SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED FEBRUARY 29, 1996
OR
[ ] TRANSITION REPORT SUBJECT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
Commission File Number: 0-11380
STAFF BUILDERS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 11-2650500
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1983 Marcus Avenue, Lake Success, NY 11042
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 358-1000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 par value
Class B Common Stock, $.01 par value
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 and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. X
The aggregate market value of the voting stock (Class A and Class B
Common Stock, assuming conversions of Class B Common Stock into Class A
Common Stock on a share for share basis) held by non-affiliates of the
registrant based on the closing price of such stock on April 26, 1996,
was $79,354,080.
The number of shares of Class A Common Stock and Class B Common Stock
outstanding on April 26, 1996 was 22,016,025 and 1,496,295 shares,
respectively.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Items 10,11,12 and 13 will be included in
the Company's definitive Proxy Statement for the Annual Meeting of
Stockholders, which will be filed pursuant to Regulation 14A within 120
days after the close of the fiscal year for which this report is filed,
and which information is incorporated herein by reference.
PART I
ITEM 1. BUSINESS
Staff Builders, Inc. is a Delaware corporation which was
incorporated in New York in 1978 and reincorporated in Delaware in
May 1983. Unless the context otherwise requires, all references to
the "Company" include the Company's predecessor and its
subsidiaries.
General
The Company is a leading national provider of home
health care. In addition, it provides supplemental staffing to
health care institutions. These services are provided through a
pool of approximately 40,000 caregivers operating within a network
of 214 offices located in 37 states and the District of Columbia.
Of these offices, 30 are directly owned by the Company and 184 are
operated by 85 franchisees.
The Company's 214 field office locations include 46
locations which were added from six acquisitions made during the
three years ended February 29, 1996. On September 29, 1995, the
Company acquired a home health care provider consisting of nine
locations in Ohio, Virginia and Indiana, which have been
consolidated to seven locations as of February 29, 1996. These
locations contributed revenues of approximately $2.6 million for
the fiscal year ended February 29, 1996 ("Fiscal 1996"). On
September 1, 1995, four locations in Central New Jersey were
acquired from a home health care business which generated revenues
of approximately $1.9 million in fiscal 1996. On August 30, 1995,
the Company acquired seven locations in the Raleigh-Durham, North
Carolina area, which contributed revenues of approximately $5.6
million in fiscal 1996. In July 1994, the Company acquired
thirteen locations of a supplemental staffing business operating in
seven states, and in a separate acquisition in November 1994, seven
additional supplemental staffing offices operating in five states
were added. These supplemental staffing locations contributed
revenues of approximately $24.0 million and $15.4 million in fiscal
1996 and for the year ended February 28, 1995 ("Fiscal 1995"),
respectively. See "Business -- Supplemental Staffing."
In July 1993, the Company acquired eight locations of a regional
home health care business which contributed revenues of
approximately $ 36.2 million, $29.7 million and $16.8 million in
fiscal 1996, fiscal 1995 and for the year ended February 28, 1994
("Fiscal 1994"), respectively. Additionally, the Company acquired
certain assets, consisting primarily of employee and customer
lists, of 23 other home health care providers in 30 locations
during the three years ended February 29, 1996.
Home Health Care
The Company provides a broad range of health care
services to individuals in their homes, affording an alternative to
institutionalized care. Services are rendered by licensed and
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registered nurses, therapists and medical social workers, who
provide skilled care such as intravenous therapy, pain management,
ventilator care, changing of dressings, injections, administration
of medication and other nursing procedures. In addition, unskilled
care is provided by home health aides and other unlicensed
personnel who assist patients with their daily activities.
Services are available 24 hours per day, seven days per
week, and personnel at each of the Company's offices are available
after normal business hours to respond to emergencies and meet
other service requests. Each office generally is staffed by a
manager who has responsibility for general management of the
office; one or more field staff supervisors who are responsible for
ensuring that requested services are provided; and a director of
home care services who is responsible for overseeing the
implementation of the patient's plan of care as prescribed by the
physician.
Clients' requests for home health care are typically
received at a local office and all skilled home health care
services are provided pursuant to the orders of the patient's
physician. Generally, after a referral is received, the director
of home care services will make arrangements for an assessment in
which the patient's condition is analyzed in order to identify the
patient's needs. Home care services are rendered in accordance
with the plan of care. During the intake process, the Company
contacts third-party payors to confirm the extent of insurance
coverage.
Home health care services accounted for approximately
90%, 91% and 95% of revenues for fiscal 1996, 1995 and 1994,
respectively. The primary payment sources for home health care
revenues are Medicare, Medicaid, commercial insurance carriers and
individuals, and state and local government health programs. See
"Business -- Reimbursement" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Supplemental Staffing
The Company has expanded its supplemental staffing
business through the acquisition in July 1994 of ATC Services
Incorporated ("ATC"), a provider of temporary and contractual
staffing services to health care institutions and other
organizations, through thirteen offices located in seven states,
and the acquisition by ATC in November 1994 of seven additional
offices in five states. During fiscal 1996, additional
supplemental staffing franchise locations were added contributing
to the total supplemental staffing revenues of approximately $38.1
million in fiscal 1996, as compared to $28.8 million and $10.5
million in fiscal 1995 and fiscal 1994, respectively. The
Company's supplemental staffing operations provide clients with
temporary technicians, registered nurses, licensed practical
nurses, insurance billers and other personnel. Health care
institutions use supplemental staffing to cover permanent positions
for which they have openings, for peak periods, vacations and
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emergencies and to accommodate periodic increases in the number of
patients.
Local offices are generally familiar with the
operations, procedures and policies of the institutions in the
areas served by such offices and use this knowledge in providing
the training and orientation to their supplemental staffing
personnel. Accordingly, the personnel provided are able to assume
responsibility quickly and work effectively with permanent staff
members.
Supplemental staffing operations accounted for
approximately 9%, 9% and 4% of the revenues for fiscal 1996, 1995
and 1994, respectively.
Franchisees
Of the Company's 214 field office locations, 184 are
operated by 85 franchisees pursuant to the terms of a franchise
agreement with the Company. The Company utilizes a form of
franchising whereby it licenses independent companies or
contractors to represent the Company within a designated territory
using the Company's trade names and service marks. These
franchisees recruit direct service personnel and solicit orders and
assign Company personnel including registered nurses, therapists
and home health aides to service the Company's clients. The
Company pays and distributes the payroll for the direct service
personnel, administers all payroll withholdings and payments, bills
the customers and receives and processes the accounts receivable.
The franchisees are responsible for providing an office and paying
related expenses for administration including rent, utilities and
costs for administrative personnel. The Company owns all necessary
health care-related permits and licenses and, where required,
certificates of need for operation of franchise offices. The
revenues and related direct costs are included in the Company's
consolidated service revenues and operating costs.
The locations operated by franchisees contributed
approximately $334 million, $251 million and $184 million, or
approximately 82%, 77% and 75% of the Company's service revenues
for fiscal 1996, 1995 and 1994, respectively.
The initial franchise term granted by the Company is
generally ten years. A franchisee has the option to extend for an
additional five-year term, subject to the franchisee adhering to
the operating procedures and quality control standards established
by the Company. The initial franchise fee is currently $29,500 for
home health care and $19,500 for the ATC supplemental staffing
operations. In addition, franchisees who have converted branch
offices into franchises may be required to lease certain assets of
the branch office from the Company. When converting independently
owned agencies into franchises, the Company negotiates the terms of
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the conversion on a transaction-by-transaction basis depending on
the size of the agency, the nature of the agency's business and the
location of the agency.
The Company pays a distribution or commission to the
franchisees based upon a defined formula of gross profit generated.
Generally, the Company pays the home health care franchisee 60% of
the gross profit attributable to the non-Medicare operations of the
franchise. The payment to the Company's franchises related to
Medicare operations is adjusted for cost limitations and
reimbursement of allowable Medicare costs. The Company generally
pays the supplemental staffing franchises 60% of the gross profit
based on volume. For fiscal 1996, 1995 and 1994, total franchisee
distributions of approximately $75.4 million, $56.9 million and
$40.5 million, respectively, were included in the Company's general
and administrative expenses.
The Company has implemented its franchise program to
permit it to quickly penetrate new markets and realize economies of
scale. The program also enables the Company to maintain stable
local management by reducing personnel turnover.
Data Processing
The Company maintains central computerized management
information systems (including payroll, billing and other
administrative functions) for its home health care operations at
its corporate headquarters in Lake Success, New York. The ATC
operations have their corporate headquarters in Atlanta, Georgia.
Generally, bills are rendered, payroll is processed and collections
are received at the corporate headquarters or at lock-boxes which
have been established in connection with the Company's revolving
line of credit.
Recruiting and Training
The Company and its franchisees recruit health care and
medical staffing personnel principally through referrals from other
personnel, newspaper advertisements and direct mail solicitations
to nursing, paramedical and other recruiting sources. A large
percentage of these personnel are employed only when needed, and
are paid for the actual number of hours worked or visits made.
The Company has standardized procedures for recruiting,
interviewing, testing and reference checking prospective personnel.
All nurses and therapists must be licensed by the appropriate
licensing authorities. Substantially all unlicensed health care
personnel must be certified either through a state-approved
certification program or must have had previous experience in
providing direct patient care in a hospital, nursing home or in the
home. After selection, applicants receive instruction in the
Company's procedures and policies. Subsequently, they are included
on a list of personnel eligible for placement on home care cases.
The Company has an in-service training program for its home health
personnel which satisfies the statutory prerequisites for
certification required by certain states.
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In addition to health care personnel recruited and
trained by the Company, the Company contracts with third parties to
meet its personnel requirements. These contracted personnel must
have the same qualifications required of Company personnel.
Quality Control
As a service business, the quality and reputation of the
Company's personnel and operations is critical to the Company's
success. The Company has implemented uniform quality assurance
programs for its home health care operations, including its
consumer hotline and service evaluation system in which patients
are asked by the Company to rate the quality of care provided.
These programs are administered at the national and local levels.
The Company's Directors of Professional Services conduct periodic
on-site reviews to determine compliance with all regulations.
Marketing
The Company markets its services on a national and local
basis. Each office seeks to retain strong local identification in
order to best respond to prevailing market conditions and cultivate
local referrals. Office managers and franchisees are able to offer
the most appropriate services based on market need and implement
customized marketing programs for the areas they serve. The
Company provides marketing support including sales brochures,
selling seminars, advertising and marketing materials in addition
to assistance in developing marketing plans.
Local marketing efforts principally involve periodic
visits or calls to hospital discharge planners, nursing management,
physicians and other individuals at hospitals, nursing homes and
other health care facilities who are responsible for discharge
planning.
Due to changes in health care reimbursement, insurance
companies and health maintenance organizations have become more
involved in directing services for those to whom they provide
coverage. The Company has sought to adapt to the increased role of
these organizations in patient referrals through the implementation
of its Managed Care Program. Under this program, the Company
provides services to members of health maintenance organizations or
policy holders of insurance companies at a negotiated rate. The
Company believes that some of these organizations, as a result of
their strict guidelines, centralized administration and geographic
diversity, retain the Company because of its ability to
consistently offer quality services on a national basis. Moreover,
the Company believes that its ability to offer patients a wide
variety of home health care services will provide it with a
competitive edge in obtaining additional business from these
organizations.
The Company's representatives attend and participate in
health care functions, trade shows and conventions and have ongoing
public education programs to further enhance the Company's role as
a national home health care provider.
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Reimbursement
Revenues generated from the Company's home health care
services are paid by private insurance carriers, health maintenance
organizations and individuals, Medicare, Medicaid and other state
and local government health insurance programs. During fiscal 1996
approximately 13% of the Company's total revenues represented
reimbursement from commercial insurance carriers, health
maintenance organizations and individuals; 58% came from Medicare;
and 19% came from Medicaid and other local government health
programs. Medicare is a Federally funded program available to
persons with certain disabilities and persons of age 65 or older.
Medicaid, a program jointly funded by Federal and state
governments, and other local government health care programs are
designed to pay for certain health care and medical services
provided to low income individuals without regard to age.
The Company has 132 locations which are certified to
provide home health care services to Medicare patients. Medicare
reimburses the Company for covered items and services at the lower
of the Company's cost, as determined by Medicare, cost limits
established by the Federal government, or the amount charged by the
Company. The Company submits all Medicare claims to a single
insurance company acting as a fiscal intermediary which processes
claims on behalf of the Federal government. As of February 29,
1996, the Company has 76 offices which qualify to participate in
Medicare's periodic interim payments ("PIP") program. Under PIP,
the Company receives regular bi-weekly Medicare payments based on
past Medicare activity of qualifying offices, which are adjusted at
the end of each calendar quarter for actual levels of activity.
Offices which are not participating in the PIP program receive
payment for services upon submission of individual claims.
The Company is also reimbursed for covered items by
Medicaid. Approximately 75% of the Company's local offices are
approved to provide home health care services to Medicaid
recipients. Medicaid reimbursement procedures vary from state to
state.
Competition
Although there are national home health care and
supplemental staffing companies, the home health care industry is
highly fragmented and competitors are often localized in particular
geographical markets. In general, there has been a recent trend
toward consolidation in the health care industry, and particularly
within the home health care industry. As the nation's health care
system is overhauled to encourage "managed competition", it is
likely that this trend toward increased consolidation in the home
health care industry will accelerate. In any event, the Company
expects that it will continue to compete with the national
organizations as well as local providers including home health care
providers owned or otherwise controlled by hospitals. Some of the
entities with which the Company competes have substantially greater
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financial and other resources. In addition, the Company's
operations depend, to a significant degree, on its ability to
recruit qualified health care personnel and the Company faces
competition from other companies in recruiting. Generally, there
is a shortage of qualified health care personnel and, as a result,
the Company, from time to time, has experienced difficulties in
obtaining personnel to meet demands for services.
The Company believes that prompt service, price, quality
and range of services offered are the principal competitive factors
which enable it to compete effectively. The Company believes that
its rate structure is competitive with others in the industry.
During fiscal 1996, no single client or group contract accounted
for ten percent or more of the consolidated revenues of the
Company. The Company expects additional competition will develop
given the increasing level of demand for the type of services
offered. See "Business -- Recruiting and Training."
Service Marks
The Company believes that its service marks, Staff
Builders and EthiCare, have significant value and are important
to the marketing of its services. These names are registered as
service marks with the United States Patent and Trademark Office.
The registration of the Staff Builders service mark will remain
in effect through February 14, 1999, with respect to home care and
hospital staff relief, and through June 28, 2006 with respect to
temporary personnel for business and industry. The registration of
the EthiCare service mark will remain in effect through December
28, 2002. Each of these marks is renewable for additional ten-year
periods, provided the Company continues to use them in the ordinary
course of business. The Company also owns other federally
registered marks for names used in connection with its business.
Government Regulation
The Company's health care business is subject to
extensive and frequently changing regulation by Federal, state and
local authorities. Such regulation imposes a significant
compliance burden on the Company, including state licensing and
certificate of need requirements and Federal and state eligibility
standards for certification as a Medicare and Medicaid provider.
The imposition of more stringent regulatory requirements or the
denial or revocation of any license or permit necessary for the
Company to operate in a particular market could have a material
adverse effect on the Company's operations. In addition, the
Company will be required to comply with the licensing and/or
Certificate of Need ("CON") requirements and applicable regulations
in the jurisdictions in which it plans to provide services, except
for the states of Colorado, Massachusetts, Michigan and Ohio which
have neither CON nor licensure requirements.
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The Federal government and all states in which the
Company currently operates regulate various aspects of the
Company's business. Home health agency certification by the Health
Care Financing Administration ("HCFA") is required to receive
reimbursement for services from Medicare. The Company has 132
offices in 33 states and the District of Columbia which provide
services covered by Medicare. HCFA requires, as conditions of
participation as a home health agency in the Medicare program,
among other things, the satisfaction of certain standards with
respect to personnel, services and supervision; the preparation of
annual budgets and capital expenditure plans; and the establishment
of a professional advisory group that includes at least one
physician, one registered nurse and other representatives from
related disciplines or consumer groups.
Certain states require a provider of home health care
services to obtain a license before rendering services. Some
states, including many of the states in which the Company presently
operates, maintain Certificate of Need ("CON") legislation
requiring an office to file an application that must be approved by
the appropriate state authority before certain health care services
can be provided in an area. Approval is dependent upon, among
other things, good character and competence, financial capability
and a demonstration that the need exists for such services. In
states having a CON requirement, HCFA will grant Medicare
certification to an office, thereby permitting the office to
provide services covered by Medicare, only if the office has
obtained a CON.
New York State requires the approval by the Public
Health Council of the New York State Department of Health ("NYPHC")
of any change in the "controlling person" of an operator of a
licensed health care services agency (an "LHCSA"). Control of an
entity is presumed to exist if any person owns, controls or holds
the power to vote 10% or more of the voting securities of such
entity. A person seeking approval as a controlling person of an
operator of a LHCSA must file an application for NYPHC approval
within 30 days of becoming a controlling person, and pending a
decision by the NYPHC, such person may not exercise control over
the LHCSA. The Company has 16 offices in New York State which are
LHCSAs. Such offices accounted for approximately 14% of the
Company's revenues in fiscal 1996. If any person should become the
owner or holder, or acquire control, of the right to vote 10% or
more of the Common Stock of the Company, such person could not
exercise control of the Company's LHCSAs until such ownership,
control or holding has been approved by the NYPHC.
The Company is subject to Federal laws and laws in
certain states that govern the offer and sale of franchises. The
Company is also subject to a number of state laws that regulate
certain substantive aspects of the franchisor-franchisee
relationship. If the Company fails to comply with the franchise
laws, rules and regulations of a particular state relating to
offers and sales of franchises, the Company will be unable to
engage in offering or selling franchises in or from such state. To
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offer and sell franchises, the Company is required by the Federal
Trade Commission to furnish to prospective franchisees a current
franchise offering disclosure document. The Company has used a
Uniform Franchise Offering Circular to satisfy this disclosure
obligation. In addition, in certain states the Company is required
to register or file with such states and to provide prescribed
disclosures. The Company is currently permitted to offer
franchises in 45 states.
The Company is required to update its offering
disclosure document to reflect intended changes or the occurrence
of certain material events. The occurrence of any such changes or
events may from time to time require the Company to stop offering
and selling franchises until the document is so updated.
Insurance
The Company's field employees make decisions which can
have significant medical consequences to the patients in their
care. As a result, the Company is exposed to substantial liability
in the event of negligence or wrongful acts of its personnel. The
Company maintains medical professional and general liability
insurance providing for coverage in a maximum amount of $26 million
per claim, subject to a limitation of $26 million for all claims in
any single year and to a deductible for each claim. In addition,
franchisees are required to maintain general liability insurance
providing for coverage of at least $1 million.
Personnel and Employees
At February 29, 1996, the Company employed approximately
2,800 full-time administrative and management personnel.
Approximately 2,480 of these employees were located at the
Company's branch offices, 300 were located at its corporate
headquarters in Lake Success, New York, and 20 were located at its
medical staffing division headquarters in Atlanta, Georgia.
In addition, the Company draws upon a pool of
approximately 40,000 caregivers who are eligible for placement and
utilizes the services of approximately 17,000 of them at any one
time. Approximately 42% of these individuals are registered nurses
and other licensed personnel and 58% are home health aides and
other unlicensed personnel. The Company screens all applicants to
ensure that they meet all licensing requirements and the Company's
eligibility standards. This screening process includes skills
testing, reference checking, professional license verification,
personal interviews and a physical examination. In addition, new
employees receive an orientation on the Company's policies and
procedures prior to their initial assignment. Further, the
registered professional nurse who has responsibility for
coordinating the patient's care visits the patient within 72 hours
after commencement of services, as required, to assess the
caregiver's performance. The Company is not a party to any
collective bargaining agreement and considers its relationship with
its employees to be satisfactory.
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ITEM 2. PROPERTIES
The Company's corporate headquarters consists of
approximately 50,000 square feet of leased office space and 5,000
square feet of storage space in Lake Success, New York. The lease
for the corporate headquarters expires on September 30, 2003 and
provides for a base rent of approximately $87,600 per month, which
increases by three percent on December 1, 1996 and each year
thereafter.
In connection with the Company's acquisition of ATC
Services Incorporated in July 1994, the Company maintains its
medical staffing division in Atlanta, Georgia. The lease for
approximately 9,500 square feet of office space expires on May 31,
2000 and provides for a monthly base rent of approximately $10,500.
Approximately 6,000 square feet of the office is sublet to a
subtenant unaffiliated with the Company at a monthly rental of
approximately $5,600 with yearly increases of 4.5 percent.
The Company believes that its corporate and divisional
headquarters office space is sufficient for its immediate needs and
that it will be able to obtain additional space if needed in the
future.
The Company leases substantially all of its branch
office locations from landlords unaffiliated with the Company or
any of its executive officers or directors. Most of these leases
are for a specified term, although several of them are month-to-
month leases. As of February 29, 1996, there were 214 offices
including 30 managed directly by the Company and 184 managed by
franchisees; 18 of these franchise offices sublease the office
space from the Company and the remaining franchise offices are
leased by the franchisee from third-party landlords. The Company
believes that it will be able to renew or find adequate replacement
offices for all leases which are scheduled to expire in the next
twelve months at comparable costs.
ITEM 3. LEGAL PROCEEDINGS
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,and 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. Based on its
preliminary investigation, the Company believes that the amount of
improper claims, if any, submitted by that corporation to Medicare
between 1987 and 1989, were significantly below $1.5 million. The
Company is in negotiations with the office of the United States
Attorney to resolve this matter, but is unable to predict the
ultimate costs, if any, that may be incurred by the company. As
such, no provision has been made in the accompanying financial
statements.
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The Company is a defendant in several civil actions
which are routine and incidental to its business. The Company
purchases insurance in such amounts which management believes to be
reasonable and prudent. In the opinion of management, the outcome
of pending litigation will not have a material adverse effect on
the Company's consolidated financial condition, liquidity or
results of operations. Accrued expenses include $386,000 at
February 29, 1996 which represents the estimated amount of
liability claims payable. Such amount represents the deductible
amount for which the Company is liable, net of payments by the
Company's insurers which are probable of realization, estimated at
approximately $1.4 million.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders
during the fourth quarter of fiscal 1996.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS
(A) Market Information
The Company has outstanding two classes of common equity
securities: Class A Common Stock and Class B Common Stock. These
two classes were created by a recapitalization of the Company's
Common Stock that was completed in October 1995. The Company's
Class A Common Stock is traded in the over-the-counter market and
listed on the Nasdaq National Market under the symbol "SBLI" as was
its common stock prior to the recapitalization.
High Low
Fiscal Year Ended February 28, 1995
1st Quarter $ 5.00 $ 3.25
2nd Quarter 3.69 2.63
3rd Quarter 3.50 2.88
4th Quarter 4.00 2.88
Fiscal Year Ended February 29, 1996
1st Quarter $ 4.63 $ 3.25
2nd Quarter 4.50 3.31
3rd Quarter 5.63 2.56
4th Quarter 4.00 2.38
There is no established public trading market for the
Company's Class B Common Stock, which has ten votes per share and
upon transfer is convertible automatically into one share of Class
A Common Stock, which has one vote per share.
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(B) Holders
As of April 26, 1996 there were approximately 370 holders
of record of Class A Common Stock (including brokerage firms
holding stock in "street name" and other nominees) and 567 holders
of record of Class B Common Stock.
(C) Dividends
Since its organization, the Company has not paid any
dividends on its shares of Common Stock. Management anticipates
that for the foreseeable future all earnings will be retained for
use in its business and, accordingly, it does not intend to pay
cash dividends. The Company's current revolving credit facility
prohibits the payment of cash dividends on the common stock.
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<TABLE>
ITEM 6.
<CAPTION>
SELECTED FINANCIAL DATA (in thousands, except share and per share data)
Years Ended
February February February February February
29, 1996 28, 1995 28, 1994 28, 1993 29, 1992
<S> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATIONS DATA:
Revenues $410,160 $325,111 $246,082 $198,627 $168,508
Costs and expenses:
Operating costs 256,719 201,365 152,824 128,331 113,423
General and administrative expenses 143,704 111,462 83,682 62,075 48,817
Provision for doubtful accounts 2,678 2,431 2,400 2,352 2,588
Amortization of intangible assets 1,823 1,237 884 775 826
Interest expense 948 1,237 2,189 2,244 3,481
Other (income) expense, net 815 (818) (569) (935) (453)
Total costs and expenses 406,687 316,914 241,410 194,842 168,682
Income (loss) from operations
before income taxes 3,473 8,197 4,672 3,785 (174)
Provision for income taxes 1,459 3,462 1,308 1,211 34
Income (loss) from operations 2,014 4,735 3,364 2,574 (208)
Extraordinary Item: Gain on refinancing, net - - - - 960
Net income $ 2,014 $ 4,735 $ 3,364 $ 2,574 $ 752
Income (loss) applicable to common
stockholders:
Income (loss) from operations $ 2,014 $ 4,735 $ 3,954 $ 2,174 $ (608)
Extraordinary item - - - - 960
Income applicable to common
stockholders $ 2,014 $ 4,735 $ 3,954 $ 2,174 $ 352
Income (loss) per common and common
equivalent share -
Primary:
Income (loss) from operations $ .08 $ .20 $ .20 $ .14 $ (.09)
Extraordinary item - - - - .14
Income $ .08 $ .20 $ .20 $ .14 $ .05
Fully diluted:
Income $ .08 $ .20 $ .20 $ .13 $ .05
Cash dividends per common share $ - $ - $ - $ - $ -
Weighted average number of common
and common equivalent shares
outstanding:
Primary 25,340 24,073 22,175 16,073 7,094
Fully diluted 25,532 24,376 22,175 16,488 7,712
CONSOLIDATED BALANCE SHEET DATA:
Total assets $120,527 $103,486 $ 87,310 $ 66,983 $ 62,174
Working capital 12,007 22,038 26,855 17,214 14,012
Current portion of long-term liabilities 2,356 1,267 827 1,797 1,610
Long-term liabilities 9,611 9,186 14,021 13,768 13,097
Total liabilities 65,217 51,135 48,035 37,708 35,631
Redeemable Class B Preferred Stock
and accrued dividends - - - 6,034 5,634
Stockholders' equity 55,310 52,351 40,976 23,241 20,909
<FN>
<F1>
Certain prior period amounts have been reclassified to conform with the fiscal 1996 presentation.
</FN>
</TABLE>
-14-
<PAGE>
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information
which the Company's management believes is relevant to an
assessment and understanding of the Company's results of operations
and financial condition. This discussion should be read in
conjunction with the consolidated financial statements and notes
thereto appearing elsewhere herein. (Dollars in thousands, except
per share amounts or where otherwise indicated).
Results of Operations
Years Ended February 29, 1996 ("Fiscal 1996"), February 28, 1995
("Fiscal 1995") and February 28, 1994 ("Fiscal 1994")
Revenues. Total revenues increased by $85.0 million or
26.2% to $410.1 million in fiscal 1996 from $325.1 million in
fiscal 1995. This increase included $11.2 million of revenue from
acquisitions made in fiscal 1996, including $5.6 million of
revenues from a regional home health care provider based in
Raleigh-Durham, North Carolina which was acquired in August 1995,
and $5.6 million of revenues from three other companies acquired
since August 1995. Further, revenues generated by an Atlanta,
Georgia based provider of medical staffing services (ATC) acquired
in July 1994, which are included for the full fiscal 1996 period,
contributed $8.6 million of increased revenue in fiscal 1996 as
compared to fiscal 1995. The introduction and expansion of medical
staffing services in some of the Company's existing locations added
$2.2 million of revenues in fiscal 1996. Expansion of the
Company's franchise program resulted in increased health care
revenues of $27.0 million in fiscal 1996 over fiscal 1995 from the
addition of new locations in fiscal 1996 and the addition of
locations during fiscal 1995 which are included in the full fiscal
1996 period. Additionally, the Company generated increased revenue
of $39.0 million, or 13%, in fiscal 1996 over fiscal 1995, from
existing locations which were included for the entire two fiscal
periods. Offsetting the foregoing increases, the Company reduced
its Medicare revenues by $3.0 million due to a revision in the
methodology used to allocate corporate overhead, as required by the
Medicare fiscal intermediary.
Revenues increased by $79.0 million or 32.1% to $325.1 million
in fiscal 1995 from $246.1 million in fiscal 1994. This increase
includes $15.4 million of revenue from ATC acquired by the Company
in July 1994. Further, revenues generated by a regional home
health care business acquired in July 1993, which are included for
the full 1995 period, contributed $12.9 million of increased
revenue in the 1995 period as compared to the 1994 period. In
addition to the effect of these acquisitions, the increase in
-15-
revenues is primarily due to an increase of $39.1 million, or
33.6%, in the Company's Medicare revenues to $155.5 million in
fiscal 1995 period from $116.4 million in fiscal 1994 period.
Additionally, there was an increase of $6.2 million, or 10.6%,
in the Company's Medicaid and other local government program
revenues to $64.7 million from $58.5 million in fiscal 1994. The
remainder of the increase of $5.4 million in revenues in fiscal
1995 is primarily due to an increase of $3.4 million, or 8.2%, in
revenues from insurance and private payors to $45.1 million from
$41.7 million in the 1994 period. The foregoing increases in
revenues include $13.6 million derived from new franchise
operations added in fiscal 1995 in connection with the Company's
continued expansion of its franchise program.
The increase in Medicare and Medicaid revenues during the
three years ended February 29, 1996 was due to an increase in the
number of locations participating in these programs. In order to
be certified by the Health Care Finance Administration as a home
health agency which may participate in the Medicare program, among
other things, a location must satisfy certain operational standards
with respect to the number and qualifications of personnel, service
levels and related supervision as well as meet certain financial
standards with respect to the preparation of annual budgets and
capital expenditure plans. The number of locations which are
eligible to provide Medicare services has increased from 81 as of
February 28, 1994, to 132 as of February 29, 1996. Additionally,
the Company has continued to respond to the related, increasing
market demand for health care services.
The Company receives payment for its health care services
from several sources. The following are the Company's service
revenues by payment source:
<TABLE>
Years Ended
February February February
29, 1996 28, 1995 28, 1994
<S> <C> <C> <C>
Medicare .......................... 57.7% 56.5% 53.5%
Medicaid and other local
government programs ............. 19.4 20.1 24.2
Insurance and private payors ...... 13.4 14.5 17.4
Hospitals, nursing homes and
other health care institutions ... 9.3 8.9 4.3
Other ............................. 0.2 - 0.6
Total ............................. 100.0% 100.0% 100.0%
</TABLE>
-16-
The change in revenue mix and the reimbursement sources
reflect the Company's growth of its home health care operations and
the expansion of its supplemental staffing services. Supplemental
staffing revenues increased by $9.3 million, or 32.4%, to $38.1
million in fiscal 1996 from $28.8 million in fiscal 1995, as
compared to $10.5 million in fiscal 1994. The increase in fiscal
1996 included $8.6 million from the ATC locations acquired in July
1994.
