distribution Taxes and Post-Distribution Taxes attributable
to any member of the TLC Group.
Except as otherwise provided for herein, Parent shall have the obligation and
the sole right and full discretion to control (i) the preparation of all Returns
with respect to Post-Distribution Taxes attributable to any member of the Parent
Group and (ii) the defense, settlement or compromise of any audit, examination,
investigation suit, action or other proceeding relating to Post-Distribution
Taxes attributable to any member of the Parent Group. Parent shall have the
right to all refunds of Post-Distribution Taxes attributable to any member of
the Parent Group.
WINDFALLS.
Parent shall promptly pay to TLC the amount of any incremental Tax savings
generated by (i) a deduction, credit or exclusion that (A) is actually realized
by the Parent Group with respect to Pre-Distribution Taxes and (B) relates to or
is based on an item that is the basis for a similar deduction, credit or
exclusion taken on a Return with respect to Post-Distribution Taxes of the TLC
Group that is denied, disallowed, forfeited, or accelerated until prior to the
Distribution Date or (ii) a reduction in the amount of any gross income or
revenue that (A) is actually realized by the Parent Group with respect to
Pre-Distribution Taxes and (B) relates to, or is based on, a similar item of
gross income or revenue that the TLC Group is required to include on a Return or
otherwise required to include in its computation of taxable income as a result
of an audit, other administrative proceeding or otherwise. Parent shall use
reasonable best efforts to realize any such incremental tax savings that may
potentially be available.
TLC shall promptly pay to Parent the amount of any incremental Tax savings
generated by (i) a deduction, credit or exclusion that (A) is actually realized
by the TLC Group with respect to its Post-Distribution Taxes and (B) relates to
or is based on an item that is the basis for a similar deduction, credit or
exclusion taken on a Return with respect to Pre-Distribution Taxes that is
denied, disallowed, forfeited, or deferred until after the Distribution Date or
(ii) a reduction in the amount of any gross income or revenue that (A) is
actually realized by the TLC Group with respect to Post-Distribution Taxes and
(B) relates to, or is based on, a similar item of gross income or revenue that
the Parent Group is required to
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<PAGE> 5
include on a Return or otherwise required to include in its computation of
taxable income as a result of an audit, other administrative proceeding or
otherwise. TLC shall use reasonable best efforts to realize any such incremental
tax savings that may potentially be available.
AGENCY.
TLC irrevocably designates Parent (and shall cause each member of the TLC Group
to irrevocably designate Parent) as its agent and attorney in fact (and shall
execute any necessary powers of attorney) for the purpose of taking any and all
actions necessary or incidental to the filing of federal income tax Returns and
state unitary or combined Returns for (i) any period during which any member of
the TLC Group or any predecessor qualified to file a consolidated, combined,
unitary or similar Return with any member of the Parent Group and (ii) any
period ending on or before the Distribution Date. Parent shall keep TLC
reasonably informed of, and shall reasonably consult with TLC with respect to,
all actions to be taken on behalf of any member of the TLC Group. Parent and TLC
will each furnish the other any and all information which the other may
reasonably request in order to carry out the provisions of this Agreement to
determine the amount of any Tax liability.
CONSISTENT REPORTING.
With respect to all taxable periods ending on or prior to February 29, 2000 TLC,
each member of the TLC Group and any future Affiliates thereof shall file
federal income tax and state income tax Returns in a manner consistent with the
Returns filed (or to be filed) in respect to Pre-Distribution Taxes and in a
manner consistent with the form of the transactions contemplated by the
Distribution Agreement (the "Form") including that the Distribution qualifies
under Section 355 of the Code.
To the extent there is an inconsistency or an apparent inconsistency amongst the
Returns relating to Pre-Distribution Taxes (including after taking into account
Returns to be filed after the Distribution Date) and/or the form, TLC shall file
Returns with respect to Post-Distribution Taxes in the manner directed by
Parent.
Parent and TLC agree to contest any proposed adjustment by any Taxing Authority
that is, in the sole judgement of Parent, inconsistent with the provisions of
this Section 6.
COVENANTS OF TLC AND PARENT RELATING TO ACTIONS AFTER THE DISTRIBUTION DATE.
TLC shall, and shall cause each member of the TLC Group to refrain from
participating in any Post-Distribution Act without the prior written consent of
Parent.
TLC and Parent shall cooperate (and shall cause each of their Affiliates to
cooperate) fully at such time and to the extent reasonably requested by the
other party in connection with the preparation and filing of any Return or the
conduct of any audit, dispute, proceeding, suit or action in respect of Taxes or
other Tax matters. Such cooperation shall include, without limitation, (i) the
retention and provision on demand of books,
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<PAGE> 6
records, documentation or other information relating to any Return until the
expiration of the applicable statute of limitation (giving effect to any
extension, waiver, or mitigation thereof) plus two years; (ii) the execution of
any document that may be necessary or reasonably helpful in connection with the
filing of any Return by any member of the Parent Group or the TLC Group or in
connection with any audit, examination, investigation, suit, action or other
proceeding; and (iii) the use of the parties' reasonable best efforts to obtain
any documentation from a governmental authority or a third party that may be
necessary or helpful in connection with the foregoing.
TLC and Parent shall cooperate (and shall cause each of their Affiliates to
cooperate) in causing the tax year end of TLC to be February 28th or February
29th as the case may be, effective for the year ended February 29, 2000 with
respect to any jurisdiction in which TLC is not included in a consolidated or
combined group Tax Return for a Tax period which will end on the Distribution
Date.
TLC REPRESENTATIONS. TLC hereby represents and warrants to the Parent and each
member of the Parent Group that the statements contained in this Section 8 are
true and correct in all material respects on the date hereof:
To the best of TLC's knowledge and belief, no part of its stock being
distributed in the Distribution will be received by a shareholder of Parent in
such shareholder's capacity as a creditor, employee or in any capacity other
than that of a shareholder of Parent.
To the best of TLC's knowledge and belief, shareholders of Parent owning stock
two years prior to the Distribution Date will continue to hold at least 50% of
the stock of TLC two years after the Distribution Date.
TLC has no plan or intention to liquidate, merge with another corporation or to
sell or otherwise dispose of its assets subsequent to the Distribution except in
the ordinary course of business.
To the best of TLC's knowledge and belief, no plan or intention exists by the
shareholders of Parent to sell, exchange, transfer by gift, or otherwise dispose
of any of their stock in Parent or TLC subsequent to the Distribution.
Following the Distribution, each of Parent and TLC will operate as independent
corporations except that certain administrative and other common activities of
the two corporations will be undertaken by common personnel in accordance with
the Ancillary Agreements. Payments made in connection with all continuing
transactions between, and services provided for, each of Parent and TLC will be
for fair market value based on terms and conditions arrived at by the parties
bargaining at arm's length.
TLC has no plan involving the issuance or transfer of equity interests in TLC
following the Distribution other than issuances to employees and consultants of
TLC upon the exercise of stock options or otherwise under its 1999 Stock Option
Plan.
TLC has no plan or intention for the transfer or cessation of a substantial
portion of the business of TLC or other substantial change in the business of
TLC following the Distribution.
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<PAGE> 7
PARENT REPRESENTATIONS. Parent hereby represents and warrants to TLC and each
member of the TLC Group that the statements contained in this Section 9 are true
and correct in all material respects on the date hereof:
No part of the TLC stock being distributed in the Distribution will be received
by a shareholder of Parent in such shareholder's capacity as a creditor,
employee or in any capacity other than that of a shareholder of Parent.
To the best of Parent's knowledge and belief, shareholders of Parent owning
stock two years prior to the Distribution Date will continue to hold at least
50% of the stock of Parent two years after the Distribution Date.
Parent has no plan or intention to liquidate, merge with another corporation or
to sell or otherwise dispose of its assets subsequent to the Distribution except
in the ordinary course of business.
To the best of Parent's knowledge and belief, no plan or intention exists by the
shareholders of Parent to sell, exchange, transfer by gift, or otherwise dispose
of any of their stock in Parent or TLC subsequent to the Distribution.
Following the Distribution, each of Parent and TLC will operate as independent
corporations except that certain administrative and other common activities of
the two corporations will be undertaken by common personnel in accordance with
the Ancillary Agreements. Payments made in connection with all continuing
transactions between, and services provided for, each of Parent and TLC will be
for fair market value based on terms and conditions arrived at by the parties
bargaining at arm's length.
Parent has no plan or intention for the transfer or cessation of a substantial
portion of the business of Parent or other substantial change in the business of
Parent following the Distribution.
PAYMENTS. All payments to be made hereunder shall be made in immediately
available funds. Unless otherwise provided herein, any payment not made when due
hereunder shall bear interest from the due date at an annual rate equal to the
lowest prime rate as reported in the Wall Street Journal plus 2%, compounded and
adjusted monthly. For purposes of this Agreement, the following payments shall
be due at the following times:
Payments due under Section 2 hereof shall be paid within 10 days of the receipt
of notice from the party entitled to the payment indicating the occurrence of
the later of (i) a Final Determination relating to the item or items giving rise
to the Tax for which indemnification is made and (ii) actual payment of the Tax
giving rise to the claim for indemnification.
In the case of any refunds of Taxes received by a party other than the party
entitled to such refunds pursuant to Section 3 hereof, the recipient of the
refund shall pay the amount of such refund to the other party within five days
of the receipt of such refund.
Amounts payable pursuant to Section 4 hereof shall be paid within five days of
the later to occur of (i) a Final Determination relating to the Tax item that
gave rise to the windfall benefit and (ii) the actual receipt of the windfall
benefit.
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<PAGE> 8
ARBITRATION.
Any dispute, controversy or claim arising out of or in connection with this
Agreement (including any questions of fraud or questions concerning the validity
and enforceability of this Agreement or any of the rights herein and therein
conveyed), shall be determined and settled by arbitration in New York, New York,
pursuant to the rules then in effect of the American Arbitration Association as
modified by this paragraph. Any award rendered shall be final and conclusive
upon the parties and a judgment thereon may be entered in any court having
competent jurisdiction. The party submitting such dispute shall give written
notice to that effect to the other party, stating the dispute to be arbitrated
and the name and address of a person designated to act as arbitrator on its
behalf. Within fifteen (15) days after such notice, the other party shall give
written notice to the first party stating the name and address of a person
designated to act as an arbitrator on its behalf. In the event that the second
party shall fail to notify the first party of its designation of an arbitrator
within the time specified, then the first party shall request the American
Arbitration Association to appoint a second arbitrator. The two arbitrators so
chosen shall meet within fifteen (15) days after the second arbitrator has been
appointed to appoint a third arbitrator. If the two arbitrators are unable to
agree on the appointment of a third arbitrator within such fifteen (15) day
period, either party may request the American Arbitration Association to appoint
a third arbitrator. Each arbitrator appointed hereunder shall be independent of
the parties and either party may disqualify an arbitrator who is or is
affiliated with a supplier, customer or competitor of either party without the
consent of the other party. Each arbitrator shall be reasonably knowledgeable
regarding the area or areas in dispute. The arbitrators shall follow substantive
rules of law and the Federal Rules of Evidence, require the parties to conduct
discovery pursuant to the rules then in effect under the Federal Rules of Civil
Procedure in an expeditious manner, cause testimony to be transcribed, and make
an award accompanied by findings of fact and a statement of reasons for the
decision. All costs and expenses, including attorney's fees, of all parties
incurred in any dispute which is determined and/or settled by arbitration
pursuant to this paragraph shall be borne by the party determined to be liable
in respect of such dispute; provided, however, that if complete liability is not
assessed against only one party, the parties shall share the total costs in
proportion to their respective amounts of liability so determined. Except where
clearly prevented by the area in dispute, both parties agree to continue
performing their respective obligations under this Agreement while the dispute
is being resolved. Each party, and the arbitrators, shall use their best
efforts, subject to reasonable prosecution of the arbitration, court order and
disclosure required under securities laws, to keep the subject matter of the
arbitration and confidential information of each party confidential, and the
arbitrators are authorized to impose such protective orders as they may deem
appropriate for such purpose.
COSTS AND EXPENSES.
Except as expressly set forth in this Agreement, each party shall bear its own
costs and expenses incurred pursuant to this Agreement regardless of the
beneficiary of the items or services relating to such costs and expenses.
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<PAGE> 9
TERMINATION AND SURVIVAL.
Notwithstanding anything in this Agreement to the contrary, this Agreement shall
remain in effect and its provisions shall survive for the full period of all
applicable statutes of limitation relating to the assessment of Taxes (giving
effect to any extension, waiver or mitigation thereof) plus two years.
AMENDMENTS; LIMITATION ON WAIVERS.
Any provision of this Agreement may be amended if, and only if, such amendment
is in writing and signed by Parent and TLC.
The provisions of this Agreement may be waived only if the waiver is in writing
and signed by the party making the waiver. No delay or omission in exercising
any right under this Agreement will operate as a waiver of the right on any
further occasion. No waiver of any particular provision of the Agreement will be
treated as a waiver of any other provision, and no waiver of any rights will be
deemed a continuing waiver of the same right with respect to subsequent
occurrences that give rise to it. All rights given by this Agreement are
cumulative to other rights provided for in this Agreement and to any other
rights available under applicable law.
GOVERNING LAW AND INTERPRETATION.
This Agreement shall be governed by, interpreted and enforced in accordance with
the laws of the State of New York (regardless of the laws that might be
applicable under principles of conflict of law).
CONFIDENTIALITY.
Each party shall hold and shall cause its consultants and advisors to hold in
strict confidence, unless compelled to disclose by judicial or administrative
process or, in the opinion of its counsel, by other requirements of law, all
information (other than any such information relating solely to the business or
affairs of such party) concerning the other parties hereto furnished to it by
such other party or its representatives pursuant to this Agreement (except to
the extent that such information can be shown to have been (a) previously known
by the party to which it was furnished, (b) in the public domain through no
fault of such party, or (c) later lawfully acquired from other sources by the
party to which it was furnished), and each party shall not release or disclose
such information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors who shall be advised of the
provisions of this Section 16. Each party shall be deemed to have satisfied its
obligation to hold confidential information concerning or supplied by the other
party if it exercises the same care as it takes to preserve confidentiality for
its own similar information.
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<PAGE> 10
COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same instrument.
ASSIGNMENTS AND THIRD PARTY BENEFIT.
This Agreement and the terms and provisions hereof shall be binding upon and
shall inure to the benefit of, the parties and their respective successors and
assigns.
SEVERABILITY.
If any term, provision, condition or covenant of this Agreement, or the
application thereof to any party or circumstance shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of
this instrument, or the application of such term, provision, condition or
covenant to persons or circumstances other than those as to whom or which it is
held invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
MERGER OF PRIOR AGREEMENTS.
This Agreement contains all of the terms and provisions and constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior written, oral or implied understandings,
representations and agreements of the parties relating to the subject matter of
this Agreement. Without limiting the foregoing, the parties acknowledge and
agree that in the event of any conflict or inconsistency between the provisions
of this Agreement and the provisions of the Distribution Agreement, the
provisions of this Agreement shall control and to such extent shall be deemed to
supersede such conflicting provisions under the Distribution Agreement.
The parties acknowledge that pursuant hereto any and all existing tax allocation
agreements or arrangements binding or benefiting TLC shall be terminated as of
the close of business on the Distribution Date, and that after the Distribution
Date this Agreement shall constitute the sole tax allocation agreement among
Parent and TLC.
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10
<PAGE> 11
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
STAFF BUILDERS, INC.
By: /s/ Stephen Savitsky
--------------------------------------
Title: Chairman of the Board and
--------------------------------------
Chief Executive Officer
--------------------------------------
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
By: /s/ Dale R. Clift
--------------------------------------
Title: President, Chief Operating Officer
--------------------------------------
11
<PAGE> 1
EXHIBIT 10.3
TRANSITIONAL SERVICES AGREEMENT
THIS TRANSITIONAL SERVICES AGREEMENT (the "AGREEMENT") is made
as of October 20, 1999 between STAFF BUILDERS, INC., a Delaware corporation
("STAFF BUILDERS"), and TENDER LOVING CARE HEALTH CARE SERVICES, INC., a
Delaware corporation ("TLC").
RECITALS
WHEREAS, the Board of Directors of Staff Builders has
determined that it is in the best interest of Staff Builders and its
shareholders to separate its home health care business from the remainder of its
business;
WHEREAS, Staff Builders and TLC recognize that it is advisable
for TLC to continue providing certain administrative and other services to Staff
Builders until Staff Builders has had a reasonable opportunity to evaluate its
continued need for the services and to investigate other sources of the
services; and
WHEREAS, this Agreement is entered into pursuant to the
Distribution Agreement dated as of the date hereof between Staff Builders and
TLC (the "DISTRIBUTION AGREEMENT") (All capitalized terms used and not otherwise
defined herein shall have the meanings set forth in the Distribution Agreement);
NOW, THEREFORE, in consideration of the mutual covenants and
agreements made herein, the parties hereto agree as follows:
SECTION 1 - SERVICES
1.1 Services.
Beginning on the Distribution Date (as defined in the
Distribution Agreement) TLC, through its corporate staff, will provide or
otherwise make available to Staff Builders, upon the reasonable request of Staff
Builders, certain general corporate services, including but not limited to
accounting and audit, tax, legal, financial and human resources, and arrange for
administration of insurance and employee benefit programs. The services may
include the following:
(a) ACCOUNTING RELATED SERVICES. Provision of general
financial advice and services including, without limitation, assistance with
respect to matters such as cash management and financial controls.
(b) TAX RELATED SERVICES. Preparation of Federal tax returns,
preparation of state and local tax returns (including income tax returns), tax
research and
<PAGE> 2
planning and assistance on tax audits (Federal, state and local) in accordance
with the terms of the Tax Allocation Agreement.
(c) LEGAL RELATED SERVICES. Provision of certain legal
services, including without limitation, assistance in the preparation of reports
under the Securities Exchange Act of 1934, as amended, proxy statements in
connection with meetings of shareholders and offering documents used in
connection with the sale of franchises.
(d) INSURANCE AND EMPLOYEE BENEFIT RELATED SERVICES.
Assistance, if requested, with respect to the liability, property, casualty, and
other normal business insurance coverage. Administration of employee benefit
plans and insurance programs sponsored by Staff Builders. Filing of all required
reports under ERISA for employee benefit plans sponsored by Staff Builders.
(e) ADDITIONAL SERVICES. Services in addition to those
enumerated in subsections 1.1(a) through 1.1(d) above as may be agreed upon by
Staff Builders and TLC from time to time.
SECTION 2 - CHARGES AND PAYMENTS
2.1 Charges for General Services.
For performing general services of the types described above in Section 1 TLC
will charge Staff Builders 110% of the costs actually incurred (including
overhead and general administrative expenses). To the extent such direct costs
cannot be separately measured, TLC shall charge Staff Builders for a portion of
the total cost determined according to a method reasonably selected by TLC and
approved by Staff Builders.
The charges for services pursuant to subsection 2.1 above will
be determined and payable no less frequently than quarterly. The charges will be
due when billed and shall be paid no later than thirty (30) days from the date
of billing.
2.2 Charges for Third-Party Services.
When services of the type described above in Section 1 are
provided, upon the mutual agreement of Staff Builders and TLC, by outside
providers or, in connection with the provision of such services out-of-pocket
costs are incurred such as travel, the cost thereof will be paid by Staff
Builders. To the extent that Staff Builders is billed by the provider directly,
Staff Builders shall pay the bill directly. If TLC is billed for such services,
TLC may pay the bill and charge Staff Builders the amount of the bill or forward
the bill to Staff Builders for payment by Staff Builders.
2.3 Staff Builders shall pay any sales, use or similar tax,
excluding any income tax or taxes levied with respect to gross receipts, payable
by Staff Builders or TLC with respect to amounts payable under this Agreement.
2
<PAGE> 3
SECTION 3 - GENERAL OBLIGATIONS
3.1 Staff Builders' Directors and Officers.
Nothing contained herein will be construed to relieve the
directors or officers of Staff Builders from the performance of their respective
duties or to limit the exercise of their powers in accordance with the Amended
and Restated Articles of Incorporation or the Amended and Restated Bylaws of
Staff Builders or in accordance with any applicable statute or regulation.
3.2 Liabilities.
In furnishing Staff Builders with management advice and other
services as herein provided, neither TLC nor any of its officers, directors,
employees or agents shall be liable to Staff Builders or its creditors or
shareholders for errors of judgment or for anything except willful malfeasance,
bad faith or gross negligence in the performance of their duties or reckless
disregard of their obligations and duties under the terms of this Agreement. The
provisions of this Agreement are for the sole benefit of Staff Builders and TLC
and will not, except to the extent otherwise expressly stated herein, inure to
the benefits of any third party.
Staff Builders shall indemnify and hold harmless TLC and each
of its officers, directors, employees or agents against any claims of any kind
arising out of or relating to this Agreement or services provided hereunder,
except for claims caused by the willful malfeasance, bad faith or gross
negligence of the person seeking such indemnification.
3.3 Term.
The initial term of this Agreement shall begin on the date of
this Agreement and continue until the first anniversary date hereof. This
Agreement shall automatically renew at the end of the initial term or any
renewal term for successive three-month-terms until terminated by either party
upon written notice to the other party at least ninety (90) days prior to the
expiration of the initial term or any renewal terms of this Agreement.
3.4 Standard of Care.
TLC will use (and will cause its Subsidiaries to use)
reasonable efforts in providing the scheduled services to Staff Builders and
will perform such services with the same degree of care, skill and prudence
customarily exercised for its own operations; provided, however, that TLC shall
not be required to devote full time and attention to the performance of its
duties under this Agreement, but shall devote only so much of its time and
attention as it deems reasonable or necessary to perform the services required
hereunder. To the extent possible, such services will be substantially identical
in nature and quality to the services currently available to Staff Builders. TLC
has the right to reasonably supplement, modify, substitute or otherwise alter
such services from time to time in a manner consistent with supplements,
modifications, substitutions or alterations made with respect to similar
services provided or otherwise made available by TLC to its wholly-owned
subsidiaries. In providing such services, TLC will not be responsible for the
accuracy, completeness or timeliness of any advice or service or any return,
report, filing or other document which it provides, prepares or
3
<PAGE> 4
assists in preparing, except to the extent that any inaccuracy, incompleteness
or untimeliness arises from TLC's gross negligence or willful misconduct. Staff
Builders and TLC will cooperate in planning the scope and timing of services
provided by TLC under this Agreement in order to minimize or eliminate
interference with the conduct of TLC's business activities. If such interference
is unavoidable, TLC will apportion, in its sole discretion, the available
services in a fair and reasonable manner. Notwithstanding anything set forth in
this Section 3.4 neither TLC nor any of its officers, directors, employees or
agents shall have any liability under this Agreement except to the extent
provided in Section 3.2.
3.5 Independence.
Except for those individuals named on Schedule A hereto, all
employees and representatives of TLC providing the scheduled services to Staff
Builders will be deemed for purposes of all compensation and employee benefits
to be employees or representatives of TLC and not employees or representatives
of Staff Builders. In performing such services, such employees and
representatives will be under the direction, control and supervision of TLC (and
not of Staff Builders) and TLC will have the sole right to exercise all
authority with respect to the employment (including termination of employment),
assignment and compensation of such employees and representatives.
3.6 Non-exclusivity.
Nothing in this Agreement obligates Staff Builders to use TLC
to provide the specified services or precludes Staff Builders from obtaining the
identified services, in whole or in part, from its own employees or from
providers other than TLC.
3.7 Confidentiality.
TLC agrees to hold, and to use its best efforts to cause its
employees and representatives to hold, in confidence all confidential
information concerning Staff Builders, furnished to or obtained by TLC after the
Distribution Date in the course of providing the identified services, in a
manner consistent with TLC's standard policies with respect to the preservation
and disclosure of confidential information concerning TLC and its subsidiaries.
SECTION 4 - MISCELLANEOUS
4.1 Notices.
Notices hereunder shall be effective if given in writing and
delivered or mailed, postage prepaid, by registered or certified mail to:
STAFF BUILDERS, INC.
1983 Marcus Avenue
Lake Success, NY 11042
Attention: David Savitsky, President
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<PAGE> 5
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
1983 Marcus Avenue
Lake Success, NY 11042
Attention: Dale R. Clift, President
4.2 Applicable Law.
This Agreement shall be governed by and construed under the
laws of the State of New York applicable to contracts made and to be performed
therein.
4.3 Paragraph Titles.
The paragraph titles used in this Agreement are for
convenience of reference and will not be considered in the interpretation or
construction of any of the provisions thereof.
4.4 Amendments; Waivers.
This Agreement may be amended or modified only in writing
executed on behalf of Staff Builders and TLC. No waiver shall operate to waive
any further or future act and no failure to object or forbearance shall operate
as a waiver.
4.5 Successors and Assigns.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns,
provided that this Agreement and the rights and obligations contained herein or
in any exhibit or schedule hereto shall not be assignable, in whole or in part,
without the prior written consent of the parties hereto and any attempt to
effect any such assignment without such consent shall be void.
4.6 Arbitration.
(a) All disputes or differences of any kind or nature between
or among the parties (such parties being referred to individually as a
"DISPUTING PARTY," and, together, as the "DISPUTING PARTIES") arising out of or
in any way relating to this Agreement or the transactions contemplated hereby,
including issues of arbitrability, and including, without limitation, any
dispute between the parties under Section 3.2, which the parties are unable to
resolve themselves shall be submitted to and resolved by arbitration before a
single arbitrator in accordance with the commercial arbitration rules of the
American Arbitration Association (the "AAA"). Such arbitrator shall have
substantial professional experience with regard to corporate legal matters.
(b) The arbitrator shall consider the dispute at issue in New
York, New York, at a mutually agreed upon time within sixty (60) days (or such
longer period as may be acceptable to the Disputing Parties or as directed by
the arbitrator) of the designation of the arbitrator. The arbitration proceeding
shall be held in accordance with the rules for commercial arbitration of the AAA
in effect on the date of the initial request by the Disputing Party, that gave
rise to the dispute to be arbitrated (as such rules are modified by the terms of
this Agreement or may be further modified by mutual agreement of the Disputing
Parties) and shall include an
5
<PAGE> 6
opportunity for the parties to conduct discovery in advance of the proceeding.
Notwithstanding the foregoing, the Disputing Parties shall agree that they will
attempt, and they intend that they and the arbitrator should use their best
efforts in that attempt, to conclude the arbitration proceeding and have a final
decision from the arbitrator within one hundred twenty (120) days from the date
of selection of the arbitrator; provided, however, that the arbitrator shall be
entitled to extend such one hundred twenty (120) day period for a total of two
one hundred twenty (120) day periods. The arbitrator shall deliver a written
award with respect to the dispute to each of the parties, who shall promptly act
in accordance therewith. Each Disputing Party to such arbitration agrees that
any award of the arbitrator shall be final, conclusive and binding and that it
will not contest any action by any other party thereto in accordance with an
award of the arbitrator. It is specifically understood and agreed that any party
may enforce any award rendered pursuant to the arbitration provisions of this
Section 4.6 by bringing suit in any court of competent jurisdiction.
(c) All costs and expenses attributable to the arbitrator
shall be allocated among the parties to the arbitration in such manner as the
arbitrator shall determine to be appropriate under the circumstances.
(d) The parties hereto recognize and agree that in the event
of a breach by a party of this Section 4.6, money damages would not be an
adequate remedy to the injured party for such breach and it would be impossible
to ascertain or measure with any degree of accuracy the damages sustained by
such injured party therefrom. Accordingly, if there should be a breach or
threatened breach by a party of the provisions of this Section 4.6, the injured
party shall be entitled to an injunction restraining the breaching party from
any breach without showing or proving actual damage sustained by the injured
party.
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6
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their fully authorized officers as of the Distribution Date.
STAFF BUILDERS, INC.
By: /s/ Stephen Savitsky
--------------------------------
Title: Chairman of the Board
and Chief Executive Officer
TENDER LOVING CARE HEALTH CARE
SERVICES, INC.
By: /s/ Dale R. Clift
---------------------------------
Title: President and Chief Operating
Officer
7
<PAGE> 1
EXHIBIT 10.4
TRADEMARK LICENSE AGREEMENT
This Trademark License Agreement (the "Agreement") made and entered
into this 20th day of October, 1999, by and between STAFF BUILDERS, INC., a
Delaware corporation ("LICENSOR"), and TENDER LOVING CARE HEALTH CARE SERVICES,
INC., a Delaware corporation (("LICENSEE").
W I T N E S S E T H:
WHEREAS, Licensee is the assignor of certain rights in the service
marks set forth on Schedule 1 hereto (collectively the "MARKS"); and
WHEREAS, Licensor is the assignee of the rights of Assignor in said
Marks by way of an Assignment executed contemporaneously herewith; and
WHEREAS, pursuant to the term of the Distribution Agreement, by and
between Licensor and Licensee, dated the date hereof (the "DISTRIBUTION
AGREEMENT"), Licensor will grant an exclusive license to Licensee to use the
Marks in connection with Licensee's home health care business (the "HOME HEALTH
CARE BUSINESS"), subject to the terms and conditions below
NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth herein and in the Distribution Agreement, and other good and
valuable consideration, receipt of which the parties acknowledge, the parties
agree as follows:
1. License Grant Subject to the terms and conditions of this Agreement,
Licensor hereby grants to Licensee an exclusive, royalty-free, license to use
the Marks worldwide solely in connection with Licensee's services offered as
part of its Home Health Care Business, including related advertising and
promotion. All rights licenses and privileges not specifically granted herein
are excluded from this Agreement and reserved by Licensor. Licensor hereby
represents and warrants to Licensee that, except as set forth on Schedule 2
attached hereto, Licensor owns the marks free and clear of any and all liens,
licenses or other encumbrances.
2. Sublicense. Licensee may sublicense its rights hereunder to any of
its subsidiaries in existence on the date hereof and, with the prior written
consent of Licensor, to any subsidiaries hereafter established or acquired. No
such sublicense shall relieve Licensee from any of its obligations hereunder.
3. Costs. Subject to Section 10 hereof, all registration and
maintenance costs of the Marks, insofar as such costs relate to the Home Health
Care Business, shall be born by Licensee.
4. Quality Standards.
(a) Licensee shall take such action as is reasonably
<PAGE> 2
necessary to maintain the high-quality, value and integrity of the marks and to
refrain from taking any action likely to diminish or detract from any Mark's
value. Licensee shall insure that its use of the Marks does not tarnish or bring
into dispute the Marks.
(b) Without limiting the foregoing, Licensee represents, warrants, and
agrees that it will, at all times, operate its business and sell, offer,
advertise, distribute or otherwise exploit the Marks in compliance with all
laws, rules and regulations, including without limitation any decision, order or
administrative action or guidance of any governmental or regulatory authority.
5. Display. Licensee shall be free to display the Marks in such forms
or manners as Licensee may choose, provided that any such use shall be of a kind
and quality which does not materially detract from the value of the Marks.
Licensee shall cause to appear on all written materials on or in connection with
which the marks are used, such legends, markings and notices as Licensor may
reasonable prescribe in order to give appropriate notices of any trademark
usage, registration or ownership rights.
6. Ownership. As between the parties, Licensor, or its successors or
assigns shall own all right, title and interest, including the goodwill related
thereto, in and to the Marks. Licensee shall not acquire any ownership interest
in the Marks whatsoever and Licensee's use of the Marks shall inure to
Licensor's benefit. Licensee shall fully cooperate with Licensor in connection
with any matters pertaining to the protection or enforcement of Licensor's
rights in the Marks, including, without limitation, providing access to and
copies of any records, files or other information pertaining to the exploitation
of the Marks. Licensee shall promptly execute any documents reasonably requested
by Licensor to confirm or establish Licensor's ownership of all rights in the
Marks, failing which Licensor is hereby appointed, as Licensee's
attorney-in-fact to execute such documents. Licensee agrees that it shall not,
register or attempt to register the Marks (or a logo, mark or other design
confusingly similar to the marks) without the prior written consent of Licensor.
Licensee further agrees that it shall not contest or assist any other party in
contesting the validity of Licensor's ownership of the Marks anywhere in the
world.
7. Infringement Proceedings.
(a) Licensee shall promptly notify Licensor of any Infringement,
imitation or unauthorized use of the Marks or any mark substantially similar to
a mark in connection with a business substantially similar to the Home Health
Care Business which comes to its attention. Licensor shall take such action as
it deems advisable, and Licensee shall fully cooperate with Licensor.
(b) If Licensor does not take such action to stop an infringement,
imitation or unauthorized use within 30 days of receipt of a Licensee's
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<PAGE> 3
initial notice regarding the same, then Licensee may take such action, in which
case Licensor shall cooperate with Licensee, but all expenses shall be born by
Licensee. In the event Licensee takes any action, Licensor shall have the right
to take control of such action upon notice to Licensee.
(c) The party prosecuting the action shall be entitled to the proceeds
from any settlement or damages award. If both parties prosecute such action,
then such settlement or award shall be shared equally, after first deducting
both parties' legal expenses.
8. Term and Termination.
(a) This Agreement shall automatically terminate in the event Licensee
ceases using the Marks in connection with the Home Health Care Business for
longer than one year. Without limiting the foregoing, this Agreement shall
Determinate as follows:
upon 30 days' prior written notice to Licensee, if Licensee commits a material
breach of this Agreement which is not cured to the reasonable satisfaction of
Licensor within the 30-day period following delivery of the notice. The notice
must describe in reasonable detail the alleged breach; or
upon 30 days' prior written notice to Licensor, if Licensor commits a material
breach of this Agreement which such breach is not cured to the reasonable
satisfaction of Licensee within the 30-day period following delivery of the
notice. The notice must describe in reasonable detail alleged breach.
(b) Upon termination of this Agreement, Licensee agrees to lease any
and all use of the Marks, and all rights granted to Licensee shall revert to
Licensor. Licensee shall cease exploiting, including without imitation,
printing, manufacturing, distributing or selling, any materials bearing the
Marks. Upon Licensor's request, Licensee shall destroy or efface any Materials
bearing the Marks which are in the possession of Licensee. Licensee shall
provide Licensor with a certificate signed by an officer of Licensee attesting
to such destruction or effacement.
9. Remedies. Licensee acknowledges that a breach of any of its
covenants, agreements of undertakings hereunder or its failure to cease all use
of the Marks upon the termination or expiration of this Agreement will cause
immediate and irreparable damage to Licensor and the rights of any subsequent
licensee of Licensor. Licensee acknowledges that no adequate remedy at law
exists for failure to cease such activities and Licensee agrees that in the
event of such failure, Licensor shall be entitled to injunctive relief and such
other relief as any court with jurisdiction may deem just and proper.
-3-
<PAGE> 4
10. Indemnification.
(a) Licensee agrees to indemnify, hold harmless and defend Licensor,
its affiliates and its and their officers, directors and employees from and
against all suits, actions, claims, damages, liabilities, costs and expenses
(including but not limited to claims of infringement of any intellectual
property right, and including without limitation, settlement costs and legal and
accounting and other expenses incurred in connection therewith), or other
damages of any kind or nature arising out of or connected with (i) the use of
the Marks by Licensee or its sublicensees, (ii) the use of goods or services
bearing the Marks, including any advertising, promotion or distribution of such
goods or services, or (iii) any breach by Licensee of any covenant,
representation, warranty or other provision of this Agreement.
(b) Licensor agrees to indemnify, hold harmless and defend Licensee,
its affiliates and its and their officers, directors and employees from and
against all suits, actions, claims, damages, liabilities, costs and expenses
(including, without limitation, settlement costs and legal and accounting and
other expenses incurred in connection therewith), or other damages of any kind
or nature arising out of or connected with-any breach by Licensor of any
covenant, representation, warranty or other provision of this Agreement.
(c) If any party entitled to indemnification hereunder (an
"INDEMNITEE") shall receive notice or otherwise learn of the assertion of any
claim or of the commencement of any action (collectively, a "THIRD PARTY CLAIM")
with respect to which any party (an "INDEMNIFYING PARTY") may be obligated to
provide indemnification to such Indemnitee pursuant to Section 10(a) or 10(b),
the Indemnitee shall give such Indemnifying Party written notice thereof within
twenty (20) days after becoming aware of such Third Party Claim. Any such notice
shall describe the Third Party Claim in reasonable detail. Notwithstanding the
foregoing, the failure of any Indemnitee to give notice as provided in this
Section 10(c) shall not relieve the Indemnifying Party of its obligations under
this Section 10, except to the extent that such Indemnifying Party is actually
prejudiced by such failure to give notice.
(d) An Indemnifying Party may elect to defend (and, unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise), at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within thirty (30) days
after the receipt of notice from an Indemnitee in accordance with Section 10(c)
(or sooner, if the nature of such Third Party Claim so requires), the
Indemnifying Party shall notify the Indemnitee of its election whether or not to
defend such Third Party Claim, which election shall specify any reservations or
exceptions. After notice from an Indemnifying Party to an Indemnitee of its
election to assume the defense of a Third Party Claim, such Indemnitee shall
have the right to employ separate counsel and to participate in (but not
control) the defense, compromise, or settlement thereof, but the fees and
expenses of such counsel shall be the expense of such Indemnitee except as set
forth in Section 10(e).
-4-
<PAGE> 5
(e) If an Indemnifying Party elects not to assume responsibility for
defending a Third Party Claim, or fails to notify an Indemnitee of its election
as provided in Section 10(d), such Indemnitee may defend such Third Party Claim
at the cost and expense (including allocated costs of in-house counsel and other
personnel) of the Indemnifying Party.
(f) An Indemnitee may not settle or compromise any Third Party Claim
without the consent of the Indemnifying Party (not to be unreasonably withheld
if the settlement or compromise relates to money damages only). Without limiting
the forgoing, an Indemnifying Party shall not consent to entry of any judgment
or enter into any settlement of the Third Party Claim without the consent of the
Indemnitee if the effect thereof is to permit any injunction, declaratory
judgment, other order or other nonmonetary relief to be entered, directly or
indirectly, against any Indemnitee.
(g) This Section 10 shall survive any termination of this Agreement.
11. Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns. Except
as provided in Section 2 hereof, Licensee may not assign, transfer or delegate
any of its rights or obligations under this Agreement without the prior written
approval of Licensor. Any assignment, transfer or delegation, including as a
result of a change in control, stock transfer or merger, that occurs without
Licensor's prior written consent shall be void ab initio and deemed a material
breach of this Agreement.
12. Notices. Notices between the parties must be in writing. A notice
shall be deemed duly given upon receipt if it is sent by personal delivery,
prepaid certified or registered mail, by a nationally known overnight courier
service (e.g., Federal Express), or by facsimile with receipt confirmed by
written return facsimile to the parties at the following addresses (or at such
other address as shall be specified by like notice):
If to Licensor:
STAFF BUILDERS, INC.
1983 Marcus Avenue
Lake Success, NY 11042
Attention: David Savitsky, President
If to Licensee:
Tender Loving Care Health Care Services, Inc.
1983 Marcus Avenue
Lake Success, NY 11042
Attention: Dale R. Clift, President
-5-
<PAGE> 6
13. Waiver. The failure of either party to insist upon strict
compliance with any provision hereof shall not constitute a waiver or
modification of such provision or any other provision.
14. Severability. If any provision, in part or in whole, of this
Agreement is held to be void or unenforceable by a court of competent
jurisdiction, the remaining provisions and the remaining portion of any
provision held void or unenforceable in part will continue in full force and
effect.
15. Governing Law. This Agreement is governed by New York law. United
States state or Federal courts situated in New York, New York shall have sole
jurisdiction and venue for the resolution of all disputes arising hereunder and.
the parties hereto irrevocably submit to such jurisdiction and venue. Each party
irrevocably waives any objection it may have to the venue or any action, suit or
proceeding brought in such courts or to the convenience of the forum or the
right to proceed in any other jurisdiction.
16. Entire Agreement. This Agreement constitutes the entire agreement,
and supersede all prior Agreements (oral or written), between the parties with
respect to the use of the Marks by Licensee. This Agreement may only be amended
or modified by a writing signed by the party against whom enforcement of the
amendment or modification is sought.
17. Counterparts. This Agreement may be executed in counterparts, all
of which, taken together shall constitute one agreement.
-6-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
STAFF BUILDERS, INC.
By: /s/ Stephen Savitsky
-------------------------
Name: Stephen Savitsky
Title: Chairman of the
Board and Chief
Executive Officer
TENDER LOVING CARE HEALTH
CARE SERVICES, INC.
By: /s/ Dale R. Clift
-------------------------
Name: Dale R. Clift
Title: President and
Chief Operating
Officer
-7-
<PAGE> 8
SCHEDULE 1
REGISTERED TRADEMARKS
TRADEMARKS
<TABLE>
<CAPTION>
- ---------------------------------- -------------------- -------------------- -------------------- --------------------
TRADEMARK OWNERSHIP REGISTRATION DATE OF EXPIRATION
NUMBER REGISTRATION DATE
- ---------------------------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Staff Builders Staff Builders, 1,524,789 02/14/89 02/14/09
Inc.
- ---------------------------------- -------------------- -------------------- -------------------- --------------------
Outline of Human Figures Staff Builders, 849,595 08/16/88 08/16/08
Inc.
- ---------------------------------- -------------------- -------------------- -------------------- --------------------
</TABLE>
-8-
<PAGE> 9
SCHEDULE 2
LIENS
Pursuant to the terms of Licensor's current credit facility with Mellon
Bank, the bank holds a lien all assets of Licensor, including all rights and
interests in the Marks.
-9-
<PAGE> 1
EXHIBIT 10.5
SUBLEASE
This Sublease made the 20th day of October, 1999, between Staff
Builders, Inc., a New York Corporation, hereinafter referred to as Sublandlord,
and ATC Healthcare Services, Inc., a Georgia Corporation, hereinafter referred
to as Subtenant.
WITNESSETH, that the Sublandlord leases to the Subtenant and the
Subtenant hereby takes from the Sublandlord, the following premises to wit:
1983 Marcus Avenue
Lake Success, NY 11042
Space located on the second floor consisting of 2,030 square feet
To be used in accordance with the terms of this Sublease and for no
other purpose for a term to commence on the date hereof, and to continue on a
month to month basis thereafter at the rent as hereinafter provided, payable in
equal monthly installments in advance on the 20th day of each and every calendar
month during said term.
The said premises are a portion of same premises referred to in the
Master Lease dated October 1, 1993, as amended on October 28, 1998 (the "Master
Lease") between Matterhorn USA, Inc., as the Landlord and Staff Builders, Inc.,
a New York corporation, as the Tenant. The terms, covenants, provisions and
conditions of said Master Lease are hereby incorporated herein and shall be
binding upon all parties with the exception of Section 6 of the Master Lease
pertaining to the payment of rent and additional rent. The SubLandlord
represents that the Master Lease is in full force and effect as of this date.
The Subtenant represents that the Subtenant has been provided a copy of the
Master Lease and agrees to its terms.
The total monthly rent payable hereunder shall be $4,016.67. Rent will
be due and payable on the twentieth day of the month at the address of the
SubLandlord at the location indicated below.
All notices, demands, requests, consents and approvals shall be in
writing and sent by United States certified or registered mail, or via hand
delivery, to the following address:
If to SubLandlord: Staff Builders, Inc.
1983 Marcus Avenue CB7011
Lake Success, NY 11042-7701
If to Subtenant: ATC Healthcare Services, Inc.
2675 Paces Ferry Road, Suite 400
Atlanta, GA 30339
<PAGE> 2
If to Landlord: Matterhorn USA, Inc.
c/o BDB Management, Inc.
6800 Jericho Turnpike
Syosset, NY 11791
Except as specifically modified hereby, Subtenant shall have and enjoy all of
the rights of "Tenant" under the Master Lease.
[Remainder of page intentionally left blank.]
<PAGE> 3
IN WITNESS WHEREOF, the parties have executed this Sublease Agreement as of the
date first above written.
SUBLANDLORD:
Staff Builders, Inc., a New York Corporation
By: /s/ Dale R. Clift
--------------------------------------------
Name: Dale R. Clift
Title: President and Chief Operating Officer
SUBTENANT:
ATC Healthcare Services, Inc., a Georgia Corporation
By: /s/ Stephen Savitsky
--------------------------------------------
Name: Stephen Savitsky
Title: Chairman of the Board and Chief Executive Officer
<PAGE> 1
EXHIBIT 10.6
EMPLOYEE BENEFITS AGREEMENT
THIS EMPLOYEE BENEFITS AGREEMENT is made on October 20, 1999 (the
"Effective Date") between STAFF BUILDERS, INC., a Delaware corporation ("Staff
Builders"), and TENDER LOVING CARE HEALTH CARE SERVICES, INC., a Delaware
corporation ("TLC").
RECITALS
WHEREAS, the Board of Directors of Staff Builders has determined that it
is in the best interest of Staff Builders and its shareholders to separate its
home health care business from the remainder of its business;
WHEREAS, to effect the separation of its home health care business,
Staff Builders intends on the date hereof (the "Distribution Date") to
distribute to its shareholders, in a pro-rata distribution of a dividend (the
"Distribution") all shares of TLC common stock held by Staff Builders;
WHEREAS, certain employees of the "controlled group" (as defined in
Section 414 of the Internal Revenue Code of 1986, as amended, the "Code") of
Staff Builders are expected to become employees of TLC as of the Distribution
Date;
WHEREAS, this Agreement sets forth the employment and employee benefit
plan arrangements that will apply to certain employees of the Staff Builders
controlled group who are expected to become employees of TLC as of the
Distribution Date, and any other employees who are hired by TLC prior to the
Distribution Date (all of such employees being referred to herein as the "TLC
Employees"); and
WHEREAS, this Agreement is entered into pursuant to the Distribution
Agreement dated on the date hereof between Staff Builders and TLC (the
"Distribution Agreement");
NOW THEREFORE, in consideration of the mutual covenants and agreements
made herein, the parties hereto agree as follows:
<PAGE> 2
SECTION 1 - TERMINATION OF COVERAGE OF TLC
SECTION 1 EMPLOYEES UNDER STAFF BUILDERS PLANS
1.1 Termination of Coverage of TLC Employees under Staff Builders Plans
Effective as of the Distribution Date, TLC Employees shall cease to be
eligible to actively participate in the following employee benefit plans offered
by the Staff Builders controlled group:
(a) Staff Builders welfare plans (consisting of health, basic life
insurance, accidental death and dismemberment insurance, supplemental life
insurance, long-term disability, supplemental disability, business travel
accident insurance, employee assistance plans and cafeteria plans, as set forth
in Exhibit 1 (the "Staff Builders Welfare Plans");.
(b) the Staff Builders 401(k) savings plan (the "Staff Builders
401(k) Plan"); and
(c) the Staff Builders employee stock purchase and stock option
plans, as set forth in Exhibit 1 (the "Staff Builders Stock Plans").
As of the Distribution Date, Staff Builders will have no further obligation to
cover the TLC Employees under such plans (collectively, "Staff Builders Plans");
provided, however, that nothing in this Section 1.1 is intended to abrogate,
discontinue or terminate stop loss coverage under any policy maintained by Staff
Builders to the extent that it applies to medical claims and expenses resulting
from injury or illness to TLC employees incurred prior to the Distribution Date,
but for which no claim was filed, or is filed after such date.
1.2 Notice to Administrators and Insurers
To the extent required, Staff Builders agrees to inform, on or prior to
the Distribution Date, all relevant third party administrators and insurance
carriers, that coverage of the TLC Employees in the Staff Builders Plans ceases
as of the Distribution Date.
1.3 Amendment and Termination of Plans
Nothing in this Agreement, including without limitation, the agreement
of Staff Builders and TLC to maintain employee benefit plans or to make
contributions to such plans for any period, shall be construed as a limitation
of the right of Staff Builders or TLC to amend or terminate one or more of such
plans in accordance with the terms of this Agreement and applicable law.
2
<PAGE> 3
SECTION 2 - ESTABLISHMENT OF TLC EMPLOYEE BENEFIT PLANS
2.1 Establishment of TLC 401(k) Plan
(a) Effective as of the Distribution Date, TLC's subsidiaries will
cease to be participating Employers under the Staff Builders 401(k) Plan and TLC
Employees will cease to accrue any benefits under such plan. Effective on the
Distribution Date, TLC will establish a 401(k) savings plan (the "TLC 401(k)
Plan") substantially the same in all respects to the Staff Builders 401(k) Plan
as in effect on that date.
(b) As soon as practicable following the Distribution Date and the
establishment of the TLC 401(k) Plan, Staff Builders shall direct the trustee of
the Staff Builders 401(k) Plan to transfer to the trustee of the TLC 401(k) Plan
(which shall accept such transfer) all assets (including, but not limited to,
outstanding participant loans) and liabilities in the individual accounts of TLC
Employees in the Staff Builders 401(k) Plan ("Transfer of Account Balances").
(c) As of the date of the Transfer of Account Balances, TLC and the
TLC 401(k) Plan shall assume all liabilities for all accrued benefits under the
Staff Builders 401(k) Plan for the TLC Employees that are transferred to the TLC
401(k) Plan, and the Staff Builders 401(k) Plan shall be relieved of all
liabilities for all such transferred benefits.
(d) The TLC 401(k) Plan shall provide the following:
1. that TLC Employees shall participate in the TLC 401(k) Plan to
the extent that they were eligible to participate in the Staff Builders 401(k)
Plan immediately prior to the Distribution Date, and shall receive credit for
eligibility, vesting, and benefit accrual for all service credited for such
purposes under the Staff Builders 401(k) Plan;
2. that the compensation paid by Staff Builders to the TLC
Employees that was recognized under the Staff Builders 401(k) Plan shall be
credited for all applicable purposes under the TLC 401(k) Plan; and
3. that with respect to any amounts transferred from the Staff
Builders 401(k) Plan, the TLC 401(k) Plan will preserve any benefits, rights and
features protected under Section 411(d)(6) of the Internal Revenue Code
("Code").
2.2 Establishment of TLC Welfare Plans
(a) Effective upon the Distribution Date, TLC shall adopt, or cause
to be adopted, welfare plans ("TLC Welfare Plans") substantially the same in all
material respects to the corresponding plans offered by Staff Builders as of the
Distribution Date, as set forth on Exhibit 1.
2.3 COBRA
Effective as of the Distribution Date, TLC shall assume any and all
liability and responsibility for providing continuation of health care coverage
under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") to
any TLC Employee, and any former employee of Staff Builders, except former
employees of Chelsea Computer Consultants, Inc. and/or its subsidiaries
("Chelsea Employees") and ATC Healthcare Services, Inc. and/or its
3
<PAGE> 4
subsidiaries ("ATC Employees") and any qualified beneficiaries with respect to
any such employee (collectively "COBRA Eligible Employees"), whether or not such
continuation coverage obligations arose under any Staff Builders Welfare Plan,
and Staff Builders shall have no further liability or responsibility to provide
continuation of health care coverage to any COBRA Eligible Employee.
2.4 Establishment of TLC stock plans
(a) Effective upon the Distribution Date, TLC shall adopt, or cause
to be adopted a stock option plan ("TLC Stock Option Plan") substantially the
same in all material respects to the 1998 Staff Builders Stock Option Plan as in
effect on that date.
(b) On the day after the Distribution Date, TLC shall grant options
to purchase shares of TLC common stock under the TLC Stock Option Plan to each
of the individuals named on Exhibit 2 hereto. TLC shall grant to each such
individual options to purchase the number of shares of TLC common stock set
forth opposite such individual's name on Exhibit 2. All options so granted shall
be non-qualified and shall be exercisable during the period beginning six months
after the date of grant and ending ten years from the date of grant, subject to
early termination of the exercise period as provided in the TLC Stock Option
Plan. The per share exercise price of these options will be equal to the average
of the closing bid and asked prices of TLC common stock on the Distribution
Date, as quoted on the OTC Bulletin Board. Such options shall have such other
terms and conditions as are the same for the options granted by Staff Builders
under the 1998 Staff Builders Stock Option Plan.
(c) Staff Builders shall not make any adjustments, by reason of the
Distribution, to the number or exercise price of options held under any option
plan of Staff Builders in effect on the Distribution Date by individuals who
become employees of TLC on the Distribution Date.
2.5 Cooperation
Staff Builders and TLC agree to provide each other with all records and
information necessary or useful to carry out their obligations under this
Agreement, and to cooperate in the filing of documents required by the transfer
of assets and liabilities described herein and to take any other actions
necessary or advisable to meet any statutory, regulatory or contractual
requirements under this Agreement.