The portion of the Company's service revenues
attributable to franchise operations has been increasing. The
service revenues attributable to franchise offices increased to 82%
in fiscal 1996 from 77% in fiscal 1995 and from 75% in fiscal 1994.
The increase in revenues attributable to franchise offices was due
to the increase in the number of locations operated by franchisees
from 94 locations operated by 57 franchisees as of February 28,
1994 to 184 locations operated by 85 franchisees as of February 29,
1996. These increases result from the Company's continuing efforts
to expand its operations in additional markets primarily through
the recruitment of new franchisees.
Operating Costs. Operating costs were 62.8%, 62.1% and
62.3% of service revenues in fiscal 1996, 1995 and 1994,
respectively. Operating costs represent the direct costs of
providing services to patients, including direct service wages,
payroll taxes, travel costs, insurance costs directly related to
services, medical supplies and the cost of contracted services.
The increase in the percentage of operating costs in fiscal 1996 is
primarily due to the reduction in Medicare revenues due to a
revision in the methodology used to allocate corporate overhead.
The payroll fringe costs, consisting primarily of payroll
taxes and workers compensation insurance, represents 14.6%, 17.3%
and 21.1% of direct service wages in fiscal 1996, 1995 and 1994,
respectively. The decrease in payroll fringe costs as a percentage
of direct service wages in fiscal 1996 was primarily due to reduced
premiums for workers compensation insurance.
The cost of contracted services represents 8.1%, 9.8% and
7.4% of service revenues in fiscal 1996, 1995 and 1994,
respectively. The decrease in these costs in fiscal 1996 as a
percentage of service revenues is primarily due to the Company's
expansion and use of its own qualified work force to provide
medical staffing services which were previously rendered by
contractors. The increase in these costs in fiscal 1995 was
primarily due to the increase in Medicare services provided by the
Company.
-17-
The revenues, operating costs and resultant gross margins
generated by the Company's franchise and Company-owned locations
are as follows:
($ in millions)
Years Ended
February February February
29, 1996 28, 1995 28, 1994
Total revenues - Franchise $334 $251 $184
Total revenues - Company-Owned 76 74 62
Total revenues $410 $325 $246
Operating costs - Franchise $207 $154 $112
Operating costs - Company-Owned 50 47 41
Operating costs $257 $201 $153
Gross margin - Franchise $127 $ 97 $ 72
Gross margin - Company-Owned 26 27 21
Gross margin $153 $124 $ 93
The gross margin percentages generated by Company-owned
locations are lower than those for franchise locations as a result
of a proportionately higher volume of services which have lower
gross margin percentages, such as supplemental staffing and
Medicaid.
General and Administrative Expenses. General and
administrative expenses increased by $32.2 million or 28.9% in
fiscal 1996 as compared to fiscal 1995 and increased by $27.8
million or 33.2% in fiscal 1995 as compared to fiscal 1994. These
costs expressed as a percentage of service revenues were 35.1%,
34.4% and 34.1% in fiscal 1996, 1995 and 1994, respectively. The
increase in general and administrative expenses as a percentage of
service revenues is primarily due to the increases in the Company's
Medicare services, which require higher administrative costs than
non-Medicare services. Included in the increase in fiscal 1996 is
$3.2 million incurred by the Company's medical staffing division,
due primarily to the locations acquired in July 1994, which are
included in the full 1996 fiscal year. Further, $2.1 million was
incurred by seven locations acquired in August 1995, from a
regional home health care provider. Additionally, expansion of the
Company's franchise program resulted in increased general and
administrative expense of $18.5 million in fiscal 1996 over fiscal
1995, for the amounts distributed to new franchisees which were
added in fiscal 1996 and the addition of new franchise locations
during fiscal 1995 which are included in the full fiscal 1996
period. Also included in fiscal 1996, are non-recurring total
general and administrative expenses incurred from two unprofitable
divisions of approximately $1.4 million. Included in general and
administrative expenses are reserves and write-offs of notes
receivable from franchisees of $169 and $400 in fiscal 1996 and
fiscal 1994,
-18-
respectively. There was no expense incurred in fiscal 1995 related
to reserves and write-offs of notes receivable.
Provisions for Doubtful Accounts Receivable. The
provisions represented 0.7%, 0.8% and 1.0% of service revenues in
fiscal 1996, 1995 and 1994, respectively. The decreases in the
provisions results from improvements made in billing and collection
procedures.
Amortization of Intangible Assets. Amortization of
intangible assets was approximately $1.8 million in fiscal 1996 as
compared to $1.2 million in fiscal 1995 and $900 in fiscal 1994.
The increases are due to business acquisitions made in the 1996 and
1995 fiscal years.
Interest Expense. Interest expense was approximately
$900 in fiscal 1996 as compared to $1.2 million in fiscal 1995 and
$2.2 million in fiscal 1994. The reductions in interest expense
were due to a combination of lower interest rates and reduced
levels of borrowings required due primarily to the reduction in the
amount of time that the Company's accounts receivable were
outstanding.
Other (Income) Expense, Net. Other (income) expense, net
in fiscal 1996 includes expense of $1,580 to provide for the costs
to close two unprofitable divisions, $358 in costs associated with
the Company's recapitalization and $165 for settlement of
litigation. Other income primarily consists of interest received
on franchise notes receivable in fiscal 1996, 1995 and 1994.
Interest earned on franchise notes receivable is generally at the
prime rate plus three percent.
Provision for Income Taxes. The provision for income
taxes reflects an effective rate of 42%, 42% and 28% in fiscal
1996, 1995 and 1994, respectively. The effective tax rate of 28%
in fiscal 1994 includes a reduction of the Company's valuation
allowance of $858.
Income Applicable to Common Stockholders. Income
applicable to common stockholders for fiscal 1996 was $2.01
million, or $.08 per share, compared to $4.74 million, or $.20 per
share in fiscal 1995 and $3.95 million, or $.20 per share in fiscal
1994. Included in fiscal 1994 was a non-recurring gain of $590, or
$.03 per share, resulting from a discount from the redemption of
the Company's Class B Preferred Stock.
Liquidity and Capital Resources
The Company has a secured revolving credit facility which
-19-
consists of a revolving line of credit and an acquisition line of
credit, under which it can borrow up to an aggregate amount of $25
million. The Company is permitted to borrow up to 75% of eligible
receivables up to the maximum amount of the credit facility less
amounts outstanding under the acquisition line of credit. The
acquisition line of credit provides for borrowings up to $7.5
million without collateral to finance acquisitions made by the
Company, provided that the sum of all borrowings do not exceed $25
million. Eligible receivables are defined principally as trade
accounts receivable which have been outstanding for less than 120
days. Long-term and short-term liquidity will be enhanced to the
extent that the accounts receivable on which the Company is not
permitted to borrow are reduced and by shortening the amount of
time that its accounts are outstanding. The average daily balance
outstanding under the credit facility was approximately $1.4
million, $3.3 million, and $11.2 million in fiscal 1996, 1995 and
1994, respectively.
Trade accounts receivable at the end of fiscal 1996,
1995, and 1994 were outstanding for an average of approximately 48,
54 and 68 days, respectively. Included in these receivables are
amounts derived from Medicare services. The reduction in the days
of outstanding trade accounts receivable was due to an increase in
the number of the Company's offices which participate in Medicare's
periodic interim payment ("PIP") program. Under PIP, the Company
receives regular bi-weekly payments based on past Medicare volume.
During fiscal 1996, 76 offices participated in the PIP program.
The Company funds the operating costs for all Company
owned and franchise locations as well as all regional and corporate
general and administrative expenses. Operating costs primarily
consist of direct service salaries paid on a weekly cycle. Each
franchisee funds its own general and administrative expenses. The
Company pays a distribution to its franchisees, based upon a
percentage of gross profit generated by the franchise, within 25 to
45 days after each month-end. Some of the administrative personnel
for franchise locations are leased from the Company for which the
related cost is deducted from monthly distributions paid.
During fiscal 1994, the Company called for redemption of
outstanding public warrants issued in a 1992 public offering, which
resulted in the issuance of 5.06 million shares of its common
stock. As a result, the Company obtained net proceeds of $13.7
million, a portion of which was used to redeem the Class B
Preferred Stock and pay certain long-term debt obligations.
During fiscal 1996 and 1995, the Company purchased and
retired a total of 1,363,744 shares of its common stock at a cost
of $3.9 million. In December 1995, the Company's Board of
Directors authorized the repurchase of up to 2.4 million shares of
common stock, subject to the consent of the Company's bank. The
bank gave approval for an initial $3.0 million in purchases of
which $1.0 million was utilized through February 29, 1996.
-20-
The Company has several agreements under which it leases
computer and other capital equipment through September 2002. The
net carrying value of the assets under these leases was
approximately $3.8 million and $2.4 million at February 29, 1996
and February 28, 1995, respectively.
At February 29, 1996, the Company's debt obligations due
within the next twelve months were approximately $2.4 million.
The Company expects that its existing working capital,
cash from operations and its banking facilities will be sufficient
to meet its needs for at least the next twelve months. The Company
expects that it will be able to extend or replace its revolving
credit agreement on favorable terms prior to its expiration on July
31, 1997.
Effect of Inflation
The rate of inflation was immaterial during the 1996
fiscal year. In the past, the effects of inflation on salaries and
operating expenses have been offset by the Company's ability to
increase its charges for services rendered. The Company
anticipates that it will be able to continue to do so in the
future, subject to applicable restrictions with respect to services
provided to clients eligible for Medicare and Medicaid
reimbursement. The Company continually reviews its costs in
relation to the pricing of its services.
Recent Pronouncements of the Financial Accounting Standards Board
Recent pronouncements of the Financial Accounting
Standards Board ("FASB"), which are not required to be adopted at
this date, include Statements of Financial Accounting Standards
("SFAS") No. 123,"Accounting for Stock-Based Compensation" ("SFAS
123") and SFAS No. 121, "Accounting for Impairment of Long-Lived
Assets to be Disposed Of ("SFAS 121"), which are effective for
fiscal years beginning after December 15, 1995. The adoption of
SFAS 123 and SFAS 121 is not expected to have a material impact on
the Company's consolidated financial position or results of
operations.
-21-
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
STAFF BUILDERS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS' REPORT F-1
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets as of
February 29, 1996 and February 28, 1995 F-2
Consolidated Statements of Income
for the Years ended February 29, 1996,
February 28, 1995 and February 28, 1994 F-3
Consolidated Statements of Stockholders'
Equity for the Years ended February 29,
1996, February 28, 1995 and February 28, 1994 F-4
Consolidated Statements of Cash Flows
for the Years ended February 29, 1996,
February 28, 1995 and February 28, 1994 F-5
Notes to Consolidated Financial Statements F-6
FINANCIAL STATEMENT SCHEDULE FOR THE YEARS ENDED
FEBRUARY 29, 1996, FEBRUARY 28, 1995
AND FEBRUARY 28, 1994
II - Valuation and Qualifying Accounts F-21
All other schedules were omitted because they are not required, not
applicable or the information is otherwise shown in the financial
statements or the notes thereto.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of Staff Builders, Inc.:
We have audited the accompanying consolidated balance sheets of Staff
Builders, Inc. and subsidiaries (the "Company") as of February 29, 1996 and
February 28, 1995, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the
period ended February 29, 1996. Our audits also included the financial
statement schedule listed in the table of contents. These financial
statements and the financial statement schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements and the financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Staff Builders, Inc. and
subsidiaries at February 29, 1996 and February 28, 1995 and the results of
their operations and their cash flows for each of the three years in the
period ended February 29, 1996 in conformity with generally accepted
accounting principles. Also, in our opinion, the financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
/s/ Deloitte & Touche, LLP
Jericho, New York
April 15, 1996
F-1
<PAGE>
STAFF BUILDERS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
February February
ASSETS Notes 29, 1996 28, 1995
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 8,710 $ 4,508
Accounts receivable, net of allowance
for doubtful accounts of $2,200
and $1,750, respectively 52,957 56,222
Deferred income tax benefits 8 2,403 1,303
Prepaid expenses and other current assets 2 3,543 1,954
Total current assets 67,613 63,987
FIXED ASSETS, net 4 7,436 5,726
INTANGIBLE ASSETS, net 3 41,877 30,149
OTHER ASSETS 2,8 3,601 3,624
TOTAL 7 $120,527 $103,486
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,003 $ 9,654
Accrued expenses 5 16,478 10,834
Accrued payroll and payroll related expenses 6 27,769 18,874
Current portion of long-term liabilities 7 2,356 1,267
Current income taxes payable 8 - 1,320
Total current liabilities 55,606 41,949
LONG-TERM LIABILITIES 7 9,611 9,186
COMMITMENTS AND CONTINGENCIES 9
STOCKHOLDERS' EQUITY: 7,11
Common stock - $.01 par value; 50,000,000
shares authorized; 22,937,049 shares
outstanding at February 28, 1995 - 229
Class A Common Stock - $.01 par value;
50,000,000 shares authorized;
22,036,313 outstanding at February 29, 1996 220 -
Class B Common Stock - $.01 par value;
1,554,936 shares authorized; 1,501,007
outstanding at February 29, 1996 15 -
Convertible preferred stock, 10,000 shares
authorized; Class A - $1.00 par value;
666 2/3 shares outstanding at February 29,
1996 and February 28, 1995 1 1
Additional paid-in capital 72,767 71,828
Accumulated deficit (17,693) (19,707)
Total stockholders' equity 55,310 52,351
TOTAL $120,527 $103,486
<FN>
<F1>
See notes to consolidated financial statements
</FN>
</TABLE>
F-2
<TABLE>
<CAPTION>
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Years Ended
February February February
Notes 29, 1996 28, 1995 28, 1994
<S> <C> <C> <C> <C>
REVENUES:
Service revenues $408,873 $324,013 $245,357
Sales of franchises and fees, net 2 1,287 1,098 725
Total revenues 410,160 325,111 246,082
COSTS AND EXPENSES:
Operating costs 256,719 201,365 152,824
General and administrative expenses 143,704 111,462 83,682
Provision for doubtful accounts 2,678 2,431 2,400
Amortization of intangible assets 1,823 1,237 884
Interest expense 948 1,237 2,189
Other (income) expense, net 2,13 815 (818) (569)
Total costs and expenses 406,687 316,914 241,410
INCOME BEFORE INCOME TAXES 3,473 8,197 4,672
PROVISION FOR INCOME TAXES 8 1,459 3,462 1,308
NET INCOME $ 2,014 $ 4,735 $ 3,364
INCOME APPLICABLE TO COMMON STOCKHOLDERS:
NET INCOME $ 2,014 $ 4,735 $ 3,364
Add net discount
on Class B Preferred Stock 10 - 590
NET INCOME APPLICABLE TO COMMON SHAREHOLDERS $ 2,014 $ 4,735 $ 3,954
EARNINGS PER COMMON SHARE:
Primary earnings per share 12 $ .08 $ .20 $ .20
Fully diluted earnings per share 12 $ .08 $ .20 $ .20
<FN>
<F1>
See notes to consolidated financial statements
</FN>
</TABLE>
F - 3
<PAGE>
<TABLE>
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
<CAPTION>
Convertible
Preferred Additional
Common Stock, Paid-In Accumulated Treasury
Notes Total Stock Class A Capital Deficit Stock
<S> <C> <C> <C> <C> <C> <C> <C>
Balances, March 1, 1993
(15,808,736 common shares issued) $23,241 $158 $1 $51,560 $(28,396) $(82)
Issuance of 1,076 additional common
shares in connection with a 1987 acquisition - -
Issuance of 60,500 common shares in
connection with exercise of stock options 11 129 1 128
Discount, net of accrued dividends, on
Redeemable Class B Preferred Stock 10 590 590
Issuance of 5,060,000 common shares in
connection with the call for redemption
of stock warrants 11 13,652 51 13,601
Retirement of 11,093 shares of treasury stock - (82) 82
Net Income 3,364 3,364
Balances, February 28, 1994
(20,919,219 common shares issued) 40,976 210 1 65,207 (24,442) -
Issuance of 600 additional common
shares in connection with a 1987 acquisition - -
Issuance of 35,450 common shares in
connection with exercise of stock options 11 95 - 95
Issuance of 250,000 common shares in
connection with exercise of stock warrants 11 502 2 500
Issuance of 2,570,388 common shares in
connection with acquisitions 3 8,482 26 8,456
Issuance of 139,166 common shares in
connection with the employee stock
purchase plan 11 397 1 396
Purchase and retirement of 977,774 common shares (2,836) (10) (2,826)
Net Income 4,735 4,735
Balances, February 28, 1995
(22,937,049 common shares issued) 52,351 229 1 71,828 (19,707) -
Issuance of 1,360 additional common
shares in connection with a 1987 acquisition - -
Issuance of 437,681 common shares in connection
with exercise of stock options, net of 683,054
shares used to pay for shares and withholding
taxes, net of related tax benefits of $772 11 409 4 405
Issuance of 398,016 common shares in connection
with exercise of stock warrants 11 1,130 4 1,126
Issuance of 149,214 common shares in connection
with employee stock purchase plan 11 431 2 429
Purchase and retirement of 386,000 common shares (1,025) (4) (1,021)
Net Income 2,014 2,014
Balances, February 29, 1996
(23,537,320 common shares issued) $55,310 $235 $1 $72,767 $(17,693) $ -
<FN>
<F1>
See notes to consolidated financial statements
</FN>
</TABLE>
F-4
<PAGE>
<TABLE>
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
Years Ended
February February February
Notes 29, 1996 28, 1995 28, 1994
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 2,014 $ 4,735 $ 3,364
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization of fixed assets 2,120 1,378 1,392
Amortization of intangibles and other assets 1,823 1,237 884
Amortization of rent escalation liability 7 60 106 (167)
Allowance for doubtful accounts 450 350 200
Deferred income taxes 8 (1,013) 513 (1,611)
Change in operating assets and liabilities:
Accounts receivable 3,993 (2,452) (9,712)
Prepaid expenses and other current assets (1,447) (212) 912
Accounts payable and accrued expenses 13,046 6,243 6,656
Income taxes payable (1,098) (398) 489
Other assets (10) (595) 556
Net cash provided by
operating activities 19,938 10,905 2,963
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of businesses 3 (7,981) (3,956) (1,025)
Additions to fixed assets, net (1,127) (2,101) (1,018)
Proceeds from disposal of fixed assets 14 3 17
Net cash used in investing activities (9,094) (6,054) (2,026)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Employee Stock Purchase Plan 11 431 397 -
Exercise of stock options 409 95 129
Exercise of warrants 11 1,130 502 13,652
Payment of Redeemable Class B Preferred Stock 10 - - (5,444)
Purchase and retirement of common stock (1,026) (2,836)
Borrowings under revolving line of credit 7 (6,642) (5,094) 1,870
Reduction of notes payable and other
long-term liabilities 7 (1,127) (737) (3,993)
Net cash provided by (used in) financing
activities (6,642) (7,673) 6,214
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,202 (2,822) 7,151
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,508 7,330 179
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,710 $ 4,508 $ 7,330
SUPPLEMENTAL DATA:
Cash paid for:
Interest $ 806 $ 962 $ 1,974
Income taxes, net $ 3,485 $ 2,846 $ 2,485
Fixed assets purchased through
capital lease agreements $ 2,425 $ 1,330 $ 493
Common stock issued for business acquisitions $ - $ 8,482 $ -
<FN>
<F1>
See notes to consolidated financial statements
</FN>
</TABLE>
F-5
<PAGE>
STAFF BUILDERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 29, 1996 ("Fiscal 1996"), FEBRUARY 28, 1995
("Fiscal 1995") AND FEBRUARY 28, 1994 ("Fiscal 1994")
(Dollars in Thousands, Except Where Indicated Otherwise and, for Per
Share Amounts)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Staff Builders, Inc. ("Staff Builders" or the "Company") is
a national provider of home health care personnel and supplemental
staffing to health care institutions.
Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of Staff Builders and its wholly-owned subsidiaries. The
Company maintains its records on a fiscal year ending the last day in
February. All material intercompany accounts and transactions have
been eliminated. Certain prior period amounts have been reclassified
to conform with the fiscal 1996 presentation.
A majority of the Company's service revenues are derived
under a form of franchising where the Company licenses independent
companies or contractors to represent the Company within a designated
territory using the Company's trade names and service marks. These
franchisees recruit direct service personnel and solicit orders and
assign Company personnel including registered nurses, therapists and
home health aides to service the Company's clients. The Company pays
and distributes the payroll for the direct service personnel,
administers all payroll withholdings and payments, bills the customers
and receives and processes the accounts receivable. The franchisees
are responsible for providing an office and paying related expenses
for administration including rent, utilities and costs for
administrative personnel.
The Company owns all necessary health care related permits
and licenses and, where required, certificates of need for operation
of franchise offices. The revenues generated by the franchise
operations along with the related accounts receivable belong to the
Company. The revenues and related direct costs are included in the
Company's consolidated service revenues and operating costs.
The Company pays a distribution or commission to the
franchisees based on a defined formula of gross profit generated.
Generally, the Company pays the home health care franchisee 60% of the
gross profit attributable to the non-Medicare operations of the
franchise. The payment to the Company's franchsises related to
Medicare operations is adjusted for cost limitations and reimbursement
of allowable Medicare costs. The Company generally pays the
supplemental staffing franchisee 60% of the gross profit based on
volume.
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For fiscal 1996, 1995 and 1994, total franchisee
distributions of approximately $75.4 million, $56.9 million and $40.5
million, respectively, were included in the Company's general and
administrative expenses.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, revenues and expenses as well as the disclosure of
contingent assets and liabilities in the financial statements. Actual
results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include certificates of deposit
and commercial paper purchased with a maturity of less than three
months.
Fixed Assets
Fixed assets, primarily consisting of office equipment,
furniture and fixtures, leased equipment and leasehold improvements,
are depreciated on a straight-line basis over the estimated useful
lives of the assets or terms of the related lease, whichever is
shorter. The estimated useful life of office equipment and furniture
and fixtures is seven years and leasehold improvements and other
equipment is five years.
Intangible Assets
The excess of the purchase price and related acquisition
costs over the fair market value of the net assets of the businesses
acquired is amortized on a straight-line basis over periods ranging
from fifteen to forty years. Intangible assets also include customer
lists, trademarks and noncompete agreements, which are amortized over
a four to fifteen-year period on a straight-line basis. The
accumulated amortization as of February 29, 1996 and February 28,
1995, was $7,282 and $6,532, respectively. During fiscal 1996, the
Company wrote off $1,014 of fully amortized intangible assets.
Management evaluates the recoverability of intangible assets based on
projections of future earnings, on an undiscounted basis, attributable
to the assets acquired.
Revenue Recognition
Revenues generated from the sales and licensing of
franchises and initial franchise fees are recognized when the Company
has performed substantially all of its obligations under its franchise
agreements and when collectibility of such amounts is reasonably
assured. In circumstances where a reasonable basis does not exist for
estimating collectibility of the proceeds of the sales of franchises
and initial franchise fees, such proceeds are deferred and recognized
as collections are made, utilizing the cost recovery method (see Note
2).
F-7
Revenues generated from Medicare services are recorded when
services are provided at an estimated reimbursement rate. Certain
factors used to develop these rates are subject to review and
adjustment by the appropriate governmental authorities and may result
in additional amounts due to or due from the Company. Management
reduces revenues by its estimate of the amount of net adjustments
which should ultimately occur. Adjustments, if any, are recorded to
these estimates in the period during which they arise. The Company
reduced its Medicare revenues by $3.0 million in the quarter ended
November 30, 1995, for which the related amount of the third party
payor settlement liability is included in accrued expenses, due to a
revision in the methodology used to allocate corporate overhead.
Income Taxes
Deferred income taxes result from timing differences
between financial and income tax reporting which primarily include the
deductibility of certain expenses in different periods for financial
reporting and income tax purposes.
Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents, franchise
notes receivable, obligations under capital leases and notes payable
and other liabilities related to acquisitions approximate fair value.
2. FRANCHISE OPERATIONS
Franchise notes receivable generally bear interest at the
prevailing prime lending rate plus three percent and are generally
payable over a term of ten years. The balance of these notes
receivable at February 29, 1996 and February 28, 1995 amounted to
$1,533 and $1,816, net of deferred income reflected as a valuation
reserve for financial reporting purposes of $5,456 and $4,971,
respectively. The net balances of these notes at February 29, 1996
and February 28, 1995 include $191 and $188 in Prepaid Expenses and
Other Current Assets and $1,342 and $1,628 in Other Assets,
respectively. During fiscal 1996, 1995 and 1994, $526, $381 and $178,
respectively, of notes receivable previously not recognized into
income were collected and included in revenues.
Sales of franchises and fees, net include $761, $480 and
$498 of initial franchise fees for fiscal 1996, 1995 and 1994,
respectively. The initial franchise fees received in fiscal 1996 and
1995 include $507 and $452 for health care franchises and $254 and $28
for supplemental staffing franchises, respectively. The remaining
amounts represent charges to franchisees for the use of Company assets
including customer and employee lists. The Company has performed
substantially all of its obligations as required under the terms of
its franchise agreements.
General and administrative expenses include reserves and
write-offs of notes receivable from franchisees of $169 and $400 in
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fiscal 1996 and 1994, respectively. There was no expense incurred in
fiscal 1995 related to reserves and write-offs of notes receivable.
Other income primarily consists of interest received on
franchise notes receivable.
During fiscal 1993, one of the franchisees was acquired by
a corporation owned by a family member of one of the Company's
officers. The purchase price for the franchise included the
assumption of a note payable to the Company of $845 of which $771
remains outstanding at February 29, 1996. The note bears interest at
three percent above the prevailing prime lending rate and matures in
2009.
Five of the Company's officers, including two executive
officers, own all or a portion of four franchises. Two of these
officers own a portion of a franchise for which a note payable was
issued to the company of $300 of which $281 remains outstanding at
February 29, 1996. Additionally, two other Company officers own two
franchises for which a liability to the Company of $51 remains
outstanding at February 29, 1996. Further, a Company officer acquired
a portion of a franchise for which a note payable of $105 remains
outstanding at February 29, 1996.
3. ACQUISITIONS
On August 30, 1995, the Company acquired the stock of
MedVisit, Inc., a regional health care provider consisting of seven
locations in the Raleigh-Durham, North Carolina area. The transaction
was accounted for as a purchase for which aggregate consideration of
approximately $5.0 million included cash paid of $1.2 million, the
present value of notes payable of $2.7 million and net obligations
assumed of $1.1 million.
On September 1, 1995, the Company acquired assets of Accredicare,
Inc., a health care provider consisting of four locations, in central
New Jersey, which was accounted for as a purchase for which cash
consideration of approximately $1.2 million was paid. This health
care provider currently operates these locations as a franchise of the
Company. Commencing in September 2000, the franchise has the option
to require the Company to purchase the right to operate in these
locations for an amount equal to the gross margin generated for the
prior twelve month period.
On September 29, 1995, the Company acquired assets of Care Star, Inc.,
a health care provider consisting of nine locations in Virginia,
Indiana and Central Ohio, which was accounted for as a purchase for
aggregate cash consideration of approximately $2.4 million.
On July 22, 1994, the Company acquired the stock of ATC Services
Incorporated ("ATC"), an Atlanta, Georgia based provider of medical
staffing services, for aggregate consideration of approximately $8.7
million which resulted in goodwill and intangibles of approximately
$5.7 million. The consideration consisted of approximately 2.5
F-9
million shares of the Company's common stock and approximately $300
in related acquisition costs. In November 1994, ATC acquired certain
assets and the operations of seven additional medical staffing
locations for aggregate cash consideration of $800, which resulted in
goodwill of approximately $700. These acquisitions were accounted for
as purchase transactions.
On July 2, 1993, the Company acquired the assets of the
Albert Gallatin Visiting Nurse Association, Inc. and the stock of
Albert Gallatin Services Corporation for aggregate consideration of
approximately $1.9 million including cash paid of $493. This
acquisition was accounted for as a purchase and resulted in goodwill
of approximately $1.9 million.
The results of operations of the acquired companies are
included in the accompanying consolidated financial statements
subsequent to their respective dates of acquisition. Revenues, net
income and earnings per share, on an unaudited pro-forma basis for the
year ended February 29, 1996, if the fiscal 1996 acquisitions had
occurred on March 1, 1995, would have approximated $425 million, $2.3
million and $.09, respectively. Revenues, net income and earnings per
share on an unaudited pro-forma basis for the year ended February 28,
1995, if the fiscal 1996 and 1995 acquisitions had occurred on March
1, 1994, would have approximated $368 million, $5.4 million and $.21,
respectively. Revenues, net income and earnings per share on an
unaudited pro-forma basis for the year ended February 28, 1994, if the
fiscal 1995 and 1994 acquisitions had occurred on March 1, 1993,
would have approximated $295 million, $3.7 million and $.17,
respectively.
Additionally, the Company acquired certain assets,
consisting primarily of employee and customer lists, of other home
health care providers in fiscal 1996, 1995 and 1994 for aggregate
consideration of approximately $4,693, $3,147 and $712, respectively.
The fiscal 1996 and fiscal 1994 consideration included $2,933 and $532
in cash and $1,760 and $180 in notes payable (see Note 7),
respectively. The fiscal 1995 consideration was paid in cash. These
acquisitions consisted of eleven, seven, and five separate health care
entities in fiscal 1996, 1995 and 1994, respectively, and were
accounted for as purchase transactions.
In connection with the fiscal 1996 and 1995 acquisitions,
consideration paid was as follows:
1996 1995
Fair value of assets acquired...... $15,440 $5,559
Liabilities assumed................ 7,459 1,603
Total consideration for
assets and stock.................. $ 7,981 $3,956
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4. FIXED ASSETS
Fixed assets consist of the following:
February February
29, 1996 28, 1995
Equipment under capital leases
(see Note 7)..................... $ 5,341 $ 3,147
Office equipment, furniture
and fixtures..................... 5,988 6,293
Leasehold improvements............. 752 578
Land and building.................. 106 106
Total, at cost..................... 12,187 10,124
Less accumulated depreciation
and amortization................. 4,751 4,398
Fixed assets, net.................. $ 7,436 $ 5,726
During fiscal 1996 and fiscal 1995, the Company wrote off fully
depreciated fixed assets of approximately $1.7 million and $2.1
million, respectively.
5. ACCRUED EXPENSES
Accrued expenses include $7,185 and $5,460 at February 29, 1996
and February 28, 1995, respectively, of accrued franchise
distributions. Also included in accrued expenses at February 29, 1996
and February 28, 1995 was $7,036 and $2,853, respectively, reflecting
the Company's third-party payor settlement liability.