SECTION 3 - INDEMNIFICATION
3.1 Indemnification
(a) TLC agrees to indemnify and hold harmless Staff Builders, its
subsidiaries and affiliates, their officers, directors, employees, agents, and
fiduciaries from and against any and all costs, damages, losses, expenses
(including reasonable attorneys fees and costs) and other liabilities arising
out of or related to the TLC Welfare Plans, the TLC 401(k) Plan, and the TLC
Stock Option Plan (collectively referred to as the "TLC Plans") with respect
4
<PAGE> 5
to TLC Employees and/or COBRA Eligible Employees and from any liability relating
to any applicable taxes or penalties arising from the failure of the TLC 401(k)
Plan to be qualified under Section 401(a) of the Code at the time of the asset
transfer other than any failure attributable to the terms or operation of the
Staff Builders 401(k) Plan prior to the asset transfer.
(b) Staff Builders agrees to indemnify and hold harmless TLC and its
affiliates, their officers, directors, employees, agents, and fiduciaries from
and against any and all costs, damages, losses, expenses (including reasonable
attorneys fees and costs) and other liabilities arising out of or related to the
Staff Builders Plans; arising out of the determination of the accrued benefits
to be transferred to the TLC 401(k) Plan; the determination of book reserves or
salary deduction liabilities with respect to the TLC Employees under and from
the Staff Builders Plans; any claims under the Staff Builders Plans which are
not attributable to TLC Employees and/or assumed by TLC under this Agreement;
and any liability relating to the applicable taxes or penalties arising from the
failure of the TLC 401(k) Plan to be qualified under Section 401(a) of the Code
due to the terms or operation of the Staff Builders 401(k) Plan prior to the
date the assets are transferred.
3.2 Health and Welfare Benefit Claims
Except as provided in Section 3.1, TLC agrees that it shall assume and
be solely responsible for all liabilities and obligations of Staff Builders in
connection with the claims for benefits brought by or on behalf of TLC Employees
under the Staff Builders Welfare Plans, and Staff Builders shall cease to have
any such liabilities or obligation related to such claims.
SECTION 4 - MISCELLANEOUS
4.1 Notices
Notices hereunder shall be effective if given in writing and delivered
or mailed, postage prepaid, by registered or certified mail to:
If to Staff Builders:
STAFF BUILDERS, INC.
1983 Marcus Avenue
Lake Success, NY 11042
Attention: David Savitsky, President
If to TLC:
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
1983 Marcus Avenue
Lake Success, NY 11042
Attention: Dale R. Clift, President
5
<PAGE> 6
4.2 Amendments; Waivers
This Agreement may be amended or modified only in writing executed on
behalf of Staff Builders and TLC. No waiver shall operate to waive any further
or future act and no failure to object or forbearance shall operate as a waiver.
4.3 No Third Party Beneficiary
This Agreement is solely between Staff Builders and TLC, and nothing
herein, whether expressed or implied, shall confer any rights or remedies on any
employee of Staff Builders or TLC, any former employee of Staff Builders, or any
other person.
4.4 Entire Agreement
This Agreement constitutes the sole and entire agreement and
understanding between the parties with respect to the matters covered hereby.
Any amendment, modification, or termination of this Agreement must be in writing
and must be signed by both parties.
4.5 Governing Law
This Agreement shall be governed by the laws of the State of New York,
except to the extent preempted by the Employee Retirement Income Security Act of
1974, as amended.
4.6 Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns, provided that
this Agreement and the rights and obligations contained herein or in any exhibit
or schedule hereto shall not be assignable, in whole or in part, without the
prior written consent of the parties hereto and any attempt to effect any such
assignment without such consent shall be void.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their authorized representatives as of the Effective Date
STAFF BUILDERS, INC.
By: /s/ Stephen Savitsky
----------------------------------------
Title: Chairman of the Board and Chief
Executive Officer
TENDER LOVING CARE HEALTHCARE SERVICES, INC.
By: /s/ Dale R. Clift
----------------------------------------
Title: President and Chief Operating
Officer
6
<PAGE> 7
EXHIBIT 1
STAFF BUILDERS WELFARE PLANS
Staff Builders Group Health Plan
MetLife DentalPrudential Dental
Aetna Life & AD&D
Aetna LTD
Staff Builders Cafeteria Plan
Cap District- Albany Medical Plan
Health Care Plan - Buffalo
Independent Health - Buffalo
Community Blue - Buffalo
North Americare - Buffalo
United Health Care - Syracuse
First Priority - Wilkes Barre
Personal Choice - Independence Blue Cross
Aetna-US Healthcare
United Health Care - Edwardsville
Regence Blue Cross - Washington
7
<PAGE> 8
<TABLE>
<CAPTION>
NAME OF GRANTEE NUMBER OF OPTIONS
- --------------- -----------------
<S> <S>
Dale R. Clift 500,000
Stephen Savitsky 400,000
David Savitsky 300,000
Sandra Parshall 100,000
Will Derr 75,000
Renee Silver 50,000
John McElligott 50,000
Laura Wilson 50,000
Lisa Aiello 50,000
Steve Schoffield 50,000
Carolina Conn 40,000
David Frank 40,000
Don Ramsey 30,000
Michael Seago 20,000
Vera Carson 20,000
Paul Oettinger 40,000
Carlos Lugo 15,000
Joe Casella 10,000
Mary Brendel 10,000
Shirley Bardel 10,000
Leslie Hackett 10,000
Carol Bosbyshell 10,000
Doug Lindley 10,000
</TABLE>
8
<PAGE> 9
<TABLE>
<CAPTION>
NAME OF GRANTEE NUMBER OF OPTIONS
- --------------- -----------------
<S> <C>
Jamie Hynes 10,000
Patti Ariel 10,000
Nancy Carlucci 10,000
Barbara Gorddard 7,500
Ed McNicholas 7,500
Nita Davison 5,000
Marge Shakun 5,000
Nina Smith 5,000
Gary Marcus 3,750
Mario Marchi 3,750
Paul Seitz 2,500
Chris Cute 2,500
Chuck Zucaro 2,500
Jennie Ascensio 1,500
Carol Brandman 3,000
Mat Mione 1,500
Kathleen Csialldone 1,000
Eliza Velicu 1,250
Veronica Barnaby 3,000
Elaine Belisle 1,000
Dorene Kaufman 1,500
Lynn Barthmare 5,000
</TABLE>
9
<PAGE> 1
EXHIBIT 10.10
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
EMPLOYMENT AGREEMENT
WITH
STEPHEN SAVITSKY
AGREEMENT as of the 20th day of October, 1999, between Stephen
Savitsky, residing at 423 Daub Avenue, Hewlett, New York 11557 ("Executive"),
and TENDER LOVING CARE HEALTH CARE SERVICES, INC. ("Company" or "TLC"), a
Delaware corporation, having its principal place of business at 1983 Marcus
Avenue, Lake Success, New York 11042.
W I T N E S S E T H:
WHEREAS, the Company wishes to secure the services of
Executive on the terms and conditions set forth below; and
WHEREAS, the Executive is willing to accept employment with
TLC on such terms and conditions.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto do agree as follows:
1. Employment. The Company will employ the Executive as
Chairman of the Board and Chief Executive Officer in accordance with all of the
terms and conditions set forth in this Agreement.
2. Term. The term of Executive's employment under this
Agreement shall commence effective as of the date hereof and subject to the
terms and conditions of this
<PAGE> 2
Agreement, shall continue for a period of sixty (60) consecutive months. This
Agreement shall be automatically renewed for the sixty (60) month period
following each anniversary date hereof (an "Anniversary Date") unless Executive
or the Company shall have filed an election to terminate, as hereinafter
provided, in which event Employee's employment shall terminate sixty (60) months
after the filing of such election. Such election to terminate shall be made by
either Executive or the Company by notice in writing to the other, on or before
the Anniversary Date of any year of employment, and in such case the effective
date of such election shall be deemed to be the Anniversary Date of such year of
employment.
3. Compensation.
(a) The Company shall pay to Executive, for all services rendered
by Executive under this Agreement, a base salary at the rate of $295,374.00 per
year ("Base Salary") payable in equal installments (not less frequently than
monthly) in accordance with the Company's regular payroll practices. On each
Anniversary Date, during the term hereof, the Base Salary shall be automatically
increased by a cost-of-living adjustment of an amount equal to the percentage
increase, if any, of the Consumer Price Index as published by the Bureau of
Labor Statistics.
(b) Notwithstanding the amounts set forth above, Executive may be
entitled to additional compensation, in the discretion of the Board of Directors
of the Company, for serving as a director and acting as a member and attending
meetings of the Board.
4. Duties. Executive is engaged to serve as Chief Executive Officer
and Chairman of the Board of Directors of the Company and shall perform such
duties and functions as is compatible with that position as the Company from
time-to-time may determine. During the term of this Agreement, Executive shall
devote approximately one-half of his business time to the affairs of the
Company.
5. Expenses. Executive is authorized to incur expenses for promoting
the business of the Company which are reasonable and necessary in the exercise
of his duties,
2
<PAGE> 3
including reasonable expenses for entertainment, travel and similar items. The
Company shall reimburse Executive promptly for all such expenses upon
presentation by Executive, from time to time, of an itemized account of
expenditures.
6. Vacation. The Executive is entitled to five (5) weeks annual
vacation. If the vacation time is not used within the annual period the
Executive will not be entitled to carry over the unused vacation time.
7. Death or Disability. In the event Executive becomes disabled, the
Employer's obligations hereunder, including Section 3, shall not be affected
thereby, and Executive's duties under Section 4 may be reduced only if, and the
event that, his disability prevents him from fully or completely satisfying any
duty thereunder. In the event of the death of the Executive, the compensation at
date of death, without further adjustment, shall be paid monthly as a death
benefit (through the end of the then-current sixty (60) month term) to his
estate, or if he so designates, his beneficiary.
8. Welfare Benefits. To the extent not received in connection with
Executive's employment with Staff Builders, Inc., a Delaware corporation,
Executive shall be entitled to continue to receive or participate in all
benefits, such as life, health, medical and disability plans, profit sharing
plans, pension plans and the like ("Welfare Plans"), which the Company may make
generally available to its senior executive employees. Executive shall be
entitled to the above-described benefits so long as Executive serves as an
employee of the Company, or as otherwise provided by the terms and conditions of
the Welfare Plans.
9. Change of Control. In the event that at any time after a Change of
Control (as defined below) but prior to the end of twelve months after such
Change of Control Executive is discharged for any reason (other than the
conviction of a felony) or leaves for any reason Executive shall receive within
thirty (30) days after such discharge a lump sum severance payment equal to 2.99
times the "average annual base salary" paid to him. For the purposes of this
Section 9 "average annual base salary shall mean the average of Executive's
annual income in the nature of compensation payable by the Company and
includible in gross income over the five most recent taxable years ending before
the Change in Control.
3
<PAGE> 4
A "Change of Control" shall be deemed to occur when a person,
corporation, partnership, association or entity (x) acquires a majority of the
Company's outstanding voting securities, or (y) acquires securities of the
Company bearing a majority of voting power with respect to election of directors
of the Company, or (z) acquires all or substantially all of the Company's
assets.
10. Termination. It is specifically understood and acknowledged that
the only ground upon which the Company can terminate this Agreement, except
under paragraph 2 hereof, is if Executive is found guilty of a crime resulting
in his conviction as a felon in New York State. It is expressly agreed and
understood between the parties that in the event Executive shall violate any
provision of this Agreement, the sole remedy of the Company shall be to
institute and prosecute proceedings at law in accordance with Section 12, and
not termination of Executive's employment. Executive shall be under no
obligation to minimize or mitigate damages by seeking other employment or
otherwise in the event the Company breaches or does not fulfill its obligations
under this Agreement. It is further agreed that in the event of a default by the
Company of its obligations under this Agreement or of an unsuccessful action by
the Company against Executive for his alleged violation of this Agreement,
Executive shall be entitled to recover from the Company all his expenses of
enforcing or defending any action arising out of this Agreement, including his
reasonable legal fees and expenses.
11. Noncompetition by Executive.
(a) Upon termination of Executive's employment hereunder for any
reason, Executive agrees not to compete, in the manner described hereinafter,
with the business currently conducted by the Company in the United States, for a
period of six (6) months following such termination. Executive agrees that,
during such period, he will not be employed by, work for, advise, consult with,
serve or assist in any way, directly or indirectly, any party whose activities
or .business is similar to that of the Company. The foregoing restrictions on
competition by Executive shall be operative for the benefit of the Company and
of any business owned or controlled by the Company, or any successor or assign
of any of the foregoing.
4
<PAGE> 5
(b) If the period of time or geographical areas specified under
this section should be determined to be unreasonable in any judicial proceeding,
then the period of time and areas of the restriction shall be reduced so that
this Agreement may be enforced in such areas and during such period of time as
shall be determined to be reasonable.
12. Arbitration. The Executive and Company hereby agree that if any
dispute arises between them, such dispute shall be determined by arbitration in
the State of New York in accordance with the rules of the American Arbitration
Association then in effect. The award rendered by such arbitration shall be
final and binding upon the parties hereto, and a judgment upon the award so
rendered may be entered in any court of competent jurisdiction.
13. Waiver. Failure to insist upon compliance with any of the terms,
covenants, or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one time or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
14. Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision. The parties to this Agreement agree and intend that this Agreement
shall be enforced as fully as it may be enforced consistent with applicable
statutes and rules of law.
15. Benefit. Except as otherwise herein expressly provided, this
Agreement shall inure to the benefit of and be binding upon the Company, its
successors and assigns, including, without limitation, any corporation which may
acquire all or substantially all of the Company's assets or business or with or
into which the Company may be consolidated or merged, and to the benefit of, and
be binding upon, Executive, his heirs, executors, administrators and legal
representatives.
5
<PAGE> 6
16. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties hereto, supersedes any and all
prior discussions, agreements and correspondence with regard to the subject
matter hereof, and may not be amended, modified or supplemented in any respect,
except by a subsequent writing executed by both parties hereto.
17. Applicable Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York, without
giving effect to principles of conflicts of law.
18. Remedy for Breach. Any action to enforce, arising out of, or
relating in any way to, any of the provisions of this Agreement shall be an
action at law pursuant to the provisions of Section 12 of this Agreement.
19. Notices. All notices required hereby or given under this Agreement
shall be in writing and shall be served either personally or by certified mail,
return receipt requested, at the following addresses, or at such other address
as the parties may designate to one another in writing:
To the Company: Tender Loving Care Health Care Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
To Executive: Stephen Savitsky
423 Daub Avenue
Hewlett, New York 11557
6
<PAGE> 7
All notices shall be deemed given when so received. All change of address
notices shall be given in the same manner as provided above.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
By:/s/ Dale R. Clift
-----------------------------------------
Dale R. Clift, President and Chief
Operating Officer
/s/ Stephen Savitsky
-----------------------------------------
Stephen Savitsky
7
<PAGE> 1
EXHIBIT 10.11
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
EMPLOYMENT AGREEMENT
WITH
DAVID SAVITSKY
AGREEMENT as of the 20th day of October, 1999, between David
Savitsky, residing at 29 Oxford Road, New Rochelle, NY 10804 ("Executive"), and
TENDER LOVING CARE HEALTH CARE SERVICES, INC. ("Company" or "TLC"), a Delaware
corporation, having its principal place of business at 1983 Marcus Avenue, Lake
Success, New York 11042.
W I T N E S S E T H:
WHEREAS, the Company wishes to secure the services of
Executive on the terms and conditions set forth below; and
WHEREAS, the Executive is willing to accept employment with
TLC on such terms and conditions.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto do agree as follows:
1. Employment. The Company will employ the Executive as Vice
Chairman, Government Relations in accordance with all of the terms and
conditions set forth in this Agreement.
2. Term. The term of Executive's employment under this
Agreement shall commence effective as of the date hereof and subject to the
terms and conditions of this
<PAGE> 2
Agreement, shall continue for a period of sixty (60) consecutive months. This
Agreement shall be automatically renewed for the sixty (60) month period
following each anniversary date hereof (the "Anniversary Date") unless Executive
or the Company shall have filed an election to terminate, as hereinafter
provided, in which event Employee's employment shall terminate sixty (60) months
after the filing of such election. Such election to terminate shall be made by
either Executive or the Company by notice in writing to the other, on or before
the Anniversary Date of any year of employment, and in such case the effective
date of such election shall be deemed to be the Anniversary Date of such year of
employment.
3. Compensation.
(a) The Company shall pay to Executive, for all services
rendered by Executive under this Agreement, a base salary at the rate of
$110,000 per year ("Base Salary") payable in equal installments (not less
frequently than monthly) in accordance with the Company's regular payroll
practices. On each Anniversary Date, during the term hereof, the Base Salary
shall be automatically increased by a cost-of-living adjustment of an amount
equal to the percentage increase, if any, of the Consumer Price Index as
published by the Bureau of Labor Statistics.
(b) Notwithstanding the amounts set forth above, Executive
may be entitled to additional compensation, in the discretion of the Board of
Directors of the Company, for serving as a director and acting as a member and
attending meetings of the Board.
4. Duties. Executive is engaged to serve as Chief Executive
Officer and Chairman of the Board of Directors of the Company and shall perform
such duties and functions as is compatible with that position as the Company
from time-to-time may determine. During the term of this Agreement, Executive
shall devote approximately twenty percent (20%) of his business time to the
affairs of the Company.
5. Expenses. Executive is authorized to incur expenses for
promoting the business of the Company which are reasonable and necessary in the
exercise of his duties, including reasonable expenses for entertainment, travel
and similar items. The Company shall
2
<PAGE> 3
reimburse Executive promptly for all such expenses upon presentation by
Executive, from time to time, of an itemized account of expenditures.
6. Vacation. The Executive is entitled to five (5) weeks
annual vacation. If the vacation time is not used within the annual period the
Executive will not be entitled to carry over the unused vacation time.
7. Death or Disability. In the event Executive becomes
disabled, the Employer's obligations hereunder, including Section 3, shall not
be affected thereby, and Executive's duties under Section 4 may be reduced only
if, and the event that, his disability prevents him from fully or completely
satisfying any duty thereunder. In the event of the death of the Executive, the
compensation at date of death, without further adjustment, shall be paid monthly
as a death benefit (through the end of the then-current sixty (60) month term)
to his estate, or if he so designates, his beneficiary.
8. Welfare Benefits. To the extent not received in connection
with Executive's employment with Staff Builders, Inc., a Delaware corporation,
Executive shall be entitled to continue to receive or participate in all
benefits, such as life, health, medical and disability plans, profit sharing
plans, pension plans and the like ("Welfare Plans"), which the Company may make
generally available to its senior executive employees. Executive shall be
entitled to the above-described benefits so long as Executive serves as an
employee of the Company, or as otherwise provided by the terms and conditions of
the Welfare Plans.
9. Change of Control. In the event that at any time after a
Change of Control (as defined below) but prior to the end of twelve months after
such Change of Control Executive is discharged for any reason (other than the
conviction of a felony) or leaves for any reason Executive shall receive within
thirty (30) days after such discharge a lump sum severance payment equal to 2.99
times the "average annual base salary" paid to him. For the purposes of this
Section 9 "average annual base salary shall mean the average of Executive's
annual income in the nature of compensation payable by the Company and
includible in gross income over the five most recent taxable years ending before
the Change in Control.
3
<PAGE> 4
A "Change of Control" shall be deemed to occur when a person,
corporation, partnership, association or entity (x) acquires a majority of the
Company's outstanding voting securities, or (y) acquires securities of the
Company bearing a majority of voting power with respect to election of directors
of the Company, or (z) acquires all or substantially all of the Company's
assets.
10. Termination. It is specifically understood and
acknowledged that the only ground upon which the Company can terminate this
Agreement, except under paragraph 2 hereof, is if Executive is found guilty of a
crime resulting in his conviction as a felon in New York State. It is expressly
agreed and understood between the parties that in the event Executive shall
violate any provision of this Agreement, the sole remedy of the Company shall be
to institute and prosecute proceedings at law in accordance with Section 12, and
not termination of Executive's employment. Executive shall be under no
obligation to minimize or mitigate damages by seeking other employment or
otherwise in the event the Company breaches or does not fulfill its obligations
under this Agreement. It is further agreed that in the event of a default by the
Company of its obligations under this Agreement or of an unsuccessful action by
the Company against Executive for his alleged violation of this Agreement,
Executive shall be entitled to recover from the Company all his expenses of
enforcing or defending any action arising out of this Agreement, including his
reasonable legal fees and expenses.
11. Noncompetition by Executive.
(a) Upon termination of Executive's employment hereunder
for any reason, Executive agrees not to compete, in the manner described
hereinafter, with the business currently conducted by the Company in the United
States, for a period of six (6) months following such termination. Executive
agrees that, during such period, he will not be employed by, work for, advise,
consult with, serve or assist in any way, directly or indirectly, any party
whose activities or .business is similar to that of the Company. The foregoing
restrictions on competition by Executive shall be operative for the benefit of
the Company and of any business owned or controlled by the Company, or any
successor or assign of any of the foregoing.
4
<PAGE> 5
(b) If the period of time or geographical areas specified
under this section should be determined to be unreasonable in any judicial
proceeding, then the period of time and areas of the restriction shall be
reduced so that this Agreement may be enforced in such areas and during such
period of time as shall be determined to be reasonable.
12. Arbitration. The Executive and Company hereby agree that
if any dispute arises between them, such dispute shall be determined by
arbitration in the State of New York in accordance with the rules of the
American Arbitration Association then in effect. The award rendered by such
arbitration shall be final and binding upon the parties hereto, and a judgment
upon the award so rendered may be entered in any court of competent
jurisdiction.
13. Waiver. Failure to insist upon compliance with any of the
terms, covenants, or conditions hereof shall not be deemed a waiver of such
term, covenant, or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one time or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
14. Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision. The parties to this Agreement agree and intend that this
Agreement shall be enforced as fully as it may be enforced consistent with
applicable statutes and rules of law.
15. Benefit. Except as otherwise herein expressly provided,
this Agreement shall inure to the benefit of and be binding upon the Company,
its successors and assigns, including, without limitation, any corporation which
may acquire all or substantially all of the Company's assets or business or with
or into which the Company may be consolidated or merged, and to the benefit of,
and be binding upon, Executive, his heirs, executors, administrators and legal
representatives.
16. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties hereto, supersedes any and all
prior discussions, agreements
5
<PAGE> 6
and correspondence with regard to the subject matter hereof, and may not be
amended, modified or supplemented in any respect, except by a subsequent writing
executed by both parties hereto.
17. Applicable Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without giving effect to principles of conflicts of law.
18. Remedy for Breach. Any action to enforce, arising out of,
or relating in any way to, any of the provisions of this Agreement shall be an
action at law pursuant to the provisions of Section 12 of this Agreement.
19. Notices. All notices required hereby or given under this
Agreement shall be in writing and shall be served either personally or by
certified mail, return receipt requested, at the following addresses, or at such
other address as the parties may designate to one another in writing:
To the Company: Tender Loving Care Health Care Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
To Executive: David Savitsky
29 Oxford Road
New Rochelle, NY 10804
6
<PAGE> 7
All notices shall be deemed given when so received. All change of address
notices shall be given in the same manner as provided above.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
By: /s/ Dale R. Clift
-------------------------------------------
Dale R. Clift, President and Chief
Operating Officer
/s/ David Savitsky
-------------------------------------------
David Savitsky
7
<PAGE> 1
EXHIBIT 10.12
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
EMPLOYMENT AGREEMENT
WITH
DALE R. CLIFT
AGREEMENT as of the 20th day of October, 1999, between Dale R.
Clift, residing at 38 The Hollows North, Muttontown, NY 11732 ("Executive"), and
TENDER LOVING CARE HEALTH CARE SERVICES, INC. ("Company"), a Delaware
corporation, having its principal place of business at 1983 Marcus Avenue, Lake
Success, New York 11042.
W I T N E S S E T H:
WHEREAS, the Company wishes to secure the services of
Executive on the terms and conditions set forth below; and
WHEREAS, the Executive is willing to accept employment with
TLC on such terms and conditions.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter contained, the parties hereto do agree as follows:
1. Employment. The Company will employ the Executive as
President and Chief Operating Officer in accordance with all of the terms and
conditions set forth in this Agreement.
2. Term. The term of Executive's employment under this
Agreement shall commence effective as of the date hereof and subject to the
terms and conditions of this
<PAGE> 2
Agreement, shall continue for a period of sixty (60) consecutive months. This
Agreement shall be automatically renewed for the sixty (60) month period
following each anniversary date hereof (an "Anniversary Date") unless Executive
or the Company shall have filed an election to terminate, as hereinafter
provided, in which event Employee's employment shall terminate sixty (60) months
after the filing of such election. Such election to terminate shall be made by
either Executive or the Company by notice in writing to the other, on or before
the Anniversary Date of any year of employment, and in such case the effective
date of such election shall be deemed to be the Anniversary Date of such year of
employment.
3. Compensation.
(a) The Company shall pay to Executive, for all services
rendered by Executive under this Agreement, a base salary at the rate of
$400,000 per year ("Base Salary") payable in equal installments (not less
frequently than monthly) in accordance with the Company's regular payroll
practices.
(b) Notwithstanding the amounts set forth above, Executive may
be entitled to additional compensation, in the discretion of the Board of
Directors of the Company, for serving as a director and acting as a member and
attending meetings of the Board.
4. Duties. Executive is engaged to serve as President and
Chief Operating Officer of the Company and shall perform such duties and
functions as is compatible with that position as the Company from time-to-time
may determine. During the term of this Agreement, Executive shall devote all of
his business time to the affairs of the Company, subject to his limited duties
as an employee of Staff Builders, Inc., a Delaware corporation.
5. Expenses. Executive is authorized to incur expenses for
promoting the business of the Company which are reasonable and necessary in the
exercise of his duties, including reasonable expenses for entertainment, travel
and similar items. The Company shall
2
<PAGE> 3
reimburse Executive promptly for all such expenses upon presentation by
Executive, from time to time, of an itemized account of expenditures.
6. Vacation. The Executive is entitled to five (5) weeks
annual vacation. If the vacation time is not used within the annual period the
Executive will not be entitled to carry over the unused vacation time.
7. Death or Disability. In the event Executive becomes
disabled, the Employer's obligations hereunder, including Section 3, shall not
be affected thereby, and Executive's duties under Section 4 may be reduced only
if, and the event that, his disability prevents him from fully or completely
satisfying any duty thereunder. In the event of the death of the Executive, the
compensation at date of death, without further adjustment, shall be paid monthly
as a death benefit (through the end of the then-current sixty (60) month term)
to his estate, or if he so designates, his beneficiary.
8. Welfare Benefits. Executive shall be entitled to continue
to receive or participate in all benefits, such as life, health, medical and
disability plans, profit sharing plans, pension plans and the like ("Welfare
Plans"), which the Company may make generally available to its senior executive
employees. Executive shall be entitled to the above-described benefits so long
as Executive serves as an employee of the Company, or as otherwise provided by
the terms and conditions of the Welfare Plans.
9. Change of Control. In the event that at any time after a
Change of Control (as defined below) but prior to the end of twelve months after
such Change of Control Executive is discharged for any reason (other than the
conviction of a felony) or leaves for any reason Executive shall receive within
thirty (30) days after such discharge a lump sum severance payment equal to 2.99
times the "average annual base salary" paid to him. For the purposes of this
Section 9 "average annual base salary shall mean the average of Executive's
annual income in the nature of compensation payable by the Company and
includible in gross income over the five most recent taxable years ending before
the Change in Control.
3
<PAGE> 4
A "Change of Control" shall be deemed to occur when a person,
corporation, partnership, association or entity (x) acquires a majority of the
Company's outstanding voting securities, or (y) acquires securities of the
Company bearing a majority of voting power with respect to election of directors
of the Company, or (z) acquires all or substantially all of the Company's
assets.
10. Termination. It is specifically understood and
acknowledged that the only ground upon which the Company can terminate this
Agreement, except under paragraph 2 hereof, is if Executive is found guilty of a
crime resulting in his conviction as a felon in New York State. It is expressly
agreed and understood between the parties that in the event Executive shall
violate any provision of this Agreement, the sole remedy of the Company shall be
to institute and prosecute proceedings at law in accordance with Section 12, and
not termination of Executive's employment. Executive shall be under no
obligation to minimize or mitigate damages by seeking other employment or
otherwise in the event the Company breaches or does not fulfill its obligations
under this Agreement. It is further agreed that in the event of a default by the
Company of its obligations under this Agreement or of an unsuccessful action by
the Company against Executive for his alleged violation of this Agreement,
Executive shall be entitled to recover from the Company all his expenses of
enforcing or defending any action arising out of this Agreement, including his
reasonable legal fees and expenses.
11. Noncompetition by Executive.
(a) Upon termination of Executive's employment hereunder for
any reason, Executive agrees not to compete, in the manner described
hereinafter, with the business currently conducted by the Company in the United
States, for a period of six (6) months following such termination. Executive
agrees that, during such period, he will not be employed by, work for, advise,
consult with, serve or assist in any way, directly or indirectly, any party
whose activities or .business is similar to that of the Company. The foregoing
restrictions on competition by Executive shall be operative for the benefit of
the Company and of any business owned or controlled by the Company, or any
successor or assign of any of the foregoing.
4
<PAGE> 5
(b) If the period of time or geographical areas specified
under this section should be determined to be unreasonable in any judicial
proceeding, then the period of time and areas of the restriction shall be
reduced so that this Agreement may be enforced in such areas and during such
period of time as shall be determined to be reasonable.
12. Arbitration. The Executive and Company hereby agree that
if any dispute arises between them, such dispute shall be determined by
arbitration in the State of New York in accordance with the rules of the
American Arbitration Association then in effect. The award rendered by such
arbitration shall be final and binding upon the parties hereto, and a judgment
upon the award so rendered may be entered in any court of competent
jurisdiction.
13. Waiver. Failure to insist upon compliance with any of the
terms, covenants, or conditions hereof shall not be deemed a waiver of such
term, covenant, or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one time or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
14. Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision. The parties to this Agreement agree and intend that this
Agreement shall be enforced as fully as it may be enforced consistent with
applicable statutes and rules of law.
15. Benefit. Except as otherwise herein expressly provided,
this Agreement shall inure to the benefit of and be binding upon the Company,
its successors and assigns, including, without limitation, any corporation which
may acquire all or substantially all of the Company's assets or business or with
or into which the Company may be consolidated or merged, and to the benefit of,
and be binding upon, Executive, his heirs, executors, administrators and legal
representatives.
16. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties hereto, supersedes any and all
prior discussions, agreements
5
<PAGE> 6
and correspondence with regard to the subject matter hereof, and may not be
amended, modified or supplemented in any respect, except by a subsequent writing
executed by both parties hereto.
17. Applicable Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without giving effect to principles of conflicts of law.
18. Remedy for Breach. Any action to enforce, arising out of,
or relating in any way to, any of the provisions of this Agreement shall be an
action at law pursuant to the provisions of Section 12 of this Agreement.
19. Notices. All notices required hereby or given under this
Agreement shall be in writing and shall be served either personally or by
certified mail, return receipt requested, at the following addresses, or at such
other address as the parties may designate to one another in writing:
To the Company: Tender Loving Care Health Care Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
To Executive: Dale R. Clift
38 The Hollows North
Muttontown, NY 11732
6
<PAGE> 7
All notices shall be deemed given when so received. All change of address
notices shall be given in the same manner as provided above.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
By:/s/ Stephen Savitsky
---------------------------------------------
Stephen Savitsky, Chairman of the Board
and Chief Executive Officer
/s/ Dale R. Clift
---------------------------------------------
Dale R. Clift
7
<PAGE> 1
EXHIBIT 10.13
EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") dated as of October 20, 1999 by and
between STAFF BUILDERS, INC., a New York corporation (the "Company"), and Sandra
Parshall who resides at 728 West Jackson Blvd., Suite 307, Chicago, Illinois
60661 ("Executive").
WHEREAS, the Company wishes to secure the services of the Executive on
the terms and conditions set forth below; and
WHEREAS, the Executive is willing to accept employment with the Company
on such terms and conditions.
NOW, THEREFORE, in consideration of their mutual promises and other
adequate consideration, the Company and the Executive do hereby agree as
follows:
1. EMPLOYMENT. The Company will employ the Executive as Senior
Vice President-Operations, in accordance with the terms and
provisions of this Agreement.
2. DUTIES. The Executive shall report to the Chief Operating
Officer of the Company and shall be responsible for the
management of assigned aspects of the operations of the home
health care business of the Company. The Executive shall
perform such other duties as shall be assigned to the
Executive by the Chief Operating Officer or such officer of
the Company as the board of Directors may from time-to-time
designate. The Executive shall devote her full business time,
attention and skills to the performance of her duties
hereunder and to the advancement of the business and interests
of the Company. During the time of this Agreement, the
Executive shall be required to base her business office at the
Lake Success Corporate office location. The Executive's base
business office shall not be changed without her prior
consent.
3. TERM. This Agreement shall be effective upon execution by the
Company and the Executive, and shall remain in effect until
February 28, 2002, unless terminated earlier pursuant to the
terms hereof.
4. COMPENSATION.
(a) Salary. The Executive shall be paid a salary of $204,000 per
annum during the term hereof, payable in weekly installments.
The Executive's salary will be reviewed by the Company on June
1, 2000 and June 1, 2001.
<PAGE> 2
(b) Benefits. The Executive shall be eligible to receive and
participate in, in accordance with their terms, all health,
medical or other insurance benefits which the Company provides
or makes available to its employees.
(c) Expenses. The Company shall reimburse the Executive for all
reasonable and necessary expenses upon submission by the
Executive of receipts, accounts or such other documents
reasonably requested by the Company.
(d) Car Allowance. The Company will lease a Lexus ES300 for the
Executive.
(e) Vacation. The Executive shall be entitled to three (3) weeks
of paid vacation during each twelve (12) month period of
employment during the term.
(f) Nothing in this Agreement is intended to cause a reduction in
the Executive's benefits under the Company's policy or under
any benefit plan in which Executive is a participant at the
time of the execution of this Agreement.
5. TERMINATION: RIGHTS AND OBLIGATIONS UPON TERMINATION.
(a) If the Executive dies during the Term, then the Executive's
employment under this Agreement shall terminate. In such
event, the Executive's estate shall be entitled only to
compensation and expenses accrued and unpaid as at the date of
the Executive's death.
(b) If, as a result of the Executive's incapacity due to physical
or mental illness, whether or not job related, the Executive
is absent from her duties hereunder for 90 consecutive days,
or an aggregate of 120 days during the Term, the Executive's
employment hereunder and this Agreement shall terminate. In
such event, the Executive shall be entitled only to
compensation and expenses accrued and unpaid as at the date of
termination of the Executive's employment.
(c) The Company shall have the right to terminate the Executive's
employment under this Agreement for Cause. For purposes of the
Agreement, the Company shall have "Cause" to terminate the
Executive's employment if (i) the Executive assigns, pledges,
or otherwise disposes of her rights and obligations under this
Agreement, or attempts to do the same without the prior
written consent of the Company; or (ii) the Executive has been
insubordinate, has materially breached any of the terms or
conditions hereof, has engaged in willful misconduct or has
acted in bad faith; or (iii) the Executive has breached
Section 7 of this Agreement; or (iv) the Executive has
committed a felony or perpetrated a fraud against the Company.
If the Company terminates this Agreement for Cause, the
Company's obligations hereunder shall cease, except for the
Company's obligation to pay the
-2-
<PAGE> 3
Executive the compensation and expenses accrued and unpaid as
of the date of termination in accordance with the provisions
hereof.
(d) In the event that at any time after a Change of Control (as
defined below) but prior to the end of twelve (12) months
after such Change of Control, the Executive is discharged for
any reason other than for Cause (as defined in (c) above) or
resigns for any reason (other than due to termination for
Cause), the Executive shall receive within thirty (30) days
after such discharge or resignation a lump-sum severance
payment equal to 2.99 times her average annual base salary.
For the purposes of this Section 5, "average annual base
salary" shall mean the average of Executive's annual income in
the nature of compensation payable by the Company and
includible in gross income over the five most recent taxable
years ending before the Change of Control. Anything contained
herein to the contrary notwithstanding, for a Change of
Control occurring before 2002, years considered in the base
period for calculating "average annual base salary" shall be
determined as follows:
<TABLE>
<CAPTION>
Years Considered in
Year of Change in Control Calculating Average Base Salary
------------------------- -------------------------------
<S> <C>
1999 1996-1998
2000 1996-1999
2001 1996-2000
</TABLE>
A "Change of Control" shall be deemed to occur when a person,
Company, partnership, association or entity (i) acquires a
majority of the outstanding voting securities of Tender Loving
Care Health Care Services, a Delaware corporation ("TLC") or
(ii) acquires securities bearing a majority of voting power
with respect to election of directors of TLC or (iii) acquires
all or substantially all of TLC's assets.
(e) Notwithstanding anything to the contrary contained herein, all
payments owed to the Executive upon termination of this
Agreement shall be subject to offset by the Company for
amounts owed to the Company by the Executive hereunder.
(f) The obligations of the Company and the Executive pursuant to
this Section 5 shall survive the termination of this
Agreement.
-3-
<PAGE> 4
6. NOTICES. Any written notice permitted or required under this
Agreement shall be deemed sufficient when hand delivered or
posted by certified or registered mail, postage prepaid, and
addressed to:
if to Staff Builders, Inc.:
1983 Marcus Avenue
Lake Success, New York 11042
Attention:Dale R. Clift, COO
or
if to the Executive: Sandra Parshall
728 West Jackson Boulevard, Suite 307
Chicago, Illinois 60661
Either party may, in accordance with the provisions of this Section,
give written notice of a change of address, in which event all such notices and
requests shall thereafter be given as above provided at such changed address.
7. CONFIDENTIALITY OBLIGATIONS; NON-COMPETITION BY EXECUTIVE.
(a) The Executive acknowledges that in the course of performing
her duties hereunder, she will be made privy to confidential
and proprietary information. The Executive covenants and
agrees that during the term of this Agreement and at any time
after the termination of this Agreement, she will not directly
or indirectly, for her own account or as an employee, officer,
director, partner, joint venturer, shareholder, investor, or
otherwise, disclose to others or use for her own benefit or
cause or induce others to do the same, any proprietary or
confidential information or trade secrets of the Company.
(b) The Executive agrees that, while this Agreement is in effect,
and for six(6) months following termination of employment, she
will not, within the United States (A) compete, directly or
indirectly for her own account or as an employee, officer,
director, partner, joint venturer, shareholder, investor, or
otherwise, with the business conducted by the Company; or (B)
while this Agreement is in effect and for one (1) year
following termination of employment directly or indirectly
solicit or recruit any employee of the Company to leave the
employ of the Company, or solicit any client or customer of
the Company to terminate or modify its business relationship
with the Company.
-4-
<PAGE> 5
(c) The foregoing restrictions on the Executive set forth in this
Section 7 shall be operative for the benefit of the Company
and of any business owned or controlled by the Company, or any
successor or assign of any of the foregoing.
(d) Notwithstanding anything herein to the contrary, if the period
of time or the geographical area specified in this Section 7
should be determined to be unreasonable in a judicial
proceeding, then the period of time and territory of the
restriction shall be reduced so that this Agreement may be
enforced in such area and during such period of time as shall
be determined to be reasonable.
(e) The parties acknowledge that any breach of this Section 7 will
cause the Company irreparable harm for which there is no
adequate remedy at law, and as a result of this, the Company
shall be entitled to the issuance of an injunction,
restraining order or other equitable relief in favor of the
Company restraining Executive from committing or continuing
any such violation. Any right to obtain an injunction,
restraining order or other equitable relief hereunder shall
not be deemed a waiver of any right to assert any other remedy
the Company may have at law or equity.
(f) For purposes of this Section 7, the term "the Company" shall
refer to the Company and all of its parents, subsidiaries and
affiliated Companies.
8. JURISDICTION. The Executive and the Company consent to the
jurisdiction of the New York Supreme Court for a determination
of any disputes as to any matters whatsoever arising out of or
in any way connected with this Agreement and authorize the
service of process on the Company or Executive by registered
mail sent to either party at the address set forth in Section
6 of this Agreement.
9. HANDBOOK GROUP INSURANCE PROGRAM BOOKLET. The Executive
acknowledges receipt of the Company's Employee Handbook and
Group Insurance Program Booklet (together, the "Handbook").
The terms of the Handbook are incorporated herein by
reference.
10. BINDING EFFECT. This Agreement shall bind and inure to the
benefit of the Company, its successors and assigns and shall
inure to the benefit of, and be binding upon, the Executive,
her heirs, executors and legal representatives.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall in no way affect the
validity or enforceability of any other provision, or any part
thereof.
12. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York.
-5-
<PAGE> 6
13. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject
matter hereof and supersedes all prior and contemporaneous
agreements, understandings, negotiations, and discussions,
whether oral or written. of the parties.
14. MODIFICATION, TERMINATION OR WAIVER. This Agreement may only
be amended or modified by a written instrument executed by the
parties hereto. The failure of any party at any time to
require performance of any provision of this Agreement shall
in no manner affect the right of such party at a later time to
enforce the same.
15. INDEMNIFICATION. The Company shall indemnify and hold
Executive harmless from any and all damages, costs, fees and
expenses, including but not limited to attorneys' fees, which
she may incur as a result of any claim against her arising out
of her performance of her duties under this Agreement provided
that she is not found to have committed intentional
misconduct.
IN WITNESS WHEREOF, the Company and the Executive have
executed this Employment Agreement as of the date first above written.
STAFF BUILDERS, INC.
By: /s/ Dale R. Clift
------------------------------------
Dale R. Clift, President and Chief
Operating Officer
/s/ Sandra Parshall
---------------------------------------
Sandra Parshall
-6-
<PAGE> 1
EXHIBIT 10.14
EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") dated as of October 20, 1999 by and
between TENDER LOVING CARE HEALTH CARE SERVICES, INC., a Delaware Corporation
("TLC" or the "Corporation"), and Willard T. Derr who resides at 8 Shirley
Court, East Northport, NY 11731 ("Executive").
WHEREAS, TLC wishes to secure the services of the Executive on the
terms and conditions set forth below; and
WHEREAS, the Executive is willing to accept employment with TLC on such
terms and conditions.
NOW, THEREFORE, in consideration of their mutual promises and other
adequate consideration, TLC and the Executive do hereby agree as follows:
1. EMPLOYMENT. TLC will employ the Executive as Chief Financial
Officer, Senior Vice President and Corporate Controller, in
accordance with the terms and provisions of this Agreement.
2. DUTIES. The Executive shall report to the Chief Operating
Officer of TLC and shall be responsible to perform such duties
as shall be assigned to the Executive by the Chairman or Chief
Operating Officer of TLC or their designee. The Executive
shall devote his full business time, attention and skill such
as is required for the performance of his duties hereunder and
to the advancement of the business and interests of TLC,
subject to limited consulting duties to Staff Builders, Inc.
3. TERM. This Agreement shall be effective upon execution by TLC
and the Executive, and shall remain in effect until the third
anniversary date hereof, unless terminated earlier pursuant to
the terms hereof.
4. COMPENSATION.
(a) Salary. The Executive shall be paid a salary of $160,000 per
annum during the term hereof, payable in weekly installments.
The Executive's salary will be reviewed by TLC on March 1,
2000.
(b) Benefits. The Executive shall be eligible to receive and
participate in, in accordance with their terms, all health,
medical or other insurance benefits which TLC provides or
makes available to its employees.
<PAGE> 2
(c) Expenses. TLC shall reimburse the Executive for all reasonable
and necessary expenses upon submission by the Executive of
receipts, accounts or such other documents reasonably
requested by TLC.
(d) Car Allowance. The Executive shall have the use of a 1997
Toyota Camry VIN# 4T1BF22K8VU003368 for the balance of the
lease which expires on October 1999. Thereafter for the
balance of the term of this Agreement, Executive shall receive
a car allowance of $300 per month.
(e) Vacation. The Executive shall be entitled to four (4) weeks of
paid vacation during each twelve (12) month period of
employment during the term.
(f) Nothing in this Agreement is intended to cause a reduction in
the Executive's benefits under any TLC's policy or under any
benefit plan in which Executive is a participant at the time
of the execution of this Agreement.
5. TERMINATION; RIGHTS AND OBLIGATIONS UPON TERMINATION.
(a) If the Executive dies during the Term, then the Executive's
employment under this Agreement shall terminate. In such
event, the Executive's estate shall be entitled only to
compensation and expenses accrued and unpaid as at the date of
the Executive's death.
(b) If, as a result of the Executive's incapacity due to physical
or mental illness, whether or not job related, the Executive
is absent from his duties hereunder for 90 consecutive days,
or an aggregate of 120 days during the Term, the Executive's
employment hereunder and this Agreement shall terminate. In
such event, the Executive shall be entitled only to
compensation and expenses accrued and unpaid as at the date of
termination of the Executive's employment.
(c) The Corporation shall have the right to terminate the
Executive's employment under this Agreement for Cause. For
purposes of the Agreement, the Corporation shall have "Cause"
to terminate the Executive's employment if (i) the Executive
assigns, pledges, or otherwise disposes of his rights and
obligations under this Agreement, or attempts to do the same
without the prior written consent of the Corporation; or (ii)
the Executive has been insubordinate, has materially, breached
any of the terms or conditions hereof, has engaged in willful
misconduct or has acted in bad faith; or (iii) the Executive
has breached Section 7 of this Agreement; or (iv) the
Executive has committed a felony or perpetrated a fraud
against the Corporation. If the Corporation terminates this
Agreement for Cause, the Corporation's obligations hereunder
shall cease, except for the Corporation's obligation to pay
the Executive the compensation and expenses accrued and unpaid
as of the date of termination in accordance with the
provisions hereof.
-2-
<PAGE> 3
(d) In the event that at any time after a Change of Control (as
defined below) but prior to the end of twelve (12) months
after such Change of Control, the Executive is discharged for
any reason other than for Cause (as defined in (c) above) or
resigns for any reason (other than due to termination for
Cause), the Executive shall receive within thirty (30) days
after such discharge or resignation a lump-sum severance
payment equal to 2.99 times his average annual base salary.
For the purposes of this Section 5, "average annual base
salary" shall mean the average of Executive's annual income in
the nature of compensation payable by the Company and
includible in gross income over the five most recent taxable
years ending before the Change of Control. Anything contained
herein to the contrary notwithstanding, for a Change of
Control occurring before 2002, years considered in the base
period for calculating "average annual base salary" shall be
determined as follows:
<TABLE>
<CAPTION>
Years Considered in
Year of Change in Control Calculating Average Base Salary
------------------------- -------------------------------
<S> <C>
1999 1994-1998
2000 1995-1999
2001 1996-2000
</TABLE>
A "Change of Control" shall be deemed to occur when a person,
corporation, partnership, association or entity (i) acquires a
majority of the outstanding voting securities of TLC, Inc., a
Delaware corporation ("TLC") or (ii) acquires securities
bearing a majority of voting power with respect to election of
directors of TLC or (iii) acquires all or substantially all of
TLC's assets.
(e) Notwithstanding anything to the contrary contained herein, all
payments owed to the Executive upon termination of this
Agreement shall be subject to offset by the Corporation for
amounts owed to the corporation by the Executive hereunder.
(f) The obligations of the Corporation and the Executive pursuant
to this Section 5 shall survive the termination of this
Agreement.
6. NOTICES. Any written notice permitted or required under this
Agreement shall be deemed sufficient when hand delivered or
posted by certified or registered mail, postage prepaid, and
addressed to:
if to Tender Loving Care Health Care Services, Inc.:
-3-
<PAGE> 4
1983 Marcus Avenue
Lake Success, New York 11042
Attention: Dale R. Clift, COO
or
if to the Executive: Willard T. Derr
8 Shirley Court
East Northport, NY 11721
Either party may, in accordance with the provisions of this Section,
give written notice of a change of address, in which event all such notices and
requests shall thereafter be given as above provided at such changed address.
7. CONFIDENTIALITY OBLIGATIONS; NON-COMPETITION BY EXECUTIVE.
(a) The Executive acknowledges that in the course of performing
his duties hereunder, he will be made privy to confidential
and proprietary information. The Executive covenants and
agrees that during the term of this Agreement and at any time
after the termination of this Agreement, he will not directly
or indirectly, for his own account or as an employee, officer,
director, partner, joint venturer, shareholder, investor, or
otherwise, disclose to others or use for his own benefit or
cause or induce others to do the same, any proprietary or
confidential information or trade secrets of TLC.
(b) The Executive agrees that, while this Agreement is in effect,
and for six (6) months following termination of employment, he
will not, within the United States (A) compete, directly or
indirectly for his own account or as an employee, officer,
director, partner, joint venturer, shareholder, investor, or
otherwise, with the business conducted by TLC; or (B) while
this Agreement is in effect and for one (1) year following
termination of employment directly or indirectly solicit or
recruit any employee of TLC to leave the employ of TLC, or
solicit any client or customer of TLC to terminate or modify
its business relationship with TLC.
(c) The foregoing restrictions on the Executive set forth in this
Section 7 shall be operative for the benefit of TLC and of any
business owned or controlled by TLC, or any successor or
assign of any of the foregoing.
(d) Executive acknowledges that the restricted period of time and
geographical area specified in this Section 7 is reasonable,
in view of the nature of the business in which TLC in engaged
and the Executive's knowledge of TLC's business.
Notwithstanding anything herein to the contrary, if the period
of time or the
-4-
<PAGE> 5
geographical area specified in this Section 7 should be
determined to be unreasonable in a judicial proceeding, then
the period of time and territory of the restriction shall be
reduced so that this Agreement may be enforced in such area
and during such period of time as shall be determined to be
reasonable.
(e) The parties acknowledge that any breach of this Section 7 will
cause TLC irreparable harm for which there is no adequate
remedy at law, and as a result of this, TLC shall be entitled
to the issuance of an injunction, restraining order or other
equitable relief in favor of TLC restraining Executive from
committing or continuing any such violation. Any right to
obtain an injunction, restraining order or other equitable
relief hereunder shall not be deemed a waiver of any right to
assert any other remedy TLC may have at law or equity.
(f) For purposes of this Section 7, the term "TLC" shall refer to
the Corporation and all of its parents, subsidiaries and
affiliated corporations.
8. JURISDICTION. The Executive and TLC consent to the
jurisdiction of the New York Supreme Court for a determination
of any disputes as to any matters whatsoever arising out of or
in any way connected with this Agreement and authorize the
service of process on TLC or Executive by registered mail sent
to either party at the address set forth in Section 6 of this
Agreement.
9. HANDBOOK GROUP INSURANCE PROGRAM BOOKLET. The Executive
acknowledges receipt of the TLC Employee Handbook and Group
Insurance Program booklet (together, the "Handbook"). The
terms of the Handbook are incorporated herein by reference.
10. BINDING EFFECT. This Agreement shall bind and inure to the
benefit of TLC, its successors and assigns and shall inure to
the benefit of, and be binding upon, the Executive, his heirs,
executors and legal representatives.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall in no way affect the
validity or enforceability of any other provision, or any part
thereof.
12. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New
York.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject
matter hereof and supersedes all prior and contemporaneous
agreements, understandings, negotiations, and discussions,
whether oral or written. of the parties.
-5-
<PAGE> 6
14. MODIFICATION, TERMINATION OR WAIVER. This Agreement may only
be amended or modified by a written instrument executed by the
parties hereto. The failure of any party at any time to
require performance of any provision of this Agreement shall
in no manner affect the right of such party at a later time to
enforce the same.
15. INDEMNIFICATION. TLC shall indemnify and hold Executive
harmless from any and all damages, costs, fees and expenses,
including but not limited to attorneys' fees, which he may
incur as a result of any claim against his arising out of his
performance of his duties under this Agreement provided that
he is not found to have committed intentional misconduct.
-6-
<PAGE> 7
IN WITNESS WHEREOF, TLC and the Executive have executed this Employment
Agreement as of the date first above written.
TENDER LOVING CARE HEALTH
CARE SERVICES, INC.