6. ACCRUED PAYROLL AND PAYROLL RELATED EXPENSES
Accrued payroll and payroll related expenses consist of the
following:
February February
29, 1996 28, 1995
Accrued payroll..................... $11,781 $ 8,605
Accrued insurance ................. 10,563 5,531
Accrued payroll taxes .............. 2,567 3,048
Other .............................. 2,858 1,690
Total .............................. $27,769 $18,874
F-11
7. LONG-TERM LIABILITIES
Long-term liabilities consist of the following:
February February
29, 1996 28, 1995
Borrowings under a secured revolving
line of credit(a)................. $ - $ 6,461
Obligations under capital leases(b). 3,755 2,290
Rent escalation liability(c)........ 1,086 769
Notes payable and other liabilities
related to acquisitions(d)........ 5,428 301
Other............................... 1,698 632
Total............................... 11,967 10,453
Less current portion................ 2,356 1,267
Long-term liabilities(e)............ $ 9,611 $ 9,186
(a) The Company has a secured credit facility which expires on July
31, 1997. The credit facility consists of a revolving line of credit
and an acquisition line of credit, under which the Company can borrow
up to an aggregate amount of $25 million.
Amounts borrowed under the credit facility are collateralized by
a pledge of all the stock of the Company's subsidiaries, by all
accounts receivable and by liens on substantially all other assets of
the Company and its subsidiaries. The agreement contains certain
financial covenants which, among other things, (i) require the
maintenance of a specified minimum defined level of effective net
worth, net income, and the ratio of senior debt to effective net
worth, (ii) limit the amount of capital expenditures, and (iii)
prohibit the declaration or payment of cash dividends.
The amount available for borrowing under the credit facility was
$24.8 million at February 29, 1996 and $13.8 million at February 28,
1995. The maximum amounts borrowed under the credit facility for
fiscal 1996 and 1995, were $10.0 million and $16.9 million and the
average interest rates were 8.98% and 7.53%, respectively.
The Company is permitted to borrow up to 75% of eligible accounts
receivable, up to the maximum amount of the credit facility less
amounts outstanding under the acquisition line of credit. The
acquisition line of credit provides for borrowings up to $7.5 million
without collateral to finance acquisitions, provided that the sum of
all borrowings do not exceed $25 million. Each amount borrowed under
the acquisition line of credit is subject to the Bank's approval and
must be repaid over twelve to forty-eight months as determined by the
Bank, at one percent over prime. There have been no borrowings under
the acquisition line of credit.
During fiscal 1996, funds were borrowed at the prevailing prime
lending rate, such prime rate being 8.25% at February 29, 1996. A
commitment fee on the unused portion of the credit facility is payable
at the rate of .375% per annum, together with an annual collateral
management fee of $75.
F-12
(b) At February 29, 1996, the Company had capital lease agreements
for computers and other equipment through September 2002. The net
carrying value of the assets under capital leases was approximately
$3.8 million and $2.5 million at February 29, 1996 and February 28,
1995, respectively, and such amounts are included in Fixed Assets.
(c) The lease on the Company's corporate headquarters requires
scheduled rent increases through September 30, 2003. A rent
escalation liability is recorded for the amounts required to record
the expense of this lease on a straight-line basis over the life of
the lease, in excess of payments made.
(d) At February 29, 1996, the Company had a balance of notes payable
and other liabilities related to acquisitions made during fiscal 1996
of $4,511 and $697, respectively. The notes payable bear interest at
7.5% to 8.0% and are payable through September 2010. Additionally,
in connection with acquisitions made in prior fiscal years, an
aggregate remaining balance of $220 at February 29, 1996, bears
interest at 7.0% to 8.0% and matures at dates through October 2003.
(e) Long-term liabilities maturing subsequent to February 29, 1996
are as follows:
Obligations
Under
Capital Other
Years Ending February Leases Debt Total
1997.................... $1,579 $1,051 $ 2,630
1998.................... 1,309 565 1,874
1999.................... 989 451 1,440
2000.................... 403 610 1,013
2001.................... 4 636 640
Thereafter.............. 6 4,899 4,905
4,290 8,212 12,502
Less amount representing
interest ($274 payable
in fiscal 1997)....... 535 - 535
Total................... $3,755 $8,212 $11,967
8. INCOME TAXES
The provision for income taxes consists of the following:
Years Ended
February February February
29, 1996 28, 1995 28, 1994
Current:
Federal.............. $ 1,829 $2,208 $2,221
State................ 643 741 698
Deferred................ (1,013) 513 (753)
Reduction of valuation
allowance.............. - - (858)
Total................... $ 1,459 $3,462 $1,308
F-13
The deferred tax assets (liabilities) at February 29, 1996
and February 28, 1995 are comprised of the following:
February February
29, 1996 28, 1995
Current:
Allowance for doubtful
accounts receivable...... $ 647 $ 453
Nondeductible accruals.... 1,756 850
Current................. 2,403 1,303
Non-Current:
Revenue recognition....... 407 261
Accelerated depreciation.. (370) (84)
Other assets.............. 65 21
Non-current............. 102 156
Total................. $2,505 $1,459
The non-current deferred tax assets are included in Other Assets on
the accompanying balance sheets.
The following is a reconciliation of the effective income tax rate
to the Federal statutory rate:
<TABLE>
Years Ended
February February February
29, 1996 28, 1995 28, 1994
<S> <C> <C> <C>
Federal statutory rate....... 34.0% 34.0% 34.0%
State and local income taxes,
net of Federal income
tax benefit................. 8.7 6.9 7.5
Tax credits.................. (3.9) (0.1) (0.2)
Goodwill amortization........ 8.9 2.9 3.9
Reduction in valuation
allowance on deferred
tax assets ................. - - (18.4)
Reversal of prior year
accrual..................... (7.4) - -
Other........................ 1.7 1.5 (1.2)
Effective rate............... 42.0% 42.2% 28.0%
</TABLE>
9. COMMITMENTS AND CONTINGENCIES
Approximate minimum annual rental commitments for the
remaining terms of the Company's noncancellable operating leases
relating to office space and equipment rentals are as follows:
Years Ending February
1997 ............................ $ 4,007
1998 ............................ 3,289
1999 ............................ 2,672
2000 ............................ 2,103
2001 ............................ 1,715
Thereafter ...................... 3,224
Total ........................... $17,010
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Certain leases require additional payments based upon property
tax and maintenance expense escalations.
Aggregate rental expense for fiscal 1996, 1995 and 1994
approximated $3,409, $2,850 and $2,605, respectively.
The Company has entered into employment agreements with
several key officers and personnel which require minimum aggregate
payments of approximately $2,850, $1,855, $1,267, $1,076 and
$1,180, over the next five fiscal years. Agreements with two
executives provide, in the event of their death, for the continued
payment of their compensation to their beneficiaries for the
duration of their agreements. Additionally, certain officers have
entered into agreements which provide that in the event of change
in control of, and the discontinuance of such employee's
employment, the Company will pay a lump sum amount of 2.99 times
the average annual compensation paid to the employee during the
five-year period immediately preceding the date of the
discontinuance of employment.
The Company is a guarantor of a mortgage in the amount of $561
as of February 29, 1996 through February 2005 arising from the sale
of land and a building in June 1988.
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, and 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. Based on its
preliminary investigation, the Company believes that the amount of
improper claims, if any, submitted by that corporation to Medicare
between 1987 and 1989, were significantly below $1.5 million. The
Company is in negotiations with the office of the United States
Attorney to resolve this matter, but is unable to predict the
ultimate costs, if any, that may be incurred by the Company. As
such no provision has been made in the accompanying financial
statements.
The Company is a defendant in several civil actions which are
routine and incidental to its business. The Company purchases
insurance in such amounts which management believes to be
reasonable and prudent. In management's opinion, after
consultation with legal counsel, settlement of these actions will
not have a material adverse effect on the Company's consolidated
financial position, liquidity or results of operations. Accrued
expenses include $386 at February 29, 1996 which represents the
estimated amount of liability claims payable. Such amount
represents the deductible amount for which the Company is liable,
net of payments by the Company's insurers which are probable of
realization, estimated at approximately $1.4 million.
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10. REDEEMABLE CLASS B PREFERRED STOCK
The Company redeemed all of the Class B Preferred Stock upon
the payment of $5,444 during fiscal 1994. Such amount was net of
a discount of $900. Income applicable to common stockholders for
fiscal 1994 included the discount, less dividends accrued of $310.
11. STOCKHOLDERS' EQUITY
Common Stock - Recapitalization and Voting Rights
During fiscal 1996 the shareholders approved a plan of
recapitalization by which the existing Common Stock, $.01 par
value, was reclassified and converted into either Class A Common
Stock, $.01 par value per share, or Class B Common Stock, $.01 par
value per share. Prior to the recapitalization, shares of common
stock that were held by the beneficial owner for at least 48
consecutive months were considered long-term shares, and, were
entitled to ten votes for each share of stock. Pursuant to the
recapitalization, long-term shares were converted into Class B
Common Stock and short-term shares (beneficially owned for less
than 48 months) were converted into Class A Common Stock. As a
result of the recapitalization, 1,554,936 shares of Class B common
stock were issued.
A holder of Class B Common Stock is entitled to ten votes for
each share and each share is convertible into one share of Class A
Common Stock (and will automatically convert into one share of
Class A Common Stock upon any transfer subject to certain limited
exceptions). Except as otherwise required by the Delaware General
Corporation Law, all shares of common stock vote as a single class
on all matters submitted to a vote by the stockholders.
The recapitalization included all outstanding options and
warrants to purchase shares of common stock which were converted
automatically into options and warrants, to purchase an equal
number of shares of Class A Common Stock.
Stock Options
During fiscal 1994, the Company adopted a stock option plan
(the "1993 Stock Option Plan") under which an aggregate of one
million shares of common stock are reserved for issuance upon
exercise of options thereunder. Options granted under this plan
may be incentive stock options ("ISO's") or non-qualified options
("NQSO's"). This plan replaces the 1986 Non-Qualified Plan ("1986
NQSO Plan") and the 1983 Incentive Stock Option Plan ("1983 ISO
Plan") which terminated in 1993 except as to options then
outstanding. Employees, officers, directors and consultants are
eligible to participate in the plan. Options are granted at not
less than the fair market value of the common stock at the date of
grant.
A total of 671,500 stock options were granted under the 1993
Stock Option Plan, at option prices ranging from $2.63 to $3.87, of
which 597,500 remain outstanding at February 29, 1996.
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A summary of activity under the 1993 Stock Option Plan, the 1986
NQSO Plan and the 1983 ISO Plan is as follows:
Options
for Shares Price per Share
Options outstanding at
February 28, 1993 2,690,125 $1.31 to $6.38
Granted 1,029,540 $2.19 to $3.87
Exercised (60,500) $1.93 to $3.00
Terminated (45,550) $2.19 to $3.00
Options outstanding at
February 28, 1994 3,613,615 $1.31 to $6.38
Granted 110,500 $2.94 to $3.75
Exercised (35,450) $1.31 to $3.00
Terminated (23,800) $2.19 to $3.69
Options outstanding at
February 28, 1995 3,664,865 $1.63 to $6.38
Granted 31,000 $2.63 to $2.94
Exercised (1,120,735) $1.75 to $3.00
Terminated (72,100) $2.19 to $4.00
Options outstanding at
February 29, 1996 2,503,030 $1.63 to $6.38
Included in the outstanding options are 739,622 ISO's and
1,397,523 NQSO's which were exercisable at February 29, 1996. The
remaining options to purchase 365,885 shares become exercisable at
various dates through April 1998.
During fiscal 1995, the Company adopted a stock option plan
(the "1994 Performance-Based Stock Option Plan") which provides for
the issuance of up to 3,400,000 shares of its common stock.
Executive officers of the Company and its wholly owned subsidiaries
are eligible for grants. Performance-based stock options are
granted for periods of up to ten years and the exercise price is
equal to the average of the closing price of the common stock for
the twenty consecutive trading days prior to the date on which the
option is granted. Vesting of performance based options is during
the first four years after the date of grant, and is dependent upon
increases in the market price of the common stock.
A total of 2,230,000 stock options were granted under the 1994
Performance-Based Stock Option Plan at an option price of $3.14.
Options for 1,115,000 are currently exercisable through 2004 and
the remaining 1,115,000 options may become exercisable prior to
October 1998 based upon the market price of the Company's common
stock.
During fiscal 1994, the Company adopted an Employee Stock
Purchase Plan which provides for the issuance of up to one million
shares of its common stock. The purchase price of the shares is
the lesser of 90 percent of the fair market value at the enrollment
date, as defined, or the exercise date. During fiscal 1996 and
1995 a total of 288,380 shares were issued under this plan.
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Stock Warrants
In connection with a public sale of securities completed in
February 1992, the Company sold warrants to purchase its common
stock at $3.00 per share. During fiscal 1994, the Company called
for redemption of the outstanding public warrants, which resulted
in the issuance of 5.06 million shares of common stock and net
proceeds of $13.7 million. In connection with the redemption of
the warrants, the Company issued to a financial advisor, for an
aggregate of $200, warrants to purchase 200,000 shares of the
Company's common stock at $3.20 per share. These warrants were
exercised during fiscal 1996.
In connection with the February 1992 public sale of
securities, the Company sold to the underwriter and its designees,
for an aggregate consideration of $200, warrants to purchase
200,000 units at an exercise price of $9.90 per unit. Each unit
consists of four shares of common stock. During fiscal 1996,
warrants to purchase 49,504 units were exercised and the company
issued 198,016 shares and received proceeds of $490. The remaining
underwriter warrants are exercisable through January 31, 1997.
During Fiscal 1992, the Company granted warrants for the
purchase of 150,000 shares of its common stock at $1.12 per share
and 250,000 shares at $2.08 per share to a financial public
relations firm which expire in October 1996 and February 1997,
respectively.
In connection with the establishment of the Company's
revolving line of credit, the Company issued warrants for the
purchase of 250,000 shares of its common stock at $2.00 per share
to a consulting firm. These warrants were exercised during fiscal
1995.
Convertible Preferred Stock, Class A
Each issued and outstanding share of Convertible Preferred Stock,
Class A, is entitled to a noncumulative dividend of $1.00, and has a
preference on liquidation of $1.00. The holders of the Convertible
Class A Preferred Stock do not have any voting rights except on
matters concerning the substantive rights, privileges and preferences
of the Class A Preferred Stock and on issues related to certain
business combinations.
Common Shares Reserved
The following represents common shares reserved and available for
issuance, at February 29, 1996, for options granted and outstanding
warrants and employee stock purchases:
Available
Reserved for Issuance
1994 Performance-Based Stock
Option Plan..................... 2,230,000 1,170,000
1993, 1986 and 1983 Stock
Option Plans.................... 2,503,030 358,500
1993 Employee Stock Purchase Plan .. - 711,620
Underwriter Unit Warrants .......... 601,984 -
Other Warrants ..................... 400,000 -
Other............................... 50,221 -
Total ............................. 5,785,235 2,240,120
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12. EARNINGS PER COMMON SHARE
Primary and fully diluted earnings per common and common
equivalent share were computed by dividing the earnings applicable to
common stockholders, as adjusted in fiscal 1994 for the dividends and
discount on the Class B Preferred Stock (see Note 10), by the weighted
average number of shares of common stock and common stock equivalents
which consist principally of dilutive stock options and warrants.
The fiscal 1995 and 1994 computations include the additional
shares and the assumed savings of interest expense, net of income
taxes, that would have occurred if all outstanding options and
warrants were exercised.
The following table presents information necessary to calculate
earnings per share for fiscal 1996, 1995 and 1994 (in thousands):
Years Ended
February February February
29, 1996 28, 1995 28, 1994
Primary
Shares outstanding:
Weighted average outstanding 23,598 22,389 16,412
Share equivalents 1,742 1,684 5,763
Adjusted outstanding 25,340 24,073 22,175
Adjusted net income applicable
to common stockholders:
Net income $ 2,014 $ 4,735 $ 3,364
Add net discount (deduct
dividends) on Class B
Preferred Stock (see Note 10) - - 590
Net income applicable to
common stockholders 2,014 4,735 3,954
Add interest savings, net
of tax provision - - 438
Adjusted net income applicable
to common stockholders $ 2,014 $ 4,735 $ 4,392
Fully Diluted
Shares outstanding:
Weighted average outstanding 23,598 22,389 16,412
Share equivalents 1,934 1,987 5,763
Adjusted outstanding 25,532 24,376 22,175
Adjusted net income applicable
to common stockholders:
Net income $ 2,014 $ 4,735 $ 3,364
Add net discount (deduct
dividends) on Class B
Preferred Stock (see Note 10) - - 590
Net income applicable to
common stockholders 2,014 4,735 3,954
Add interest savings, net
of tax provision - 25 373
Adjusted net income applicable
to common stockholders $ 2,014 $ 4,760 $ 4,327
F-19
13. UNAUDITED QUARTERLY FINANCIAL DATA
Summarized unaudited quarterly financial data for fiscal 1996 and
1995 are as follows (in thousands, except per share data):
<TABLE>
Quarters Ended
May August November February
31, 1995 31, 1995 30, 1995 29, 1996
<S> <C> <C> <C> <C>
Revenues ......................... $ 98,426 $100,369 $105,971 $105,394
Gross profit ..................... $ 37,928 $ 38,099 $ 37,272 $ 40,142
Net Income (Loss)................. $ 1,394 $ 1,542 $ (1,860) $ 938
Income (Loss) per common share:
Primary ....................... $ .06 $ .06 $ (.08) $ .04
Fully diluted ................. $ .06 $ .06 $ (.08) $ .04
Weighted average number
of common shares:
Primary........................ 25,222 25,616 23,847 24,358
Fully diluted ................. 25,239 25,681 23,847 24,451
Quarters Ended
May August November February
31, 1994 31, 1994 30, 1994 28, 1995
Revenues ......................... $ 72,577 $ 76,038 $ 85,085 $ 91,411
Gross profit ..................... $ 26,725 $ 30,134 $ 32,325 $ 34,562
Net Income........................ $ 814 $ 1,178 $ 1,263 $ 1,480
Income per common share:
Primary ....................... $ .04 $ .05 $ .05 $ .06
Fully diluted ................. $ .04 $ .05 $ .05 $ .06
Weighted average number
of common shares:
Primary........................ 23,103 23,708 25,042 24,463
Fully diluted ................. 23,123 23,804 26,244 25,936
</TABLE>
The quarterly earnings per share amounts were calculated on
a discrete basis and therefore may not aggregate to the year to
date earnings per share amounts.
The Company reduced its revenues by $3.0 million in the
quarter ended November 30, 1995 due to a change in the method of
allocating overhead to the Company's Medicare operations. The
Company also recorded charges in other (income) expense, net
including $1.6 million during the quarter ended November 30, 1995
for the closure of two unprofitable divisions, $165 for settlement
of litigation and $358 of costs associated with the Company's
recapitalization (see Note 11).
F-20
SCHEDULE II
<TABLE>
<CAPTION>
STAFF BUILDERS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
Years Ended
February February February
29, 1996 28, 1995 28, 1994
<S> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Balance, beginning of period $ 1,750 $ 1,400 $ 1,200
Charged to costs and expenses 2,678 2,431 2,400
Deductions (2,228) (2,081) (2,200)
Balance, end of period $ 2,200 $ 1,750 $ 1,400
ACCUMULATED AMORTIZATION OF
INTANGIBLE ASSETS:
Balance, beginning of period $ 6,532 $ 5,342 $ 4,485
Charged to costs and expenses 1,764 1,190 857
Deductions (1,014) - -
Balance, end of period $ 7,282 $ 6,532 $ 5,342
DEFERRED INCOME (NETTED AGAINST
FRANCHISE NOTES RECEIVABLE):
Balance, beginning of period $ 4,971 $ 5,761 $ 5,693
Charged to notes receivable 1,115 402 390
Deductions ( 630) (1,192) (322)
Balance, end of period $ 5,456 $ 4,971 $ 5,761
</TABLE>
F-21
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no such changes or disagreements.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Items 10, 11, 12 and 13 is
included in the Company's definitive Proxy Statement for the
Annual Meeting of Stockholders, which will be filed pursuant to
Regulation 14A within 120 days after the close of the fiscal year
for which this Report is filed, and which information is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K
(A) Financial Statements and Financial Statement Schedules
The financial statements, including the supporting schedules,
filed as part of the report, are listed in the Table of Contents
to the Consolidated Financial Statements.
(B) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant for the
quarter ended February 29, 1996.
(C) Exhibits
-22-
EXHIBIT INDEX
Exhibit No. Description
3.1 Restated Certificate of Incorporation of the
Company, filed July 11, 1988. (A)
3.2 Certificate of Amendment to the Restated
Certificate of Incorporation of the Company, filed
August 22, 1991. (B)
3.3 Certificate of Amendment to the Restated
Certificate of Incorporation of the Company, filed
September 3, 1992. (A)
3.4 Certificate of Retirement of Stock of the Company,
filed February 28, 1994. (C)
3.5 Certificate of Retirement of Stock of the Company,
filed June 3, 1994. (A)
3.6 Certificate of Designation, Rights and Preferences
of the Class A Preferred Stock of the Company,
filed June 6, 1994. (A)
3.7 Certificate of Amendment of Restated Certificate
of Incorporation of the Company, filed August 23,
1994. (A)
3.8 Certificate of Amendment of Restated Certificate
of Incorporation of the Company, filed October 26,
1995. (D)
3.9 Certificate of Amendment of Restated Certificate
of Incorporation of the Company, filed December
19, 1995.
3.10 Plan Of Recapitalization dated as of May 12, 1995.
3.11 Amended and Restated By-Laws of the Company. (A)
4.1 Specimen Class A Common Stock Certificate. (E)
4.2 Specimen Class B Common Stock Certificate. (F)
4.3 Warrant Certificate issued by the Company to Whale
Securities Co., L.P. issued on September 25, 1995.
- - ---------------------
See Notes to Exhibits
Exhibit No. Description
4.4 Common Stock Purchase Warrant issued by the
Company to Strategic Growth International, Inc. on
October 22, 1991. (K)
4.5 Common Stock Purchase Warrant issued by the
Company to Strategic Growth International, Inc. on
February 13, 1992. (K)
10.1 1983 Incentive Stock Option Plan (incorporated by
reference to Exhibit 18.1 to the Company's
Registration Statement on Form S-18, (File No.
1-83939NY), filed with the Commission on September
15, 1983).
10.2 Amendment to the 1983 Incentive Stock Option Plan
(adopted on May 15, 1986). (A)
10.3 Amendment to the 1983 Incentive Stock Option Plan,
dated January 1, 1987. (A)
10.4 Amendment to the 1983 Incentive Stock Option Plan,
dated as of December 1, 1987. (A)
10.5 Amendment to the 1983 Incentive Stock Option Plan,
dated as of August 3, 1988. (A)
10.6 Amendment to the 1983 Incentive Stock Option Plan,
dated as of August 8, 1990. (A)
10.7 Amendment to the 1983 Incentive Stock Option Plan,
dated as of October 27, 1995. (G)
10.8 1986 Non-Qualified Stock Option Plan of the
Company. (H)
10.9 First Amendment to 1986 Non-Qualified Stock Option
Plan, effective as of May 11, 1990. (A)
10.10 Amendment to the 1986 Non-Qualified Stock Option
Plan, dated as of October 27, 1995. (I)
- - ---------------------
See Notes to Exhibits
10.11 Resolutions of the Company's Board of Directors
amending the 1983 Incentive Stock Option Plan and
the 1986 Non-Qualified Stock Option Plan, dated as
of June 3, 1991. (A)
10.12 1993 Stock Option Plan of the Company. (A)
10.13 Amended and Restated 1993 Employee Stock Purchase
Plan of the Company. (J)
10.14 Executive Deferred Compensation Plan, effective as
of March 1, 1994. (C)
10.15 Form of Split-Dollar Life Insurance Agreement. (C)
10.16 1994 Performance-Based Stock Option Plan of the
Company (incorporated by reference to Exhibit B to
the Company's Proxy Statement, dated July 18,
1994, filed with the Commission on July 27, 1994.)
10.17 Stock Option Agreement, dated June 17, 1991, under
the Company's 1983 Incentive Stock Option Plan
between the Company and Stephen Savitsky. (A)
10.18 Stock Option Agreement, dated May 26, 1992, under
the Company's 1983 Incentive Stock Option Plan
between the Company and Stephen Savitsky. (A)
10.19 Stock Option Agreement, dated April 22, 1993,
under the Company's 1983 Incentive Stock Option
Plan between the Company and Stephen Savitsky. (A)
10.21 Stock Option Agreement, dated as of March 28,
1990, under the Company's 1986 Non-Qualified Stock
Option Plan between the Company and Stephen
Savitsky. (A)
10.22 Stock Option Agreement, dated as of June 17, 1991,
under the Company's 1986 Non-Qualified Stock
Option Plan between the Company and Stephen
Savitsky. (A)
- - ---------------------
See Notes to Exhibits
10.23 Stock Option Agreement, dated February 3, 1994,
under the Company's 1993 Stock Option Plan between
the Company and Stephen Savitsky. (A)
10.24 Stock Option Agreement, dated October 1, 1994,
under the Company's 1994 Performance-Based Stock
Option Plan between the Company and Stephen
Savitsky. (A)
10.27 Stock Option Agreement, dated June 17, 1991, under
the Company's 1983 Incentive Stock Option Plan
between the Company and David Savitsky. (A)
10.28 Stock Option Agreement, dated May 26, 1992, under
the Company's 1983 Incentive Stock Option Plan
between the Company and David Savitsky. (A)
10.29 Stock Option Agreement, dated April 22, 1993,
under the Company's 1983 Incentive Stock Option
Plan between the Company and David Savitsky. (A)
10.31 Stock Option Agreement, dated as of March 28,
1990, under the Company's 1986 Non-Qualified Stock
Option Plan between the Company and David
Savitsky. (A)
10.32 Stock Option Agreement, dated as of June 17, 1991,
under the Company's 1986 Non-Qualified Stock
Option Plan between the Company and David
Savitsky. (A)
10.33 Stock Option Agreement, dated February 3, 1994,
under the Company's 1993 Stock Option Plan between
the Company and David Savitsky. (A)
10.34 Stock Option Agreement, dated October 1, 1994,
under the Company's 1994 Performance-Based Stock
Option Plan between the Company and David
Savitsky. (A)
- - ---------------------
See Notes to Exhibits
10.35 Stock Option Agreement, dated May 26, 1992, under
the Company's 1983 Incentive Stock Option Plan
between the Company and Gary Tighe. (A)
10.36 Stock Option Agreement, dated April 22, 1993,
under the Company's 1983 Incentive Stock Option
Plan between the Company and Gary Tighe. (A)
10.37 Stock Option Agreement, dated as of April 15,
1991, under the Company's 1986 Non-Qualified Stock
Option Plan between the Company and Gary Tighe.(A)
10.38 Stock Option Agreement, dated October 1, 1994,
under the Company's 1994 Performance-Based Stock
Option Plan between the Company and Gary Tighe.(A)
10.39 Stock Option Agreement, dated June 17, 1991, under
the Company's 1983 Incentive Stock Option Plan
between the Company and Edward Teixeira. (A)
10.40 Stock Option Agreement, dated May 26, 1992, under
the Company's 1983 Incentive Stock Option Plan
between the Company and Edward Teixeira. (A)
10.41 Stock Option Agreement, dated as March 28, 1990,
under the Company's 1986 Non-Qualified Stock
Option Plan between the Company and Edward
Teixeira. (A)
10.42 Stock Option Agreement, dated as of October 1,
1994, under the Company's 1994 Performance-Based
Stock Plan between the Company and Edward
Teixiera. (A)
10.43 Stock Option Agreement, dated May 26, 1992, under
the Company's 1983 Incentive Stock Option Plan
between the Company and Sharon Hamilton. (A)
- - ---------------------
See Notes to Exhibits
10.44 Stock Option Agreement, dated April 22, 1993,
under the Company's 1983 Incentive Stock Option
Plan between the Company and Sharon Hamilton. (A)
10.45 Stock Option Agreement, dated as of November 6,
1990, under the Company's 1986 Non-Qualified Stock
Option Plan between the Company and Sharon
Hamilton. (A)
10.46 Stock Option Agreement, dated as of October 1,
1994, under the Company's 1994 Performance-Based
Stock Option Plan between the Company and Sharon
Hamilton. (A)
10.47 Employment Agreement, dated as of June 1, 1987,
between the Company and Stephen Savitsky. (A)
10.48 Amendment, dated as of October 31, 1991, to the
Employment Agreement between the Company and
Stephen Savitsky. (A)
10.49 Amendment, dated as of December 7 1992, to the
Employment Agreement between the Company and
Stephen Savitsky. (A)
10.50 Employment Agreement, dated as of June 1, 1987,
between the Company and Ephraim Koschitzki. (A)
10.51 Amendment, dated as of November 1, 1991, to the
Employment Agreement between the Company and
Ephraim Koschitzki. (B)
10.52 Second Amendment dated October 20, 1995, to the
Employment Agreement between the Company and
Ephraim Koschitzki.
10.53 Employment Agreement, dated as of June 1, 1987,
between the Company and David Savitsky. (A)
- - ---------------------
See Notes to Exhibits
10.54 Amendment, dated as of October 31, 1991, to the
Employment Agreement between the Company and David
Savitsky. (A)
10.55 Amendment, dated as of January 3, 1992, to the
Employment Agreement between the Company and David
Savitsky. (A)
10.56 Amendment, dated as of December 7, 1992, to the
Employment Agreement between the Company and David
Savitsky. (A)
10.57 Employment Agreement, dated as of May 15, 1993,
between the Company and Gary Tighe. (K)
10.58 Employment Agreement, dated as of July 26, 1993,
between Staff Builders, Inc. (NY) and Edward
Teixeira. (K)
10.59 Employment Agreement, dated as of May 1, 1993,
between Staff Builders, Inc. (NY) and Sharon
Hamilton. (K)
10.60 Loan and Security Agreement, dated as of February
10, 1992, between the Company, its subsidiaries
and Mellon Bank, N.A. (A)
10.61 Amendment to Loan and Security Agreement, dated as
of August 31, 1993, between the Company, its
subsidiaries and Mellon Bank, N.A. (K)
10.62 Second Amendment to Loan and Security Agreement,
dated as of March 30, 1994, between the Company,
its subsidiaries and Mellon Bank, N.A. (C)
10.63 Third Amendment to Loan and Security Agreement,
dated as of April 29, 1994, between the Company,
its subsidiaries and Mellon Bank, N.A.