By: /s/ Dale R. Clift
------------------------------
Dale R. Clift, President and
Chief Operating Officer
/s/ Willard T. Derr
---------------------------------
Willard T. Derr
-7-
<PAGE> 1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement") dated as of October 20, 1999 by and
between TENDER LOVING CARE HEALTH CARE SERVICES, INC., a Delaware Corporation
("TLC" or the "Corporation"), and Renee J. Silver, Esq. who resides at 11 Pine
Drive, Port Washington, NY 11050 ("Executive").
WHEREAS, TLC Builders wishes to secure the services of the Executive on
the terms and conditions set forth below; and
WHEREAS, the Executive is willing to accept employment with TLC on such
terms and conditions.
NOW, THEREFORE, in consideration of their mutual promises and other
adequate consideration, TLC and the Executive do hereby agree as follows:
1. EMPLOYMENT. TLC will employ the Executive as Vice President &
General Counsel, in accordance with the terms and provisions of
this Agreement.
2. DUTIES. The Executive shall be responsible for the day-to-day
legal affairs of the Corporation and its subsidiaries and shall
perform such duties as may from time-to-time be assigned by the
Chief Executive Officer of the Corporation or his designees. The
Executive shall report directly to the Chairman of the Board, CEO
of the Corporation or such other officer of the Corporation as the
Board of Directors may from time-to-time designate. The Executive
shall devote her full business time, attention and skill to the
performance of her duties hereunder and to the advancement of the
business and interests of TLC, subject to limited consulting
duties to Staff Builders, Inc.
3. TERM. This Agreement shall be effective upon execution by TLC and
the Executive, and shall remain in effect until the third
anniversary date hereof, unless terminated earlier pursuant to the
terms hereof.
4. COMPENSATION.
(a) Salary. The Executive shall be paid a salary of $170,000 per annum
during the term hereof, payable in weekly installments. The
Executive's salary will be reviewed by TLC on February 25, 2000
and on February 25, 2001.
<PAGE> 2
(b) Benefits. The Executive shall be eligible to receive and
participate in, in accordance with their terms, all health,
medical or other insurance benefits which TLC provides or makes
available to its employees.
(c) Expenses. TLC shall reimburse the Executive for all reasonable and
necessary expenses upon submission by the Executive of receipts,
accounts or such other documents reasonably requested by TLC.
(d) Vacation. The Executive shall be entitled to three (3) weeks of
paid vacation during each twelve (12) month period of employment
during the term. As of November 1, 1999, the Executive shall be
entitled to four (4) weeks of vacation during each twelve (12)
month period of employment during the term.
(e) Nothing in this Agreement is intended to cause a reduction in the
Executive's benefits under any TLC' policy or under any benefit
plan in which Executive is a participant at the time of the
execution of this Agreement.
5. TERMINATION; RIGHTS AND OBLIGATIONS UPON TERMINATION.
(a) If the Executive dies during the Term, then the Executive's
employment under this Agreement shall terminate. In such event,
the Executive's estate shall be entitled only to compensation and
expenses accrued and unpaid as at the date of the Executive's
death.
(b) If, as a result of the Executive's incapacity due to physical or
mental illness, whether or not job related, the Executive is
absent from her duties hereunder for 90 consecutive days, or an
aggregate of 120 days during the Term, the Executive's employment
hereunder and this Agreement shall terminate. In such event, the
Executive shall be entitled only to compensation and expenses
accrued and unpaid as at the date of termination of the
Executive's employment.
(c) The Corporation shall have the right to terminate the Executive's
employment under this Agreement for Cause. For purposes of the
Agreement, the Corporation shall have "Cause" to terminate the
Executive's employment if (i) the Executive assigns, pledges, or
otherwise disposes of her rights and obligations under this
Agreement, or attempts to do the same without the prior written
consent of the Corporation; or (ii) the Executive has been
insubordinate, has materially breached any of the terms or
conditions hereof, has engaged in willful misconduct or has acted
in bad faith; or (iii) the Executive has breached Section 7 of
this Agreement; or (iv) the Executive has committed a felony or
perpetrated a fraud against the Corporation. If the Corporation
terminates this Agreement for Cause, the Corporation's obligations
hereunder shall cease, except for the Corporation's obligation to
pay the Executive the compensation and expenses accrued and unpaid
as of the date of termination in accordance with the provisions
hereof.
-2-
<PAGE> 3
(d) In the event that at any time after a Change of Control (as
defined below) but prior to the end of twelve (12) months after
such Change of Control, the Executive is discharged for any reason
other than for Cause (as defined in (c) above) or resigns for any
reason (other than due to termination for Cause), the Executive
shall receive within thirty (30) days after such discharge or
resignation a lump-sum severance payment equal to 2.99 times her
average annual base salary. For the purposes of this Section 5,
"average annual base salary" shall mean the average of Executive's
annual income in the nature of compensation payable by the Company
and includible in gross income over the five most recent taxable
years ending before the Change of Control. Anything contained
herein to the contrary notwithstanding, for a Change of Control
occurring before 2002, years considered in the base period for
calculating "average annual base salary" shall be determined as
follows:
<TABLE>
<CAPTION>
Years Considered in
Year of Change in Control Calculating Average Base Salary
------------------------- -------------------------------
<S> <C>
1999 1994-1998
2000 1995-1999
2001 1996-2000
</TABLE>
A "Change of Control" shall be deemed to occur when a person,
corporation, partnership, association or entity (i) acquires a
majority of the outstanding voting securities of TLC or (ii)
acquires securities bearing a majority of voting power with
respect to election of directors of TLC or (iii) acquires all or
substantially all of TLC's assets.
(e) Notwithstanding anything to the contrary contained herein, all
payments owed to the Executive upon termination of this Agreement
shall be subject to offset by the Corporation for amounts owed to
the corporation by the Executive hereunder.
(f) The obligations of the Corporation and the Executive pursuant to
this Section 5 shall survive the termination of this Agreement.
-3-
<PAGE> 4
6. NOTICES. Any written notice permitted or required under this
Agreement shall be deemed sufficient when hand delivered or posted
by certified or registered mail, postage prepaid, and addressed
to:
if to Tender Loving Care Health Care Services, Inc.:
1983 Marcus Avenue
Lake Success, New York 11042
Attention: Stephen Savitsky, Chairman
or
if to the Executive: Renee J. Silver, Esq.
11 Pine Drive
Port Washington, NY 11050
Either party may, in accordance with the provisions of this Section,
give written notice of a change of address, in which event all such notices and
requests shall thereafter be given as above provided at such changed address.
7. CONFIDENTIALITY OBLIGATIONS; NON-COMPETITION BY EXECUTIVE.
(a) The Executive acknowledges that in the course of performing her
duties hereunder, she will be made privy to confidential and
proprietary information. The Executive covenants and agrees that
during the term of this Agreement and at any time after the
termination of this Agreement, she will not directly or
indirectly, for her own account or as an employee, officer,
director, partner, joint venturer, shareholder, investor, or
otherwise, disclose to others or use for her own benefit or cause
or induce others to do the same, any proprietary or confidential
information or trade secrets of TLC.
(b) The Executive agrees that, while this Agreement is in effect, and
for six(6) months following termination of employment, she will
not, within the United States (A) compete, directly or indirectly
for her own account or as an employee, officer, director, partner,
joint venturer, shareholder, investor, or otherwise, with the
business conducted by TLC; or (B) while this Agreement is in
effect and for one (1) year following termination of employment
directly or indirectly solicit or recruit any employee of TLC to
leave the employ of TLC, or solicit any client or customer of TLC
to terminate or modify its business relationship with TLC.
(c) The foregoing restrictions on the Executive set forth in this
Section 7 shall be operative for the benefit of TLC and of any
business owned or controlled by TLC, or any successor or assign of
any of the foregoing.
-4-
<PAGE> 5
(d) Notwithstanding anything herein to the contrary, if the period of
time or the geographical area specified in this Section 7 should
be determined to be unreasonable in a judicial proceeding, then
the period of time and territory of the restriction shall be
reduced so that this Agreement may be enforced in such area and
during such period of time as shall be determined to be
reasonable.
(e) The parties acknowledge that any breach of this Section 7 will
cause TLC irreparable harm for which there is no adequate remedy
at law, and as a result of this, TLC shall be entitled to the
issuance of an injunction, restraining order or other equitable
relief in favor of TLC restraining Executive from committing or
continuing any such violation. Any right to obtain an injunction,
restraining order or other equitable relief hereunder shall not be
deemed a waiver of any right to assert any other remedy TLC may
have at law or equity.
(f) For purposes of this Section 7, the term "TLC" shall refer to the
Corporation and all of its parents, subsidiaries and affiliated
corporations.
8. JURISDICTION. The Executive and TLC consent to the jurisdiction of
the New York Supreme Court for a determination of any disputes as
to any matters whatsoever arising out of or in any way connected
with this Agreement and authorize the service of process on TLC or
Executive by registered mail sent to either party at the address
set forth in Section 6 of this Agreement.
9. HANDBOOK GROUP INSURANCE PROGRAM BOOKLET. The Executive
acknowledges receipt of the TLC Employee Handbook and Group
Insurance Program booklet (together, the "Handbook"). The terms of
the Handbook are incorporated herein by reference.
10. BINDING EFFECT. This Agreement shall bind and inure to the benefit
of TLC, its successors and assigns and shall inure to the benefit
of, and be binding upon, the Executive, her heirs, executors and
legal representatives.
11. SEVERABILITY. The invalidity or unenforceability of any provision
of this Agreement shall in no way affect the validity or
enforceability of any other provision, or any part thereof.
12. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof
and supersedes all prior and contemporaneous agreements,
understandings, negotiations, and discussions, whether oral or
written. of the parties.
-5-
<PAGE> 6
14. MODIFICATION, TERMINATION OR WAIVER. This Agreement may only be
amended or modified by a written instrument executed by the
parties hereto. The failure of any party at any time to require
performance of any provision of this Agreement shall in no manner
affect the right of such party at a later time to enforce the
same.
15. INDEMNIFICATION. TLC shall indemnify and hold Executive harmless
from any and all damages, costs, fees and expenses, including but
not limited to attorneys' fees, which she may incur as a result of
any claim against her arising out of her performance of her duties
under this Agreement provided that she is not found to have
committed intentional misconduct.
-6-
<PAGE> 7
IN WITNESS WHEREOF, TLC and the Executive have executed this Employment
Agreement as of the date first above written.
TENDER LOVING CARE HEALTH
CARE SERVICES, INC.
By: /s/ Dale R. Clift
-----------------------------------------
Dale R. Clift, President and Chief
Operating Officer
/s/ Renee J. Silver
-----------------------------------------
Renee J. Silver
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EXHIBIT 10.16
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
INDEMNIFICATION AGREEMENT
with
STEPHEN SAVITSKY
THIS AGREEMENT, made and entered into as of October 20, 1999 (the
"AGREEMENT"), by and between TENDER LOVING CARE HEALTH CARE SERVICES, INC., a
Delaware corporation (the "COMPANY"), and STEPHEN SAVITSKY ("INDEMNITEE"):
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of
their service to and activities on behalf of the corporation; and
WHEREAS, the current impracticability of obtaining adequate insurance
and the uncertainties relating to indemnification have increased the difficulty
of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") has determined that the inability to attract and retain such
persons is detrimental to the best interests of the Company's stockholders and
that the Company should act to assure such persons that there will be increased
certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest
extent permitted by applicable law so that they will serve or continue to serve
the Company free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company on the condition that he
be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
Section 1. Services by Indemnitee.
Indemnitee agrees to continue to serve as an employee of the Company, subject
to the
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terms and conditions of his employment agreement, dated the date hereof as such
agreement may be amended, renewed or extended from time to time and as a
director of the Company.
Section 2. Indemnification -- General.
The Company shall indemnify, and advance Expenses (as hereinafter defined) to
Indemnitee as provided in this Agreement and to the fullest extent permitted by
applicable law in effect on the date hereof and to such greater extent as
applicable law may thereafter from time to time permit. The rights of
Indemnitee provided under the preceding sentence shall include, but shall not
be limited to, the rights set forth in the other Sections of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in the Right of
the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 3 if, by reason of his Corporate Status (as hereinafter defined), he
is, or is threatened to be made, a party to any threatened, pending, or
completed Proceeding (as hereinafter defined), other than a Proceeding by or in
the right of the Company. Pursuant to this Section 3, Indemnitee shall be
indemnified against Expenses, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him or on his behalf in
connection with such Proceeding or any claim, issue or matter therein, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 4. Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 4 if, by reason of his Corporate Status, he is, or is threatened to be
made, a party to any threatened, pending or completed Proceeding brought by or
in the right of the Company to procure a judgment in its favor. Pursuant to
this Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company. Notwithstanding the
foregoing, no indemnification against such Expenses shall be made in respect of
any claim, issue or matter in such Proceeding as to which Indemnitee shall have
been adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Court of Chancery of the State of
Delaware, or the Court in which such Proceeding shall have been brought or is
pending, shall determine.
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Section 5. Indemnification for Expenses of a Party Who Is Wholly or
Partly Successful.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a party to and is successful,
on the merits or otherwise, in any Proceeding, he shall be indemnified against
all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or
matter. For purposes of this Section, and without limitation, the termination
of any claim, issue or matter in such a Proceeding by dismissal, with or
without prejudice, shall be deemed to be a successful result as to such claim,
issue or matter.
Section 6. Indemnification for Expenses of a Witness.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding,
he shall be indemnified against all expenses actually and reasonably incurred
by him or on his behalf in connection therewith.
Section 7. Advancement of Expenses.
The Company shall advance all reasonable Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding within twenty days after the
receipt by the Company of a statement or statements from Indemnitee requesting
such advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include or be preceded
or accompanied by an undertaking by or on behalf of Indemnitee to repay any
Expenses advanced if it shall ultimately be determined that Indemnitee is not
entitled to be indemnified against such Expenses.
Section 8. Procedure for Determination of Entitlement to
Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.
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(b) Upon written request by Indemnitee for indemnification pursuant to
the first sentence of Section 8(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be made
in the specific case: (i) if a Change in Control (as hereinafter defined) shall
have occurred, by Independent Counsel (as hereinafter defined) (unless
Indemnitee shall request that such determination be made by the Board of
Directors or the stockholders, in which case by the person or persons or in the
manner provided for in clause (ii) or (iii) of this Section 8(b)) in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the
Board of Directors by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined), or (B) if a quorum of the Board of
Directors consisting of Disinterested Directors is not obtainable or, even if
obtainable, such quorum of Disinterested Directors so directs, by Independent
Counsel in a written opinion to the Board of Directors, a copy of which shall
be delivered to Indemnitee, or (C) by the stockholders of the Company; or (iii)
as provided in Section 9(b) of this Agreement; and, if it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten (10) days after such determination. Indemnitee shall cooperate with
the person, persons or entity making such determination with respect to
Indemnitee's entitlement to indemnification, including providing to such
person, persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in so cooperating with the person,
persons or entity making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 8(b) hereof,
Independent Counsel shall be selected as provided in this Section 8(c). If a
Change of Control shall not have occurred, Independent Counsel shall be
selected by the Board of Directors, and the Company shall give written notice
to Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change of Control shall have occurred, Independent Counsel shall
be selected by Indemnitee (unless Indemnitee shall request that such selection
be made by the Board of Directors, in which even the preceding sentence shall
apply), and the Indemnitee shall give written notice to the Company advising it
of the identity of Independent Counsel so selected. In either event, Indemnitee
or the Company, as the case may be, may, within 7 days after such written
notice of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection. Such
objection may be asserted only on the ground that Independent Counsel so
selected does not meet the requirements of "Independent Counsel" as defined in
Section 17 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. If such written objection is
made, Independent Counsel so selected may not
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serve as Independent Counsel unless and until a court has determined that such
objection is without merit. If, within 20 days after submission by Indemnitee
of a written request for indemnification pursuant to Section 8(a) hereof, no
Independent Counsel shall have been selected and not objected to, either the
Company or Indemnitee may petition the Court of Chancery of the State of
Delaware or other court of competent jurisdiction for resolution of any
objection which shall have been made by the Company or Indemnitee to the
other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the Court or by such other person
as the Court shall designate, and the person with respect to whom an objection
is so resolved or the person so appointed shall act as Independent Counsel
under Section 8(b) hereof. The Company shall pay any and all reasonable fees
and expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 8(b) hereof and the Company shall
pay all reasonable fees and expenses incident to the procedures of this Section
8(c), regardless of the manner in which such Independent Counsel was selected
or appointed. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 10(a)(iii) of this Agreement, Independent
Counsel shall be discharged and relieved of any further responsibility in such
capacity (subject to the applicable standards of professional conduct then
prevailing).
Section 9. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee
has submitted a request for indemnification in accordance with Section 8(a) of
this Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
(b) If a person, persons or entity empowered or selected under Section
8 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination with 60 days after receipt
by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification
under applicable law; provided, however, that such 60-day period may be
extended for a reasonable time, not to exceed an additional 30 days, if the
person, persons or entity making the determination with respect to entitlement
to indemnification in good faith requires such additional time for the
obtaining or evaluating of documentation and/or information relating thereto;
and provided, further, that the foregoing provisions of this Section 9(b) shall
not apply (i) if the determination
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of entitlement to indemnification is to be made by the stockholders pursuant to
Section 8(b) of this Agreement and if (A) within 15 days after receipt by the
Company of the request for such determination the Board of Directors has
resolved to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within 75 days after such
receipt and such determination is made thereat, or (B) a special meeting of
stockholders is called within 15 days after such receipt for the purpose of
making such determination, such meeting is held within 60 days after having
been so called and such determination is made thereat, or (ii) if the
determination to entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
Section 10. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section
8 of this Agreement that Indemnitee is not entitled to indemnification under
this Agreement, (ii) advancement of Expenses is not timely made pursuant to
Section 7 of this Agreement, (iii) the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 8(b)
of this Agreement and such determination shall not have been made and delivered
in a written opinion within 90 days after receipt by the Company of the request
for indemnification, or (iv) payment of indemnification is not made pursuant to
Section 6 of this Agreement within ten (10) days after receipt by the Company
of a written request therefor, or (v) payment of indemnification is not made
within ten (10) days after a determination has been made that Indemnitee is
entitled to indemnification or such determination is deemed to have been made
pursuant to Section 8 or 9 of this Agreement, Indemnitee shall be entitled to
an adjudication in an appropriate court of the State of Delaware, or in any
other court of competent jurisdiction, of his entitlement to such
indemnification or advancement of Expenses. Alternatively, Indemnitee, at his
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association. Indemnitee shall
commence such proceeding seeking an adjudication or an award in arbitration
within 180 days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 10(a). The Company shall not
oppose Indemnitee's right to seek adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to
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indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 10 shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. If a Change of Control shall have occurred, in any
judicial proceeding or arbitration commenced pursuant to this Section 10 the
Company shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been
made pursuant to Section 8 or 9 of this Agreement that Indemnitee is entitled
to indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 10,
absent (i) a misstatement by Indemnitee or a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 10 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 10, seeks a
judicial adjudication of or an award in arbitration to enforce his rights
under, or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company
against, any and all expenses (of the types described in the definition of
Expenses in Section 17 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in such judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification,
or advancement of Expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be
appropriately prorated.
Section 11. Non-Exclusivity: Survival of Rights; Insurance;
Subrogation.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or termination of this Agreement or any provision hereof shall be
effective as to any Indemnitee with respect to any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
termination.
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(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which such
person serves at the request of the Company Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, employee or agent
under such policy or policies.
(c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indefinable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
Section 12. Duration of Agreement.
This Agreement shall continue until and terminate upon the later of: (a) 10
years after the date that Indemnitee shall have ceased to serve as director or
employee, or (b) the final termination of all pending Proceedings in respect of
which Indemnitee is granted rights of indemnification or advancement of
Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to
Section 10 of this Agreement relating thereto. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to the benefit
of Indemnitee and his heirs, executors and administrators.
Section 13. Severability.
If any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including,
without limitation, each portion of any Section of this Agreement contain any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby; and (b) the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any Section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable,
that is not itself invalid, illegal or unenforceable) shall be construed so as
to give effect to the intent manifested by the provision held invalid, illegal
or unenforceable.
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Section 14. Exception to Right of Indemnification or Advancement of
Expenses.
Notwithstanding any other provision of this Agreement, Indemnitee shall not be
entitled to indemnification or advancement of Expenses under this Agreement
with respect to any proceeding, or any claim therein, brought or made by him
against the Company.
Section 15. Identical Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
for all purposes be deemed to be an original but all of which together shall
constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence
the existence of this Agreement.
Section 16. Headings.
The headings of the paragraphs of this Agreement are inserted for convenience
only and shall not be deemed to constitute part of this Agreement or to affect
the construction thereof.
Section 17. Definitions.
For purposes of this Agreement:
(a) "Change of Control" means a change in control of the Company
occurring after the date hereof of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the date hereof (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board of Directors in office immediately prior to such person
attaining such percentage interest; (ii) the Company is a party to a merger
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's stockholder was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
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(b) "Corporate Status" describes the status of a person who is or was
a director, officer, employee, agent or fiduciary of the Company or of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which such person is or was serving at the request of the
Company.
(c) "Disinterested Director" means a director of the Company who is
not or was not a party to the Proceeding in respect of which indemnification is
sought by the Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness in
a Proceeding.
(e) "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party, or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct than
prevailing, would have a conflict or interest in representing either the
Company or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.
(f) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any
other proceeding whether civil, criminal, administrative or investigative,
except one initiated by Indemnitee pursuant to Section 10 of this Agreement to
enforce his rights under this Agreement.
Section 18. Modification and Waiver.
No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both of the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
Section 19. Notice by Indemnitee.
Indemnitee agrees promptly to notify the Company in writing upon being served
with any summons, citation, subpoena, complaint, indictment, information or
other document relating to any Proceeding or matter which may be subject to
indemnification or advancement of Expenses covered hereunder.
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Section 20. Notices.
All notices requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if (i) delivered by hand
and receipted for by the party to whom said notice or other communication shall
have been directed, or (ii) mailed by certified or registered mail with postage
prepaid, on the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to:
his address indicated on
the signature page hereof
(b) If to the Company, to:
Tender Loving Care Health Care Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
or such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
Section 21. Governing Law.
The parties agree that this Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware.
Section 22. Miscellaneous.
Use of the masculine pronoun shall be deemed to include usage of the feminine
pronoun where appropriate.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
TENDER LOVING CARE HEALTH CARE
SERVICES, INC.
By: /s/ Dale R. Clift
------------------------------
Name: Dale R. Clift
Title: President and Chief
Operating Officer
INDEMNITEE
/s/ Stephen Savitsky
-----------------------------------
Stephen Savitsky
Address: 423 Daub Avenue
Hewlett, New York 11557
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EXHIBIT 10.17
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
INDEMNIFICATION AGREEMENT
with
DAVID SAVITSKY
THIS AGREEMENT, made and entered into as of October 20, 1999 (the
"AGREEMENT"), by and between TENDER LOVING CARE HEALTH CARE SERVICES, INC., a
Delaware corporation (the "COMPANY"), and DAVID SAVITSKY ("INDEMNITEE"):
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of
their service to and activities on behalf of the corporation; and
WHEREAS, the current impracticability of obtaining adequate insurance
and the uncertainties relating to indemnification have increased the difficulty
of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") has determined that the inability to attract and retain such
persons is detrimental to the best interests of the Company's stockholders and
that the Company should act to assure such persons that there will be increased
certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest
extent permitted by applicable law so that they will serve or continue to serve
the Company free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company on the condition that he
be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
Section 1. Services by Indemnitee.
Indemnitee agrees to continue to serve as an employee of the Company, subject
to the terms and conditions of his employment agreement, dated the date hereof
as such
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agreement may be amended, renewed or extended from time to time and as a
director of the Company.
Section 2. Indemnification -- General.
The Company shall indemnify, and advance Expenses (as hereinafter defined) to
Indemnitee as provided in this Agreement and to the fullest extent permitted by
applicable law in effect on the date hereof and to such greater extent as
applicable law may thereafter from time to time permit. The rights of
Indemnitee provided under the preceding sentence shall include, but shall not
be limited to, the rights set forth in the other Sections of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in the Right of
the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 3 if, by reason of his Corporate Status (as hereinafter defined), he
is, or is threatened to be made, a party to any threatened, pending, or
completed Proceeding (as hereinafter defined), other than a Proceeding by or in
the right of the Company. Pursuant to this Section 3, Indemnitee shall be
indemnified against Expenses, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him or on his behalf in
connection with such Proceeding or any claim, issue or matter therein, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 4. Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 4 if, by reason of his Corporate Status, he is, or is threatened to be
made, a party to any threatened, pending or completed Proceeding brought by or
in the right of the Company to procure a judgment in its favor. Pursuant to
this Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company. Notwithstanding the
foregoing, no indemnification against such Expenses shall be made in respect of
any claim, issue or matter in such Proceeding as to which Indemnitee shall have
been adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Court of Chancery of the State of
Delaware, or the Court in which such Proceeding shall have been brought or is
pending, shall determine.
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Section 5. Indemnification for Expenses of a Party Who Is Wholly or
Partly Successful.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a party to and is successful,
on the merits or otherwise, in any Proceeding, he shall be indemnified against
all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or
matter. For purposes of this Section, and without limitation, the termination
of any claim, issue or matter in such a Proceeding by dismissal, with or
without prejudice, shall be deemed to be a successful result as to such claim,
issue or matter.
Section 6. Indemnification for Expenses of a Witness.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding,
he shall be indemnified against all expenses actually and reasonably incurred
by him or on his behalf in connection therewith.
Section 7. Advancement of Expenses.
The Company shall advance all reasonable Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding within twenty days after the
receipt by the Company of a statement or statements from Indemnitee requesting
such advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include or be preceded
or accompanied by an undertaking by or on behalf of Indemnitee to repay any
Expenses advanced if it shall ultimately be determined that Indemnitee is not
entitled to be indemnified against such Expenses.
Section 8. Procedure for Determination of Entitlement to
Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for
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<PAGE> 4
indemnification pursuant to the first sentence of Section 8(a) hereof, a
determination, if required by applicable law, with respect to Indemnitee's
entitlement thereto shall be made in the specific case: (i) if a Change in
Control (as hereinafter defined) shall have occurred, by Independent Counsel
(as hereinafter defined) (unless Indemnitee shall request that such
determination be made by the Board of Directors or the stockholders, in which
case by the person or persons or in the manner provided for in clause (ii) or
(iii) of this Section 8(b)) in a written opinion to the Board of Directors, a
copy of which shall be delivered to Indemnitee; (ii) if a Change of Control
shall not have occurred, (A) by the Board of Directors by a majority vote of a
quorum consisting of Disinterested Directors (as hereinafter defined), or (B)
if a quorum of the Board of Directors consisting of Disinterested Directors is
not obtainable or, even if obtainable, such quorum of Disinterested Directors
so directs, by Independent Counsel in a written opinion to the Board of
Directors, a copy of which shall be delivered to Indemnitee, or (C) by the
stockholders of the Company; or (iii) as provided in Section 9(b) of this
Agreement; and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten (10) days after
such determination. Indemnitee shall cooperate with the person, persons or
entity making such determination with respect to Indemnitee's entitlement to
indemnification, including providing to such person, persons or entity upon
reasonable advance request any documentation or information which is not
privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee's entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 8(b) hereof,
Independent Counsel shall be selected as provided in this Section 8(c). If a
Change of Control shall not have occurred, Independent Counsel shall be
selected by the Board of Directors, and the Company shall give written notice
to Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change of Control shall have occurred, Independent Counsel shall
be selected by Indemnitee (unless Indemnitee shall request that such selection
be made by the Board of Directors, in which even the preceding sentence shall
apply), and the Indemnitee shall give written notice to the Company advising it
of the identity of Independent Counsel so selected. In either event, Indemnitee
or the Company, as the case may be, may, within 7 days after such written
notice of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection. Such
objection may be asserted only on the ground that Independent Counsel so
selected does not meet the requirements of "Independent Counsel" as defined in
Section 17 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. If such written objection is
made, Independent Counsel so selected may not serve as Independent Counsel
unless and until a court has determined that such
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objection is without merit. If, within 20 days after submission by Indemnitee
of a written request for indemnification pursuant to Section 8(a) hereof, no
Independent Counsel shall have been selected and not objected to, either the
Company or Indemnitee may petition the Court of Chancery of the State of
Delaware or other court of competent jurisdiction for resolution of any
objection which shall have been made by the Company or Indemnitee to the
other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the Court or by such other person
as the Court shall designate, and the person with respect to whom an objection
is so resolved or the person so appointed shall act as Independent Counsel
under Section 8(b) hereof. The Company shall pay any and all reasonable fees
and expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 8(b) hereof and the Company shall
pay all reasonable fees and expenses incident to the procedures of this Section
8(c), regardless of the manner in which such Independent Counsel was selected
or appointed. Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 10(a)(iii) of this Agreement, Independent
Counsel shall be discharged and relieved of any further responsibility in such
capacity (subject to the applicable standards of professional conduct then
prevailing).
Section 9. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee
has submitted a request for indemnification in accordance with Section 8(a) of
this Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
(b) If a person, persons or entity empowered or selected under Section
8 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination with 60 days after receipt
by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification
under applicable law; provided, however, that such 60-day period may be
extended for a reasonable time, not to exceed an additional 30 days, if the
person, persons or entity making the determination with respect to entitlement
to indemnification in good faith requires such additional time for the
obtaining or evaluating of documentation and/or information relating thereto;
and provided, further, that the foregoing provisions of this Section 9(b) shall
not apply (i) if the determination of entitlement to indemnification is to be
made by the stockholders pursuant to Section
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<PAGE> 6
8(b) of this Agreement and if (A) within 15 days after receipt by the Company
of the request for such determination the Board of Directors has resolved to
submit such determination to the stockholders for their consideration at an
annual meeting thereof to be held within 75 days after such receipt and such
determination is made thereat, or (B) a special meeting of stockholders is
called within 15 days after such receipt for the purpose of making such
determination, such meeting is held within 60 days after having been so called
and such determination is made thereat, or (ii) if the determination to
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
Section 10. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section
8 of this Agreement that Indemnitee is not entitled to indemnification under
this Agreement, (ii) advancement of Expenses is not timely made pursuant to
Section 7 of this Agreement, (iii) the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 8(b)
of this Agreement and such determination shall not have been made and delivered
in a written opinion within 90 days after receipt by the Company of the request
for indemnification, or (iv) payment of indemnification is not made pursuant to
Section 6 of this Agreement within ten (10) days after receipt by the Company
of a written request therefor, or (v) payment of indemnification is not made
within ten (10) days after a determination has been made that Indemnitee is
entitled to indemnification or such determination is deemed to have been made
pursuant to Section 8 or 9 of this Agreement, Indemnitee shall be entitled to
an adjudication in an appropriate court of the State of Delaware, or in any
other court of competent jurisdiction, of his entitlement to such
indemnification or advancement of Expenses. Alternatively, Indemnitee, at his
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association. Indemnitee shall
commence such proceeding seeking an adjudication or an award in arbitration
within 180 days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 10(a). The Company shall not
oppose Indemnitee's right to seek adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding or arbitration commenced pursuant to this
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Section 10 shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. If a Change of Control shall have occurred, in any
judicial proceeding or arbitration commenced pursuant to this Section 10 the
Company shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been
made pursuant to Section 8 or 9 of this Agreement that Indemnitee is entitled
to indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 10,
absent (i) a misstatement by Indemnitee or a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 10 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 10, seeks a
judicial adjudication of or an award in arbitration to enforce his rights
under, or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company
against, any and all expenses (of the types described in the definition of
Expenses in Section 17 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in such judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification,
or advancement of Expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be
appropriately prorated.
Section 11. Non-Exclusivity: Survival of Rights; Insurance;
Subrogation.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or termination of this Agreement or any provision hereof shall be
effective as to any Indemnitee with respect to any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
termination.
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(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which such
person serves at the request of the Company Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, employee or agent
under such policy or policies.
(c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indefinable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
Section 12. Duration of Agreement.
This Agreement shall continue until and terminate upon the later of: (a) 10
years after the date that Indemnitee shall have ceased to serve as director or
employee, or (b) the final termination of all pending Proceedings in respect of
which Indemnitee is granted rights of indemnification or advancement of
Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to
Section 10 of this Agreement relating thereto. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to the benefit
of Indemnitee and his heirs, executors and administrators.
Section 13. Severability.
If any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including,
without limitation, each portion of any Section of this Agreement contain any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby; and (b) the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any Section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable,
that is not itself invalid, illegal or unenforceable) shall be construed so as
to give effect to the intent manifested by the provision held invalid, illegal
or unenforceable.
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Section 14. Exception to Right of Indemnification or Advancement of
Expenses.
Notwithstanding any other provision of this Agreement, Indemnitee shall not be
entitled to indemnification or advancement of Expenses under this Agreement
with respect to any proceeding, or any claim therein, brought or made by him
against the Company.
Section 15. Identical Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
for all purposes be deemed to be an original but all of which together shall
constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence
the existence of this Agreement.
Section 16. Headings.
The headings of the paragraphs of this Agreement are inserted for convenience
only and shall not be deemed to constitute part of this Agreement or to affect
the construction thereof.
Section 17. Definitions.
For purposes of this Agreement:
(a) "Change of Control" means a change in control of the Company
occurring after the date hereof of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the date hereof (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board of Directors in office immediately prior to such person
attaining such percentage interest; (ii) the Company is a party to a merger
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's stockholder was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
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(b) "Corporate Status" describes the status of a person who is or was
a director, officer, employee, agent or fiduciary of the Company or of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which such person is or was serving at the request of the
Company.
(c) "Disinterested Director" means a director of the Company who is
not or was not a party to the Proceeding in respect of which indemnification is
sought by the Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness in
a Proceeding.
(e) "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party, or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct than
prevailing, would have a conflict or interest in representing either the
Company or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.
(f) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any
other proceeding whether civil, criminal, administrative or investigative,
except one initiated by Indemnitee pursuant to Section 10 of this Agreement to
enforce his rights under this Agreement.
Section 18. Modification and Waiver.
No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both of the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
Section 19. Notice by Indemnitee.
Indemnitee agrees promptly to notify the Company in writing upon being served
with any summons, citation, subpoena, complaint, indictment, information or
other document relating to any Proceeding or matter which may be subject to
indemnification or advancement of Expenses covered hereunder.
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Section 20. Notices.
All notices requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if (i) delivered by hand
and receipted for by the party to whom said notice or other communication shall
have been directed, or (ii) mailed by certified or registered mail with postage
prepaid, on the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to:
his address indicated on
the signature page hereof
(b) If to the Company, to:
Tender Loving Care Health Care Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
or such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
Section 21. Governing Law.
The parties agree that this Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware.
Section 22. Miscellaneous.
Use of the masculine pronoun shall be deemed to include usage of the feminine
pronoun where appropriate.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
TENDER LOVING CARE HEALTH CARE
SERVICES, INC.
By: /s/ Dale R. Clift
------------------------------
Name: Dale R. Clift
Title: President and Chief
Operating Officer
INDEMNITEE
/s/ David Savitsky
----------------------------------
David Savitsky
Address: 29 Oxford Road
New Rochelle, New York 10804
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<PAGE> 1
EXHIBIT 10.18
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
INDEMNIFICATION AGREEMENT
with
BERNARD J. FIRESTONE
THIS AGREEMENT, made and entered into as of October 20, 1999 (the
"AGREEMENT"), by and between TENDER LOVING CARE HEALTH CARE SERVICES, INC., a
Delaware corporation (the "COMPANY"), and BERNARD J. FIRESTONE ("INDEMNITEE"):
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the corporation; and
WHEREAS, the current impracticability of obtaining adequate insurance
and the uncertainties relating to indemnification have increased the difficulty
of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") has determined that the inability to attract and retain such persons
is detrimental to the best interests of the Company's stockholders and that the
Company should act to assure such persons that there will be increased certainty
of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company on the condition that he
be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
Section 1. Services by Indemnitee. Indemnitee agrees to continue to
serve as a director of the Company. Indemnitee may at any time and for any
reason resign from such position (subject to any other contractual obligation or
any obligation imposed by operation of law), in which event the Company shall
have no obligation under this Agreement to continue Indemnitee in any such
position.
<PAGE> 2
Section 2. Indemnification -- General. The Company shall indemnify, and
advance Expenses (as hereinafter defined) to Indemnitee as provided in this
Agreement and to the fullest extent permitted by applicable law in effect on the
date hereof and to such greater extent as applicable law may thereafter from
time to time permit. The rights of Indemnitee provided under the preceding
sentence shall include, but shall not be limited to, the rights set forth in the
other Sections of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in the Right of the
Company. Indemnitee shall be entitled to the rights of indemnification provided
in this Section 3 if, by reason of his Corporate Status (as hereinafter
defined), he is, or is threatened to be made, a party to any threatened,
pending, or completed Proceeding (as hereinafter defined), other than a
Proceeding by or in the right of the Company. Pursuant to this Section 3,
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter therein,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 4. Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of indemnification provided in this Section 4
if, by reason of his Corporate Status, he is, or is threatened to be made, a
party to any threatened, pending or completed Proceeding brought by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Notwithstanding the foregoing, no
indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Court of Chancery of the State of
Delaware, or the Court in which such Proceeding shall have been brought or is
pending, shall determine.
Section 5. Indemnification for Expenses of a Party Who Is Wholly or
Partly Successful. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith. If Indemnitee is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably incurred
by him or on his behalf in connection with each successfully resolved claim,
issue or matter. For purposes of this Section, and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
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Section 6. Indemnification for Expenses of a Witness. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding, he shall be
indemnified against all expenses actually and reasonably incurred by him or on
his behalf in connection therewith.
Section 7. Advancement of Expenses. The Company shall advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding within twenty days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses.
Section 8. Procedure for Determination of Entitlement to
Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to
the first sentence of Section 8(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be made
in the specific case: (i) if a Change in Control (as hereinafter defined) shall
have occurred, by Independent Counsel (as hereinafter defined) (unless
Indemnitee shall request that such determination be made by the Board of
Directors or the stockholders, in which case by the person or persons or in the
manner provided for in clause (ii) or (iii) of this Section 8(b)) in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the
Board of Directors by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined), or (B) if a quorum of the Board of Directors
consisting of Disinterested Directors is not obtainable or, even if obtainable,
such quorum of Disinterested Directors so directs, by Independent Counsel in a
written opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee, or (C) by the stockholders of the Company; or (iii) as provided in
Section 9(b) of this Agreement; and, if it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten (10)
days after such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the
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Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 8(b) hereof, Independent
Counsel shall be selected as provided in this Section 8(c). If a Change of
Control shall not have occurred, Independent Counsel shall be selected by the
Board of Directors, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected. If a Change
of Control shall have occurred, Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by the
Board of Directors, in which even the preceding sentence shall apply), and the
Indemnitee shall give written notice to the Company advising it of the identity
of Independent Counsel so selected. In either event, Indemnitee or the Company,
as the case may be, may, within 7 days after such written notice of selection
shall have been given, deliver to the Company or to Indemnitee, as the case may
be, a written objection to such selection. Such objection may be asserted only
on the ground that Independent Counsel so selected does not meet the
requirements of "Independent Counsel" as defined in Section 17 of this
Agreement, and the objection shall set forth with particularity the factual
basis of such assertion. If such written objection is made, Independent Counsel
so selected may not serve as Independent Counsel unless and until a court has
determined that such objection is without merit. If, within 20 days after
submission by Indemnitee of a written request for indemnification pursuant to
Section 8(a) hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or Indemnitee may petition the Court of Chancery
of the State of Delaware or other court of competent jurisdiction for resolution
of any objection which shall have been made by the Company or Indemnitee to the
other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the Court or by such other person as
the Court shall designate, and the person with respect to whom an objection is
so resolved or the person so appointed shall act as Independent Counsel under
Section 8(b) hereof. The Company shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 8(b) hereof and the Company shall pay
all reasonable fees and expenses incident to the procedures of this Section
8(c), regardless of the manner in which such Independent Counsel was selected or
appointed. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 10(a)(iii) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).
Section 9. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with Section 8(a) of this
Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
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(b) If a person, persons or entity empowered or selected under Section
8 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination with 60 days after receipt
by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 60-day period may be extended for a
reasonable time, not to exceed an additional 30 days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto; and provided, further, that
the foregoing provisions of this Section 9(b) shall not apply (i) if the
determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 8(b) of this Agreement and if (A) within 15
days after receipt by the Company of the request for such determination the
Board of Directors has resolved to submit such determination to the stockholders
for their consideration at an annual meeting thereof to be held within 75 days
after such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within 15 days after such receipt for the
purpose of making such determination, such meeting is held within 60 days after
having been so called and such determination is made thereat, or (ii) if the
determination to entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
Section 10. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 8
of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7
of this Agreement, (iii) the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 8(b) of this Agreement and
such determination shall not have been made and delivered in a written opinion
within 90 days after receipt by the Company of the request for indemnification,
or (iv) payment of indemnification is not made pursuant to Section 6 of this
Agreement within ten (10) days after receipt by the Company of a written request
therefor, or (v) payment of indemnification is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 8 or 9 of this Agreement, Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Delaware, or in any other
court of competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at
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his option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the rules of the American Arbitration Association.
Indemnitee shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first has the
right to commence such proceeding pursuant to this Section 10(a). The Company
shall not oppose Indemnitee's right to seek adjudication or award in
arbitration.
(b) In the event that a determination shall have been made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding or arbitration commenced pursuant to this Section 10
shall be conducted in all respects as a de novo trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, in any judicial
proceeding or arbitration commenced pursuant to this Section 10 the Company
shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been made
pursuant to Section 8 or 9 of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 10, absent
(i) a misstatement by Indemnitee or a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 10 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 10, seeks a
judicial adjudication of or an award in arbitration to enforce his rights under,
or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company
against, any and all expenses (of the types described in the definition of
Expenses in Section 17 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in such judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification,
or advancement of Expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
Section 11. Non-Exclusivity: Survival of Rights; Insurance;
Subrogation.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or termination of this Agreement or any provision hereof shall be
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effective as to any Indemnitee with respect to any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
termination.
(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which such
person serves at the request of the Company Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, employee or agent
under such policy or policies.
(c) In the event of any payment under this Agreement, the Company shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indefinable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
Section 12. Duration of Agreement. This Agreement shall continue until
and terminate upon the later of: (a) 10 years after the date that Indemnitee
shall have ceased to serve as director, or (b) the final termination of all
pending Proceedings in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 10 of this Agreement relating
thereto. This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of Indemnitee and his heirs, executors
and administrators.
Section 13. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
Section of this Agreement contain any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and (b) the fullest extent
possible, the provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
Section 14. Exception to Right of Indemnification or Advancement of
Expenses. Notwithstanding any other provision of this Agreement, Indemnitee
shall not be entitled to indemnification or advancement of Expenses under this
Agreement with respect to any proceeding, or any claim therein, brought or made
by him against the Company.
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Section 15. Identical Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.
Section 16. Headings. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
Section 17. Definitions. For purposes of this Agreement:
(a) "Change of Control" means a change in control of the Company
occurring after the date hereof of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the date hereof (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board of Directors in office immediately prior to such person
attaining such percentage interest; (ii) the Company is a party to a merger
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's stockholder was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(b) "Corporate Status" describes the status of a person who is or was a
director, officer, employee, agent or fiduciary of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of the Company.
(c) "Disinterested Director" means a director of the Company who is not
or was not a party to the Proceeding in respect of which indemnification is
sought by the Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending,
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<PAGE> 9
preparing to prosecute or defend, investigating, or being or preparing to be a
witness in a Proceeding.
(e) "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party, or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct than
prevailing, would have a conflict or interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.
(f) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding whether civil, criminal, administrative or investigative, except one
initiated by Indemnitee pursuant to Section 10 of this Agreement to enforce his
rights under this Agreement.
Section 18. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.
Section 20. Notices. All notices requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, to:
his address indicated
on the signature page
hereof
(b) If to the Company, to:
Tender Loving Care Health Care Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
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or such other address as may have been furnished to Indemnitee by the Company or
to the Company by Indemnitee, as the case may be.
Section 21. Governing Law. The parties agree that this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the
State of Delaware.
Section 22. Miscellaneous. Use of the masculine pronoun shall be deemed
to include usage of the feminine pronoun where appropriate.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
TENDER LOVING CARE HEALTH
CARE SERVICES, INC.
By: /s/ Dale R. Clift
----------------------------------
Name: Dale R. Clift
Title: President and Chief Operating
Officer
INDEMNITEE
/s/ Bernard J. Firestone
-------------------------------------
Bernard J. Firestone
Address: 631 Evergreen Drive
West Hempstead, New York 11552
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<PAGE> 1
EXHIBIT 10.19
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
INDEMNIFICATION AGREEMENT
with
JONATHAN J. HALPERT
THIS AGREEMENT, made and entered into as of October 20, 1999 (the
"AGREEMENT"), by and between TENDER LOVING CARE HEALTH CARE SERVICES, INC., a
Delaware corporation (the "COMPANY"), and JONATHAN J. HALPERT ("INDEMNITEE"):
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the corporation; and
WHEREAS, the current impracticability of obtaining adequate insurance
and the uncertainties relating to indemnification have increased the difficulty
of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") has determined that the inability to attract and retain such persons
is detrimental to the best interests of the Company's stockholders and that the
Company should act to assure such persons that there will be increased certainty
of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company on the condition that he
be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
Section 1. Services by Indemnitee. Indemnitee agrees to continue to
serve as a director of the Company. Indemnitee may at any time and for any
reason resign from such position (subject to any other contractual obligation or
any obligation imposed by operation of law), in which event the Company shall
have no obligation under this Agreement to continue Indemnitee in any such
position.
<PAGE> 2
Section 2. Indemnification -- General. The Company shall indemnify, and
advance Expenses (as hereinafter defined) to Indemnitee as provided in this
Agreement and to the fullest extent permitted by applicable law in effect on the
date hereof and to such greater extent as applicable law may thereafter from
time to time permit. The rights of Indemnitee provided under the preceding
sentence shall include, but shall not be limited to, the rights set forth in the
other Sections of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in the Right of the
Company. Indemnitee shall be entitled to the rights of indemnification provided
in this Section 3 if, by reason of his Corporate Status (as hereinafter
defined), he is, or is threatened to be made, a party to any threatened,
pending, or completed Proceeding (as hereinafter defined), other than a
Proceeding by or in the right of the Company. Pursuant to this Section 3,
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter therein,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 4. Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of indemnification provided in this Section 4
if, by reason of his Corporate Status, he is, or is threatened to be made, a
party to any threatened, pending or completed Proceeding brought by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Notwithstanding the foregoing, no
indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Court of Chancery of the State of
Delaware, or the Court in which such Proceeding shall have been brought or is
pending, shall determine.
Section 5. Indemnification for Expenses of a Party Who Is Wholly or
Partly Successful. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith. If Indemnitee is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably incurred
by him or on his behalf in connection with each successfully resolved claim,
issue or matter. For purposes of this Section, and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
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Section 6. Indemnification for Expenses of a Witness. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding, he shall be
indemnified against all expenses actually and reasonably incurred by him or on
his behalf in connection therewith.
Section 7. Advancement of Expenses. The Company shall advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding within twenty days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses.
Section 8. Procedure for Determination of Entitlement to
Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to
the first sentence of Section 8(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be made
in the specific case: (i) if a Change in Control (as hereinafter defined) shall
have occurred, by Independent Counsel (as hereinafter defined) (unless
Indemnitee shall request that such determination be made by the Board of
Directors or the stockholders, in which case by the person or persons or in the
manner provided for in clause (ii) or (iii) of this Section 8(b)) in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the
Board of Directors by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined), or (B) if a quorum of the Board of Directors
consisting of Disinterested Directors is not obtainable or, even if obtainable,
such quorum of Disinterested Directors so directs, by Independent Counsel in a
written opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee, or (C) by the stockholders of the Company; or (iii) as provided in
Section 9(b) of this Agreement; and, if it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten (10)
days after such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the
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Company (irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 8(b) hereof, Independent
Counsel shall be selected as provided in this Section 8(c). If a Change of
Control shall not have occurred, Independent Counsel shall be selected by the
Board of Directors, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected. If a Change
of Control shall have occurred, Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by the
Board of Directors, in which even the preceding sentence shall apply), and the
Indemnitee shall give written notice to the Company advising it of the identity
of Independent Counsel so selected. In either event, Indemnitee or the Company,
as the case may be, may, within 7 days after such written notice of selection
shall have been given, deliver to the Company or to Indemnitee, as the case may
be, a written objection to such selection. Such objection may be asserted only
on the ground that Independent Counsel so selected does not meet the
requirements of "Independent Counsel" as defined in Section 17 of this
Agreement, and the objection shall set forth with particularity the factual
basis of such assertion. If such written objection is made, Independent Counsel
so selected may not serve as Independent Counsel unless and until a court has
determined that such objection is without merit. If, within 20 days after
submission by Indemnitee of a written request for indemnification pursuant to
Section 8(a) hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or Indemnitee may petition the Court of Chancery
of the State of Delaware or other court of competent jurisdiction for resolution
of any objection which shall have been made by the Company or Indemnitee to the
other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the Court or by such other person as
the Court shall designate, and the person with respect to whom an objection is
so resolved or the person so appointed shall act as Independent Counsel under
Section 8(b) hereof. The Company shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 8(b) hereof and the Company shall pay
all reasonable fees and expenses incident to the procedures of this Section
8(c), regardless of the manner in which such Independent Counsel was selected or
appointed. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 10(a)(iii) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).
Section 9. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with Section 8(a) of this
Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
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(b) If a person, persons or entity empowered or selected under Section
8 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination with 60 days after receipt
by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 60-day period may be extended for a
reasonable time, not to exceed an additional 30 days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto; and provided, further, that
the foregoing provisions of this Section 9(b) shall not apply (i) if the
determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 8(b) of this Agreement and if (A) within 15
days after receipt by the Company of the request for such determination the
Board of Directors has resolved to submit such determination to the stockholders
for their consideration at an annual meeting thereof to be held within 75 days
after such receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within 15 days after such receipt for the
purpose of making such determination, such meeting is held within 60 days after
having been so called and such determination is made thereat, or (ii) if the
determination to entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
Section 10. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 8
of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7
of this Agreement, (iii) the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 8(b) of this Agreement and
such determination shall not have been made and delivered in a written opinion
within 90 days after receipt by the Company of the request for indemnification,
or (iv) payment of indemnification is not made pursuant to Section 6 of this
Agreement within ten (10) days after receipt by the Company of a written request
therefor, or (v) payment of indemnification is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 8 or 9 of this Agreement, Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Delaware, or in any other
court of competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at
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his option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the rules of the American Arbitration Association.
Indemnitee shall commence such proceeding seeking an adjudication or an award in
arbitration within 180 days following the date on which Indemnitee first has the
right to commence such proceeding pursuant to this Section 10(a). The Company
shall not oppose Indemnitee's right to seek adjudication or award in
arbitration.
(b) In the event that a determination shall have been made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding or arbitration commenced pursuant to this Section 10
shall be conducted in all respects as a de novo trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, in any judicial
proceeding or arbitration commenced pursuant to this Section 10 the Company
shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been made
pursuant to Section 8 or 9 of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 10, absent
(i) a misstatement by Indemnitee or a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 10 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 10, seeks a
judicial adjudication of or an award in arbitration to enforce his rights under,
or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company
against, any and all expenses (of the types described in the definition of
Expenses in Section 17 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in such judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification,
or advancement of Expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
Section 11. Non-Exclusivity: Survival of Rights; Insurance;
Subrogation.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or termination of this Agreement or any provision hereof shall be
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effective as to any Indemnitee with respect to any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
termination.
(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which such
person serves at the request of the Company Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, employee or agent
under such policy or policies.
(c) In the event of any payment under this Agreement, the Company shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indefinable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
Section 12. Duration of Agreement. This Agreement shall continue until
and terminate upon the later of: (a) 10 years after the date that Indemnitee
shall have ceased to serve as director, or (b) the final termination of all
pending Proceedings in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 10 of this Agreement relating
thereto. This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of Indemnitee and his heirs, executors
and administrators.