(Incorporated by reference to the Company's
exhibit booklet to its Form 10-Q for the quarterly
period ended May 31, 1994, (File No. 0-11380),
filed with the Commission on July 13, 1994.)
- - ---------------------
See Notes to Exhibits
10.64 Fourth Amendment to Loan and Security Agreement,
dated as of August 1, 1994, between the Company,
its subsidiaries and Mellon Bank, N.A.
(Incorporated by reference to the Company's
exhibit booklet to its Form 10-Q for the quarterly
period ended August 31, 1994, (File No. 0-11380),
filed with the Commission on October 13, 1994.)
10.65 Fifth Amendment to Loan and Security Agreement,
dated as of April 10, 1995, between the Company,
its subsidiaries and Mellon Bank, N.A. (A)
10.66 Sixth Amendment to Loan and Security Agreement,
dated as of August 23, 1995, between the Company,
its subsidiaries and Mellon Bank, N.A.
10.67 Seventh Amendment to Loan and Security Agreement,
dated as of January 3, 1996, between the Company,
its subsidiaries and Mellon Bank, N.A.
10.68 Promissory Note and Mortgage, dated August 23,
1984, of U.S. Ethicare Corporation to Niasher
Realty, Inc. (H)
10.69 Agreement of Lease, dated as of October 1, 1994,
between Triad III Associates and Staff Builders,
Inc. (NY). (A)
10.70 Supplemental Agreement, dated as of January 21,
1994, between General Electric Capital
Corporation, Triad III Associates and Staff
Builders, Inc. (NY) (A)
10.71 Agreement of Lease, dated as of June 19, 1995,
between Triad III Associates and Staff Builders,
Inc. (NY).
10.72 Agreement of Lease, dated as of February 12, 1996,
between Triad III Associates and Staff Builders,
Inc. (NY).
- - ---------------------
See Notes to Exhibits
10.73 Asset Purchase Agreement dated as of June 22,
1993, between Albert Gallatin Home Care, Inc and
Albert Gallatin Visiting Nurse Association, Inc.
(C)
10.74 Stock Purchase Agreement, dated as of June 22,
1993, between Staff Builders, Inc. (NY) and Albert
Gallatin Planning and Development Corporation. (C)
10.75 Agreement of Merger among Staff Builders, Inc.,
ATC Acquisition Corp., ATC Services Incorporated,
and Terrence L. Bauer and the Shareholders of ATC
Services Incorporated, dated July 22, 1994
(Incorporated by reference to the Company's Form
8-K (File No. 0-11380) dated July 22, 1994, filed
with the Commission on August 22, 1994.)
10.76 Stock Purchase Agreement, dated as of August 30,
1995, between Staff Builders Services, Inc.,
MedVisit, Inc. and Roger Jack Pleasant.
10.77 Asset Purchase and Sale Agreement, dated as of
September 1, 1995, between Staff Builders
Services, Inc. and Accredicare, Inc.
10.78 Asset Purchase and Sale Agreement, dated as of
September 29, 1995, between Staff Builders
Services, Inc. and Carestar, Inc.
10.79 Indemnification Agreement, dated as of September
1, 1987, between the Company and Ephraim
Koschitzki. (A)
10.80 Indemnification Agreement, dated as of September
1, 1987, between the Company and Stephen
Savitsky. (A)
- - ---------------------
See Notes To Exhibits
10.81 Indemnification Agreement, dated as of September
1, 1987, between the Company and David
Savitsky. (A)
10.82 Indemnification Agreement, dated as of September
1, 1987, between the Company and Bernard J.
Firestone. (A)
10.83 Indemnification Agreement, dated as of September
1, 1987, between the Company and Jonathan
Halpert. (A)
10.84 Indemnification Agreement, dated as of February
10, 1992, between the Company and Gary Tighe. (A)
10.85 Indemnification Agreement, dated as of February
10, 1992, between the Company and Sharon
Hamilton. (A)
10.86 Indemnification Agreement, dated as of May 2,
1995, between the Company and Edward Teixeira. (A)
10.87 Form of Home Health Care Services Franchise
Agreement. (B)
10.88 Form of Medical Staffing Services Franchise
Agreement
10.89 Common Stock Purchase Warrant issued by the
Company to Strategic Growth International, Inc. on
February 13, 1992. (K)
10.90 Letter Agreement, dated November 17, 1993, between
the Company and Bear, Stearns & Co. Inc. (J)
10.91 Letter Agreement, dated December 20, 1993, between
the Company and Bear, Stearns & Co. Inc. (L)
21 Subsidiaries of the Company.
24 Powers of Attorney.
- - ---------------------
See Notes to Exhibits
NOTES TO EXHIBITS
(A) Incorporated by reference to the Company's exhibit
booklet to its Form 10-K for the fiscal year ended
February 28, 1995 (File No. 0-11380), filed with the
Commission on May 5, 1995.
(B) Incorporated by reference to the Company's Registration
Statement on Form S-1 (File No. 33-43728), dated
January 29, 1992.
(C) Incorporated by reference to the Company's exhibit
booklet to its Form 10-K for the fiscal year ended
February 28, 1994, (File No. 0-11380), filed with the
Commission on May 13, 1994.
(D) Incorporated by reference to the Company's Form 8-K
filed with the Commission on October 31, 1995.
(E) Incorporated by reference to the Company's Form 8-A
filed with the Commission on October 24, 1995.
(F) Incorporated by reference to the Company's Form 8-A
filed with the Commission on October 24, 1995.
(G) Incorporated by reference to the Company's Registration
Statement on Form S-8 (File No. 33-63941), filed with
the Commission on November 2, 1995.
(H) Incorporated by reference to the Company's Registration
Statement of Form S-4, as amended (File No. 33-9261),
dated April 9, 1987.
(I) Incorporated by reference to the Company's Registration
Statement on Form S-8 (File No. 33-63939), filed with
the Commission on November 2, 1995.
(J) Incorporated by reference to the Company's Registration
Statement on Form S-1 (File No. 33-71974), filed with
the Commission on November 19, 1993.
(K) Incorporated by reference to the Company's Post-
Effective Amendment No. 1 to Registration Statement on
Form S-1 (File No. 33-43728), filed with the Commission
on October 15, 1993.
(L) Incorporated by reference to the Amendment No. 1 to the
Company's Registration Statement on Form S-1 (File No.
33-71974), filed with the Commission on December 21,
1993.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
STAFF BUILDERS, INC.
By: /S/ STEPHEN SAVITSKY
Stephen Savitsky
Chairman of the Board,
President, and Chief
Executive Officer
Dated: May 10, 1996
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
/S/ STEPHEN SAVITSKY Chairman of the Board, May 10, 1996
Stephen Savitsky President and Chief
Executive Officer
(Principal Executive
Officer) and Director
/S/ DAVID SAVITSKY Executive Vice President, May 10, 1996
David Savitsky Chief Operating Officer,
Secretary, Treasurer
and Director
/S/ GARY TIGHE Senior Vice President, May 10, 1996
Gary Tighe Finance and Chief
Financial Officer
(Principal Financial
and Accounting Officer)
* Director May 10, 1996
Bernard J. Firestone,
Ph.D.
* Director May 10, 1996
Jonathan Halpert,
Ph.D.
* Director May 10, 1996
Donald Meyers
* By: /S/ STEPHEN SAVITSKY
(Stephen Savitsky,
Attorney-in-Fact)
-23-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-29-1996
<PERIOD-START> MAR-01-1995
<PERIOD-END> FEB-29-1996
<CASH> 8710
<SECURITIES> 0
<RECEIVABLES> 52957
<ALLOWANCES> 2200
<INVENTORY> 0
<CURRENT-ASSETS> 67613
<PP&E> 12187
<DEPRECIATION> 4751
<TOTAL-ASSETS> 120527
<CURRENT-LIABILITIES> 55606
<BONDS> 0
0
1
<COMMON> 220
<OTHER-SE> 55089
<TOTAL-LIABILITY-AND-EQUITY> 120527
<SALES> 0
<TOTAL-REVENUES> 410160
<CGS> 0
<TOTAL-COSTS> 256719
<OTHER-EXPENSES> 2638
<LOSS-PROVISION> 2678
<INTEREST-EXPENSE> 948
<INCOME-PRETAX> 3473
<INCOME-TAX> 1459
<INCOME-CONTINUING> 2014
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2014
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
EXHIBIT
3.9<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
STAFF BUILDERS, INC.
The undersigned, being the President and the Secretary,
respectively, of Staff Builders, Inc., hereby certify that:
1. The name of the Corporation (hereinafter called
"Corporation") is Staff Builders, Inc.
2. The first sentence of Article FOURTH of the Restated
Certificate of Incorporation of the Corporation is hereby amended
to read as follows:
FOURTH: The total number of shares of stock that the
Corporation shall have the authority to issue is 51,564,936,
consisting of 50,000,000 shares of Class A Common Stock, par value
$.01 per share ("Class A Common Stock"), 1,554,936 shares of Class
B Common Stock, par value $.01 per share ("Class B Common Stock",
and collectively with Class A Common Stock, "Common Stock"), and
10,000 shares of Preferred Stock, par value $1.00 per share (the
"Preferred Stock").
3. The amendment of the Certificate of Incorporation herein
certified has been duly adopted in accordance with the provision of
Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned have executed this
document and affirm that the facts contained therein are true under
penalties of perjury.
Dated: December 18, 1995
/s/Stephen Savitsky
Stephen Savitsky, President
Attest:
/s/David Savitsky, Sec.
David Savitsky, Secretary
EXHIBIT
3.10<PAGE>
EXHIBIT A TO THE
PROXY STATEMENT
PLAN OF RECAPITALIZATION
PLAN OF RECAPITALIZATION, dated as of May 12, 1995, adopted
by the Board of Directors of Staff Builders, Inc., a Delaware
corporation (the "Corporation").
ARTICLE 1
THE RECAPITALIZATION AND RELATED MATTERS
1.1 The Recapitalization.
(a) Article FOURTH of the Restated Certificate of
Incorporation of the Corporation authorized the issuance of up to
50,000,000 shares of common stock, $.01 par value per share (the
"Existing Common Stock"), and 10,000 shares of preferred stock,
$1.00 par value per share, and contains a time phased voting
rights plan (the "Voting Rights Plan"). Under the Voting Rights
Plan, each holder of record of Existing Common Stock, except in
certain situations, is entitled to ten votes for each share of
Existing Common Stock that has been beneficially owned by the
current beneficial owner for at least 48 consecutive calendar
months (dating from the first day of the first calendar month on
or after the holder acquired beneficial ownership of such share)
prior to the record date for a meeting of stockholders ("Long
Term Shares"). Each holder of record of Existing Common Stock
that has not been beneficially owned by the current beneficial
owner for at least such a 48 consecutive calendar month period
prior to the record date (with certain limited exceptions) is
entitled to only one vote per share ("Short Term Shares"). A
holder may own both Long-Term Shares and Short-Term shares, in
which case he is entitled to ten votes for each Long-Term Share
and one vote for each Short-Term Share. Except for the number of
votes attached to each, Long-Term Shares and Short-Term Shares
are identical in all respects and constitute a single class of
stock.
(b) Subject to the terms and conditions of this Plan of
Recapitalization (the "Plan"), at the Effective Time (as defined
in Section 1.1(c)), the common stock of the Corporation shall be
reclassified (the "Recapitalization") in accordance with Section
1.2 of this Plan and the provisions of the Delaware General
Corporation Law (the "GCL") and exchanged in accordance with this
Article I for the New Shares (as defined in Section 1.3).
(c) The Recapitalization shall become effective upon
the filing of a certificate of amendment to the Corporation's
Restated Certificate of Incorporation in the form of Annex 1
hereto with the Secretary of State of the State of Delaware (the
"Certificate of Amendment") in accordance with the provisions of
Section 242 of the GCL. The Certificate of Amendment shall be
filed promptly following the approval of this Plan by the
stockholders of the Corporation in accordance with the terms
hereof. The date and time when the Recapitalization shall become
effective is hereinafter referred to as the "Effective Time".
1.2. Reclassification of Stock. At the Effective Time:
(a) The Voting Rights Plan and the Existing Common
Stock will be eliminated and the issuance of 50,000,000
shares of Class A common Stock, $.01 par value per share
(the "Class A Common Stock"), and 1,450,000 shares of Class
B Common Stock, $.01 par value per share (the "Class B
Common Stock"), will be authorized.
(b) Each share of Existing Common Stock which is a
Long-Term Share as of both August 28, 1995 (the "Record
Date") and the Effective Time (assuming for these purposes
only that the Effective Time is a record date for meeting of
the Company's stockholders) will be reclassified, changed
and converted automatically into one share of Class B Common
Stock (the terms of which are set forth in the Certificate
of Amendment) and each other share of Existing Common Stock
will be reclassified, changed and converted automatically
into the share of Class A Common Stock (the terms of which
are set forth in the Certificate of Amendment).
1.3. Exchange.
(a) Promptly after the Effective Time, the American
Stock Transfer and Trust Company (the "Transfer Agent") will mail
to each record holder of a stock certificate representing shares
of Existing Common Stock outstanding immediately prior to the
Effective Time instructions and transmittal materials for
effecting the surrender of stock certificates representing shares
of Existing Common Stock in exchange for replacement certificates
representing the number of shares of Class A Common Stock and
Class B Common Stock into which such shares of Existing Common
Stock have been converted (the "New Shares").
(b) After receipt of the transmittal materials from the
Transfer Agent, stockholders may complete and return such
materials to the Transfer Agent along with the certificate or
certificates representing their shares of Existing Common Stock.
Upon delivery of such materials and certificates to the Transfer
Agent, the stockholder will be entitled to receive a new stock
certificate representing the same number of shares of Class A
Common Stock or Class B Common Stock, as the case may be, as were
represented by the certificate or certificates surrendered to the
Transfer Agent. Until surrendered, each stock certificate will
represent for all purposes the number of shares of Class A Common
Stock or Class B Common Stock, as the case may be, into which
the shares represented by such certificate were converted at the
Effective Time, as determined by the Transfer Agent's records.
(c) If any new certificate representing shares of Class
A Common Stock or Class B Common Stock is to be issued in a name
or number of shares other than that in which or in respect of
which the surrendered certificate is registered, it will be a
condition to such issuance that the person requesting such
issuance deliver to the Transfer Agent all documents necessary to
evidence and effect such transfer (with signature guarantees)
and pay to the Transfer Agent any transfer or other taxes
required by reason thereof or establish to the Transfer Agent's
satisfaction that such taxes have been paid or are not
applicable.
(d) In the event any certificate representing shares of
Existing Common Stock has been lost, stolen or destroyed, the
Transfer Agent will issue a new certificate representing the
number and class of shares into which the shares represented by
such certificate were converted pursuant to the Recapitalization
upon the making of an affidavit of that fact by the person
claiming such certificate to be lost, stolen or destroyed. As a
condition precedent to such issuance, the Corporation may require
bond in such sum as the Corporation may direct to indemnify the
Corporation against any claim that may be made against the
Corporation with respect to the certificate that is alleged to
have been lost, stolen or destroyed.
(e) In determining whether a record holder of Existing
Common Stock on the Effective Time will be entitled to receive
shares of Class A Common Stock or Class B Common Stock, the
Board of Directors of the Corporation will apply the same
principles which have been used in determining whether shares are
Long-Term Shares or Short-Term Shares for purpose of voting on
matters submitted to a vote by the stockholders. Shares held of
record by a holder at least 48 consecutive calendar months
(dating from the first day of the first calendar month on or
after the holder acquired beneficial ownership of such shares)
prior to both the Record Date and the Effective Time (assuming
for these purposes only that the Effective Time is a record date
for a meeting of the Company's stockholders) will be exchanged
for an equal number of shares of Class B Common Stock, except
that shares held of record on the Effective Time in "street"
or "nominee" name will be presumed to be held for less than
48 consecutive calendar months (dating from the first day of
the first calendar month on or after the holder acquired
beneficial ownership of such shares) prior to both the Record
Date and the Effective Time and, unless such presumption is
rebutted as described below, exchanged for an equal number of
shares of Class A Common Stock.
(f) The transmittal materials delivered by the Transfer
Agent to each record holder of Common Stock on the Effective Time
will indicate the number of shares of Class A Common Stock and
Class B Common Stock the holder is entitled to receive in the
Recapitalization and will include the provisions established by
the Board of Directors of the Corporation by which a stockholder
may establish that he or she has been the beneficial owner of the
shares to be exchanged in the Recapitalization for at least 48
consecutive calendar months (dating from the first day of the
calendar month on or after the holder acquired beneficial
ownership of such shares) prior to both the Record Date and the
Effective Time (assuming for these purposes only that the
Effective Time is a record date for a meeting of the Company's
stockholders). If a stockholder wishes to assert that the
transmittal materials overstate the number of shares of Class A
Common Stock, and understate the number of shares of Class B
Common Stock, entitled to be received by such stockholder in the
Recapitalizationm then on or before December 1, 1995, such
stockholder must deliver to the general counsel of the Corporaton
the information required pursuant to the procedures to establish
beneficial ownership of his or her shares for a least 48
consecutive calendar months (dating from the first day of the
first calendar month on or wafter the holder acquired beneficial
ownership of such shares) prior to both the Record Date and the
Effective Time (assuming for these purposes only that the
Effective Time is a record date for a meeting of the company's
stockholders. If such information is not furnished to the
Corporation's general counsel by December 1, 1995, then the
allocation of the number of shares of Class A Common Stock and
Class B Common Stock to be issued to such stokholder as set
forth in the transmittal materials will be final and binding on
the stockholder. If such information is furnished to the
Corporation's general counsel prior to December 1, 1995, then the
Board of Directors of the Corporation shall determine the proper
allocation of the number of shares of Class A Common Stock and
Class B Common Stock to be issued to such stockholder, which
determination shall be final and binding.
1.4 Certificate of Incorporation.
(a) The Corporation's Restated Certificate of
Incorporation, as in effect immediately prior to the Effective
Time, shall be amended at the Effective Time in the manner set
forth in Annex 1 hereto and, as so amended, shall be the
certificate of incorporation of the Corporation until thereafter
amended as provided therein and in accordance with the GCL.
(b) The Certificate of Amendment will authorize for
issuance 1,450,000 shares of Class B Common Stock, which
represents an estimate by the Board of Directors of the number of
shares of Class B Common Stock to be issued in the
Recapitalization. If a number of shares of Class B Common Stock
other than 1,450,000 is required to be issued in the
Recapitalization, then the Board of Directors shall be authorized
to file a further amendment to the Corporation's Restated
Certificate of Incorporation, in the form of Annex 2 hereto, to
reflect the precise number of shares of Class B Common Stock to
be issued in the Recapitalization.
1.5. Effective Time. This Plan shall become effective on
the later of (i) the day on which the last of the conditions set
forth in Article III hereof is fulfilled or (subject to
applicable law) waived, or (ii) such other date as the Board of
Directors of the Corporation shall fix.
ARTICLE II
ADDITIONAL ACTIONS OF THE CORPORATION UNDER
THIS PLAN OF RECAPITALIZATION
2.1. Stock Options.
(a) The Corporation shall take such actions as are necessary
to permit each holder of an Option (as hereinafter defined),
whether or not exercisable, to have such Option adjusted as
provided in Section 2.1(b). The term "Option" means a right
issued under any of the Corporation's stock option plans to
purchase shares of Existing Common Stock.
(b) Each Option will be adjusted so that upon exercise the
holder will be entitled to acquire the number of shares of Class
A Common Stock equal to the number of shares of Existing Common
Stock such holder would have been entitled to acquire under the
applicable stock option plan.
2.2. Stock Warrants.
(a) The Corporation shall take such actions as are necessary
to permit each holder of a Warrant (as hereinafter defined), to
have such Warrant adjusted as provided in Section 2.2(b). The
term "Warrant" means a right granted under any of the
Corporation's warrant agreements to purchase shares of Existing
Common Stock.
(b) Each Warrant will be adjusted so that upon exercise the
holder will be entitled to acquire the number of shares of Class
A Common Stock equal to the number of shares of Existing Common
Stock such holder would have been entitled to acquire under the
applicable warrant agreement.
2.3. Other Actions. The Corporation shall use its
reasonable best efforts to take such other actions as it, in its
sole discretion, deems necessary or advisable (including the
amendment of any of the Corporation's existing employee benefit
plans) in connection with the consummation of this Plan and the
transactions contemplated hereby.
ARTICLE III
CONDITIONS PRECEDENT
3.1. Conditions Precedent to Consummation of the
Recapitalization. The consummation of the Recapitalization is
subject to the satisfaction or (subject to applicable law) waiver
of each of the following conditions:
(a) Approval of Stockholders. The approval of this Plan and
all actions contemplated by this Plan that require the
approval of the Corporation's stockholders shall have been
obtained in accordance with the GCL, and the Corporation's
Restated Certificate of Incorporation. Further, such
approval shall have been obtained from holders of a majority
of the Long-Term Shares, voting as a class, and from holders
of a majority of the Short-Term Shares, voting as a class.
(b) Receipt of Licenses, Permits and Consents. The
Corporation shall have received evidence, in form and
substance reasonably satisfactory to it, that such licenses,
permits, consents. approvals, authorizations, qualifications
and orders of governmental authorities and parties to
contracts with the Corporation and its subsidiaries as are
necessary for consummation of the Recapitalization have been
obtained and are in full force and effect (other than those
which, if not obtained, would not have a material adverse
effect on (i) the Recapitalization, (ii) the financial
condition, results of operations or businesses of the
Corporation and its subsidiaries taken as a whole, or (iii)
the continuation of the operations and businesses of the
Corporation and its subsidiaries after the consummation of
the Recapitalization).
(c) Litigation. No action, proceeding or investigation
shall have been instituted or threatened prior to the
Effective Time before any court or administrative body to
restrain, enjoin or otherwise prevent the consummation of
this Plan or the transactions contemplated hereby or to
recover any damages or obtain other relief as a result of
this Plan or the transactions contemplated hereby, and no
restraining order or injunction issued by any court of
competent jurisdiction shall be in effect prohibiting the
consummation of his Plan or any of the transactions
contemplated hereby.
(d) Actions and Proceedings. All actions, proceedings,
instruments and documents required to carry out the
transactions contemplated by, or incidental to, this Plan
and all other related legal matters shall have been
reasonably satisfactory to and approved by counsel for the
Corporation, and such counsel shall have been furnished with
certified copies of such corporate actions and proceedings
and such other instruments and documents as such counsel
shall have reasonably requested.
(e) NASDAQ Listing. The Class A Common Stock shall have
been approved for listing, upon official notice of issuance,
on the NASDAQ National Market.
ARTICLE IV
MISCELLANEOUS
4.1. Termination and Abandonment. This Plan may be
terminated and the transactions contemplated hereby may be
abandoned by the Board of Directors of the Corporation at any
time prior to the filing of the Certificate of Amendment in
accordance with Section 1.1(c), notwithstanding approval thereof
by the stockholders of the Corporation.
4.2. Amendment and Modification. Subject to applicable law,
the provisions of this Plan (including the exhibits attached
hereto) may be amended or waived in any respect by the Board of
Directors of the Corporation at any time prior to the filing of
the Certificate of Amendment in accordance with Section 1.1(c);
provided that after the approval of this Plan by the stockholders
of the Corporation, no such amendment or waiver shall, without
the further approval of such stockholders, (x) modify the
amendments to the Corporation's Restated Certificate of
Incorporation attached as Annex 1 hereto (except as contemplated
by the terms of Annex 2 with respect to the number of authorized
shares), or (y) change the kind of New Shares to be delivered in
respect of each share of Existing Common Stock pursuant to
Sections 1.2(a) and 1.2(b). The good faith determination by the
Board of Directors that an amendment to this Plan complies with
this Section 4.2 shall be conclusive on all holders of shares of
Existing Common Stock or shares of any series of preferred stock.
By Order of the Board of Directors
/S/ David Savitsky
David Savitsky
Secretary
EXHIBIT
4.3<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTEND
APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION
OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER,
STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M, NEW YORK TIME, JANUARY 31, 1997
No. W-16 74,582 Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that Whale Securities Co.,
L.P or registered assigns, is the registered holder of 74,582
Warrants to purchase, at any time from January 31, 1993 until 5:00
P.M. New York City time on January 31, 1997 ("Expiration Date"), up
to an aggregate of 74,582 units ("Units"), each consisting of four
fully-paid and non-assessable shares of common stock, $.01 par
value ("Common Stock"), of Staff Builders, Inc., a Delaware
corporation (the "Company"), and two Common Stock Purchase
Warrants, each Common Stock Purchase Warrant Entitling the holder
thereof to purchase one share of Common Stock (collectively, the
"Unit Warrants"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $9.90 per
Unit upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement
dated as of January 31, 1992 between the Company and Whale
Securities Co., L.P. (("Whale") (the "Warrant Agreement"). Payment
of the Exercise Price may be made in cash, or by certified or
official bank check in New York Clearing House funds payable to the
order of the Company, or any combination of cash or check.
Each Unit Warrant issuable upon the exercise of a Warrant is
initially exercisable from january 31, 1993, through January 31,
1995, for one (1) fully-paid and nonassessable share of Common
Stock at an initial exercise price of $4.95. the Unit Warrants are
issuable pursuant to the terms and provisions of a certain
agreement dated as of January 31, 1992 among the Company, American
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Stock transfer & Trust Company and Whale (the "Unit Warrant
Agreement"). the Unit Warrant Agreement is hereby incorporated by
reference in an made a part of this instrument and is hereby
referred to (except as otherwise provided in the Warrant Agreement)
for a description of the rights, limitations of rights, manner of
exercise, anti-dilution provisions and other provisions with
respect to the Unit Warrants, provided, however, the Unit Warrants
are not redeemable by the Company at any time.
No Warrant may be exercised after 5:00 P.M., New York City
time, on the Expiration Date, at which time all Warrants evidenced
hereby, unless exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant
Agreement, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Company and
the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of
certain events, the Exercise Price and the type and/or number of
the Company's securities issuable thereupon may, subject to certain
conditions, be adjusted. In such event, the Company will, at the
request of the holder, issue a new Warrant Certificate evidencing
the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant
certificates shall not in any way change, alter, or otherwise
impair, the rights of the holder as set forth in the Warrant
Agreement.
Upon due presentation for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new
Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be
issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the
Warrant Agreement, without any charge except for any tax, or other
governmental charge imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the
holder hereof a new Warrant Certificate representing such number of
unexercised Warrants.
The Company may deem and threat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing heron
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made by anyone), for the purpose of any exercise hereof, and of any
distribution to the holder(s) hereof, and for all other purposes,
and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them
in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated: September 25, 1995 Staff Builders, Inc.
[SEAL} By: /s/ Stephen Savitsky
Name: Stephen Savitsky
Title: President
Attest: /s/ David Savitsky
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EXHIBIT
10.52<PAGE>
STAFF BUILDERS, INC.
SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT
WITH EPHRAIM KOSCHITZKI
Amendment to Employment Agreement (the "Agreement")
effective as of August 17, 1995 between Ephraim Koschitzki,
residing at 992 East 22nd Street, Brooklyn, NY 11210 (the
"Employee") and Staff Builders, Inc., a Delaware corporation (the
"Company") having its principal place of business at 1981 Marcus
Avenue, Lake Success, NY 11042.
W I T N E S S E T H :
WHEREAS, Employee and the Company are parties to an
employment agreement dated June 1, 1987 (the "1987 Agreement"),
amended by agreement dated November 1, 1991 (the "1991
Amendment"); and
WHEREAS, Employee and the Company are in dispute whether
Employee has certain rights to options and the parties have
settled the dispute to the satisfaction of Employee; and
WHEREAS, the Company and the Employee are mutually willing,
upon the terms and conditions herein set forth, to amend the 1987
Agreement, as amended by the 1991 Amendment, to reduce Employee's
rights to certain payments provided therein.
NOW THEREFORE, in consideration of the agreements herein
made and intending to be legally bound, the parties hereto agree
as follows:
1. Employee's compensation, as set forth in the 1991
Amendment, shall be reduced by $135,000 in the aggregate.
Employee's compensation shall be at the rate of $316,328 per year
commencing September 1, 1996 payable in equal installments (not
less frequently than monthly) in accordance with the Company's
regular payroll practices. To effect the $135,000 reduction,
Employee shall be paid $26,360 per month for the months of
September through November, 1996 and $23,166 for the month of
December, 1996 and there shall be no further compensation after
December, 1996.
2. All other provisions of the 1987 Agreement, as amended
by the 1991 Amendment, shall remain in effect until December 31,
1996. December 31, 1996 shall be substituted for May 31, 1997 in
paragraph two of the 1991 Amendment and in the fourth sentence
from the end of paragraph 11 in the 1991 Amendment.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the 20th day of October, 1995.
STAFF BUILDERS, INC.
By: /s/ Stephen Savitsky
Name:
Title: CEO
/s/ Ephraim Koschitzki
Ephraim Koschitzki
ephraim2/kl
EXHIBIT
10.66 <PAGE>
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Sixth Amendment to Loan and Security Agreement ("Sixth
Amendment") is made this 23rd day of August, 1995 by and between
Staff Builders, Inc. ("Staff Builders, Inc."), a Delaware
corporation with a place of business at 1983 Marcus Avenue, Lake
Success, NY 11042, the direct and indirect Subsidiaries of Staff
Builders, Inc. listed on the signature pages attached hereto, (All
of the foregoing severally a "Borrower" and jointly "Borrowers"),
and Mellon Bank, N.A. ("Lender").
BACKGROUND
A. On February 10, 1992, Borrowers entered into a certain
Loan and Security Agreement ("Loan Agreement"), and related
agreements and documents with Lender to reflect certain financing
arrangements between the parties.
B. On April 28, 1992, Borrowers and Lender entered into a
certain Letter Agreement to correct certain errors contained in the
original Loan Agreement.
C. On August 10, 1993, Borrowers and Lender entered into
that certain Amendment to Loan and Security Agreement, pursuant to
which the Maximum Revolving Credit Amount was raised to Twenty
Million Dollars ($20,000,000) and certain covenants were amended
(the "First Amendment").
D. On March 30, 1994, Borrowers and Lender entered into
that certain Second Amendment to Loan and Security Agreement,
pursuant to which the interest rate paid on the first Seven Million
Dollars in Advances was amended (the "Second Amendment").
-1-
E. On April 29, 1994, Borrowers and Lender entered into that
certain Third Amendment to Loan and Security Agreement, pursuant to
which the term was amended and certain covenants were amended (the
"Third Amendment").
F. On August 1, 1994, Borrowers and Lender entered into that
certain Fourth Amendment to Loan and Security Agreement, pursuant
to which the term was amended, to LIBOR rate added and certain
covenants were amended (the "Fourth Amendment").