Section 13. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
Section of this Agreement contain any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and (b) the fullest extent
possible, the provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
Section 14. Exception to Right of Indemnification or Advancement of
Expenses. Notwithstanding any other provision of this Agreement, Indemnitee
shall not be entitled to indemnification or advancement of Expenses under this
Agreement with respect to any proceeding, or any claim therein, brought or made
by him against the Company.
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Section 15. Identical Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed by the party against whom
enforceability is sought needs to be produced to evidence the existence of this
Agreement.
Section 16. Headings. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
Section 17. Definitions. For purposes of this Agreement:
(a) "Change of Control" means a change in control of the Company
occurring after the date hereof of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the date hereof (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board of Directors in office immediately prior to such person
attaining such percentage interest; (ii) the Company is a party to a merger
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's stockholder was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(b) "Corporate Status" describes the status of a person who is or was a
director, officer, employee, agent or fiduciary of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of the Company.
(c) "Disinterested Director" means a director of the Company who is not
or was not a party to the Proceeding in respect of which indemnification is
sought by the Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending,
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<PAGE> 9
preparing to prosecute or defend, investigating, or being or preparing to be a
witness in a Proceeding.
(e) "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party, or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct than
prevailing, would have a conflict or interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.
(f) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding whether civil, criminal, administrative or investigative, except one
initiated by Indemnitee pursuant to Section 10 of this Agreement to enforce his
rights under this Agreement.
Section 18. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.
Section 20. Notices. All notices requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, to:
his address indicated
on the signature page
hereof
(b) If to the Company, to:
Tender Loving Care Health Care Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
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or such other address as may have been furnished to Indemnitee by the Company or
to the Company by Indemnitee, as the case may be.
Section 21. Governing Law. The parties agree that this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the
State of Delaware.
Section 22. Miscellaneous. Use of the masculine pronoun shall be deemed
to include usage of the feminine pronoun where appropriate.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
TENDER LOVING CARE HEALTH
CARE SERVICES, INC.
By: /s/ Dale R. Clift
----------------------------------
Name: Dale R. Clift
Title: President and Chief Operating Officer
INDEMNITEE
/s/ Jonathan J. Halpert
-------------------------------------
Jonathan J. Halpert
Address: 166-07 69th Avenue
Flushing, New York 11365
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<PAGE> 1
EXHIBIT 10.20
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
INDEMNIFICATION AGREEMENT
with
DALE R. CLIFT
THIS AGREEMENT, made and entered into as of October 20, 1999
(the "AGREEMENT"), by and between TENDER LOVING CARE HEALTH CARE SERVICES,
INC., a Delaware corporation (the "COMPANY"), and DALE R. CLIFT ("INDEMNITEE"):
WHEREAS, highly competent persons are becoming more reluctant
to serve publicly-held corporations as directors or in other capacities unless
they are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the corporation;
and
WHEREAS, the current impracticability of obtaining adequate
insurance and the uncertainties relating to indemnification have increased the
difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") has determined that the inability to attract and retain such
persons is detrimental to the best interests of the Company's stockholders and
that the Company should act to assure such persons that there will be increased
certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the
Company contractually to obligate itself to indemnify such persons to the
fullest extent permitted by applicable law so that they will serve or continue
to serve the Company free from undue concern that they will not be so
indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve
and to take on additional service for or on behalf of the Company on the
condition that he be so indemnified;
NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, the Company and Indemnitee do hereby covenant and
agree as follows:
Section 1. Services by Indemnitee.
Indemnitee agrees to continue to serve as an employee of the Company, subject
to the terms and conditions of his employment agreement, dated the date hereof
as such
<PAGE> 2
agreement may be amended, renewed or extended from time to time and as a
director of the Company.
Section 2. Indemnification -- General.
The Company shall indemnify, and advance Expenses (as hereinafter defined) to
Indemnitee as provided in this Agreement and to the fullest extent permitted by
applicable law in effect on the date hereof and to such greater extent as
applicable law may thereafter from time to time permit. The rights of
Indemnitee provided under the preceding sentence shall include, but shall not
be limited to, the rights set forth in the other Sections of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in the
Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 3 if, by reason of his Corporate Status (as hereinafter defined), he
is, or is threatened to be made, a party to any threatened, pending, or
completed Proceeding (as hereinafter defined), other than a Proceeding by or in
the right of the Company. Pursuant to this Section 3, Indemnitee shall be
indemnified against Expenses, judgments, penalties, fines and amounts paid in
settlement actually and reasonably incurred by him or on his behalf in
connection with such Proceeding or any claim, issue or matter therein, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 4. Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 4 if, by reason of his Corporate Status, he is, or is threatened to be
made, a party to any threatened, pending or completed Proceeding brought by or
in the right of the Company to procure a judgment in its favor. Pursuant to
this Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company. Notwithstanding the
foregoing, no indemnification against such Expenses shall be made in respect of
any claim, issue or matter in such Proceeding as to which Indemnitee shall have
been adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Court of Chancery of the State of
Delaware, or the Court in which such Proceeding shall have been brought or is
pending, shall determine.
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Section 5. Indemnification for Expenses of a Party Who Is
Wholly or Partly Successful.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a party to and is successful,
on the merits or otherwise, in any Proceeding, he shall be indemnified against
all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith. If Indemnitee is not wholly successful in such Proceeding
but is successful, on the merits or otherwise, as to one or more but less than
all claims, issues or matters in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf in connection with each successfully resolved claim, issue or
matter. For purposes of this Section, and without limitation, the termination
of any claim, issue or matter in such a Proceeding by dismissal, with or
without prejudice, shall be deemed to be a successful result as to such claim,
issue or matter.
Section 6. Indemnification for Expenses of a Witness.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding,
he shall be indemnified against all expenses actually and reasonably incurred
by him or on his behalf in connection therewith.
Section 7. Advancement of Expenses.
The Company shall advance all reasonable Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding within twenty days after the
receipt by the Company of a statement or statements from Indemnitee requesting
such advance or advances from time to time, whether prior to or after final
disposition of such Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include or be preceded
or accompanied by an undertaking by or on behalf of Indemnitee to repay any
Expenses advanced if it shall ultimately be determined that Indemnitee is not
entitled to be indemnified against such Expenses.
Section 8. Procedure for Determination of Entitlement to
Indemnification.
(a) To obtain indemnification under this Agreement,
Indemnitee shall submit to the Company a written request, including therein or
therewith such documentation and information as is reasonably available to
Indemnitee and is reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. The Secretary of the Company shall,
promptly upon receipt of such a request for indemnification, advise the Board
of Directors in writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 8(a) hereof, a determination, if
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<PAGE> 4
required by applicable law, with respect to Indemnitee's entitlement thereto
shall be made in the specific case: (i) if a Change in Control (as hereinafter
defined) shall have occurred, by Independent Counsel (as hereinafter defined)
(unless Indemnitee shall request that such determination be made by the Board
of Directors or the stockholders, in which case by the person or persons or in
the manner provided for in clause (ii) or (iii) of this Section 8(b)) in a
written opinion to the Board of Directors, a copy of which shall be delivered
to Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the
Board of Directors by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined), or (B) if a quorum of the Board of
Directors consisting of Disinterested Directors is not obtainable or, even if
obtainable, such quorum of Disinterested Directors so directs, by Independent
Counsel in a written opinion to the Board of Directors, a copy of which shall
be delivered to Indemnitee, or (C) by the stockholders of the Company; or (iii)
as provided in Section 9(b) of this Agreement; and, if it is so determined that
Indemnitee is entitled to indemnification, payment to Indemnitee shall be made
within ten (10) days after such determination. Indemnitee shall cooperate with
the person, persons or entity making such determination with respect to
Indemnitee's entitlement to indemnification, including providing to such
person, persons or entity upon reasonable advance request any documentation or
information which is not privileged or otherwise protected from disclosure and
which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys' fees and
disbursements) incurred by Indemnitee in so cooperating with the person,
persons or entity making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement to
indemnification) and the Company hereby indemnifies and agrees to hold
Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 8(b)
hereof, Independent Counsel shall be selected as provided in this Section 8(c).
If a Change of Control shall not have occurred, Independent Counsel shall be
selected by the Board of Directors, and the Company shall give written notice
to Indemnitee advising him of the identity of the Independent Counsel so
selected. If a Change of Control shall have occurred, Independent Counsel shall
be selected by Indemnitee (unless Indemnitee shall request that such selection
be made by the Board of Directors, in which even the preceding sentence shall
apply), and the Indemnitee shall give written notice to the Company advising it
of the identity of Independent Counsel so selected. In either event, Indemnitee
or the Company, as the case may be, may, within 7 days after such written
notice of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection. Such
objection may be asserted only on the ground that Independent Counsel so
selected does not meet the requirements of "Independent Counsel" as defined in
Section 17 of this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. If such written objection is
made, Independent Counsel so selected may not serve as Independent Counsel
unless and until a court has determined that such objection is without merit.
If, within 20 days after submission by Indemnitee of a written
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<PAGE> 5
request for indemnification pursuant to Section 8(a) hereof, no Independent
Counsel shall have been selected and not objected to, either the Company or
Indemnitee may petition the Court of Chancery of the State of Delaware or other
court of competent jurisdiction for resolution of any objection which shall
have been made by the Company or Indemnitee to the other's selection of
Independent Counsel and/or for the appointment as Independent Counsel of a
person selected by the Court or by such other person as the Court shall
designate, and the person with respect to whom an objection is so resolved or
the person so appointed shall act as Independent Counsel under Section 8(b)
hereof. The Company shall pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in connection with
acting pursuant to Section 8(b) hereof and the Company shall pay all reasonable
fees and expenses incident to the procedures of this Section 8(c), regardless
of the manner in which such Independent Counsel was selected or appointed. Upon
the due commencement of any judicial proceeding or arbitration pursuant to
Section 10(a)(iii) of this Agreement, Independent Counsel shall be discharged
and relieved of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
Section 9. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee
has submitted a request for indemnification in accordance with Section 8(a) of
this Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
(b) If a person, persons or entity empowered or selected
under Section 8 of this Agreement to determine whether Indemnitee is entitled
to indemnification shall not have made a determination with 60 days after
receipt by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification
under applicable law; provided, however, that such 60-day period may be
extended for a reasonable time, not to exceed an additional 30 days, if the
person, persons or entity making the determination with respect to entitlement
to indemnification in good faith requires such additional time for the
obtaining or evaluating of documentation and/or information relating thereto;
and provided, further, that the foregoing provisions of this Section 9(b) shall
not apply (i) if the determination of entitlement to indemnification is to be
made by the stockholders pursuant to Section 8(b) of this Agreement and if (A)
within 15 days after receipt by the Company of the
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request for such determination the Board of Directors has resolved to submit
such determination to the stockholders for their consideration at an annual
meeting thereof to be held within 75 days after such receipt and such
determination is made thereat, or (B) a special meeting of stockholders is
called within 15 days after such receipt for the purpose of making such
determination, such meeting is held within 60 days after having been so called
and such determination is made thereat, or (ii) if the determination to
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue
or matter therein, by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
Section 10. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses is not timely made pursuant
to Section 7 of this Agreement, (iii) the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 8(b)
of this Agreement and such determination shall not have been made and delivered
in a written opinion within 90 days after receipt by the Company of the request
for indemnification, or (iv) payment of indemnification is not made pursuant to
Section 6 of this Agreement within ten (10) days after receipt by the Company
of a written request therefor, or (v) payment of indemnification is not made
within ten (10) days after a determination has been made that Indemnitee is
entitled to indemnification or such determination is deemed to have been made
pursuant to Section 8 or 9 of this Agreement, Indemnitee shall be entitled to
an adjudication in an appropriate court of the State of Delaware, or in any
other court of competent jurisdiction, of his entitlement to such
indemnification or advancement of Expenses. Alternatively, Indemnitee, at his
option, may seek an award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association. Indemnitee shall
commence such proceeding seeking an adjudication or an award in arbitration
within 180 days following the date on which Indemnitee first has the right to
commence such proceeding pursuant to this Section 10(a). The Company shall not
oppose Indemnitee's right to seek adjudication or award in arbitration.
(b) In the event that a determination shall have been made
pursuant to Section 8 of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 10 shall be conducted in all respects as a de novo trial, or
arbitration, on the
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merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, in any judicial
proceeding or arbitration commenced pursuant to this Section 10 the Company
shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have
been made pursuant to Section 8 or 9 of this Agreement that Indemnitee is
entitled to indemnification, the Company shall be bound by such determination
in any judicial proceeding or arbitration commenced pursuant to this Section
10, absent (i) a misstatement by Indemnitee or a material fact, or an omission
of a material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 10 that
the procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section
10, seeks a judicial adjudication of or an award in arbitration to enforce his
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all expenses (of the types described in the definition
of Expenses in Section 17 of this Agreement) actually and reasonably incurred
by him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in such judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification,
or advancement of Expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be
appropriately prorated.
Section 11. Non-Exclusivity: Survival of Rights; Insurance;
Subrogation.
(a) The rights of indemnification and to receive advancement
of Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or termination of this Agreement or any provision hereof shall be
effective as to any Indemnitee with respect to any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
termination.
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<PAGE> 8
(b) To the extent that the Company maintains an insurance
policy or policies providing liability insurance for directors, officers,
employees, agents or fiduciaries of the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
which such person serves at the request of the Company Indemnitee shall be
covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for any such director, officer,
employee or agent under such policy or policies.
(c) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents
as are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to
make any payment of amounts otherwise indefinable hereunder if and to the
extent that Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.
Section 12. Duration of Agreement.
This Agreement shall continue until and terminate upon the later of: (a) 10
years after the date that Indemnitee shall have ceased to serve as employee and
director, or (b) the final termination of all pending Proceedings in respect of
which Indemnitee is granted rights of indemnification or advancement of
Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to
Section 10 of this Agreement relating thereto. This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to the benefit
of Indemnitee and his heirs, executors and administrators.
Section 13. Severability.
If any provision or provisions of this Agreement shall be held to be invalid,
illegal or unenforceable for any reason whatsoever: (a) the validity, legality
and enforceability of the remaining provisions of this Agreement (including,
without limitation, each portion of any Section of this Agreement contain any
such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby; and (b) the fullest extent possible, the provisions of this Agreement
(including, without limitation, each portion of any Section of this Agreement
containing any such provision held to be invalid, illegal or unenforceable,
that is not itself invalid, illegal or unenforceable) shall be construed so as
to give effect to the intent manifested by the provision held invalid, illegal
or unenforceable.
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Section 14. Exception to Right of Indemnification or
Advancement of Expenses.
Notwithstanding any other provision of this Agreement, Indemnitee shall not be
entitled to indemnification or advancement of Expenses under this Agreement
with respect to any proceeding, or any claim therein, brought or made by him
against the Company.
Section 15. Identical Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
for all purposes be deemed to be an original but all of which together shall
constitute one and the same Agreement. Only one such counterpart signed by the
party against whom enforceability is sought needs to be produced to evidence
the existence of this Agreement.
Section 16. Headings.
The headings of the paragraphs of this Agreement are inserted for convenience
only and shall not be deemed to constitute part of this Agreement or to affect
the construction thereof.
Section 17. Definitions.
For purposes of this Agreement:
(a) "Change of Control" means a change in control of the
Company occurring after the date hereof of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the date hereof (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board of Directors in office immediately prior to such person
attaining such percentage interest; (ii) the Company is a party to a merger
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's stockholder was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
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(b) "Corporate Status" describes the status of a person who
is or was a director, officer, employee, agent or fiduciary of the Company or
of any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise which such person is or was serving at the request of
the Company.
(c) "Disinterested Director" means a director of the Company
who is not or was not a party to the Proceeding in respect of which
indemnification is sought by the Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness in
a Proceeding.
(e) "Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent: (i)
the Company or Indemnitee in any matter material to either such party, or (ii)
any other party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall
not include any person who, under the applicable standards of professional
conduct than prevailing, would have a conflict or interest in representing
either the Company or Indemnitee in an action to determine Indemnitee's rights
under this Agreement.
(f) "Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing
or any other proceeding whether civil, criminal, administrative or
investigative, except one initiated by Indemnitee pursuant to Section 10 of
this Agreement to enforce his rights under this Agreement.
Section 18. Modification and Waiver.
No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both of the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
Section 19. Notice by Indemnitee.
Indemnitee agrees promptly to notify the Company in writing upon being served
with any summons, citation, subpoena, complaint, indictment, information or
other document relating to any Proceeding or matter which may be subject to
indemnification or advancement of Expenses covered hereunder.
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<PAGE> 11
Section 20. Notices.
All notices requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if (i) delivered by hand
and receipted for by the party to whom said notice or other communication shall
have been directed, or (ii) mailed by certified or registered mail with postage
prepaid, on the third business day after the date on which it is so mailed:
(a) If to Indemnitee, to:
his address indicated on the
signature page hereof
(b) If to the Company, to:
Tender Loving Care Health Care Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
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or such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
Section 21. Governing Law.
The parties agree that this Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware.
Section 22. Miscellaneous.
Use of the masculine pronoun shall be deemed to include usage of the feminine
pronoun where appropriate.
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
TENDER LOVING CARE HEALTH
CARE SERVICES, INC.
By: /s/ Stephen Savitsky
--------------------------------
Name: Stephen Savitsky
Title: Chairman of the Board,
Chief Executive Officer
INDEMNITEE
/s/ Dale R. Clift
------------------------------------
Dale R. Clift
Address: 38 The Hollows North
Muttontown, New York 11732
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<PAGE> 1
EXHIBIT 10.21
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
INDEMNIFICATION AGREEMENT
with
WILLARD T. DERR
THIS AGREEMENT, made and entered into as of October 20, 1999 (the
"AGREEMENT"), by and between TENDER LOVING CARE HEALTH CARE SERVICES, INC., a
Delaware corporation (the "COMPANY"), and WILLARD T. DERR ("INDEMNITEE"):
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to and activities on behalf of the corporation; and
WHEREAS, the current impracticability of obtaining adequate insurance
and the uncertainties relating to indemnification have increased the difficulty
of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") has determined that the inability to attract and retain such persons
is detrimental to the best interests of the Company's stockholders and that the
Company should act to assure such persons that there will be increased certainty
of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company on the condition that he
be so indemnified;
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
Section 1. Services by Indemnitee. Indemnitee agrees to continue to
serve as an employee of the Company, subject to the terms and conditions of his
employment agreement, dated the date hereof as such agreement may be amended,
renewed or extended from time to time.
Section 2. Indemnification -- General. The Company shall indemnify, and
advance Expenses (as hereinafter defined) to Indemnitee as provided in this
Agreement and to
<PAGE> 2
the fullest extent permitted by applicable law in effect on the date hereof and
to such greater extent as applicable law may thereafter from time to time
permit. The rights of Indemnitee provided under the preceding sentence shall
include, but shall not be limited to, the rights set forth in the other Sections
of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in the Right of the
Company. Indemnitee shall be entitled to the rights of indemnification provided
in this Section 3 if, by reason of his Corporate Status (as hereinafter
defined), he is, or is threatened to be made, a party to any threatened,
pending, or completed Proceeding (as hereinafter defined), other than a
Proceeding by or in the right of the Company. Pursuant to this Section 3,
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by him or on his
behalf in connection with such Proceeding or any claim, issue or matter therein,
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 4. Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of indemnification provided in this Section 4
if, by reason of his Corporate Status, he is, or is threatened to be made, a
party to any threatened, pending or completed Proceeding brought by or in the
right of the Company to procure a judgment in its favor. Pursuant to this
Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by him or on his behalf in connection with such Proceeding
if he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company. Notwithstanding the foregoing, no
indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Court of Chancery of the State of
Delaware, or the Court in which such Proceeding shall have been brought or is
pending, shall determine.
Section 5. Indemnification for Expenses of a Party Who Is Wholly or
Partly Successful. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith. If Indemnitee is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably incurred
by him or on his behalf in connection with each successfully resolved claim,
issue or matter. For purposes of this Section, and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
Section 6. Indemnification for Expenses of a Witness. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate
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Status, a witness in any Proceeding, he shall be indemnified against all
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.
Section 7. Advancement of Expenses. The Company shall advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding within twenty days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses.
Section 8. Procedure for Determination of Entitlement to
Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant to
the first sentence of Section 8(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be made
in the specific case: (i) if a Change in Control (as hereinafter defined) shall
have occurred, by Independent Counsel (as hereinafter defined) (unless
Indemnitee shall request that such determination be made by the Board of
Directors or the stockholders, in which case by the person or persons or in the
manner provided for in clause (ii) or (iii) of this Section 8(b)) in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the
Board of Directors by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined), or (B) if a quorum of the Board of Directors
consisting of Disinterested Directors is not obtainable or, even if obtainable,
such quorum of Disinterested Directors so directs, by Independent Counsel in a
written opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee, or (C) by the stockholders of the Company; or (iii) as provided in
Section 9(b) of this Agreement; and, if it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten (10)
days after such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee's entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold Indemnitee harmless therefrom.
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<PAGE> 4
(c) In the event the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 8(b) hereof, Independent
Counsel shall be selected as provided in this Section 8(c). If a Change of
Control shall not have occurred, Independent Counsel shall be selected by the
Board of Directors, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected. If a Change
of Control shall have occurred, Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by the
Board of Directors, in which even the preceding sentence shall apply), and the
Indemnitee shall give written notice to the Company advising it of the identity
of Independent Counsel so selected. In either event, Indemnitee or the Company,
as the case may be, may, within 7 days after such written notice of selection
shall have been given, deliver to the Company or to Indemnitee, as the case may
be, a written objection to such selection. Such objection may be asserted only
on the ground that Independent Counsel so selected does not meet the
requirements of "Independent Counsel" as defined in Section 17 of this
Agreement, and the objection shall set forth with particularity the factual
basis of such assertion. If such written objection is made, Independent Counsel
so selected may not serve as Independent Counsel unless and until a court has
determined that such objection is without merit. If, within 20 days after
submission by Indemnitee of a written request for indemnification pursuant to
Section 8(a) hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or Indemnitee may petition the Court of Chancery
of the State of Delaware or other court of competent jurisdiction for resolution
of any objection which shall have been made by the Company or Indemnitee to the
other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the Court or by such other person as
the Court shall designate, and the person with respect to whom an objection is
so resolved or the person so appointed shall act as Independent Counsel under
Section 8(b) hereof. The Company shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 8(b) hereof and the Company shall pay
all reasonable fees and expenses incident to the procedures of this Section
8(c), regardless of the manner in which such Independent Counsel was selected or
appointed. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 10(a)(iii) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).
Section 9. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with Section 8(a) of this
Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
(b) If a person, persons or entity empowered or selected under Section
8 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination with 60 days after receipt
by the Company of the request therefor, the
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<PAGE> 5
requisite determination of entitlement to indemnification shall be deemed to
have been made and Indemnitee shall be entitled to such indemnification, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law; provided, however,
that such 60-day period may be extended for a reasonable time, not to exceed an
additional 30 days, if the person, persons or entity making the determination
with respect to entitlement to indemnification in good faith requires such
additional time for the obtaining or evaluating of documentation and/or
information relating thereto; and provided, further, that the foregoing
provisions of this Section 9(b) shall not apply (i) if the determination of
entitlement to indemnification is to be made by the stockholders pursuant to
Section 8(b) of this Agreement and if (A) within 15 days after receipt by the
Company of the request for such determination the Board of Directors has
resolved to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within 75 days after such
receipt and such determination is made thereat, or (B) a special meeting of
stockholders is called within 15 days after such receipt for the purpose of
making such determination, such meeting is held within 60 days after having been
so called and such determination is made thereat, or (ii) if the determination
to entitlement to indemnification is to be made by Independent Counsel pursuant
to Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter
therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided
in this Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
Section 10. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to Section 8
of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7
of this Agreement, (iii) the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to Section 8(b) of this Agreement and
such determination shall not have been made and delivered in a written opinion
within 90 days after receipt by the Company of the request for indemnification,
or (iv) payment of indemnification is not made pursuant to Section 6 of this
Agreement within ten (10) days after receipt by the Company of a written request
therefor, or (v) payment of indemnification is not made within ten (10) days
after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 8 or 9 of this Agreement, Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Delaware, or in any other
court of competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
rules of the American Arbitration Association. Indemnitee shall commence such
proceeding seeking an adjudication or an award in arbitration within 180 days
following the date on which
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<PAGE> 6
Indemnitee first has the right to commence such proceeding pursuant to this
Section 10(a). The Company shall not oppose Indemnitee's right to seek
adjudication or award in arbitration.
(b) In the event that a determination shall have been made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to indemnification,
any judicial proceeding or arbitration commenced pursuant to this Section 10
shall be conducted in all respects as a de novo trial, or arbitration, on the
merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. If a Change of Control shall have occurred, in any judicial
proceeding or arbitration commenced pursuant to this Section 10 the Company
shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been made
pursuant to Section 8 or 9 of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 10, absent
(i) a misstatement by Indemnitee or a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 10 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 10, seeks a
judicial adjudication of or an award in arbitration to enforce his rights under,
or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company
against, any and all expenses (of the types described in the definition of
Expenses in Section 17 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in such judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification,
or advancement of Expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
Section 11. Non-Exclusivity: Survival of Rights; Insurance;
Subrogation.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or termination of this Agreement or any provision hereof shall be
effective as to any Indemnitee with respect to any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
termination.
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(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise which such
person serves at the request of the Company Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, employee or agent
under such policy or policies.
(c) In the event of any payment under this Agreement, the Company shall
be subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all action necessary
to secure such rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indefinable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
Section 12. Duration of Agreement. This Agreement shall continue until
and terminate upon the later of: (a) 10 years after the date that Indemnitee
shall have ceased to serve as director, or (b) the final termination of all
pending Proceedings in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 10 of this Agreement relating
thereto. This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of Indemnitee and his heirs, executors
and administrators.
Section 13. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of any
Section of this Agreement contain any such provision held to be invalid, illegal
or unenforceable, that is not itself invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby; and (b) the fullest extent
possible, the provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
Section 14. Exception to Right of Indemnification or Advancement of
Expenses. Notwithstanding any other provision of this Agreement, Indemnitee
shall not be entitled to indemnification or advancement of Expenses under this
Agreement with respect to any proceeding, or any claim therein, brought or made
by him against the Company.