G. On April 10, 1995, Borrowers and Lender entered into that
certain Fifth Amendment to Loan and Security Agreement, pursuant to
which certain financial covenants were amended (the "Fifth
Amendment").
H. For the purposes hereof, the Loan Agreement, the First
Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment, the Fifth Amendment and all agreements and documents
executed pursuant thereto are sometimes hereinafter collectively
called the "Existing Financing Agreements."
I. The Revolving Credit is outstanding and in effect on the
date hereof.
J. All terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Existing Financing
Agreements.
K. The parties have agreed, subject to the terms and
conditions of the Existing Financing Agreements as modified by this
Sixth Amendment, and to amend certain other covenants.
-2-
NOW, THEREFORE, with the foregoing Background hereinafter
deemed incorporated by reference herein and made part hereof, the
parties hereto, intending to be legally bound hereby, promise and
agree as follows:
AMENDMENT
1. Section 7.25 of the Loan Agreement is hereby deleted in
its entirety and replaced as follows:
7.25 Acquisitions: Neither Borrowers nor any Subsidiaries
shall acquire all or a material portion of the stock, securities or
assets of any Person in any transaction or in any series of related
transactions or enter into any sale or leaseback transaction for an
amount exceeding $1,000,000 per transaction, without prior written
approval or Lender. Borrowers may acquire all or a material
portion of the stock, securities or assets of any Person in any
transaction or in any series of related transactions or enter into
any sale or leaseback transaction for an amount not exceeding
$1,000,000 per transaction without prior written approval of
Lender, provided that no default under the Existing Financing
Agreements has occurred and Borrowers have a minimum availability
of $10,000,000 for a period of sixty (60) days before and after the
acquisition.
2. Approval: Lender hereby approves of Borrowers'
acquisition of five (5%) percent of common stock of Caretenders
Health corporation from Aetna Insurance for a purchase price of
approximately $900,000.
3. Representations, Warranties, Covenants and Consents:
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(a) All warranties and representations set forth in the
Existing Financing Agreements are hereby reasserted and made by
Borrowers as of the date hereof and are being relied upon by
Lender.
(b) All covenants, whether affirmative and negative,
contained in the Existing Financing Agreements are also reasserted,
incorporated herein by reference and made part hereof.
4. Collateral:
Borrowers hereby confirm that all Collateral, liens, and
security interests at any time granted by Borrowers to Lender,
shall continue unimpaired and in full force and effect and shall
continue to cover and secure the indebtedness of Borrowers to
Lender to the full extent set forth in the Loan Agreement as
amended, including, without limitation, all Borrowers' liabilities
under the Revolving Credit.
5. Incorporation of Existing Financing Documents:
The parties acknowledge and agree that this Sixth
Amendment is incorporated into and made part of the Existing
Financing Agreements, the terms and provisions of which, unless
expressly modified herein, or unless no longer applicable by their
terms, continue unchanged and in full force and effect. To the
extent that any terms or provisions of this Sixth Amendment is or
may be deemed expressly inconsistent with any term or provision in
the Existing Financing Agreements, the terms and provisions hereof
shall control.
6. Conditions to Effectiveness Hereof:
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Borrowers shall deliver, or caused to be delivered, the
following executed documents to Lender as a condition to Lender's
agreement to effect the terms hereof ("Sixth Amendment Closing"):
(a) This Sixth Amendment;
(b) Certified copies of resolutions of Borrowers' board
of directors authorizing execution of this Sixth Amendment and each
document required under any provision hereof; and
(c) Such other executed documents as Lender may require.
7. Miscellaneous:
(a) Headings: The headings of any paragraph of this
Sixth Amendment are for convenience only and shall not be used to
interpret any provision hereof.
(b) Other Instruments: Borrowers agree to execute any
other documents, instruments and writings, in form satisfactory to
Lender, as Lender may reasonably request, to carry out the
intentions of parties hereunder.
(c) Modifications: No modification hereof or any
agreement referred to herein shall be binding or enforceable unless
in writing and signed on behalf of the part against whom
enforcement is sought.
(d) Governing Law: The terms and conditions of this
Sixth Amendment shall be governed by the laws of the Commonwealth
of Pennsylvania.
-5-
IN WITNESS WHEREOF, the undersigned have executed this Sixth
Amendment to Loan and Security Agreement the day and year first
written above.
MELLON BANK, N.A. STAFF BUILDERS, INC. (DE)
By: /s/Jeffrey Saperstein By: /s/Gary Tighe
Attest: /s/David Savitsky
THE BERGALL CORPORATION (MA)
By: /s/Gary Tighe
Attest: /s/David Savitsky
CARECO, INC. (MA) T.L.C. MEDICARE SERVICES, INC.
(DE)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
T.L.C. MIDWEST INC. (DE) TENDER LOVING CARE HEALTH
CARE SERVICES, INC. (CT)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
LOVING HOME CARE, INC. (NY) HOME HEALTH CARE, INC. (MD)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
PERSONNEL INDUSTRIES, INC. (MD) T.L.C. HOME HEALTH CARE, INC.
(FL)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitksy
T.L.C. MEDICARE SERVICES OF T.L.C. MEDICARE SERVICES OF
DADE, INC. (FL) BROWARD, INC. (FL)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRECEDING PAGE]
TENDER LOVING CARE PRIVATE TENDER LOVING CARE HOME CARE
PATIENT COMPANY, INC. (FL) SERVICES, INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
U.S. ETHICARE ALBANY U.S. ETHICARE CHAUTAUQUA
CORPORATION (NY) CORPORATION (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
U.S. ETHICARE ERIE U.S. ETHICARE NIAGARA
CORPORATION (NY) CORPORATION (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
U.S. ETHICARE ONONDAGA ETHICARE CERTIFIED SERVICES,
CORPORATION (NY) INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
ETHICARE MEDIAL ALERT SYSTEMS, NATIONAL HOSPITAL HOME CARE
INC. (NY) AFFILIATES, INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
STAFF BUILDERS BUFFALO, INC. (NY) STAFF BUILDERS, INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
S.B.H.F. INC. (NY) STAFF BUILDERS SERVICES,
INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATUES CONTINUED FROM PRECEDING PAGE]
STAFF BUILDERS HOME HEALTH U.S. ETHICARE CORPORATION
CARE, INC. (DE) (DE)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
STAFF BUILDERS INTERNATIONAL, STAFF BUILDERS PERSONNEL
INC. (NY) SERVICES, INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
PROFESSIONAL DETAIL SERVICE, A RELIABLE HOMEMAKER OF
INC. (NY) MARTIN-ST. LUCIE COUNTY,
INC. (FL)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
ST. LUCIE HOME HEALTH ALBERT GALLATIN SERVICES CORP.
AGENCY, INC. (FL) (PA)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
ALBERT GALLATIN HOME CARE, INC. ATC SERVICES INCORPORATED (GA)
(DEL)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
ATC ALLIED MEDICAL SERVICES ATC NURSING SERVICES
INCORPORATED (GA) INCORPORATED (GA)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
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EXHIBIT
10.67<PAGE>
SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Seventh Amendment to Loan and Security Agreement
("Seventh Amendment") is made this 3rd day of January, 1996 by and
between Staff Builders, Inc. ("Staff Builders, Inc."), a Delaware
corporation with a place of business at 1983 Marcus Avenue, Lake
Success, NY 11042, the direct and indirect Subsidiaries of Staff
Builders, Inc. listed on the signature pages attached hereto, (All
of the foregoing severally a "Borrower" and jointly "Borrowers"),
and Mellon Bank, N.A. ("Lender").
BACKGROUND
A. On February 10, 1992, Borrowers entered into a certain
Loan and Security Agreement ("Loan Agreement"), and related
agreements and documents with Lender to reflect certain financing
arrangements between the parties.
B. On April 28, 1992, Borrowers and Lender entered into a
certain Letter Agreement to correct certain errors contained in the
original Loan Agreement.
C. On August 10, 1993, Borrowers and Lender entered into
that certain Amendment to Loan and Security Agreement, pursuant to
which the Maximum Revolving Credit Amount was raised to Twenty
Million Dollars ($20,000,000) and certain covenants were amended
(the "First Amendment").
D. On March 30, 1994, Borrowers and Lender entered into
that certain Second Amendment to Loan and Security Agreement,
pursuant to which the interest rate paid on the first Seven Million
Dollars in Advances was amended (the "Second Amendment").
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E. On April 29, 1994, Borrowers and Lender entered into that
certain Third Amendment to Loan and Security Agreement, pursuant to
which the term was amended and certain covenants were amended (the
"Third Amendment").
F. On August 1, 1994, Borrowers and Lender entered into that
certain Fourth Amendment to Loan and Security Agreement, pursuant
to which the term was amended, to LIBOR rate added and certain
covenants were amended (the "Fourth Amendment").
G. On April 10, 1995, Borrowers and Lender entered into that
certain Fifth Amendment to Loan and Security Agreement, pursuant to
which certain financial covenants were amended (the "Fifth
Amendment").
H. On August 15, 1995, Borrowers and Lender entered into
that certain Sixth amendment to Loan and Security Agreement,
pursuant to which certain financial covenants were amended (the
"Sixth Amendment").
I. For the purposes hereof, the Loan Agreement, the First
Amendment, the Second Amendment, the Third Amendment, the Fourth
Amendment, the Fifth Amendment, the Sixth Amendment and all
agreements and documents executed pursuant thereto are sometimes
hereinafter collectively called the "Existing Financing
Agreements."
J. The Revolving Credit is outstanding and in effect on the
date hereof.
K. All terms not otherwise defined herein shall have the
respective meanings ascribed thereto in the Existing Financing
Agreements.
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L. The parties have agreed, subject to the terms and
conditions of the Existing Financing Agreements as modified by this
Sixth Amendment, and to amend certain other covenants.
NOW, THEREFORE, with the foregoing Background hereinafter
deemed incorporated by reference herein and made part hereof, the
parties hereto, intending to be legally bound hereby, promise and
agree as follows:
AMENDMENT
1. Section 6.12 (b) of the Loan Agreement is hereby deleted
in its entirety and replaced as follows:
(b) Effective Net Worth: Borrowers shall have and maintain
Effective Net Worth of not less than $10,000,000 at February 28,
1995 and at all times through February 27, 1997; $12,000,000 at
February 28, 1997 and at all times thereafter.
2. Section 6.12 (c) of the Loan Agreement is hereby deleted
in its entirety and replaced as follows:
(c) Ratio to Senior Debt to Effective Net Worth: Borrowers
shall have and maintain a ration of Senior Debt to Effective Net
Worth of not more than: 6.50 to 1.00 at February 28, 1995 and at
all times thereafter.
3. Approval: Lender hereby consents to Borrowers' repurchase
of up to three million ($3,000,000) dollars of its common stock
during the period from the date hereof until February 28, 1996.
4. Representations, Warranties, Covenants and Consents:
(a) All warranties and representations set forth in the
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Existing Financing Agreements are hereby reasserted and made by
Borrowers as of the date hereof and are being relied upon by
Lender.
(b) All covenants, whether affirmative and negative,
contained in the Existing Financing Agreements are also reasserted,
incorporated herein by reference and made part hereof.
5. Collateral:
Borrowers hereby confirm that all Collateral, liens, and
security interests at any time granted by Borrowers to Lender,
shall continue unimpaired and in full force and effect and shall
continue to cover and secure the indebtedness of Borrowers to
Lender to the full extent set forth in the Loan Agreement as
amended, including, without limitation, all of Borrowers'
liabilities under the Revolving Credit.
6. Incorporation of Existing Financing Documents:
The parties acknowledge and agree that this Seventh
Amendment is incorporated into and made part of the Existing
Financing Agreements, the terms and provisions of which, unless
expressly modified herein, or unless no longer applicable by their
terms, continue unchanged and in full force and effect. To the
extent that any term or provision of the Seventh Amendment is or
may be deem expressly inconsistent with any term or provision in
the Existing Financing Agreements, the terms and provisions hereof
shall control.
7. Conditions to Effectiveness Hereof:
Borrowers shall deliver, or caused to be delivered, the
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following executed documents to Lender as a condition to Lender's
agreement to effect the terms hereof ("Seventh Amendment
Closing"):
(a) This Seventh Amendment;
(b) Certified copies of resolutions of Borrowers' board
of directors authorizing execution of this Seventh Amendment and
each document required under any provision hereof; and
(c) Such other executed documents as Lender may require.
8. Miscellaneous:
(a) Headings: The headings of any paragraph of this
Seventh Amendment are for convenience only and shall not be used to
interpret any provision hereof.
(b) Other Instruments: Borrowers agree to execute any
other documents, instruments and writing, in form satisfactory to
Lender, as Lender may reasonably request, to carry out the
intention of parties hereunder.
(c) Modifications: No modification hereof or 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.
(d) Governing Law: The terms and conditions of this
Seventh Amendment shall be governed by the laws of the Commonwealth
of Pennsylvania.
IN WITNESS WHEREOF, the undersigned have executed this
Seventh Amendment to Loan and Security Agreement the day and year
first written above.
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MELLON BANK, N.A. STAFF BUILDERS, INC. (DE)
By: /s/Jeffrey Saperstein By: /s/Gary Tighe
Attest: /s/David Savitsky
THE BERGALL CORPORATION (MA)
By: /s/Gary Tighe
Attest: /s/David Savitsky
CARECO, INC. (MA) T.L.C. MEDICARE SERVICES, INC.
(DE)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
T.L.C. MIDWEST INC. (DE) TENDER LOVING CARE HEALTH
CARE SERVICES, INC. (CT)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
LOVING HOME CARE, INC. (NY) HOME HEALTH CARE, INC. (MD)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
PERSONNEL INDUSTRIES, INC. (MD) T.L.C. HOME HEALTH CARE, INC.
(FL)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitksy
T.L.C. MEDICARE SERVICES OF T.L.C. MEDICARE SERVICES OF
DADE, INC. (FL) BROWARD, INC. (FL)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
TENDER LOVING CARE PRIVATE TENDER LOVING CARE HOME CARE
PATIENT COMPANY, INC. (FL) SERVICES, INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRECEDING PAGE]
U.S. ETHICARE ALBANY U.S. ETHICARE CHAUTAUQUA
CORPORATION (NY) CORPORATION (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
U.S. ETHICARE ERIE U.S. ETHICARE NIAGARA
CORPORATION (NY) CORPORATION (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
U.S. ETHICARE ONONDAGA ETHICARE CERTIFIED SERVICES,
CORPORATION (NY) INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
ETHICARE MEDIAL ALERT SYSTEMS, NATIONAL HOSPITAL HOME CARE
INC. (NY) AFFILIATES, INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
STAFF BUILDERS BUFFALO, INC. (NY) STAFF BUILDERS, INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
S.B.H.F. INC. (NY) STAFF BUILDERS SERVICES,
INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
STAFF BUILDERS HOME HEALTH U.S. ETHICARE CORPORATION
CARE, INC. (DE) (DE)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRECEDING PAGE]
STAFF BUILDERS INTERNATIONAL, STAFF BUILDERS PERSONNEL
INC. (NY) SERVICES, INC. (NY)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
PROFESSIONAL DETAIL SERVICE, A RELIABLE HOMEMAKER OF
INC. (NY) MARTIN-ST. LUCIE COUNTY,
INC. (FL)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
ST. LUCIE HOME HEALTH ALBERT GALLATIN SERVICES CORP.
AGENCY, INC. (FL) (PA)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
ALBERT GALLATIN HOME CARE, INC. ATC SERVICES INCORPORATED (GA)
(DEL)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
ATC ALLIED MEDICAL SERVICES ATC NURSING SERVICES
INCORPORATED (GA) INCORPORATED (GA)
By: /s/Gary Tighe By: /s/Gary Tighe
Attest: /s/David Savitsky Attest: /s/David Savitsky
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EXHIBIT
10.71<PAGE>
AGREEMENT OF LEASE, made as of this 19th day of June,
1995, between
TRIAD III ASSOCIATES
1981 Marcus Avenue
Lake Success, NY 11042
party of the first part, hereinafter referred to as LANDLORD, and
STAFF BUILDERS, INC.
1983 Marcus Avenue
Lake Success, NY 11042
party of the second part, hereinafter referred to as TENANT.
WITNESSETH: LANDLORD hereby leases to TENANT and TENANT hereby hires
from LANDLORD
1,014 rentable square feet on the Concourse
Level
in the building known as:
TRIAD III
1983 Marcus Avenue
Lake Success, NY 11042
For the term of approximately eight (8) years (or until such term
shall sooner cease and expire as hereinafter provided) to commence
on the 1st day of March, nineteen hundred and ninety-six (the
"Commencement Date"), and to end on the 30th day of September, two
thousand three, both dates inclusive, at a basic annual rental
rate of Twenty Thousand, Two Hundred Eighty Dollars ($20,280.00),
payable monthly at the rate of One Thousand Six Hundred Ninety
Dollars, ($1,690.00) which TENANT agrees to pay in lawful money of
the United States which shall be legal tender in payment of all
debts and dues, public and private, at the time of payment, in
equal monthly installments in advance on the first day of each
month during said term at the office of LANDLORD or such other
place as LANDLORD may designate, without any set off or deduction,
except as otherwise expressly set forth herein.
In the event that, at the commencement of the term of this Lease,
or thereafter, TENANT shall be in default in the payment of rent
to LANDLORD pursuant to the terms of another lease with LANDLORD
or with LANDLORD's predecessor in interest, LANDLORD may at
LANDLORD's option, upon ten (10) days notice to TENANT add the
amount of such arrearage to any monthly installment of rent
payable hereunder and the same shall be payable to LANDLORD as
additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and
assigns, hereby covenant as follows:
RENT: 1. TENANT shall pay the rent as above and as
hereinafter provided.
USE OF PREMISES: 2. TENANT shall use and occupy the Demised
Premises for office space, incidental usage
related thereto and for no other purpose.
DEMISE: 3. The LANDLORD, for and in consideration of
the rents, additional rents (and escalations
thereof), covenants and agreements hereinafter
reserved and contained on the part
of the TENANT to be paid, kept and performed, has demised and
leased, and by these presents does demise and lease unto the
TENANT, and the TENANT does hereby take and hire, upon and
subject to the covenants and conditions hereinafter expressed
which the TENANT agrees to keep and perform, premises consisting
of 675 rentable square feet shown on the Floor Plan annexed hereto
as Exhibit "A", hereinafter called the "Demised Premises" or
"Premises" in the Building, together with the right to use in
common with other tenants of the LANDLORD in this and other
buildings in the Triad Office Park, Lake Success, New York the
parking area for the parking of automobiles of employees of the
TENANT and other tenants of the LANDLORD. In arriving at the
rentable square feet, LANDLORD has taken into consideration in
whole or in part such areas as parking areas, garages, first floor
area used for commercial purposes, public areas in connection with
the same and other common facilities, and although this
computation is of necessity an arbitrary one, the parties hereto
accept and agree that for the purpose of this Lease, and the
consideration thereof, the said rentable square feet set forth
herein will be used. Nothing contained herein shall in any way
limit LANDLORD from at any time altering, increasing or decreasing
the atrium area, or any other public area or corridor in the
Building, provided that (a) the actual floor space of the Demised
Premises are not thereby reduced, (b) TENANT's percentage in
Article 6 (B) of this Lease is not affected and (c) TENANT's
liability under Article 6(C) and Article 6(D) do not increase as a
result thereof.
PARKING: 4. The TENANT shall be allowed two (2)
underground car spaces on the site at no
charge, designated for its exclusive use and LANDLORD shall mark
them accordingly and enforce diligently TENANT's exclusive right
to them. As of the execution of this Lease, the entrance to the
underground garage is open Monday through Friday (excluding
holidays) from 6:00 a.m. to 7:00 p.m. and the exit to the
underground garage is open Monday through Friday (excluding
holidays) from 6:00 a.m. to 9:30 p.m. All car spaces in the
underground garage are intended for the use of TENANT's personnel
only. Those who utilize the garage must obey all LANDLORD's rules
and regulations and park at their own risk. All car spaces in the
underground garage shall be so designated within thirty (30) days
after this Lease is executed.
TERM: 5.A. The term of this Lease shall end
approximately seven (7) years from
Commencement Date of this Lease.
B. The LANDLORD and the TENANT, at the
request of either party, shall execute an agreement in recordable
form together with such supplementary forms as are required for
recordation, setting forth both the dates of the commencement of
the term of this Lease and the date of termination hereof, which
agreement may be recorded by either party.
BASIC RENT - 6.A. Following the Commencement Date, rent shall
ADDITIONAL be paid on the first day of each month, without
RENT notice anddemand and without abatement, deduction
or set-off herein of any amount whatsoever except
as expressly set forth to the contrary
B. TENANT'S PERCENTAGE: TENANT's proportionate
share, wherever such term is used in this Lease, shall be .3219
percent. LANDLORD represents that for the purpose of this
calculation the total rentable square feet in the Building is
315,000 rentable square feet.
C. TAXES: (1) TENANT shall pay to LANDLORD its
proportionate share of all increases in total real estate taxes
levy on the land and the Building of which the Demised Premises
form a part over the total real estate tax levy that was in effect
during the Tax Base Year. The term "total real estate tax levy"
shall mean the total real estate taxes payable for the County
General Tax and the County School Tax. The term "Tax Base Year"
shall mean (a) the County General Tax for January 1, 1995 -
December 31, 1995 and (b) the County School Tax for the second
half of the 1994/95 tax year and the first half of the 1995/96 tax
year. The amount of additional rent to be paid by TENANT to
LANDLORD shall be termed "Tenant's Payable Tax".
(2) LANDLORD shall render a bill
to TENANT for Tenant's Payable Tax, or portions thereof which bill
shall be accompanied by LANDLORD's calculations of how Tenant's
Payable Tax is determined, together with a copy of the receipted
tax bill. TENANT shall pay to the LANDLORD Tenant's Payable Tax
(or the portion thereof then billed) within thirty (30) days after
receipt of LANDLORD's invoice.
(3) In the event that there should
be a change in the method of assessment, the TENANT shall
nevertheless thereafter pay to the LANDLORD, annually, as
additional rent, the last Tenant's Payable Tax then computed under
the present system of assessment, which shall be deemed additional
rent hereunder, and upon the new method of assessment taking
effect, there shall be an adjustment in the Tenant's Tax Base so
that the parties shall be kept in the same position as if the
method of assessment had not been changed. If the parties cannot
agree in the change in the Tenant's Tax Base, then the question
shall be submitted to arbitration before the AMERICAN ARBITRATION
ASSOCIATION in Nassau County under its rules then obtaining and
each of the parties hereto shall pay one-half of the cost of such
arbitration. If, however, there shall be more than one tenant
included in such arbitration, then the cost of the arbitration
shall be divided by the total number of parties to such
arbitration and each party shall pay its share thereof
(4) In the event that LANDLORD or
any major tenant of the building should contest any taxes or
assessments levied against the building, the TENANT agrees to
cooperate in any such proceeding or action. In the event that
there shall be any refunds of taxes by reason of any such action
or proceeding, the TENANT shall be entitled to receive back its
proportionate share of the net refund (after deducting therefrom
the cost of the actions or proceeding including, without
limitation, fees for experts, court costs, attorneys' fees, etc.).
In no event shall TENANT be entitled to any refund in excess of
taxes or additional taxes paid by the TENANT for the year for
which such refund was made. LANDLORD shall file such a proceeding
annually unless advised by counsel that there is no basis for
filing.
D. INFLATION: As a part of the basic
consideration hereof, in addition to the rents and other
additional rents reserved herein, in order to compensate the
LANDLORD for any increase if any (or portion thereof) in
maintenance and operating costs in the building in which the
Demised Premises form a part during the term of this Lease, and in
order to protect the LANDLORD to some extent from the effects of
inflation, the TENANT shall pay as additional rent, and TENANTS
rent shall be increased, in accordance with the following
provisions:
Commencing July 1, 1996 subject to recomputation on each
anniversary date thereafter, TENANT shall pay to LANDLORD, in
equal monthly installments with the basic annual rent, a sum that
for each such year is equal to three percent (30%) of (a) the
basic annual rent for the year commencing July 1, 1996, as
increased by (b) the amount due under this Inflation Clause during
the previous lease year. For the purpose of this calculation, the
basic annual rent during the lease year commencing July 1, 1996
shall be without regard to any rent concession or abatement
provided for herein during that period of time. The amount of the
yearly increase shall be irrespective of any change in LANDLORD's
operating costs.
E. LATE FEE AND INTEREST CHARGES: It is
understood and agreed that the Basic Annual Rent and the
Additional Rent due pursuant to Article 6(D) of this Lease, as
heretofore and hereinafter defined, shall be paid by the TENANT
on or before the fifth (5th) day of each month without notice or
demand by the LANDLORD. In the event that said Rent or any part
thereof shall not be paid by the tenth (1Oth) day of any month, or
any other item of Additional Rent shall not be paid within the
applicable grace period (if none is specified, within thirty (30)
days after notice) the TENANT shall pay to LANDLORD, as a further
item of Additional Rent, a Late Fee which shall be equal to three
(3%) percent of such Rent as shall have been unpaid; additionally
the TENANT shall pay interest on any amounts advanced by LANDLORD
to cure TENANT defaults not cured within applicable grace periods
at the rate of one (1%) percent per month, or at the highest rate
allowed by law, whichever is the lesser, until the same is paid.
The Late Fee shall be charged by LANDLORD to TENANT on the tenth
(10th) day of each and every month on which any item of Rent, as
hereinabove defined, shall not have been paid by TENANT to
LANDLORD.
SERVICES PROVIDED BY,
LANDLORD - WATER,
ELEVATORS, HEAT,
AIR CONDITIONING:
7. (a) LANDLORD will provide ingress and egress into
the building and the Demised Premises 24 hours per day, 7 days per
week. The term "Business "Days" as used in this Lease shall
exclude Saturdays, (except such portion covered in the specific
hours hereinabove), Sundays, and the following days: New Year's
Day, Presidents' Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day. (b) The LANDLORD
covenants to provide and pay on Business Days for heat, air
conditioning, ventilation and elevator service as provided for
herein. Elevator service in at least one passenger elevator shall
be provided (except in the case of emergency) 24 hours per day, 7
days per week. Heat, air conditioning and ventilation when
appropriate and/or required by law, will be provided from 8:00
a.m. to 9:00 p.m., Monday through Friday and on Saturday from 9:00
a.m. to 3:00 p.m. LANDLORD will not provide either heat or air
conditioning in the garage. (c) Except as otherwise set forth
herein to the contrary, LANDLORD shall have no responsibility or
liability for failure to supply the services agreed to herein
provided that LANDLORD has conducted itself in a commercially
reasonable fashion in seeking to restore said services. LANDLORD
reserves the right to stop services of the heating, elevators,
plumbing, air-conditioning, power systems or cleaning or other
services, if any, when necessary or commercially reasonable and to
restore such services by acting in a commercially reasonable
manner that take into account the business needs and requirements
of TENANT. LANDLORD shall not be responsible to TENANT for any
injury caused to TENANT unless caused by the improper acts or
omissions of LANDLORD, its servants, employees or agents. The
cleaning specifications are set forth in Schedule "A" attached
hereto and made a part hereof (d) LANDLORD shall operate and
maintain the Building as a first-class office building at least
comparable to other first-class office buildings in Nassau County.
REPAIRS AND
MAINTENANCE:
8. (a) TENANT may have its workmen commence work in
the Demised Premises prior to the substantial completion of
LANDLORD's work, if any, provided that such workmen do not in any
material manner interfere with or impede LANDLORD's workers. In
the event that TENANTs workers shall materially interfere with or
impede LANDLORD's workers, then, upon notice from LANDLORD, TENANT
will immediately take steps to stop such interference or remove
its workers from the Demised Premises. TENANT's entry into the
Demised Premises for the purpose of making TENANT's installations
shall not be deemed as a waiver of any of the TENANT's rights
under the Lease, nor shall the same be deemed an acceptance of the
work to be done by the LANDLORD hereunder. (b) The TENANT
covenants throughout the term of this Lease, at the TENANT's sole
cost and expense, to take good care of the interior of the Demised
Premises and to keep the same in good order and condition and to
make all repairs therein except as provided in subsection (c)
hereof (c) The LANDLORD covenants throughout the term of this
Lease, at the LANDLORD's sole cost and expense, to make all
structural repairs to the Building in which the Demised Premises
are located and shall also maintain and keep in good repair the
Building's roof, exterior, common areas (interior and exterior),
parking areas, items caused by LANDLORD's negligence and sanitary,
electrical, heating and other systems servicing or located in or
passing through Demised Premises, other than: (i) To any systems,
facilities and equipment installed by the TENANT; (ii) To any of
the improvements to the interior of the Demised Premises installed
by the TENANT; and (iii) Any repairs which are necessitated by any
improper act or omission of the TENANT, its agents, servants,
employees or invitees, which repairs TENANT shall make at its own
cost and expense. (d) Except as expressly provided otherwise in
this Lease, there shall be no allowance to the TENANT or
diminution of rent and no liability on the part of the LANDLORD by
reason of inconvenience, annoyance or injury to TENANT's business
arising from the making of any repairs, alterations, additions or
improvements in or to any portion of the building, or the Demised
Premises, or in the parking area, or in and to the fixtures,
appurtenances and equipment thereof, provided same are needed in
LANDLORD's reasonable judgment and are performed in a commercially
reasonable manner that takes into account the business needs and
requirements of TENANT. (e) LANDLORD and TENANT, to the extent of
its obligations under Articles 8, 9, and 10 hereof, shall be
excused for the period of any delay in the performance of any of
its obligations hereunder when prevented from so doing by cause or
causes beyond the control of the respective parties, which shall
include, without limitations all labor disputes, civil commotion,
war, war-like operations, invasion, rebellion, riots, hostilities,
military or usurped power, sabotage governmental regulations or
controls, fire or other casualty, inability to obtain any such
materials, or services or through acts of God. (f) If an
excavation shall be made upon land adjacent to the Demised
Premises or shall be authorized to be made, TENANT shall afford to
the person causing or authorized to cause such excavation license
to enter upon the Demised Premises for the purpose of doing such
work as said person shall deem necessary to preserve the wall or
the Building of which Demised Premises form a part from injury or
damage, and to support the same by proper foundations without
diminution or abatement of rent provided the work is performed in
a commercially reasonable manner that takes into account the
business needs and requirements of TENANT. (g) LANDLORD or its
agents shall not be liable for any damage to property of TENANT or
of others entrusted to employees of the Building, nor for loss of
or damage to any property of TENANT by theft or otherwise, nor for
any injury or damage to persons or property resulting from any
cause of whatsoever nature, unless caused by or due to acts of
negligence of LANDLORD, its agents, servants or employees; nor
shall LANDLORD or its agents be liable for any such damage caused
by other tenants or persons in, upon or about said Building or
caused by operations in construction of any private, public or
quasi public work unless LANDLORD has negligently failed to take
proper safeguards against same. If at any time any windows of the
Demised Premises are temporarily closed, darkened or bricked up
(or permanently closed, darkened or bricked up, if required by
law) for any reason whatsoever not within LANDLORD's control,
LANDLORD shall not be liable for any damage TENANT may sustain
thereby and TENANT shall not be entitled to any compensation
therefor nor abatement or diminution of rent nor shall the same
release TENANT from its obligations hereunder nor constitute an
eviction provided that LANDLORD has acted in a commercially
reasonable manner to minimize any damage to TENANT. TENANT shall
not move any safe, heavy machinery, heavy equipment, bulky matter,
or fixtures into or out of the Building without LANDLORD's prior
written consent, which LANDLORD agrees shall not be unreasonably
withheld or delayed. If such safe, machinery, equipment, bulky
matter or fixtures requires special handling, all work in
connection herewith shall comply with all laws and regulations
applicable thereto and shall be done during such hours as LANDLORD
may reasonably designate. TENANT shall indemnify and save
harmless LANDLORD against and from all liabilities, obligations,
damages, penalties, claims, costs and expenses for which LANDLORD
shall not be reimbursed by insurance, including reasonable
attorneys' fees paid, suffered or incurred as a result of any
material breach by TENANT, TENANT's agents, contractors,
employees, invitees or licensees, of any substantial covenant or
condition of this Lease, or the carelessness, negligence or
improper conduct of the TENANT, TENANT's agents, contractors, or
employees. TENANT's liability under this Lease extends to the
acts and omissions of any subtenant and any agents, contractor, or
employees of any subtenant. In case any action or proceedings is
brought against LANDLORD by reason of any such claim, TENANT, upon
written notice from LANDLORD, will at TENANTs expense resist or
defend such action or proceedings by counsel and approved by
LANDLORD in writing, such approval not to be unreasonably withheld
or delayed. The equivalent indemnity shall flow from LANDLORD to
TENANT.