Section 15. Identical Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall for all purposes be deemed to be
an original but all of which together shall constitute one and the same
Agreement. Only one such counterpart signed
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by the party against whom enforceability is sought needs to be produced to
evidence the existence of this Agreement.
Section 16. Headings. The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.
Section 17. Definitions. For purposes of this Agreement:
(a) "Change of Control" means a change in control of the Company
occurring after the date hereof of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the date hereof (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board of Directors in office immediately prior to such person
attaining such percentage interest; (ii) the Company is a party to a merger
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's stockholder was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(b) "Corporate Status" describes the status of a person who is or was a
director, officer, employee, agent or fiduciary of the Company or of any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of the Company.
(c) "Disinterested Director" means a director of the Company who is not
or was not a party to the Proceeding in respect of which indemnification is
sought by the Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a witness in a
Proceeding.
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<PAGE> 9
(e) "Independent Counsel" means a law firm, or a member of a law firm,
that is experienced in matters of corporation law and neither presently is, nor
in the past five years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party, or (ii) any other party
to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct than
prevailing, would have a conflict or interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.
(f) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any other
proceeding whether civil, criminal, administrative or investigative, except one
initiated by Indemnitee pursuant to Section 10 of this Agreement to enforce his
rights under this Agreement.
Section 18. Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
Section 19. Notice by Indemnitee. Indemnitee agrees promptly to notify
the Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.
Section 20. Notices. All notices requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, to:
his address indicated on
the signature page hereof
(b) If to the Company, to:
Tender Loving Care Health Care Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
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or such other address as may have been furnished to Indemnitee by the Company or
to the Company by Indemnitee, as the case may be.
Section 21. Governing Law. The parties agree that this Agreement shall
be governed by, and construed and enforced in accordance with, the laws of the
State of Delaware.
Section 22. Miscellaneous. Use of the masculine pronoun shall be deemed
to include usage of the feminine pronoun where appropriate.
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
TENDER LOVING CARE HEALTH
CARE SERVICES, INC.
By: /s/ Dale R. Clift
---------------------------
Name: Dale R. Clift
Title: President and Chief
Operating Officer
INDEMNITEE
/s/ Willard T. Derr
------------------------------
Willard T. Derr
Address: 8 Shirley Ct.
East Northport, New York 11731
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<PAGE> 1
EXHIBIT 10.22
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
INDEMNIFICATION AGREEMENT
with
RENEE J. SILVER
THIS AGREEMENT, made and entered into as of October 20, 1999
(the "AGREEMENT"), by and between TENDER LOVING CARE HEALTH CARE SERVICES,INC.,
a Delaware corporation (the "COMPANY"), and RENEE J. SILVER ("INDEMNITEE"):
WHEREAS, highly competent persons are becoming more reluctant
to serve publicly-held corporations as directors or in other capacities unless
they are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the corporation; and
WHEREAS, the current impracticability of obtaining adequate
insurance and the uncertainties relating to indemnification have increased the
difficulty of attracting and retaining such persons; and
WHEREAS, the Board of Directors of the Company (the "BOARD OF
DIRECTORS") has determined that the inability to attract and retain such persons
is detrimental to the best interests of the Company's stockholders and that the
Company should act to assure such persons that there will be increased certainty
of such protection in the future; and
WHEREAS, it is reasonable, prudent and necessary for the
Company contractually to obligate itself to indemnify such persons to the
fullest extent permitted by applicable law so that they will serve or continue
to serve the Company free from undue concern that they will not be so
indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and
to take on additional service for or on behalf of the Company on the condition
that she be so indemnified;
NOW, THEREFORE, in consideration of the premises and the
covenants contained herein, the Company and Indemnitee do hereby covenant and
agree as follows:
Section 1. Services by Indemnitee. Indemnitee agrees to
continue to serve as an employee of the Company, subject to the terms and
conditions of her employment agreement, dated the date hereof as such agreement
may be amended, renewed or extended from time to time.
Section 2. Indemnification -- General. The Company shall
indemnify, and advance Expenses (as hereinafter defined) to Indemnitee as
provided in this Agreement and to
<PAGE> 2
the fullest extent permitted by applicable law in effect on the date hereof and
to such greater extent as applicable law may thereafter from time to time
permit. The rights of Indemnitee provided under the preceding sentence shall
include, but shall not be limited to, the rights set forth in the other Sections
of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in the
Right of the Company. Indemnitee shall be entitled to the rights of
indemnification provided in this Section 3 if, by reason of her Corporate Status
(as hereinafter defined), she is, or is threatened to be made, a party to any
threatened, pending, or completed Proceeding (as hereinafter defined), other
than a Proceeding by or in the right of the Company. Pursuant to this Section 3,
Indemnitee shall be indemnified against Expenses, judgments, penalties, fines
and amounts paid in settlement actually and reasonably incurred by her or on her
behalf in connection with such Proceeding or any claim, issue or matter therein,
if she acted in good faith and in a manner she reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal Proceeding, had no reasonable cause to believe her conduct was
unlawful.
Section 4. Proceedings by or in the Right of the Company.
Indemnitee shall be entitled to the rights of indemnification provided in this
Section 4 if, by reason of her Corporate Status, she is, or is threatened to be
made, a party to any threatened, pending or completed Proceeding brought by or
in the right of the Company to procure a judgment in its favor. Pursuant to this
Section, Indemnitee shall be indemnified against Expenses actually and
reasonably incurred by her or on her behalf in connection with such Proceeding
if she acted in good faith and in a manner she reasonably believed to be in or
not opposed to the best interests of the Company. Notwithstanding the foregoing,
no indemnification against such Expenses shall be made in respect of any claim,
issue or matter in such Proceeding as to which Indemnitee shall have been
adjudged to be liable to the Company if applicable law prohibits such
indemnification; provided, however, that if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Court of Chancery of the State of
Delaware, or the Court in which such Proceeding shall have been brought or is
pending, shall determine.
Section 5. Indemnification for Expenses of a Party Who Is
Wholly or Partly Successful. Notwithstanding any other provision of this
Agreement, to the extent that Indemnitee is, by reason of her Corporate Status,
a party to and is successful, on the merits or otherwise, in any Proceeding, she
shall be indemnified against all Expenses actually and reasonably incurred by
her or on her behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such Proceeding,
the Company shall indemnify Indemnitee against all Expenses actually and
reasonably incurred by her or on her behalf in connection with each successfully
resolved claim, issue or matter. For purposes of this Section, and without
limitation, the termination of any claim, issue or matter in such a Proceeding
by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter.
Section 6. Indemnification for Expenses of a Witness.
Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of her Corporate
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<PAGE> 3
Status, a witness in any Proceeding, she shall be indemnified against all
expenses actually and reasonably incurred by her or on her behalf in connection
therewith.
Section 7. Advancement of Expenses. The Company shall advance
all reasonable Expenses incurred by or on behalf of Indemnitee in connection
with any Proceeding within twenty days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses.
Section 8. Procedure for Determination of Entitlement to
Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee
shall submit to the Company a written request, including therein or therewith
such documentation and information as is reasonably available to Indemnitee and
is reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of Directors in
writing that Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification
pursuant to the first sentence of Section 8(a) hereof, a determination, if
required by applicable law, with respect to Indemnitee's entitlement thereto
shall be made in the specific case: (i) if a Change in Control (as hereinafter
defined) shall have occurred, by Independent Counsel (as hereinafter defined)
(unless Indemnitee shall request that such determination be made by the Board of
Directors or the stockholders, in which case by the person or persons or in the
manner provided for in clause (ii) or (iii) of this Section 8(b)) in a written
opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the
Board of Directors by a majority vote of a quorum consisting of Disinterested
Directors (as hereinafter defined), or (B) if a quorum of the Board of Directors
consisting of Disinterested Directors is not obtainable or, even if obtainable,
such quorum of Disinterested Directors so directs, by Independent Counsel in a
written opinion to the Board of Directors, a copy of which shall be delivered to
Indemnitee, or (C) by the stockholders of the Company; or (iii) as provided in
Section 9(b) of this Agreement; and, if it is so determined that Indemnitee is
entitled to indemnification, payment to Indemnitee shall be made within ten (10)
days after such determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to Indemnitee's
entitlement to indemnification, including providing to such person, persons or
entity upon reasonable advance request any documentation or information which is
not privileged or otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such determination. Any
costs or expenses (including attorneys' fees and disbursements) incurred by
Indemnitee in so cooperating with the person, persons or entity making such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee's entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold Indemnitee harmless therefrom.
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<PAGE> 4
(c) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 8(b)
hereof, Independent Counsel shall be selected as provided in this Section 8(c).
If a Change of Control shall not have occurred, Independent Counsel shall be
selected by the Board of Directors, and the Company shall give written notice to
Indemnitee advising her of the identity of the Independent Counsel so selected.
If a Change of Control shall have occurred, Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such selection be
made by the Board of Directors, in which even the preceding sentence shall
apply), and the Indemnitee shall give written notice to the Company advising it
of the identity of Independent Counsel so selected. In either event, Indemnitee
or the Company, as the case may be, may, within 7 days after such written notice
of selection shall have been given, deliver to the Company or to Indemnitee, as
the case may be, a written objection to such selection. Such objection may be
asserted only on the ground that Independent Counsel so selected does not meet
the requirements of "Independent Counsel" as defined in Section 17 of this
Agreement, and the objection shall set forth with particularity the factual
basis of such assertion. If such written objection is made, Independent Counsel
so selected may not serve as Independent Counsel unless and until a court has
determined that such objection is without merit. If, within 20 days after
submission by Indemnitee of a written request for indemnification pursuant to
Section 8(a) hereof, no Independent Counsel shall have been selected and not
objected to, either the Company or Indemnitee may petition the Court of Chancery
of the State of Delaware or other court of competent jurisdiction for resolution
of any objection which shall have been made by the Company or Indemnitee to the
other's selection of Independent Counsel and/or for the appointment as
Independent Counsel of a person selected by the Court or by such other person as
the Court shall designate, and the person with respect to whom an objection is
so resolved or the person so appointed shall act as Independent Counsel under
Section 8(b) hereof. The Company shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to Section 8(b) hereof and the Company shall pay
all reasonable fees and expenses incident to the procedures of this Section
8(c), regardless of the manner in which such Independent Counsel was selected or
appointed. Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 10(a)(iii) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject
to the applicable standards of professional conduct then prevailing).
Section 9. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with Section 8(a) of this
Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making by any person, persons or entity of
any determination contrary to that presumption.
(b) If a person, persons or entity empowered or selected under
Section 8 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination with 60 days after receipt
by the Company of the request therefor, the
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<PAGE> 5
requisite determination of entitlement to indemnification shall be deemed to
have been made and Indemnitee shall be entitled to such indemnification, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law; provided, however,
that such 60-day period may be extended for a reasonable time, not to exceed an
additional 30 days, if the person, persons or entity making the determination
with respect to entitlement to indemnification in good faith requires such
additional time for the obtaining or evaluating of documentation and/or
information relating thereto; and provided, further, that the foregoing
provisions of this Section 9(b) shall not apply (i) if the determination of
entitlement to indemnification is to be made by the stockholders pursuant to
Section 8(b) of this Agreement and if (A) within 15 days after receipt by the
Company of the request for such determination the Board of Directors has
resolved to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within 75 days after such
receipt and such determination is made thereat, or (B) a special meeting of
stockholders is called within 15 days after such receipt for the purpose of
making such determination, such meeting is held within 60 days after having been
so called and such determination is made thereat, or (ii) if the determination
to entitlement to indemnification is to be made by Independent Counsel pursuant
to Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue
or matter therein, by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which she reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that her conduct was unlawful.
Section 10. Remedies of Indemnitee.
(a) In the event that (i) a determination is made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, (ii) advancement of Expenses is not timely made pursuant
to Section 7 of this Agreement, (iii) the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to Section 8(b) of
this Agreement and such determination shall not have been made and delivered in
a written opinion within 90 days after receipt by the Company of the request for
indemnification, or (iv) payment of indemnification is not made pursuant to
Section 6 of this Agreement within ten (10) days after receipt by the Company of
a written request therefor, or (v) payment of indemnification is not made within
ten (10) days after a determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made pursuant to
Section 8 or 9 of this Agreement, Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Delaware, or in any other
court of competent jurisdiction, of her entitlement to such indemnification or
advancement of Expenses. Alternatively, Indemnitee, at her option, may seek an
award in arbitration to be conducted by a single arbitrator pursuant to the
rules of the American Arbitration Association. Indemnitee shall commence such
proceeding seeking an adjudication or an award in arbitration within 180 days
following the date on which
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<PAGE> 6
Indemnitee first has the right to commence such proceeding pursuant to this
Section 10(a). The Company shall not oppose Indemnitee's right to seek
adjudication or award in arbitration.
(b) In the event that a determination shall have been made
pursuant to Section 8 of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 10 shall be conducted in all respects as a de novo trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. If a Change of Control shall have occurred, in any
judicial proceeding or arbitration commenced pursuant to this Section 10 the
Company shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have
been made pursuant to Section 8 or 9 of this Agreement that Indemnitee is
entitled to indemnification, the Company shall be bound by such determination in
any judicial proceeding or arbitration commenced pursuant to this Section 10,
absent (i) a misstatement by Indemnitee or a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 10 that
the procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 10,
seeks a judicial adjudication of or an award in arbitration to enforce her
rights under, or to recover damages for breach of, this Agreement, Indemnitee
shall be entitled to recover from the Company, and shall be indemnified by the
Company against, any and all expenses (of the types described in the definition
of Expenses in Section 17 of this Agreement) actually and reasonably incurred by
her in such judicial adjudication or arbitration, but only if she prevails
therein. If it shall be determined in such judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the indemnification,
or advancement of Expenses sought, the expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
Section 11. Non-Exclusivity: Survival of Rights; Insurance;
Subrogation.
(a) The rights of indemnification and to receive advancement
of Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the Certificate of Incorporation, the By-Laws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or termination of this Agreement or any provision hereof shall be
effective as to any Indemnitee with respect to any action taken or omitted by
such Indemnitee in her Corporate Status prior to such amendment, alteration or
termination.
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<PAGE> 7
(b) To the extent that the Company maintains an insurance
policy or policies providing liability insurance for directors, officers,
employees, agents or fiduciaries of the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
which such person serves at the request of the Company Indemnitee shall be
covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for any such director, officer,
employee or agent under such policy or policies.
(c) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to
make any payment of amounts otherwise indefinable hereunder if and to the extent
that Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
Section 12. Duration of Agreement. This Agreement shall
continue until and terminate upon the later of: (a) 10 years after the date that
Indemnitee shall have ceased to serve as director, or (b) the final termination
of all pending Proceedings in respect of which Indemnitee is granted rights of
indemnification or advancement of Expenses hereunder and of any proceeding
commenced by Indemnitee pursuant to Section 10 of this Agreement relating
thereto. This Agreement shall be binding upon the Company and its successors and
assigns and shall inure to the benefit of Indemnitee and her heirs, executors
and administrators.
Section 13. Severability. If any provision or provisions of
this Agreement shall be held to be invalid, illegal or unenforceable for any
reason whatsoever: (a) the validity, legality and enforceability of the
remaining provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement contain any such provision held to be
invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (b) the
fullest extent possible, the provisions of this Agreement (including, without
limitation, each portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
Section 14. Exception to Right of Indemnification or
Advancement of Expenses. Notwithstanding any other provision of this Agreement,
Indemnitee shall not be entitled to indemnification or advancement of Expenses
under this Agreement with respect to any proceeding, or any claim therein,
brought or made by her against the Company.
Section 15. Identical Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall for all purposes be
deemed to be an original but all of which together shall constitute one and the
same Agreement. Only one such counterpart signed
7
<PAGE> 8
by the party against whom enforceability is sought needs to be produced to
evidence the existence of this Agreement.
Section 16. Headings. The headings of the paragraphs of this
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction thereof.
Section 17. Definitions. For purposes of this Agreement:
(a) "Change of Control" means a change in control of the
Company occurring after the date hereof of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the date hereof (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds of the
members of the Board of Directors in office immediately prior to such person
attaining such percentage interest; (ii) the Company is a party to a merger
consolidation, sale of assets or other reorganization, or a proxy contest, as a
consequence of which members of the Board of Directors in office immediately
prior to such transaction or event constitute less than a majority of the Board
of Directors thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors (including for this purpose any new director whose election or
nomination for election by the Company's stockholder was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board of Directors.
(b) "Corporate Status" describes the status of a person who is
or was a director, officer, employee, agent or fiduciary of the Company or of
any other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise which such person is or was serving at the request of the
Company.
(c) "Disinterested Director" means a director of the Company
who is not or was not a party to the Proceeding in respect of which
indemnification is sought by the Indemnitee.
(d) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses of the
types customarily incurred in connection with prosecuting, defending, preparing
to prosecute or defend, investigating, or being or preparing to be a witness in
a Proceeding.
8
<PAGE> 9
(e) "Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to represent: (i)
the Company or Indemnitee in any matter material to either such party, or (ii)
any other party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall
not include any person who, under the applicable standards of professional
conduct than prevailing, would have a conflict or interest in representing
either the Company or Indemnitee in an action to determine Indemnitee's rights
under this Agreement.
(f) "Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative hearing or
any other proceeding whether civil, criminal, administrative or investigative,
except one initiated by Indemnitee pursuant to Section 10 of this Agreement to
enforce her rights under this Agreement.
Section 18. Modification and Waiver. No supplement,
modification or amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provisions hereof (whether or not similar) nor shall such waiver constitute a
continuing waiver.
Section 19. Notice by Indemnitee. Indemnitee agrees promptly
to notify the Company in writing upon being served with any summons, citation,
subpoena, complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification or advancement of
Expenses covered hereunder.
Section 20. Notices. All notices requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, to:
her address indicated on
the signature page hereof
(b) If to the Company, to:
Tender Loving Care Health Care Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
9
<PAGE> 10
or such other address as may have been furnished to Indemnitee by the Company or
to the Company by Indemnitee, as the case may be.
Section 21. Governing Law. The parties agree that this
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware.
Section 22. Miscellaneous. Use of the masculine pronoun shall
be deemed to include usage of the feminine pronoun where appropriate.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
TENDER LOVING CARE HEALTH
CARE SERVICES, INC.
By: /s/ Dale R. Clift
---------------------------------
Name: Dale R. Clift
Title: President and Chief
Operating Officer
INDEMNITEE
/s/ Renee J. Silver
------------------------------------
Renee J. Silver
Address: 11 Pine Drive
Port Washington, New York 11050-3424
11
<PAGE> 1
Exhibit 10.23
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This First Amendment to the Second Amended and Restated Loan and
Security Agreement ("Amendment"), dated October 20, 1999, is entered into by and
among each of the corporations referred to as a Borrower on the signature pages
attached hereto (each of the foregoing individually, a "Borrower" and
collectively, "Borrowers") and Mellon Bank, N.A. ("Lender").
BACKGROUND
A. Lender and Borrowers are parties to a certain Second Amended and
Restated Loan and Security Agreement dated September 24, 1999 (as heretofore or
hereafter amended, modified, supplemented or replaced from time to time ("Loan
Agreement").
B. In conjunction with arrangements to consummate the Spin-Off, and as
a result of the variation of Borrowers' actual performance from projections
previously delivered to Lender, Borrowers have determined a need to modify the
required minimum Excess Borrowing Availability set forth in Section 8.5(b) of
the Loan Agreement. Lender is willing to accommodate Borrowers' request subject
to the terms and conditions of this Amendment.
NOW, THEREFORE, the parties hereto, intended to be legally bound,
hereby promise and agree as follows:
1. Excess Borrowing Availability ATC. Section 8.5(b)(iv) of the Loan
Agreement is hereby amended to read as follows: "Lender shall have received
evidence on the date subsections (i) and (ii) above are satisfied that, after
giving effect to the payment described in subsection (i) above, Staff Builders
and the ATC Group have a minimum Excess Borrowing Availability (as defined in
the ATC Loan Documents) of $1,000,000."
2. Excess Borrowing Availability TLC. Section 8.5(b)(v) of the Loan
Agreement is hereby amended to read as follows: "Lender shall have received
evidence on the date subsections (i) and (ii) above are satisfied that, after
giving effect to the payment described in subsection (i) above, Borrowers have a
minimum Excess Borrowing Availability of $1,100,000."
3. Future Excess Availability Covenant. Section 6.12(d) of the Loan
Agreement is hereby amended to read as follows:
"Borrowers shall have and maintain, on a consolidated basis,
an Excess Formula Availability of not less than $1,000,000 on
Thursday of each week and not less than $1,500,000 on Friday
of each week (measured at 2:00 p.m. on every such date);
provided, however, that for the period from October 1, 1999
through December 11, 1999 (solely for the purposes of this
covenant),
1
<PAGE> 2
clause (i) of the definition of Excess Formula Availability
shall mean 'an amount equal to eighty percent (80%) of
Qualified Accounts.' "
4. Amendment Fee. In consideration of the agreements and undertaking
set forth herein, Lender has hereby earned an amendment fee of $20,000, which
shall be paid by Borrowers on October 21, 1999.
5. Acknowledgment, Waiver and Release. Borrowers acknowledge and agree
that the outstanding principal indebtedness under the Loan Agreement as of the
close of business on October 19, 1999 is $15,840,965.24, which, together with
accrued interest, fees and expenses, is owing without offset, defense,
deduction, claim or counterclaim. Borrowers each waive any defense of any kind
or nature whatsoever to their obligations to Lender and each releases and
discharges Lender, its successors, assigns, officers, agents and
representatives, of and from any and all claims, demands, counterclaims,
cross-claims, losses, liabilities and damages, whether direct or indirect, known
or unknown, matured or contingent, due or to become due, asserted or unasserted,
at law or in equity.
6. No Waiver by Lender. This Amendment does not and shall not be deemed
to constitute a waiver by Lender of any breach or violation of any
representation, warranty or covenant made or agreed to by any Borrower under the
Loan Agreement as amended hereby, and all of Lender's claims and rights and
rights resulting from any such breach or misrepresentation by any Borrower, are
expressly reserved by Lender. This Amendment does not obligate Lender to agree
to any further extension or any other modification of the Loan Agreement nor
does it constitute a waiver of any other rights or remedies of Lender.
7. Incorporation. This Amendment shall amend, and is incorporated into
and made part of, the Loan Agreement. All references to the Loan Agreement shall
mean the Loan Agreement as amended hereby. To the extent that any term or
provision of this Amendment is or may be deemed expressly inconsistent with any
term or provision in the Loan Agreement, the terms and provisions hereof shall
control. Except as expressly amended by this Amendment, all of the terms and
conditions of the Loan Agreement continue unchanged and remain in full force and
effect.
8. No Modification. No modification hereof or of any agreement referred
to herein shall be binding or enforceable unless in writing and signed on behalf
of the party against whom enforcement is sought. This Amendment supersedes any
drafts or prior versions of this document and represents the final agreement of
the parties regarding the subject matter hereof.
9. Successors and Assigns. This Amendment will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
10. Governing Law. This Amendment shall be governed by, and construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania,
excluding its conflict of laws rule.
2
<PAGE> 3
11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Signature by facsimile shall also bind the parties hereto.
[Remainder of page intentionally left blank]
[SIGNATURES ON FOLLOWING PAGE]
3
<PAGE> 4
IN WITNESS WHEREOF, the undersigned have executed this Amendment on the
date first written above.
LENDER:
MELLON BANK, N.A.
By: /s/ Jeffrey G. Saperstein
--------------------------------
Name: Jeffrey G. Saperstein
Title: Vice President
BORROWERS:
ALBERT GALLATIN HOME CARE, INC.,
a Delaware corporation
ALBERT GALLATIN SERVICES CORPORATION,
a Pennsylvania corporation
CARECO, INC.,
a Massachusetts corporation
ETHICARE CERTIFIED SERVICES, INC.,
a New York corporation
HOME HEALTH CARE, INC.,
a Maryland corporation
MEDVISIT, INC.,
a North Carolina corporation
PERSONNEL INDUSTRIES, INC.
a Maryland corporation
PROFESSIONAL DETAIL SERVICES, INC.,
a New York corporation
A RELIABLE HOMEMAKER OF MARTIN - ST.
LUCIE COUNTY, INC.,
a Florida corporation
S.B. ASSURED HOME CARE, INC.,
a Delaware corporation
S.B.H.F., INC.,
a New York corporation
S.B.P.P., INC.,
a Delaware corporation
STAFF BUILDERS, INC.,
a New York corporation
STAFF BUILDERS HOME HEALTH CARE, INC.,
a Delaware corporation
STAFF BUILDERS INTERNATIONAL, INC.,
a New York corporation
STAFF BUILDERS PRESCRIPTION SERVICES, INC.,
a Colorado corporation
STAFF BUILDERS PRESCRIPTION SERVICES, INC.,
a Florida corporation
STAFF BUILDERS SERVICES, INC.,
a New York corporation
ST. LUCIE HOME HEALTH AGENCY, INC.,
a Florida corporation
T.L.C. HOME HEALTH CARE, INC.,
a Florida corporation
T.L.C. MEDICARE SERVICES OF BROWARD, INC.,
a Florida corporation
T.L.C. MEDICARE SERVICES OF DADE, INC.,
a Florida corporation
T.L.C. MIDWEST, INC.,
a Delaware corporation
S-1
<PAGE> 5
TENDER LOVING CARE HEALTH CARE SERVICES,
INC.,
a Connecticut corporation
TENDER LOVING CARE HEALTH CARE SERVICES,
INC.,
a Delaware corporation
TENDER LOVING CARE HOME CARE SERVICES,
INC.,
a New York corporation
TENDER LOVING CARE PRIVATE PATIENT
COMPANY, INC.,
a Florida corporation
U.S. ETHICARE CORPORATION,
a Delaware corporation
U.S. ETHICARE ALBANY CORPORATION,
a New York corporation
U.S. ETHICARE CHAUTAUQUA CORPORATION,
a New York Corporation
U.S. ETHICARE ERIE CORPORATION,
a New York Corporation
U.S. ETHICARE NIAGARA CORPORATION,
a New York corporation
U.S. ETHICARE ONONDAGA CORPORATION,
a New York corporation
By: /s/ Dale R. Clift
-------------------------------
Name: Dale R. Clift
Title: on behalf of and as
Executive Vice President
of each of the foregoing
corporations
S-2
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