ALTERATIONS: 9.(a) TENANT shall not make any alteration or
changes in and to the Demised Premises without the prior written
consent of the LANDLORD, which LANDLORD agrees shall not be
unreasonably withheld or delayed, and the governmental agencies
having jurisdiction over such work if required by applicable law.
However, LANDLORD hereby consents to such alterations provided all
such alterations (i) are done fully in accordance with all
applicable requirements of law, (ii) are done on written prior
notice to LANDLORD, (iii) do not affect or impact upon the
building systems, and (iv) are done in strict accordance with the
complete set of architectural drawings, if appropriate, of space
plan otherwise, that must accompany the written notice to
LANDLORD. (b) The TENANT agrees not to place any signs on the roof
or on or about the inside or outside of the Building in which the
Demised Premises are situate, except for signs inside the Demised
Premises which may not be seen from the outside, without first
obtaining the consent of the LANDLORD in writing which consent
shall not be unreasonably withheld or delayed. (c) All nonmovable
improvements and alterations made or installed by or on behalf of
the TENANT shall become the property of the LANDLORD, without
payment therefore by the LANDLORD, immediately upon expiration of
the term subject to TENANT's rights to remove same as otherwise
set for herein. (d) The TENANT shall, upon the expiration or
earlier termination of this Lease, surrender to the LANDLORD the
Demised Premises, together with all alterations and replacement
thereto, in good order and condition, except for reasonable wear
and tear, and except for office equipment, partitions and
furnishings which may be removed or surrendered by TENANT at its
option or damage by fire or other casualty. If the TENANT shall
make any alterations or changes or additions to the Demised
Premises after the commencement of the term of this Lease that
were not approved by LANDLORD (to the extent such approval is
required hereunder) and the LANDLORD shall desire the same to be
removed upon the expiration of the term hereof, then upon LANDLORD
giving notice to the TENANT of its desire to have the same
removed, the TENANT will remove the same prior to the expiration
of the term hereof at TENANT's sole cost and expense and TENANT
will, at its own cost and expense, restore the Demised Premises to
the condition which they were in without such change or addition,
normal wear and tear and damage by fire excepted, except that
where LANDLORD has consented to an alteration or when LANDLORD's
consent is not required hereunder, LANDLORD may not require its
removal. (e) The replacement of any equipment which will impose an
evenly distributed floor load in excess of fifty pounds per square
foot shall be done only after written permission received from the
LANDLORD. Such permissions may be granted only after adequate
proof is furnished by TENANT's professional engineer that such
floor loading will not endanger the structure, and such proof is
confirmed by LANDLORD's professional engineer. TENANT agrees to
pay the reasonable costs of LANDLORD's professional engineer for
his services in this connection whether or not he shall confirm
the opinion of TENANT's engineer.
COMPLIANCE WITH 10. The TENANT covenants throughout the term
ORDINANCES, ETC.: of this Lease and any renewals hereof at the
TENANT's sole cost and expense, to comply with
all laws and ordinances and the orders and requirements of all
federal, state and municipal governments and appropriate
departments, commissions, boards and officers thereof, which may
be applicable to the TENANT's use and occupancy of the Demised
Premises and shall take the necessary steps to effectuate
compliance to the extent same relates solely to the manner of
TENANT's use and not to the permitted use under this Lease and to
items of work and repairs that are TENANT's obligation under
Article 8 hereof LANDLORD represents that TENANT's permitted use
under this Lease complies with the current zoning classification
for the Building, is a conforming use, and that TENANT shall have
no obligation to remove any hazardous toxic wastes or materials
from the property, or to remove any existing latent defects, not
caused by TENANT.
MECHANIC'S LIENS: 11. The TENANT covenants not to suffer or
to permit any mechanics liens to be filed
against the fee interest of the LANDLORD, nor against TENANT's
leasehold interest in the Demised Premises, by reason of work,
labor, services or materials supplied or claimed to have been
supplied to the TENANT or any contractor, subcontractor or any
other party or person engaged by the TENANT, or anyone holding the
Demised Premises or any part thereof through or under the TENANT.
TENANT agrees that in the event any mechanic's lien shall be filed
against the fee interest of the LANDLORD or against the TENANT's
leasehold interest, the TENANT shall, within sixty (60) days after
receiving notice of the filing thereof, cause the same to be
discharged of record by payment, deposit, bond or order of a court
of competent jurisdiction, or otherwise. If TENANT shall fail to
cause such lien to be discharged or bonded within the period
aforesaid, then, IN addition to any other right or remedy,
LANDLORD may, but shall not be obligated to, discharge the same by
paying the amount claimed to be due by procuring the discharge of
such lien by deposit of by bonding proceedings and, in any such
event, LANDLORD shall be entitled, if LANDLORD so elects, to
compel the prosecution of any action for the foreclosure of such
lien by the lienor and to pay the amount of the judgment in favor
of the lienor with interest, costs and allowances. Any amount so
paid by LANDLORD and all reasonable costs and expenses incurred by
LANDLORD in connection therewith, including but not limited to
premiums on any bonds filed and reasonable attorneys' fees, shall
constitute additional rental payable by TENANT under this Lease
and shall be paid by TENANT to LANDLORD on demand.
ACCESS TO 12. The TENANT agrees to permit the LANDLORD and
PREMISES: the authorized representatives of the LANDLORD to
enter the Demised Premises at all reasonable times
on reasonable times on reasonable notice (except in
the case of emergency) during TENANT's usual
business hours, and at any time other than during regular business
hours, for the purpose of making any necessary repairs to the
Demised Premises. The LANDLORD is hereby given the right during
TENANT's usual business hours, and on prior notice, to enter the
Demised Premises to exhibit the same for the purpose of sale or
mortgage and to exhibit the same to prospective tenants for the
purposes of renting during the last twelve (12) months of the
term. LANDLORD shall act in a commercially reasonable manner to
minimize inconvenience to TENANT.
RIGHT TO 13. The TENANT covenants and agrees that if the
PERFORM TENANT shall at any time fail to make any payment
COVENANTS: or perform any other act on its part to be made or
performed under this Lease the LANDLORD, after the
expiration of any time limitation set forth in this
Lease (except in cases of emergency) may, but shall not be
obligated to, make such payment or perform such other act to the
extent the LANDLORD may deem desirable after notice and the
opportunity to cure, and in connection therewith to pay expenses
and employ counsel. All sums so paid by the LANDLORD, and all
expenses in connection therewith, including but not limited to
reasonable attorneys fees for instituting, prosecuting or
defending any action or proceeding, shall be deemed additional
rent hereunder and be payable to the LANDLORD within thirty (30)
days after notice to TENANT and the LANDLORD shall have the same
rights and remedies for the non-payment thereof as in the case of
default in the payment of the basic annual rent reserved
hereunder.
DAMAGE OR 14.(a) If the Demised Premises or any part thereof
DESTRUCTION: shall be damaged by fire or other casualty, TENANT
shall give immediate notice thereof to LANDLORD and
this Lease shall continue in full force and effect except as
hereinafter set forth. (b) If the Demised Premises are partially
damaged or tendered partially unusable by fire or other casualty,
the damages thereto shall be repaired by and at the expense of
the LANDLORD to the extent that said damages include those
installations belonging to the LANDLORD. (c) If the Demised
Premises are totally damaged or rendered wholly unusable by fire
or other casualty, then the LANDLORD shall have the right to elect
not to restore the same as hereinafter provided. (d) If the
Demised Premises are rendered wholly unusable or (Whether or not
the Demised Premises are damaged in whole or in part) if the
Building shall be so damaged that LANDLORD shall decide to
demolish it or not to restore it, then, in any such events,
LANDLORD may elect to terminate this Lease by written notice to
TENANT, given within sixty (60) days after such fire or casualty,
specifying a date for the expiration of the Lease, which date
shall not be more than sixty (60) days after the giving of such
notice, and upon the date specified in such notice the term of
this Lease shall expire as fully and completely as if such date
were the date set forth above for the termination of this Lease,
and TENANT shall forthwith quit, surrender and vacate the Demised
Premises without prejudice, however, to LANDLORD's right and
remedies against TENANT under the lease provisions in effect prior
to such termination. Any rent owing shall be paid up to the date
of the casualty and any payments of rent made by TENANT which were
on account of any period subsequent to such date shall be returned
to TENANT. Unless LANDLORD shall serve a termination notice as
provided for herein, LANDLORD shall make the repairs and
restorations under the conditions of subsections "b" and "c"
hereof, and shall provide TENANT with access to the Demised
Premises, as soon as commercially reasonable, subject to delays
due to adjustment of insurance claims, labor troubles and causes
beyond LANDLORD's control. (e) Nothing contained hereinabove shall
relieve TENANT from any liability that may exist as a result of
damage from fire or other casualty. Notwithstanding the
foregoing, each party shall look first to any insurance in its
favor before making claim against the other party for recovery for
loss or damage resulting from fire or other casualty, and to the
extent that such insurance is in force and collectible, and to the
extent permitted by law, LANDLORD and TENANT each hereby releases
and waives the right of recovery against the other or any one
claiming through or under each of them by way of subrogation or
otherwise. LANDLORD's and TENANT's insurance policies shall
contain a clause providing that such a release or waiver shall not
invalidate the insurance. Said clause shall be used only if it
can be obtained without incurring additional premium costs for
said insurance. In the event that there are additional premiums
for such waiver of subrogation, the party in whose favor such
waiver is intended shall have the option to either pay the
additional premium or waive the condition that the other's policy
contain the same. TENANT acknowledges that LANDLORD will not carry
insurance on TENANTs furniture and/or furnishings or any fixtures
or equipment, improvements or appurtenances removable by TENANT
and agrees that LANDLORD will not be obligated to repair any
damage thereto or replace the same. (f) TENANT hereby waives the
provisions of Section 227 of the Real Property Law and agrees that
the provisions of this Article shall govern and control in lieu
thereof (g) The TENANT shall not knowingly do or permit to be done
any act or thing upon the Demised Premises which will invalidate
or be in conflict with fire insurance policies covering the
Building of which the Demised Premises form a part. The TENANT
shall at its expense comply with all rules, orders, regulations or
requirements of the New York Board of Fire Underwriters, or any
other similar body, which may be applicable to the TENANT's use
and occupancy of the Demised Premises, provided that the necessity
for such compliance results from the manner of use and occupancy
of the Demised Premises by the TENANT. TENANT shall not do, or
permit anything to be done, in or upon the Demised Premises, or
bring or keep anything therein, or use the Demised Premises in a
manner, which shall increase the rate of fire insurance on the
Building of which the Demised Premises form a part, or on property
located therein, over that in effect when the Building shall have
been completed, unless the TENANT shall reimburse the LANDLORD, as
additional rent hereunder, for that part of all insurance premiums
thereafter paid by the LANDLORD which shall have been charged
because of such failure or use by the TENANT, and shall make such
reimbursement within thirty (30) days Following receipt of notice
of such outlay by the LANDLORD and evidence of the payment thereof
LANDLORD acknowledges that the permitted use should not, in and of
itself, cause an increase in insurance premiums. (h)
Notwithstanding anything to the contrary contained in this Lease,
during any period after a damage or destruction, and until the
Demised Premises have been restored, the TENANT shall be entitled,
provided in each instance that a substantial portion of the
Demised Premises are being restored and TENANT is not in default
beyond applicable notice and time to cure as of the date the
restoration is completed, to (i) a pro-rated abatement of all rent
and additional rent, and (ii) at TENANT's option, an extension of
the term of the Lease for the amount of time required to complete
the restoration.
CONDEMNATION: 15. (a) If the whole of the Demised Premises
shall be taken for any public or quasi-public use
by any lawful power or authority by exercise of
the right of condemnation or of eminent domain, or by agreement
entered into in good faith between LANDLORD and those having the
authority to exercise such right (hereinafter called "Taking"),
the term of this Lease and all rights of TENANT hereunder, except
as hereinafter provided, shall cease and expire as of the date of
vesting of title as a result of the Taking, and the rent and
additional rent payable under this Lease shall abate from the date
on which the Taking occurs, and any such rent or additional rent
for a period after such date shall be promptly refunded to TENANT.
(b) In the event of a Taking of less than the whole of the Demised
Premises, or the whole or part of the parking area, this Lease
shall cease and expire in respect of the portion of the Demised
Premises and/or parking area taken upon vesting of title as a
result of Taking, and, if the Taking results in the portion of the
Demised Premises remaining after the Taking being inadequate in
the judgment of TENANT for the efficient, economical operation of
the TENANT's business conducted at such time in the Demised
Premises, TENANT may elect to terminate this Lease by giving
notice to LANDLORD of such election not more than forty-five (45)
days after the actual Taking by the condemning authority, which
notice shall state the date of termination, which date of
termination shall be not more than thirty (30) days after the date
on which such notice to LANDLORD is given, and upon the date
specified in such notice to LANDLORD, this Lease and the term
hereof shall cease and expire and rent shall abate as of the date
of the Taking. If TENANT does not elect to terminate this Lease
as aforesaid: (i) The new rent payable under this Lease shall be
abated and the new rent shall be computed as the product of the
total rent payable under this Lease multiplied by a fractions the
numerator of which is the net rentable area of the Demised
Premises remaining after the Taking, and the denominator of which
is the net rentable area of the Demised Premises immediately
preceding the Taking; and (ii) The net award for the Taking shall
be paid to and first used by LANDLORD, subject to the rights of
the mortgagee, to restore the portion of the Demised Premises and
the Building remaining after the Taking to substantially the same
condition and tenantability (hereinafter called "Pre-Taking
Condition") as existed immediately preceding the date of the
Taking. (c) In the event of a Taking of less than the whole of the
Demised Premises which occurs during the period of one (1) year
next preceding the date of expiration of the term of this Lease,
LANDLORD, (unless TENANT has exercised or is still permitted to
exercise its option to renew) or TENANT may elect to terminate
this Lease by giving notice to the other party to this Lease of
such election, not more than forty-five (45) days after the actual
Taking by the condemnation authority, which notice shall state the
date of termination, which date of termination shall be not mote
than thirty (30) days after the date on which such notice of
termination is given, and upon the date specified in such notice,
this Lease and the term hereof shall cease and expire and all rent
and additional rent paid under this Lease for a period of such
date of termination shall be promptly refunded to TENANT. On or
before such date of termination, TENANT shall vacate the Demised
Premises, and any of TENANT's property remaining in the Demised
Premises subsequent to such date of termination shall be deemed
abandoned by TENANT and shall become the property of the LANDLORD.
(d) In the event of a Taking of the Demised Premises, or any part
thereof, and whether or not this Lease is terminated, TENANT shall
have no claim against LANDLORD or the condemning authority for the
value of the unexpired term of this Lease but TENANT may claim
against the condemning authority for the value, if any, of its
moving expenses and fixtures installed by TENANT at TENANT's
expense. (e) In the event of a Taking of all or any portion of the
Demised Premises for a limited period (hereinafter called "Limited
Taking"), then unless TENANT shall be thereby unable to utilize
the remaining portion of the Demised Premises for the intended
purpose, this Lease shall not terminate and TENANT shall continue
to pay the rent and additional rent except for an abatement of the
pro rata portion of the rent applicable to the Limited Taking, and
continue to perform and observe all of its obligations under this
Lease as though such Limited Taking has not occurred except to the
extent that TENANT may be prevented from so doing by reason of
such Limited Taking. In the event that the Limited Taking ends on
of before the date of expiration of the term of this Lease, as
such term may be renewed, the entire amount of the award made for
such Limited Taking, whether paid by way of damages, rent or
otherwise, shall be payable to TENANT. In the event that the
Limited Taking ends after the date of expiration of the term of
this Lease as such term may be renewed, the portion of the amount
of the award made for such Limited Taking, whether paid by way of
damages, rent or otherwise, payable for the period of time from
the commencement of the Limited Taking to the date of expiration
of the term of this Lease, as such term may be renewed, shall be
payable to TENANT and the balance of any such award shall be
payable to LANDLORD. At the end of the Limited Taking, LANDLORD
shall restore the Demised Premises as nearly as reasonably
possible to the Pre-Taking Condition, reasonable wear and tear and
damage by fire or other cause excepted, and LANDLORD shall be
entitled to the full amount of any award of payment made in
respect of such Limited Taking to the extent of such restoration.
DEFAULT: 16.(a) If during the term of this Lease the TENANT
shall: (i) Apply for, or consent in writing to, the appointment of
a receiver, trustee or liquidator of the TENANT or of all or
substantially all of its assets; (ii) File a voluntary petition in
bankruptcy, or admit bankruptcy, or admit in writing its inability
to pay its debts as they become due; (iii) Make a general
assignment for the benefit of creditors; (iv) File a petition or
an answer seeking reorganization (other than a reorganization not
involving the liabilities of the TENANT) or arrangement with
creditors, or take advantage of any insolvency law; or (v) File an
answer admitting the allegations of insolvency in a petition filed
against it in any bankruptcy, reorganization or insolvency
proceeding; or if any department of the State or Federal
Government or any officer thereof, duty authorized, shall take
possession of the business or property of the TENANT by reason of
insolvency of the TENANT, or if an order, judgment or decree shall
be entered by any court of competent jurisdiction on the
application of a creditor adjudicating the TENANT a bankrupt, or
insolvent, or approving a petition seeking re-organization of the
TENANT (other than re-organization not involving the liabilities
of the TENANT) or appointment of a receiver, trustee or liquidator
of the TENANT, or of all or substantially all its assets, the
LANDLORD may, at its option, give to the TENANT a notice of
intention to end the term of this Lease at the expiration of ten
(10) days from the date of service of such notice, and at the
expiration of said ten (10) days, the term of this Lease, and all
right, title and interest of the TENANT hereunder, shall expire as
fully and completely as if that day were the date herein
specifically fixed for the expiration of the term, and the TENANT
will then quit and surrender the Demised Premises to the LANDLORD,
but the TENANT shall remain liable as hereinafter provided,
Notwithstanding the foregoing, LANDLORD may not take such action
unless TENANT is in default beyond the applicable grace period in
the payment of rent and additional rent or unless TENANT is
otherwise in default hereunder beyond applicable grace periods.
(b) If, during the term of this Lease, the TENANT shall default in
fulfilling any of the covenants of this Lease other than the
covenants for the payment of basic annual rent, additional rent or
other charges payable by the TENANT hereunder, the LANDLORD may
give to the TENANT notice of any such default and, if at the
expiration of thirty (30) days after the service of such a notice
the default upon which said notice was based shall continue to
exist, or in the case of a default which cannot with due diligence
be cured within a period of thirty (30) days, if the TENANT fails
to proceed promptly after the service of such notice and with all
due diligence to cure the same and thereafter to prosecute the
curing of such default with all due diligence (it being intended
that, in connection with a default not susceptible of being cured
with due diligence within thirty (30) days, the time of the TENANT
within which to cure the same shall be extended for such period as
may be necessary to complete the same with all due diligence), the
LANDLORD may give to the TENANT a notice of intention to end the
term of this Lease at the expiration of ten (10) days from the
date of the service of such second notice, and at the expiration
of said ten (10) days, the term of this Lease and all right, title
and interest of the TENANT hereunder shall expire as fully and
completely as if that day were the date herein specifically fixed
for the expiration of the term and the TENANT will then quit and
surrender the Demised Premises to the LANDLORD, but the TENANT
shall remain liable as hereinafter provided. (c) If the TENANT
shall default in the payment of the basic annual rent, or any part
of the same, and such default shall continue for a period of ten
(10) days after notice, or shall default in the payment of any
item of additional rent or any other charge required to be paid by
the TENANT hereunder, or any part of the same, and such default
shall continue for a period of twenty (20) days after notice
thereof by the LANDLORD, or shall have its rent checks returned
unpaid by its bank on more than two occasions within any six month
period and shall not provide LANDLORD with a reasonable
explanation within ten (10) days after notice thereof, then at the
expiration of such ten (10) day period, if the default has not
been cured by TENANT, the LANDLORD may dispossess or remove the
TENANT, or any other occupant of the Demised Premises, by summary
proceedings or otherwise, or LANDLORD may serve an additional five
(5) day notice upon the TENANT declaring that the Lease will end
at the expiration of said five (5) day period unless the default
shall be cured prior to such date, and in the event such default
is not cured within said five (5) day period, this Lease shall
terminate as if such date were the original date fixed herein for
the termination of this Lease, and LANDLORD may remove TENANT's
effects and hold the Demised Premises as if this Lease had not
been made. (d) If this Lease shall be terminated as provided in
"(a)", "(b)", or "(c)" of this Article, the LANDLORD, or the
LANDLORD's agent and servants, may immediately or at any time
thereafter re-enter the Demised Premises and remove all persons
and all or any property therefrom, either by summary dispossess
proceedings, or by any suitable action or proceeding at law, or by
force or otherwise, without being liable to indictment,
prosecution or damages therefor, and repossess and enjoy the
Demised Premises, as of their former estate, together with all
additions, alterations and improvements and movable trade
fixtures, Furniture and furnishings. (e) Upon the termination of
the term of this Lease by reason of the happening of any of the
events hereinabove described in "(a)", "(b)", or "(c)" of this
Article, or under any provision of law now or at any time
hereinafter in force, by reason of or based upon or arising out of
default under or breach of this Lease on the part of the TENANT,
or upon the LANDLORD recovering possession of the Demised Premises
in the manner or in any of the circumstances hereinabove
mentioned, or in any other manner or circumstances whatsoever,
whether with or without legal proceedings, by reason of or based
upon or arising out of a default under, or breach of this Lease on
the part of the TENANT, the LANDLORD may, at its option, at any
time and from time to time, relet the Demised Premises or any part
or parts thereof, for the account of the TENANT or otherwise, and
receive and collect the rents therefor, applying the same first to
the payment of such expenses as the LANDLORD may have incurred in
recovering possession of the Demised Premises, including legal
expenses and reasonable attorneys' fees, and for putting the same
in good order or condition, expenses, commissions and charges
paid, assumed or incurred by the LANDLORD in and about the
reletting of the Demised Premises, and then to the fulfillment of
the covenants of the TENANT hereunder. LANDLORD shall have a duty
to relet or otherwise mitigate any damages occasioned by such
termination of the Lease except that LANDLORD shall be entitled to
seek to lease its comparable vacant space before it seeks to lease
the Demised Premises. TENANT hereby waives any right it may
otherwise have to assert in any proceeding that the LANDLORD
failed to relet or attempt to relet so as to mitigate TENANT's
damages. Any such reletting herein provided for may be for the
remainder of tile term of this lease, or for a longer or shorter
period. In any such case and whether or not the Demised Premises
or any part thereof be relet, the TENANT shall pay to the LANDLORD
the basic annual rent and all other charges required to be paid by
the TENANT up to the time of such termination of this Lease, or of
such recovery of possession of the Demised Premises by the
LANDLORD, as the case may be, and thereafter, the TENANT covenants
and agrees, if required by tile LANDLORD, to pay to the LANDLORD
until the end of the term of this Lease the equivalent of the
amount of the total rent reserved herein, and all other charges
required to be paid by the TENANT, less the net avails of
reletting, if any, and the same shall be due and payable by the
TENANT to the LANDLORD on the several rent days above specified,
that is to say, upon each of such rent days the TENANT shall pay
to the LANDLORD the amount of the deficiency then existing. (f)
The TENANT waives any and all rights of redemption provided for in
any statute now or hereafter in force in case the TENANT shall be
dispossessed by a judgment or by warrant of any court or judge.
The term "enter", "re-enter", "entry", or "re-entry", as used in
this Lease, are not restricted to their respective technical
meanings. (g) It is mutually agreed to by LANDLORD and TENANT that
they do hereby waive trial by jury in any action or proceeding
brought by either of them against the other on any matter arising
out of or in any way connected with this Lease. It is further
agreed that in the event the LANDLORD shall commence any summary
proceeding for non-payment of rent, additional rent, or any other
charges to be paid by the TENANT hereunder, or to recover
possession of the Demised Premises, that the TENANT will not
interpose any counterclaim or set-off of any nature whatsoever in
such proceedings unless such counterclaim or set-off will be
waived in any action or proceeding because it had not been
asserted in this proceeding and involves a substantial covenant
hereunder. (h) In the event the LANDLORD shall commence any action
or other proceeding against the TENANT, based upon a default by
TENANT hereunder, in which the LANDLORD shall be successful, the
TENANT agrees to reimburse the LANDLORD for reasonable attorneys'
fees in connection with such action or proceeding. In the event
that TENANT shall commence any action or proceeding against the
LANDLORD, based upon a default by LANDLORD hereunder, in which the
TENANT shall be successful, the LANDLORD agrees to reimburse the
TENANT for reasonable attorneys' fees in connection with such
action or proceeding.
REMEDIES: 17. The specific remedies to which the LANDLORD
or the TENANT may resort under the terms of this
Lease are cumulative and are not intended to be
exclusive of any other remedies or means of redress to which they
may be lawfully entitled in case of any breach or threatened
breach by either of them of any provisions of this Lease. The
failure of the LANDLORD to insist in any one or more instances
upon the strict performance of any of the covenants of this Lease,
or to exercise any option herein contained, shall not be construed
as a waiver or relinquishment for the future of such covenant or
option. Receipt by the LANDLORD of rent with knowledge of the
breach of any covenant, condition or obligation of TENANT under
this Lease shall not be deemed a waiver of such breach, and no
waiver, change, modification or discharge by either party hereto
of any provision in this Lease shall be deemed to have been made
or shall be effective unless expressed in writing and signed by
both the LANDLORD and the TENANT. In addition to the other
remedies in this Lease provided, the LANDLORD shall be entitled to
restraint by injunction of any violation, or attempted or
threatened violation, of any of the covenants, conditions or
provisions of this Lease or to a decree compelling performance of
any of such covenants, conditions or provisions.
SUBORDINATION: 18. It is hereby expressly agreed that this Lease,
and all rights of the TENANT hereunder, shall be
subject and subordinate at all times to any mortgage or mortgages
and any existing renewals, replacements, extensions,
consolidations or modifications thereof, which may not be liens on
the Demised Premises, or the land and Building of which the same
form a part, provided that tile holder of any future mortgage(s)
enters into an agreement with TENANT substantially similar to the
Subordination Attornment, and Non-Disturbance Agreement entered
into by TENANT and GECC simultaneously with the execution of the
lease for + 48,000 rentable square feet between the parties (tile
"Main Lease").
QUIET 19. The LANDLORD convents and agrees that the
ENJOYMENT: TENANT, upon paying the basic annual rent and
all other charges herein provided and observing and keeping the
covenants, agreements and conditions of this Lease on its part to
be kept, shall and may peaceably and quietly hold, occupy and
enjoy the Demised Premises during the term of this Lease.
NOTICES: 20. (a) All notices, demands and requests which
may or are required to be given by either party to the other shall
be in writing. They shall be deemed given upon receipt or first
refusal and may be given by counsel on behalf of his/its client.
All notices, demands and requests by the LANDLORD to the TENANT
shall be deemed to have been properly given if sent by United
States registered or certified mail, postage prepaid, or by hand,
or by Federal Express, addressed to the TENANT at the Demised
Premises, Attn: Mr. David Savitsky, Executive Vice-President, with
a copy of legal notices to tile General Counsel and a copy of
operational notices to the Operations Building Manager, or at such
other place as the TENANT may from time to time designate in a
written notice to the LANDLORD. All notices, demands and requests
by the TENANT to the LANDLORD shall be deemed to have been
properly given if sent by United States registered or certified
mail, postage prepaid, or by hand or by Federal Express, addressed
to the LANDLORD at the address first above written, or at such
other place as the LANDLORD may from time to time designate in a
written notice to the
TENANT. (b) It is understood and agreed that wherever in this
Lease a time period is stated for the performance of some act by
either party, or the sending of some notice by either party, that
said time periods are of the essence and either party shall not be
excused for any delay in connection therewith.
DEFINITIONS: 21. (a) The captions of this Lease are for
convenience and reference only and in no way
define, limit or describe the scope or intention of this Lease or
in any way affect this Lease. (b) The term "TENANT" as referred to
hereunder shall refer to this TENANT and any successor or assignee
of this TENANT. (c) The term "LANDLORD" as used hereunder shall
mean only the owner for the time being of the land and building of
which the Demised Premises form a part, so that in the event of
any sale or sales, or in the event of a lease of said land and
Building, this LANDLORD shall be and hereby is entirely free and
relieved of an covenants and obligations of LANDLORD hereunder,
and it shall be deemed and construed without further agreement
between the parties, or their successors in interest, that the
purchaser or bona fide, arms length lessee of the Building has
agreed to carry out all of the terms and covenants and obligations
of the LANDLORD hereunder incurred from and after the date of
sale.
INVALIDITY OF 22. If any term or provision of this Lease, or
PARTICULAR the application thereof to any person or
PROVISIONS: circumstance, shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not
be affected thereby, and each term and provision of this Lease
shall be valid and be enforced to the fullest extent permitted by
law.
COVENANTS TO 23. It is further covenanted and agreed by and
BIND AND between the parties hereto that the covenants and
BENEFIT agreements herein contained shall bind and inure
to RESPECTIVE the benefit of the LANDLORD, its successors and
PARTIES: assigns, subject to the provisions of this Lease.
INSURANCE: 24. (a) TENANT shall at all times during the term
hereof carry Public Liability Insurance naming
LANDLORD as a named insured with single limit of
$3,000,000.00 (by basic or by excess coverage) for injury to any
one person, for any one accident, and for property damage. (b)
Prior to taking possession, TENANT shall deliver to the LANDLORD a
certificate of the insurance company certifying that the aforesaid
liability policy is in full force and effect. A certificate
evidencing the renewal of such liability insurance policy shall be
delivered to the LANDLORD at least twenty (20) days before the
expiration thereof, and each such renewal certificate shall
include the LANDLORD as an insured. TENANT may carry the
aforesaid insurance as part of a blanket policy provided, however,
that a certificate thereof naming the LANDLORD as an insured is
delivered to the LANDLORD as aforesaid. Such policy of insurance
or certificate shall also provide that said insurance may not be
cancelled or terminated unless ten (10) days! notice is given to
the LANDLORD prior to such cancellation and that the insurance as
to the interest of the LANDLORD shall not be invalidated by any
act or neglect of the TENANT. (c) TENANT shall, prior to doing any
work in the Demised Premises, obtain any and all permits necessary
therefor and will provide Workmen's Compensation Insurance and
Liability Insurance in the limits provided for in Article "24 (a)"
hereof (d) TENANT shall include in its fire insurance policies, if
any, covering damage or loss to its furniture, furnishings,
fixtures mid other property removable by TENANT under the
provisions of the Lease, appropriate clauses pursuant to which the
insurance carriers: (i) Waive all rights of subrogation
against LANDLORD with respect to losses payable under such
policies, or (ii) Agree that such policies shall not be
invalidated should the insured waive in writing prior to a loss
any or all right of recovery against any party for losses covered
by such policies. If TENANT, at any time, is unable to obtain
such inclusion of either of the clauses described in the preceding
sentence, TENANT shall, if possible, have LANDLORD named in such
policies as one of the insured, but should any additional premium
be exacted for any of such clauses or namings, then TENANT shall
be released from the obligation hereby imposed unless LANDLORD
shall agree to pay such additional premium within twenty (20) days
after receipt of written notice from TENANT that such additional
premium is required. (e) If at any time during the term of this
Lease TENANT shall bring anything in the Demised Premises or use
the Demised Premises in any manner which will increase the rate of
fire insurance premiums because of the extra hazardous nature of
that brought into the Demised Premises or the use thereof, (normal
office equipment shall not be deemed "extra Hazardous"), then and
in that event TENANT shall pay the entire amount of any increase
in fire and any other insurance premiums for insurance carried by
the LANDLORD on the Building of which the Demised Premises forms a
part. Notwithstanding anything to the contrary contained in this
Lease, if by reason of anything brought upon the Demised Premises
by any other tenant, or the use to which any other tenant may put
its premises the insurance premiums carried by the LANDLORD on
said Building shall be increased, this TENANT shall not be
responsible for any portion of such increase. (f) TENANT does
hereby indemnify and save LANDLORD harmless from and against any
and all claims arising during the term of this Lease for (i)
damages or injuries to goods, wares, merchandise and property
and/or for any personal injury or loss of life in, upon or about
the Demised Premises or (ii) claims due to TENANT's negligence in
the hallways, sidewalks, parking areas and other common areas,
except such claims as may be the result of the negligence of
LANDLORD, its agents, employees or contractors, or the failure of
LANDLORD to perform any of its obligations under this Lease in
which event LANDLORD shall indemnify TENANT.
USE, ASSIGNMENT 25. (a) Unless the LANDLORD shall have given its
SUBLETTING AND consent thereto, which consent LANDLORD agrees
ATTORNMENT: shall not be unreasonably withheld or delayed,
this Lease may not be assigned, nor may the
Demised Premises be sublet, in whole or in part.
If LANDLORD approves an assignment of all or part of the Demised
Premises, or unreasonably fails or refuses to so consent, TENANT
shall be relieved of liability as to that which is assigned as of
the effective date of the assignment. (b) Provided TENANT is not
then in default, after notice and the opportunity to cure, beyond
any grace period provided for under the terms, covenants and
conditions of this Lease, TENANT may have the right in whole or in
part to assign or sublet the Demised Premises subject to and upon
the Following terms and conditions: (i) The TENANT shall submit to
LANDLORD all of the terms and conditions of the proposed sublease
or assignment, together with all of the pertinent information
regarding the proposed subtenant or assignee and the proposed
subtenant's or assignee's credit information, as reasonably
requested by the LANDLORD; (ii) The LANDLORD may, upon receipt of
the aforesaid information, either approve or disapprove of the
proposed subtenant or assignee, and approval, if any, shall not be
unreasonably withheld; however, in determining reasonableness,
there shall be taken into consideration the reputation, financial
responsibility, and the general nature of said proposed
subtenant's or assignee's business and its general impact on the
Building and project as a whole. LANDLORD shall not be required
to consent to any sublet or assignment to any organization which
will use the space as an employment or payment office, school
(training programs are not deemed a "school") of any kind, or a
drug or welfare program of any kind, or any similar type of high-
traffic business and (iii) In the event the LANDLORD does approve
TENANT's subtenant or assignee, and subject to the provisions of
subparagraph (a) of this Article 25, TENANT shall remain liable
and responsible for all of the obligations and all of the terms,
conditions and covenants of this Lease and the TENANT shall pay to
the LANDLORD, as additional rent, any difference between the rent
and additional rent reserved in this Lease and the rent and
additional rent reserved in such sublease or assignment. (c)
TENANT covenants and agrees that if for any reason the interest
of the LANDLORD in the Demised Premises is terminated, the TENANT
will attorn to the then holder of the reversionary interest or to
anyone who shall succeed to the interest of the LANDLORD and will
recognize each such successor in interest to the LANDLORD as the
TENANT's landlord of this Lease, subject to the Following
requirements. The TENANT agrees, upon receipt of an executed non-
disturbance agreement the same as or substantially similar to the
Subordination, Attornment and Non-Disturbance Agreement between
TENANT and General Electric Capital Corporation signed
simultaneously with the execution of the Main Lease, to execute
and deliver, at any time and from time to time, upon the request
of the LANDLORD, any instrument which may be necessary or
appropriate to evidence such attainment. Subject to the
foregoing, the TENANT further waives the provisions of any statute
or rule of law now or hereafter in effect which may give or
purport to give the TENANT any right of election to terminate this
Lease or to surrender possession of the Demised Premises in the
event any proceeding is brought by the Lessor under any underlying
lease to terminate the same, and agrees that this Lease shall not
be affected in any way whatsoever by any such proceeding. (d) In
the event that the TENANT should at any time desire to assign or
sublet this Lease, the TENANT shall not advertise in any media,
without the LANDLORD's prior written consent, the fact that the
space is available unless the advertisement does not mention a
price or mentions a price not lower than the current asking price
in the Building. (e) In no event shall the TENANT be permitted to
assign any portion of the Demised Premises to any existing TENANT
of the Building, nor shall the LANDLORD be required to approve any
such assignment. In addition, TENANT may assign or sublet the
Demised Premises without LANDLORD's prior written consent subject,
however, to the following conditions: (1) TENANT shall have the
right to assign or sublease to a publicly traded, quality company
whose net worth is at least equal to the net worth of TENANT as of
the date of this Lease; and (2) To the extent that the TENANT
subleases or assigns at a Rent and Additional Rent above that
which TENANT is paying to LANDLORD, TENANT agrees that fifty
percent (50%) of such overage as and when paid by assignee or
subleases shall be paid by TENANT to LANDLORD for the sole use and
benefit of the LANDLORD as an item of Additional Rent after
recoupment by TENANT of its reasonable expenses in assigning or
subletting, which expenses may include reasonable brokerage and
reasonable costs to prepare the space for the subtenant; to the
extent it is less with respect to a sublease, TENANT shall be
relieved of liability only to the extent of the Rent and
Additional Rent LANDLORD receives from an approved subtenant.
Notwithstanding anything contained herein to the contrary,
LANDLORD consents to a sublet or assignment to an affiliate or
subsidiary of TENANT provided nothing shall relieve TENANT
thereafter from full responsibility under the Lease.
RULES AND 26. TENANT agrees that it will abide by all of the
REGULATIONS: rules and regulations imposed by the LANDLORD
for the Building which the Demised Premises form a
part, as set forth on Schedule "B" annexed hereto, provided that
all future ones are reasonable, nondiscriminatory, do not
adversely affect TENANT's obligations herein and are promulgated
on twenty (20) days' notice.
LANDLORD'S 27. In the event that the LANDLORD shall default
LIABILITY: under the terms of this Lease and the TENANT
shall recover a judgment against the LANDLORD by
reason of such default, or for any other reason arising out of the
tenancy or use of the Demised Premises by the TENANT, or this
Lease, the LANDLORD's liability hereunder shall be limited to the
LANDLORD's interest in the land and Building of which the Demised
Premises form a part, and no further, and the TENANT agrees that
in any proceeding to collect such judgment, the TENANT's rights to
recovery shall be limited to the LANDLORD's interest in the land
and Building of which the Demised Premises form a part.
LANDLORD's liability (exclusive of insurance proceeds) in the
event of a judgment against LANDLORD as a result of a default
under the terms of this Lease is limited to two years' rent (and
additional rents), as defined in this Lease, and actually paid by
TENANT to LANDLORD in the two year period preceding the day on
which final judgment in favor of the TENANT was granted.
ENTIRE 28. This instrument contains the entire agreement
AGREEMENT: between the parties hereto and the same may not be
changed, modified or altered except by a document in
writing, executed and acknowledged by the parties hereto. Neither
LANDLORD nor LANDLORD's agents have made any representations or
promises with respect to the physical condition of the Building,
the land upon which it is erected, or the Demised Premises, the
rents, leases, expenses of operation or any other matter of thing
affecting or related to said premises except as herein expressly
set forth and no rights, easements or licenses are acquired by
TENANT by implication or otherwise except as expressly set forth
in the provisions of this Lease. TENANT has inspected the
Building and the Demised Premises and is thoroughly acquainted
with their condition, and agrees to take the same "as is" except
as set forth elsewhere herein.
All understandings and agreements heretofore made between the
parties hereto are merged in this contract, which alone fully and
completely expresses the agreement between LANDLORD and TENANT,
and any executory agreement hereafter made shall be ineffective to
change, modify, discharge or effect an abandonment of it, in whole
or in part, miles such executory agreement is in writing and
signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.
CERTIFICATES: 29. (A) Within fifteen (15) days of request by
either party, the other party agrees to execute
any certificate or certificates evidencing the commencement date
of the term of the Lease and the fact that the Lease is in full
force and effect, if such is the case, and that there are no set-
offs or other claims against the requesting party, or stating
those claims which the TENANT might have against the requesting
party. (B) Within five (5) days of request by the requesting
party, the other party agrees to execute a Memorandum of this
Lease, and any additional forms necessary for recording purposes,
in recordable form, which Memorandum shall set forth the
commencement date and termination date of the Lease and any other
required information needed to effectuate the recording.
SECURITY: 30. INTENTIONALLY OMITTED.
BROKER: 31. TENANT and LANDLORD represent to each other
that each dealt with no broker other than Sutton &
Edwards, Inc., in connection with the negotiations
and execution of this Lease and each party hereby indemnifies and
holds the other party harmless from any claims, suits, judgments,
or any expenses in connection with the foregoing by reason of any
claim made by any other broker with whom it may have dealt in
connection with this Lease other than the above named broker.
LANDLORD shall be responsible for the brokerage fees to said
broker pursuant to separate agreement and shall hold TENANT
harmless for said fees.
CONDITION
PRECEDENT: 32. INTENTIONALLY OMITTED.
SIGNAGE: 33. LANDLORD, at LANDLORD's expense, will furnish
and install, adjacent to suite entrance, a building
standard plaque which will exhibit the suite number
and the TENANT's name and/or the name of TENANTs affiliate or
subsidiary actually using said space. Additional names will be
deemed to be in excess of building standard. If TENANT wishes to
exceed building standard, TENANT must receive LANDLORD's prior
written consent, which consent LANDLORD shall not unreasonably
withhold. TENANT must submit a sample of the proposed signage which
must match LANDLORD's quality, style, color and all other
particulars of LANDLORD's building standard signage. The size of
TENANT's signage may be as large as the signage of any other tenant
in the Building. TENANT shall be entitled to the building standard
quality and size of building directory listing.
WORKLETTER: 34. LANDLORD, at its sole cost and expense, shall
design (including electric, telephone, computer
wiring and work station setup), furnish and install
with reasonable diligence all work and materials set forth in
Exhibit "A" attached hereto and made a part hereof. The
installation is intended by the parties to duplicate the quality
and provide the same pro-rata quantities utilized in the Main
Lease. To the extent the installation exceeds those standards,
TENANT shall be solely responsible for the cost and expense of the
excess. The parties shall agree, prior to the commencement of the
installation work, to what extent, if any, TENANT shall be
responsible for the cost and expense of the installation.
To the extent TENANT shall be responsible, LANDLORD or its
affiliate shall submit a Tenant Work Proposal for each item of
materials and/or work, which Tenant Work Proposal shall be
approved by TENANT before any such materials are supplied or work
is performed. TENANT shall receive a bill after the materials are
supplied and/or the work is performed. The Tenant Work Proposal
and the bill shall include a 1O% charge for overhead and an
additional 1O% charge for profit. TENANT agrees to pay that bill
promptly, as an item of additional rent, provided the materials
are properly supplied and the work properly performed. Hunter
Real Estate Construction Corp. ("Hunter"), an affiliate of
LANDLORD, shall be the general contractor for the installation
work, subject to and conditioned upon the consent of (GECC.
LANDLORD hereby guarantees to TENANT the work of Hunter. In the
event that Hunter shall be in material default in performing the
installation work, TENANT shall notify LANDLORD in writing, with a
copy to GECC.
TENANT'S 35. (a) LANDLORD, at LANDLORD's sole cost and
DRAWINGS: expense, agrees to furnish to TENANT complete
detailed architectural working drawings and
specifications for TENANT's partition layout, a reflected ceiling,
electrical duplex receptacles, and other installations required
for the performance of LANDLORD's Building Standard Work. (b)
TENANT agrees that its instructions for said plans and
specifications referred to in subsection (a) hereinabove will be
communicated to the LANDLORD. TENANT and LANDLORD shall mutually
cooperate on a timely basis in finalizing such drawings and
specification. (c) Within thirty (30) days of completion of
LANDLORD's above work, LANDLORD shall submit to TENANT an "as
built" reproducible tracing together with four (4) blueprint
copies thereof of all improvements in TENANT's Demised Premises.
ELECTRICITY: 36. The electricity from the Demised Premises will
be measured by LANDLORD attaching, at its sole cost
and expense, the wiring from the Demised Premises to
the separate meter already installed for the Main Lease. TENANT
will pay to LILCO directly the amount billed by LILCO. Any
default by TENANT in the timely payment to LILCO of all sums
billed by LILCO shall constitute a default under this Lease only
if LILCO withholds electricity from the Building, or otherwise
penalizes LANDLORD, as a result of TENANT's said default hi timely
payment, or unless such penalty is curable and is cured by TENANT
on a timely basis.
RIGHT OF 37. Provided that (a) has given LANDLORD seven (7)
CANCELLATION: months prior written notice that it will exercise
this right of cancellation and (b) is not in
default under the terms, conditions or covenants of this Lease
beyond applicable notice and grace periods on the date when notice
is given or on the date when this tight of cancellation is
exercised, TENANT may exercise this right of cancellation oil or
after May 31, 2000 by paying to LANDLORD, in seven (7) equal
monthly installments, commencing upon notifying LANDLORD that it
will exercise this right of cancellation, a total sum computed as
follows: total cost of initial tenant installation divided by 105
months and multiplied by the number of months from the date the
cancellation becomes effective to the end of the lease term.
If this Lease is terminated during said seven (7) month period, an
payments due under this Article shall thereafter cease provided
that TENANT is not in default under the terms, conditions and
covenants of this Lease beyond applicable notice and grace
periods. If TENANT does not elect to cancel on or before May 31,
2000, then LANDLORD, at its sole cost and expense, shall repaint
and replace any carpeting having a useful life of less than six
(6) years in the Demised Premises (other than the Storage Space)
using similar paint and/or carpeting as used in Article 34 above,
with the work to be done during regular business hours. TENANT
agrees to cooperate in a commercially reasonable manner and
LANDLORD agrees to have the work performed in a commercially
reasonable manner.
CLEANING: 38. TENANT, at its sole cost and expense, shall
provide cleaning service within its Demised Premises.
LANDLORD shall not provide any cleaning service within TENANT's
Demised Premises and shall have no responsibility or liability to
TENANT for the, work or for any damage to persons or property
occasioned by TENANT's cleaning service. TENANT hereby agrees to
indemnify LANDLORD against any liability to anyone caused by or
attributable to TENANT's cleaning service and agrees to obtain
from said cleaning service insurance from a New York licensed
insurance company, with commercially reasonable policy limits,
against personal injury and personal property claims from third
parties, which insurance shall name as additional insureds both
LANDLORD and LANDLORD's managing agent.
OPTION TO RENEW: 39. LANDLORD hereby gives TENANT an option to
extend the term of this Lease for a period of
five (5) years on the same terms, covenants and conditions herein
except for this option to renew, the workletter, the premises
concession clause and the rent abatement clause. The exercise of
this option shall require strict compliance with the following:
(a) TENANT shall notify LANDLORD in writing of its exercise of
the option no later than nine
(9) months prior to the expiration date of the initial term of
this Lease; and (b) at the time of
giving such written notice of election, and on the last day of the
initial term of the Lease, TENANT shall not be in default under
any of the terms, conditions or covenants of this Lease beyond
applicable notice and grace periods.
ADDENDUM TO 40. Notwithstanding anything to the contrary
ARTICLES 8, 14 contained herein, including, without
AND 15: limitation, any provisions of Articles 8, 14,
and 15 above to the contrary, if the Demised Premises are damaged
or destroyed by fire or other casualty (collectively, the
"Casualty"), or if all or a portion of the Demised Premises shall
be taken permanently, or for a limited period by any applicable
condemning authority (collectively, the "Taking") or in the event
LANDLORD shall be required or shall otherwise elect (to the extent
such election is permitted by the terms of this Lease) to make any
repairs and/or maintenance to the Demised Premises (the "Repairs
and Maintenance") (the Casualty, the Taking and the Repairs and
Maintenance are hereinafter sometimes referred to in this Article
singly as a "Triggering Event" or collectively as the "Triggering
Events") then, provided TENANT is not in material default beyond
any applicable grace period and to the extent that any of the
Triggering Events shall prevent TENANT from utilizing twenty-five
(25%) percent or more of the Demised Premises or in the event any
such Triggering Event shall otherwise materially adversely affect
TENANT's intended uses and purposes of the Demised Premises for a
period (i) with respect to Repairs and Maintenance of ninety (90)
days or more or (ii) with respect to a Casualty or Taking, of one
(1) year or more (any of such periods hereinafter referred to as
the "Termination Period"), or in the event the time to restore or
repair the Demised Premises after the occurrence or commencement
of the Triggering Event is estimated to take in excess of the
Termination Period, then and in any such event, TENANT shall be
entitled at its sole discretion to terminate this Lease by notice
(the "Termination Notice") to the LANDLORD within thirty (30) days
after the later to occur of the date of the Triggering Event or
the date when TENANT first becomes aware that LANDLORD'S
obligations in connection with or by reason of the Triggering
Event shall not be completed prior to the end of the Termination
Period. In the event TENANT shall elect to terminate this Lease
as set forth above, (i) this Lease shall terminate as of the date
of the Triggering Event, (ii) all base rent and other amounts
payable under this Lease shall be apportioned as of the date of
the Triggering Event, (iii) TENANT shall have a period of up to
six (6) months from the effective date of the Termination Notice
in order to vacate and surrender the Demised Premises but TENANT
shall be required to pay all rent and additional rent due
hereunder on the portion of the Demised Premises being used or
occupied, and (iv) upon such apportioned, vacating of the Demised
Premises and any other obligations to be performed by either party
hereunder by reason of, or in connection with such termination,
the parties shall thereafter have no obligations hereunder except
for those obligations which specifically survive the termination
of this Lease. Also, in the event any such Triggering Event shall
occur within the last year of the term of this Lease (or any
renewal tenn) the Termination Period shall be reduced (i) with
regard to Repairs and Maintenance, to sixty (60) days or more and
(ii) with regard to a Casualty or a Taking, to ninety (90) days or
more. Notwithstanding the ninety (90) day Termination Period
with regard to Repairs and Maintenance set forth above, in the
event LANDLORD shall be unable to complete such Repairs and
Maintenance within such ninety (90) day period for reason (s)
beyond LANDLORD's control as described in Article 8 (e) of this
Lease and notifies TENANT prior to the expiration of such ninety
(90) day period specifying in detail the reasons that such Repairs
and Maintenance could not be completed within such ninety (90) day
period, enclosing whatever documentation LANDLORD has or could
readily obtain to support those reasons and confirming in such
notice that to the best of LANDLORD's knowledge, such Repairs and
Maintenance will be completed within an additional 30-day period,
then and in only that event, LANDLORD shall have an additional
period of thirty (30) days in which to complete the Repairs and
Maintenance. TENANT during such additional thirty (30) day period
shall retain its right to terminate this Lease if the Repairs and
Maintenance shall, in fact, not be completed prior to the
expiration of such additional thirty (30) day period. In
addition, TENANT agrees to send copies of notices that TENANT
sends to LANDLORD hereunder, contemporaneously with the giving of
such notices to LANDLORD, also to the existing Mortgagee on the
Building, General Electric Capital Corporation, North Tower, Suite
3000, 100 Prospect Street, Stamford, Connecticut 06927, Attention:
Commercial Real Estate Financial Department.
LANDLORD DEFAULTS: 41. A. The provisions of this Article shall
take precedence over all other Articles in
this Lease to the extent any provisions of such other Articles
are contradictory or inconsistent with the terms of this Article,
but the provisions of this Article are otherwise in addition to
any other tights and/or remedies afforded to TENANT by other
provisions of this Lease.
B.(i) For purposes of this Article, a failure
by LANDLORD to perform its obligations under paragraphs (a) and
(b) of Article 7 of this Lease shall be deemed a "default" by
LANDLORD immediately upon LANDLORD's failure to perform such
obligations without TENANT having any obligation to provide notice
of such failure to LANDLORD, except with regard to the first
default by LANDLORD under Article 7 (b) of this Lease with regard
to LANDLORD's provision of heat and/or air conditioning, which
shall not be deemed a default until LANDLORD fails to perform its
obligations under such paragraph for a period of five (5) days
after notice from TENANT to LANDLORD of such failure to perform.
(ii) Any other failure by LANDLORD to perform
its obligations under this Lease shall only be deemed a "default"
under this Article if LANDLORD fails to perform such obligation
within a period of five (5) days after notice from TENANT to
LANDLORD of such failure to perform.
(iii) It is understood and agreed that the
only difference for purposes of this Article between a default by
LANDLORD under subparagraph (i) above and a default under
subparagraph (H) above is whether LANDLORD is entitled to a period
of time to cure such failure to perform before it is classified as
a "default" under this Article. Once LANDLORD has failed to cure
such default after the appropriate cure period as set forth above,
if any, such failure shall constitute a "default" entitling TENANT
to exercise the remedies set forth in this Article (and other
provisions of this Lease). With regard to performance by LANDLORD
under Article 7 (b) of this Lease, it is understood that
LANDLORD's failure to provide the required amount of heat and/or
air conditioning shall be covered by subparagraph (i) above but a
true mechanical breakdown building-wide (or substantially
building-wide) affecting the Demised Premises shall be subject to
the notice and cure requirements of subparagraph (ii).
(iv) In order to measure objectively whether
the temperature in the Demised Premises is in compliance with the
provisions of Article 7 above, LANDLORD shall be required to
install at its expense a sufficient number of appropriate
measuring devices and recording devices in various locations of
the Demised Premises, the number of which and the location of
which shall be subject to the approval of TENANT and TENANT's HVAC
engineer or advisor, which approval shall not be unreasonably
withheld or delayed. The temperature readings on such appropriate
measuring devices, absent mechanical breakdown, shall be binding
upon LANDLORD and TENANT and shall serve as the basis for
determining whether LANDLORD has complied with its obligations as
specified in the letter dated March 23, 1994.
(v) TENANT shall be required to send copies
of any notices that TENANT gives under this Article to LANDLORD,
contemporaneously with the giving of such notices to LANDLORD,
also to the existing Mortgagee on the Building, General Electric
Capital Corporation, North Tower, Suite 3000, 100 Prospect Street,
Stamford, CT 06927, Attention: Commercial Real Estate Financing
Department.
(vi) It is further understood that with
regard to defaults by LANDLORD which are subject to the notice and
cure provisions set forth in subparagraph (ii) above, the
provisions of Article 8 (e) shall be applicable as a justifiable
basis for LANDLORD's failure to perform its obligations on a
timely basis provided: (1) LANDLORD continues with all due
diligence to correct the problem notwithstanding such force
majeure occurrence, (2) LANDLORD notifies TENANT prior to the end
of the five (5) day cure period specifying in detail the reasons
that such obligations could not be satisfied within such five (5)
day period, enclosing whatever documentation LANDLORD has or could
readily obtain to support these reasons and confirming in such
notice when, to the best of LANDLORD's knowledge, such obligation
will be satisfied and (3) such force majeure occurrence has not
been caused in any manner by LANDLORD's own economic situation,
LANDLORD's failure to operate the entire facility as a first-class
office building and/or LANDLORD's willful acts which adversely
affect or affected LANDLORD's failure to timely perform its
obligations hereunder. It is understood that it will be presumed
that LANDLORD's failure to perform its obligations under the Lease
were for non-force majeure reasons and the burden is absolutely
and solely upon LANDLORD to show that such failure to perform was
caused by an event covered by Article 8 (e) of this Lease.
C. (i) For purposes of this Article, a "Lease
Year" shall be deemed to run for a period of twelve (12) months as
of any particular day during the term of this Lease (including
renewal terms).
(ii) Upon the occurrence of the first "default"
by LANDLORD hereunder in any Lease Year, TENANT shall be entitled
to offset against base rent or any other amounts due from TENANT
to LANDLORD hereunder, TENANT's actual expenses necessary to cure
LANDLORD's default (the "Cure Expenses"), which cure TENANT shall
be entitled to perform at TENANT's sole option but without any
obligation to do so ("TENANTs Cure").
(iii) Upon the occurrence of the second
"default" by LANDLORD hereunder in any Lease Year, TENANT shall be
entitled to offset against base rent or any other amounts due from
TENANT to LANDLORD hereunder, an amount equal to the higher of
$2,500 or TENANT's Cure Expenses incurred in performing TENANT's
Cure.
(iv) Upon the occurrence of the third "default"
by LANDLORD hereunder in any Lease Year, TENANT shall be entitled
to offset against base rent or any other amounts due from TENANT
to LANDLORD hereunder, an amount equal to the higher of $ 15,000
or TENANT's Cure Expenses incurred in performing TENANT's Cure.
(v) Upon the occurrence of the fourth "default"
by LANDLORD hereunder in any Lease Year, TENANT shall be entitled
to offset against base rent or any other amounts due from TENANT
to LANDLORD hereunder, an amount equal to the higher of $15,000 or
TENANT's Cure Expenses incurred in performing TENANT's Cure.
(vi) Upon the occurrence of the fifth "default"
by LANDLORD hereunder in any Lease Year, TENANT shall be entitled
to offset against base rent or any other amounts due from TENANT
to LANDLORD hereunder, an amount equal to the higher of $30,000 or
TENANT's Cure Expenses incurred in performing TENANT's Cure.
(vii) Upon the occurrence of the sixth "default"
by LANDLORD hereunder in any Lease Year, TENANT shall be entitled
to offset against base rent or any other amounts due from TENANT
to LANDLORD hereunder, an amount equal to the higher of $50,000 or
TENANT's Cure Expenses incurred in performing TENANTs Cure.
(viii) Upon the occurrence of the seventh
"default" by LANDLORD hereunder in any Lease Year, TENANT shall be
entitled to offset against base Tent or any other amounts due from
TENANT to LANDLORD hereunder, an amount equal to the higher of
$75,000 or TENANT's Cure Expenses incurred in performing TENANTs
Cure.
(ix) Upon the occurrence of the eighth and
subsequent "defaults" by LANDLORD hereunder in any Lease Year, the
base amount to be offset by TENANT shall be increased by $25,000
over the amount for the previous default by
LANDLORD.
(x) Notwithstanding the foregoing, TENANT shall
be entitled to the offsets set forth in subparagraphs (vi), (vii),
(viii) and (ix) during any Lease Year only in the event the
defaults covered by such subparagraphs occurred due to the
negligence, willfulness, recklessness, disregard or otherwise
through a pattern of neglect by LANDLORD in its obligations
hereunder. It is understood, however, that it will be presumed
that defaults by LANDLORD and remedies under those subparagraphs
shall be fully applicable and the burden will be upon the LANDLORD
to show that the occurrence of such defaults were (1) due to the
normal wear and tear and maintenance requirements of the Building
(taking into account LANDLORD's obligation to operate this
Building as a first-class office building) or (2) otherwise not
due to the negligence, willfulness, recklessness, disregard or
pattern of neglect of LANDLORD, such as under certain
circumstances or events which occur due to reasons beyond
LANDLORD's control.
D. In addition to the foregoing, during the Lease
Year in which the expiration date of the term of this Lease (or
renewal term as the case may be) shall occur, TENANT shall be
entitled, at its sole option, at such time as the base rent and
other amounts due from TENANT to LANDLORD hereunder shall be
insufficient to reimburse TENANT in full for LANDLORD's defaults
hereunder based upon the number of defaults at any given time
during that year, to terminate this Lease upon fifteen(15) days
notice to LANDLORD in which event upon the exercise of such option
by TENANT, this Lease shall terminate with the same force and
effect as if such termination date were the expiration date of
this Lease except that TENANT shall have a period of up to the
shorter of (1) six months from the date of TENANT's notice of
termination, or (2) the remaining term of this Lease, to vacate
and surrender the Demised Premises to LANDLORD, but TENANT shall
be required to pay all rent and additional rent due hereunder on
the Demised Premises being used or occupied during that period to
the extent such rent obligation exceeds the credit to which TENANT
is otherwise entitled.
IN WITNESS WHEREOF, LANDLORD and TENANT have respectively signed
and sealed this Lease as of the day and year first above written.
WITNESS FOR LANDLORD: TRIAD III ASSOCIATES
By: TRIAD LAND ASSOCIATES
/S/ Sylvia Feldman By:/S/ Irving Feldman
WITNESS FOR TENANT: STAFF BUILDERS, INC.
/S/ Edward McNicholas By:/S/ David Savitsky
EXHIBIT
10.72<PAGE>
AGREEMENT OF LEASE, made as of this 12th day of
February, 1996, between
TRIAD III ASSOCIATES
1981 Marcus Avenue
Lake Success, NY 11042
party of the first part, hereinafter referred to as LANDLORD, and
STAFF BUILDERS, INC.
1983 Marcus Avenue
Lake Success, NY 11042
party of the second part, hereinafter referred to as TENANT.
WITNESSETH: LANDLORD hereby leases to TENANT and TENANT hereby hires
from LANDLORD
675 rentable square feet on the Concourse Level
in the building known as:
TRIAD III
1983 Marcus Avenue
Lake Success, NY 11042
For the term of approximately seven (7) years (or until such term
shall sooner cease and expire as hereinafter provided) to commence
on the 1st day of March, nineteen hundred and ninety-six (the
"Commencement Date"), and to end on the 30th day of September, two
thousand three, both dates inclusive, at a basic annual rental
rate of Eleven Thousand, Four Hundred Seventy-Five Dollars
($11,475.00), payable monthly at the rate of Nine Hundred Fifty-
Six and 25/100 Dollars ($956.25), which TENANT agrees to pay in
lawful money of the United States which shall be legal tender in
payment of all debts and dues, public and private, at the time of
payment, in equal monthly installments in advance on the first day
of each month during said term at the office of LANDLORD or such
other place as LANDLORD may designate, without any set off or
deduction, except as otherwise expressly set forth herein.
In the event that, at the commencement of the term of this Lease,
or thereafter, TENANT shall be in default in the payment of rent
to LANDLORD pursuant to the terms of another lease with LANDLORD
or with LANDLORD's predecessor in interest, LANDLORD may at
LANDLORD's option, upon ten (10) days notice to TENANT add the
amount of such arrearages to any monthly installment of rent
payable hereunder and the same shall be payable to LANDLORD as
additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and
assigns, hereby covenant as follows:
RENT: 1. TENANT shall pay the rent as above and as
hereinafter provided.
USE OF PREMISES: 2. TENANT shall use and occupy the Demised
Premises for office space, incidental usage
related thereto and for no other purpose.
DEMISE: 3. The LANDLORD, for and in consideration of
the rents, additional rents (and escalations
thereof), covenants and agreements hereinafter
reserved and contained on the part
of the TENANT to be paid, kept and performed, has demised and
leased, and by these presents does demise and lease unto the
TENANT, and the TENANT does hereby take and hire, upon and
subject to the covenants and conditions hereinafter expressed
which the TENANT agrees to keep and perform, premises consisting
of 675 rentable square feet shown on the Floor Plan annexed hereto
as Exhibit "A", hereinafter called the "Demised Premises" or
"Premises" in the Building, together with the right to use in
common with other tenants of the LANDLORD in this and other
buildings in the Triad Office Park, Lake Success, New York the
parking area for the parking of automobiles of employees of the
TENANT and other tenants of the LANDLORD. In arriving at the
rentable square feet, LANDLORD has taken into consideration in
whole or in part such areas as parking areas, garages, first floor
area used for commercial purposes, public areas in connection with
the same and other common facilities, and although this
computation is of necessity an arbitrary one, the parties hereto
accept and agree that for the purpose of this Lease, and the
consideration thereof, the said rentable square feet set forth
herein will be used. Nothing contained herein shall in any way
limit LANDLORD from at any time altering, increasing or decreasing
the atrium area, or any other public area or corridor in the
Building, provided that (a) the actual floor space of the Demised
Premises are not thereby reduced, (b) TENANT's percentage in
Article 6 (B) of this Lease is not affected and (c) TENANT's
liability under Article 6(C) and Article 6(D) do not increase as a
result thereof.
PARKING: 4. The TENANT shall be allowed two (2)
underground car spaces on the site at no
charge, designated for its exclusive use and LANDLORD shall mark
them accordingly and enforce diligently TENANT's exclusive right
to them. As of the execution of this Lease, the entrance to the
underground garage is open Monday through Friday (excluding
holidays) from 6:00 a.m. to 7:00 p.m. and the exit to the
underground garage is open Monday through Friday (excluding
holidays) from 6:00 a.m. to 9:30 p.m. All car spaces in the
underground garage are intended for the use of TENANT's personnel
only. Those who utilize the garage must obey all LANDLORD's rules
and regulations and park at their own risk. All car spaces in the
underground garage shall be so designated within thirty (30) days
after this Lease is executed.
TERM: 5.A. The term of this Lease shall end
approximately seven (7) years from
Commencement Date of this Lease.
B. The LANDLORD and the TENANT, at the request
of either party, shall execute an agreement in recordable form
together with such supplementary forms as are required for
recordation, setting forth both the dates of the commencement of
the term of this Lease and the date of termination hereof, which
agreement may be recorded by either party.
BASIC RENT - 6.A. Following the Commencement Date, rent shall
ADDITIONAL be paid on the first day of each month, without
RENT notice and demand and without abatement, deduction
or set off herein of any amount whatsoever except
as expressly set forth to the contrary
B. TENANT'S PERCENTAGE: TENANT's proportionate
share, wherever such term is used in this Lease, shall be .2143
percent. LANDLORD represents that for the purpose of this
calculation the total rentable square feet in the Building is
315,000 rentable square feet.
C. TAXES: (1) TENANT shall pay to LANDLORD its
proportionate share of all increases in total real estate taxes
levy on the land and the Building of which the Demised Premises
form a part over the total real estate tax levy that was in effect
during the Tax Base Year. The term "total real estate tax levy"
shall mean the total real estate taxes payable for the County
General Tax and the County School Tax. The term "Tax Base Year"
shall mean (a) the County General Tax for January 1, 1996 -
December 31, 1996 and (b) the County School Tax for the second
half of the 1995/96 tax year and the first half of the 1996/97 tax
year. The amount of additional rent to be paid by TENANT to
LANDLORD shall be termed "Tenant's Payable Tax".
(2) LANDLORD shall render a bill to TENANT
for Tenant's Payable Tax, or portions thereof which bill shall be
accompanied by LANDLORD's calculations of how Tenant's Payable Tax
is determined, together with a copy of the receipted tax bill.
TENANT shall pay to the LANDLORD Tenant's Payable Tax (or the
portion thereof then billed) within thirty (30) days after receipt
of LANDLORD's invoice.
(3) In the event that there should be a
change in the method of assessment, the TENANT shall nevertheless
thereafter pay to the LANDLORD, annually, as additional rent, the
last Tenant's Payable Tax then computed under the present system
of assessment, which shall be deemed additional rent hereunder,
and upon the new method of assessment taking effect, there shall
be an adjustment in the Tenant's Tax Base so that the parties
shall be kept in the same position as if the method of assessment
had not been changed. If the parties cannot agree in the change
in the Tenant's Tax Base, then the question shall be submitted to
arbitration before the AMERICAN ARBITRATION ASSOCIATION in Nassau
County under its rules then obtaining and each of the parties
hereto shall pay one-half of the cost of such arbitration. If,
however, there shall be more than one tenant included in such
arbitration, then the cost of the arbitration shall be divided by
the total number of parties to such arbitration and each party
shall pay its share thereof
(4) In the event that LANDLORD or any major
tenant of the building should contest any taxes or assessments
levied against the building, the TENANT agrees to cooperate in any
such proceeding or action. In the event that there shall be any
refunds of taxes by reason of any such action or proceeding, the
TENANT shall be entitled to receive back its proportionate share
of the net refund (after deducting therefrom the cost of the
actions or proceeding including, without limitation, fees for
experts, court costs, attorneys' fees, etc.). In no event shall
TENANT be entitled to any refund in excess of taxes or additional
taxes paid by the TENANT for the year for which such refund was
made. LANDLORD shall file such a proceeding annually unless
advised by counsel that there is no basis for filing.
D. INFLATION: As a part of the basic
consideration hereof, in addition to the rents and other
additional rents reserved herein, in order to compensate the
LANDLORD for any increase if any (or portion thereof) in
maintenance and operating costs in the building in which the
Demised Premises form a part during the term of this Lease, and in
order to protect the LANDLORD to some extent from the effects of
inflation, the TENANT shall pay as additional rent, and TENANTS
rent shall be increased, in accordance with the following
provisions:
Commencing March 1, 1997, subject to recomputation on each
anniversary date thereafter, TENANT shall pay to LANDLORD, in
equal monthly installments with the basic annual rent, a sum that
for each such year is equal to four percent (4%) of (a) the basic
annual rent for the year commencing March 1, 1997, as increased by
(b) the amount due under this Inflation Clause during the previous
lease year. For the purpose of this calculation, the basic annual
rent during the lease year commencing March 1, 1997 shall be
without regard to any rent concession or abatement provided for
herein during that period of time. The amount of the yearly
increase shall be irrespective of any change in LANDLORD's
operating costs.
E. LATE FEE AND INTEREST CHARGES: It is
understood and agreed that the Basic Annual Rent and the
Additional Rent due pursuant to Article 6(D) of this Lease, as
heretofore and hereinafter defined, shall be paid by the TENANT
on or before the fifth (5th) day of each month without notice or
demand by the LANDLORD. In the event that said Rent or any part
thereof shall not be paid by the tenth (1Oth) day of any month, or
any other item of Additional Rent shall not be paid within the
applicable grace period (if none is specified, within thirty (30)
days after notice) the TENANT shall pay to LANDLORD, as a further
item of Additional Rent, a Late Fee which shall be equal to three
(3%) percent of such Rent as shall have been unpaid; additionally
the TENANT shall pay interest on any amounts advanced by LANDLORD
to cure TENANT defaults not cured within applicable grace periods
at the rate of one (1%) percent per month, or at the highest rate
allowed by law, whichever is the lesser, until the same is paid.
The Late Fee shall be charged by LANDLORD to TENANT on the tenth
(10th) day of each and every month on which any item of Rent, as
hereinabove defined, shall not have been paid by TENANT to
LANDLORD.
SERVICES PROVIDED BY, 7. (a) Landlord will provide ingress and
LANDLORD - WATER, egress into the building and the Demised
ELEVATORS, HEAT, Premises 24 hours per day, 7 days per
AIR CONDITIONING: week. The term "Business Days" as used
in this Lease shall exclude Saturdays,
(except such portion covered in the specific hours hereinabove),
Sundays, and the following days: New Year's Day, Presidents' Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. (b) The LANDLORD covenants to provide and pay on
Business Days for heat, air conditioning, ventilation and elevator
service as provided for herein. Elevator service in at least one
passenger elevator shall be provided (except in the case of
emergency) 24 hours per day, 7 days per week. Heat, air
conditioning and ventilation when appropriate and/or required by
law, will be provided from 8:00 a.m. to 9:00 p.m., Monday through
Friday and on Saturday from 9:00 a.m. to 3:00 p.m. LANDLORD will
not provide either heat or air conditioning in the garage. (c)
Except as otherwise set forth herein to the contrary, LANDLORD
shall have no responsibility or liability for failure to supply
the services agreed to herein provided that LANDLORD has conducted
itself in a commercially reasonable fashion in seeking to restore
said services. LANDLORD reserves the right to stop services of
the heating, elevators, plumbing, air-conditioning, power systems
or cleaning or other services, if any, when necessary or
commercially reasonable and to restore such services by acting in
a commercially reasonable manner that take into account the
business needs and requirements of TENANT. LANDLORD shall not be
responsible to TENANT for any injury caused to TENANT unless
caused by the improper acts or omissions of LANDLORD, its
servants, employees or agents. The cleaning specifications are set
forth in Schedule "A" attached hereto and made a part hereof (d)
LANDLORD shall operate and maintain the Building as a first-class
office building at least comparable to other first-class office
buildings in Nassau County.
REPAIRS AND 8. (a) TENANT may have its workmen commence
MAINTENANCE: work in the Demised Premises prior to the
substantial completion of LANDLORD's work,
if any, provided that such workmen do not in any material manner
interfere with or impede LANDLORD's workers. In the event that
TENANTs workers shall materially interfere with or impede
LANDLORD's workers, then, upon notice from LANDLORD, TENANT will
immediately take steps to stop such interference or remove its
workers from the Demised Premises. TENANT's entry into the
Demised Premises for the purpose of making TENANT's installations
shall not be deemed as a waiver of any of the TENANT's rights
under the Lease, nor shall the same be deemed an acceptance of the
work to be done by the LANDLORD hereunder. (b) The TENANT
covenants throughout the term of this Lease, at the TENANT's sole
cost and expense, to take good care of the interior of the Demised
Premises and to keep the same in good order and condition and to
make all repairs therein except as provided in subsection (c)
hereof (c) The LANDLORD covenants throughout the term of this
Lease, at the LANDLORD's sole cost and expense, to make all
structural repairs to the Building in which the Demised Premises
are located and shall also maintain and keep in good repair the
Building's roof, exterior, common areas (interior and exterior),
parking areas, items caused by LANDLORD's negligence and sanitary,
electrical, heating and other systems servicing or located in or
passing through Demised Premises, other than: (i) To any systems,
facilities and equipment installed by the TENANT; (ii) To any of
the improvements to the interior of the Demised Premises installed
by the TENANT; and (iii) Any repairs which are necessitated by any
improper act or omission of the TENANT, its agents, servants,
employees or invitees, which repairs TENANT shall make at its own
cost and expense. (d) Except as expressly provided otherwise in
this Lease, there shall be no allowance to the TENANT or
diminution of rent and no liability on the part of the LANDLORD by
reason of inconvenience, annoyance or injury to TENANT's business
arising from the making of any repairs, alterations, additions or
improvements in or to any portion of the building, or the Demised
Premises, or in the parking area, or in and to the fixtures,
appurtenances and equipment thereof, provided same are needed in
LANDLORD's reasonable judgment and are performed in a commercially
reasonable manner that takes into account the business needs and
requirements of TENANT. (e) LANDLORD and TENANT, to the extent of
its obligations under Articles 8, 9, and 10 hereof, shall be
excused for the period of any delay in the performance of any of
its obligations hereunder when prevented from so doing by cause or
causes beyond the control of the respective parties, which shall
include, without limitations all labor disputes, civil commotion,
war, war-like operations, invasion, rebellion, riots, hostilities,
military or usurped power, sabotage governmental regulations or
controls, fire or other casualty, inability to obtain any such
materials, or services or through acts of God. (f) If an
excavation shall be made upon land adjacent to the Demised
Premises or shall be authorized to be made, TENANT shall afford to
the person causing or authorized to cause such excavation license
to enter upon the Demised Premises for the purpose of doing such
work as said person shall deem necessary to preserve the wall or
the Building of which Demised Premises form a part from injury or
damage, and to support the same by proper foundations without
diminution or abatement of rent provided the work is performed in
a commercially reasonable manner that takes into account the
business needs and requirements of TENANT. (g) LANDLORD or its
agents shall not be liable for any damage to property of TENANT or
of others entrusted to employees of the Building, nor for loss of
or damage to any property of TENANT by theft or otherwise, nor for
any injury or damage to persons or property resulting from any
cause of whatsoever nature, unless caused by or due to acts of
negligence of LANDLORD, its agents, servants or employees; nor
shall LANDLORD or its agents be liable for any such damage caused
by other tenants or persons in, upon or about said Building or
caused by operations in construction of any private, public or
quasi public work unless LANDLORD has negligently failed to take
proper safeguards against same. If at any time any windows of the
Demised Premises are temporarily closed, darkened or bricked up
(or permanently closed, darkened or bricked up, if required by
law) for any reason whatsoever not within LANDLORD's control,
LANDLORD shall not be liable for any damage TENANT may sustain
thereby and TENANT shall not be entitled to any compensation
therefor nor abatement or diminution of rent nor shall the same
release TENANT from its obligations hereunder nor constitute an
eviction provided that LANDLORD has acted in a commercially
reasonable manner to minimize any damage to TENANT. TENANT shall
not move any safe, heavy machinery, heavy equipment, bulky matter,
or fixtures into or out of the Building without LANDLORD's prior
written consent, which LANDLORD agrees shall not be unreasonably
withheld or delayed. If such safe, machinery, equipment, bulky
matter or fixtures requires special handling, all work in
connection herewith shall comply with all laws and regulations
applicable thereto and shall be done during such hours as LANDLORD
may reasonably designate. TENANT shall indemnify and save
harmless LANDLORD against and from all liabilities, obligations,
damages, penalties, claims, costs and expenses for which LANDLORD
shall not be reimbursed by insurance, including reasonable
attorneys' fees paid, suffered or incurred as a result of any
material breach by TENANT, TENANT's agents, contractors,
employees, invitees or licensees, of any substantial covenant or
condition of this Lease, or the carelessness, negligence or
improper conduct of the TENANT, TENANT's agents, contractors, or
employees. TENANT's liability under this Lease extends to the
acts and omissions of any subtenant and any agents, contractor, or
employees of any subtenant. In case any action or proceedings is
brought against LANDLORD by reason of any such claim, TENANT, upon
written notice from LANDLORD, will at TENANTs expense resist or
defend such action or proceedings by counsel and approved by
LANDLORD in writing, such approval not to be unreasonably withheld
or delayed. The equivalent indemnity shall flow from LANDLORD to
TENANT.
ALTERATIONS: 9.(a) TENANT shall not make any alteration or
changes in and to the Demised Premises without the prior written
consent of the LANDLORD, which LANDLORD agrees shall not be
unreasonably withheld or delayed, and the governmental agencies
having jurisdiction over such work if required by applicable law.
However, LANDLORD hereby consents to such alterations provided all
such alterations (i) are done fully in accordance with all
applicable requirements of law, (ii) are done on written prior
notice to LANDLORD, (iii) do not affect or impact upon the
building systems, and (iv) are done in strict accordance with the
complete set of architectural drawings, if appropriate, of space
plan otherwise, that must accompany the written notice to
LANDLORD. (b) The TENANT agrees not to place any signs on the roof
or on or about the inside or outside of the Building in which the
Demised Premises are situate, except for signs inside the Demised
Premises which may not be seen from the outside, without first
obtaining the consent of the LANDLORD in writing which consent
shall not be unreasonably withheld or delayed. (c) All nonmovable
improvements and alterations made or installed by or on behalf of
the TENANT shall become the property of the LANDLORD, without
payment therefore by the LANDLORD, immediately upon expiration of
the subject to TENANT's rights to remove same as otherwise set for
herein. (d) The TENANT shall, upon the expiration or earlier
termination of this Lease, surrender to the LANDLORD the Demised
Premises, together with all alterations and replacement thereto,
in good order and condition, except for reasonable wear and tear,
and except for office equipment, partitions and furnishings which
may be removed or surrendered by TENANT at its option or damage by
fire or other casualty. If the TENANT shall make any alterations
or changes or additions to the Demised Premises after the
commencement of the term of this Lease that were not approved by
LANDLORD (to the extent such approval is required hereunder) and
the LANDLORD shall desire the same to be removed upon the
expiration of the term hereof, then upon LANDLORD giving notice to
the TENANT of its desire to have the same removed, the TENANT will
remove the same prior to the expiration of the term hereof at
TENANT's sole cost and expense and TENANT will, at its own cost
and expense, restore the Demised Premises to the condition which
they were in without such change or addition, normal wear and tear
and damage by fire excepted, except that where LANDLORD has
consented to an alteration or when LANDLORD's consent is not
required hereunder, LANDLORD may not require its removal. (e) The
replacement of any equipment which will impose an evenly
distributed floor load in excess of fifty pounds per square foot
shall be done only after written permission received from the
LANDLORD. Such permissions may be granted only after adequate
proof is furnished by TENANT's professional engineer that such
floor loading will not endanger the structure, and such proof is
confirmed by LANDLORD's professional engineer. TENANT agrees to
pay the reasonable costs of LANDLORD's professional engineer for
his services in this connection whether or not he shall confirm
the opinion of TENANT's engineer.
COMPLIANCE WITH 10. The TENANT covenants throughout the term
ORDINANCES, ETC.: of this Lease and any renewals hereof at the
TENANT's sole cost and expense, to comply with
all laws and ordinances and the orders and requirements of all
federal, state and municipal governments and appropriate
departments, commissions, boards and officers thereof, which may
be applicable to the TENANT's use and occupancy of the Demised
Premises and shall take the necessary steps to effectuate
compliance to the extent same relates solely to the manner of
TENANT's use and not to the permitted use under this Lease and to
items of work and repairs that are TENANT's obligation under
Article 8 hereof LANDLORD represents that TENANT's permitted use
under this Lease complies with the current zoning classification
for the Building, is a conforming use, and that TENANT shall have
no obligation to remove any hazardous toxic wastes or materials
from the property, or to remove any existing latent defects, not
caused by TENANT.
MECHANIC'S LIENS: 11. The TENANT covenants not to suffer or
to permit any mechanics liens to be filed
against the fee interest of the LANDLORD, nor against TENANT's
leasehold interest in the Demised Premises, by reason of work,
labor, services or materials supplied or claimed to have been
supplied to the TENANT or any contractor, subcontractor or any
other party or person engaged by the TENANT, or anyone holding the
Demised Premises or any part thereof through or under the TENANT.
TENANT agrees that in the event any mechanic's lien shall be filed
against the fee interest of the LANDLORD or against the TENANT's
leasehold interest, the TENANT shall, within sixty (60) days after
receiving notice of the filing thereof, cause the same to be
discharged of record by payment, deposit, bond or order of a court
of competent jurisdiction, or otherwise. If TENANT shall fail to
cause such lien to be discharged or bonded within the period
aforesaid, then, IN addition to any other right or remedy,
LANDLORD may, but shall not be obligated to, discharge the same by
paying the amount claimed to be due by procuring the discharge of
such lien by deposit of by bonding proceedings and, in any such
event, LANDLORD shall be entitled, if LANDLORD so elects, to
compel the prosecution of any action for the foreclosure of such
lien by the lienor and to pay the amount of the judgment in favor
of the lienor with interest, costs and allowances. Any amount so
paid by LANDLORD and all reasonable costs and expenses incurred by
LANDLORD in connection therewith, including but not limited to
premiums on any bonds filed and reasonable attorneys' fees, shall
constitute additional rental payable by TENANT under this Lease
and shall be paid by TENANT to LANDLORD on demand.
ACCESS TO 12. The TENANT agrees to permit the LANDLORD and
PREMISES: the authorized representatives of the LANDLORD to
enter the Demised Premises at all reasonable times
on reasonable times on reasonable notice (except in
the case of emergency) during TENANT's usual
business hours, and at any time other than during regular business
hours, for the purpose of making any necessary repairs to the
Demised Premises. The LANDLORD is hereby given the right during
TENANT's usual business hours, and on prior notice, to enter the
Demised Premises to exhibit the same for the purpose of sale or
mortgage and to exhibit the same to prospective tenants for the
purposes of renting during the last twelve (12) months of the
term. LANDLORD shall act in a commercially reasonable manner to
minimize inconvenience to TENANT.
RIGHT TO 13. The TENANT covenants and agrees that if the
PERFORM TENANT shall at any time fail to make any payment
COVENANTS: or perform any other act on its part to be made or
performed under this Lease the LANDLORD, after the
expiration of any time limitation set forth in this
Lease (except in cases of emergency) may, but shall not be
obligated to, make such payment or perform such other act to the
extent the LANDLORD may deem desirable after notice and the
opportunity to cure, and in connection therewith to pay expenses
and employ counsel. All sums so paid by the LANDLORD, and all
expenses in connection therewith, including but not limited to
reasonable attorneys fees for instituting, prosecuting or
defending any action or proceeding, shall be deemed additional
rent hereunder and be payable to the LANDLORD within thirty (30)
days after notice to TENANT and the LANDLORD shall have the same
rights and remedies for the non-payment thereof as in the case of
default in the payment of the basic annual rent reserved
hereunder.
DAMAGE OR 14.(a) If the Demised Premises or any part thereof
DESTRUCTION: shall be damaged by fire or other casualty, TENANT
shall give immediate notice thereof to LANDLORD and
this Lease shall continue in full force and effect except as
hereinafter set forth. (b) If the Demised Premises are partially
damaged or tendered partially unusable by fire or other casualty,
the damages thereto shall be repaired by and at the expense of
the LANDLORD to the extent that said damages include those
installations belonging to the LANDLORD. (c) If the Demised
Premises are totally damaged or rendered wholly unusable by fire
or other casualty, then the LANDLORD shall have the right to elect
not to restore the same as hereinafter provided. (d) If the
Demised Premises are rendered wholly unusable or (Whether or not
the Demised Premises are damaged in whole or in part) if the
Building shall be so damaged that LANDLORD shall decide to
demolish it or not to restore it, then, in any such events,
LANDLORD may elect to terminate this Lease by written notice to
TENANT, given within sixty (60) days after such fire or casualty,
specifying a date for the expiration of the Lease, which date
shall not be more than sixty (60) days after the giving of such
notice, and upon the date specified in such notice the term of
this Lease shall expire as fully and completely as if such date
were the date set forth above for the termination of this Lease,
and TENANT shall forthwith quit, surrender and vacate the Demised
Premises without prejudice, however, to LANDLORD's right and
remedies against TENANT under the lease provisions in effect prior
to such termination. Any rent owing shall be paid up to the date
of the casualty and any payments of rent made by TENANT which were
on account of any period subsequent to such date shall be returned
to TENANT. Unless LANDLORD shall serve a termination notice as
provided for herein, LANDLORD shall make the repairs and
restorations under the conditions of subsections "b" and "c"
hereof, and shall provide TENANT with access to the Demised
Premises, as soon as commercially reasonable, subject to delays
due to adjustment of insurance claims, labor troubles and causes
beyond LANDLORD's control. (e) Nothing contained hereinabove shall
relieve TENANT from any liability that may exist as a result of
damage from fire or other casualty. Notwithstanding the
foregoing, each party shall look first to any insurance in its
favor before making claim against the other party for recovery for
loss or damage resulting from fire or other casualty, and to the
extent that such insurance is in force and collectible, and to the
extent permitted by law, LANDLORD and TENANT each hereby releases
and waives the right of recovery against the other or any one
claiming through or under each of them by way of subrogation or
otherwise. LANDLORD's and TENANT's insurance policies shall
contain a clause providing that such a release or waiver shall not
invalidate the insurance. Said clause shall be used only if it
can be obtained without incurring additional premium costs for
said insurance. In the event that there are additional premiums
for such waiver of subrogation, the party in whose favor such
waiver is intended shall have the option to either pay the
additional premium or waive the condition that the other's policy
contain the same. TENANT acknowledges that LANDLORD will not carry
insurance on TENANTs furniture and/or furnishings or any fixtures
or equipment, improvements or appurtenances removable by TENANT
and agrees that LANDLORD will not be obligated to repair any
damage thereto or replace the same. (f) TENANT hereby waives the
provisions of Section 227 of the Real Property Law and agrees that
the provisions of this Article shall govern and control in lieu
thereof (g) The TENANT shall not knowingly do or permit to be done
any act or thing upon the Demised Premises which will invalidate
or be in conflict with fire insurance policies covering the
Building of which the Demised Premises form a part. The TENANT
shall at its expense comply with all rules, orders, regulations or
requirements of the New York Board of Fire Underwriters, or any
other similar body, which may be applicable to the TENANT's use
and occupancy of the Demised Premises, provided that the necessity
for such compliance results from the manner of use and occupancy
of the Demised Premises by the TENANT. TENANT shall not do, or
permit anything to be done, in or upon the Demised Premises, or
bring or keep anything therein, or use the Demised Premises in a
manner, which shall increase the rate of fire insurance on the
Building of which the Demised Premises form a part, or on property
located therein, over that in effect when the Building shall have
been completed, unless the TENANT shall reimburse the LANDLORD, as
additional rent hereunder, for that part of all insurance premiums
thereafter paid by the LANDLORD which shall have been charged
because of such failure or use by the TENANT, and shall make such
reimbursement within thirty (30) days Following receipt of notice
of such outlay by the LANDLORD and evidence of the payment thereof
LANDLORD acknowledges that the permitted use should not, in and of
itself, cause an increase in insurance premiums. (h)
Notwithstanding anything to the contrary contained in this Lease,
during any period after a damage or destruction, and until the
Demised Premises have been restored, the TENANT shall be entitled,
provided in each instance that a substantial portion of the
Demised Premises are being restored and TENANT is not in default
beyond applicable notice and time to cure as of the date the
restoration is completed, to (i) a pro-rated abatement of all rent
and additional rent, and (ii) at TENANT's option, an extension of
the term of the Lease for the amount of time required to complete
the restoration.
CONDEMNATION: 15. (a) If the whole of the Demised Premises
shall be taken for any public or quasi-public use
by any lawful power or authority by exercise of
the right of condemnation or of eminent domain, or by agreement
entered into in good faith between LANDLORD and those having the
authority to exercise such right (hereinafter called "Taking"),
the term of this Lease and all rights of TENANT hereunder, except
as hereinafter provided, shall cease and expire as of the date of
vesting of title as a result of the Taking, and the rent and
additional rent payable under this Lease shall abate from the date
on which the Taking occurs, and any such rent or additional rent
for a period after such date shall be promptly refunded to TENANT.
(b) In the event of a Taking of less than the whole of the Demised
Premises, or the whole or part of the parking area, this Lease
shall cease and expire in respect of the portion of the Demised
Premises and/or parking area taken upon vesting of title as a
result of Taking, and, if the Taking results in the portion of the
Demised Premises remaining after the Taking being inadequate in
the judgment of TENANT for the efficient, economical operation of
the TENANT's business conducted at such time in the Demised
Premises, TENANT may elect to terminate this Lease by giving
notice to LANDLORD of such election not more than forty-five (45)
days after the actual Taking by the condemning authority, which
notice shall state the date of termination, which date of
termination shall be not more than thirty (30) days after the date
on which such notice to LANDLORD is given, and upon the date
specified in such notice to LANDLORD, this Lease and the term
hereof shall cease and expire and rent shall abate as of the date
of the Taking. If TENANT does not elect to terminate this Lease
as aforesaid: (i) The new rent payable under this Lease shall be
abated and the new rent shall be computed as the product of the
total rent payable under this Lease multiplied by a fractions the
numerator of which is the net rentable area of the Demised
Premises remaining after the Taking, and the denominator of which
is the net rentable area of the Demised Premises immediately
preceding the Taking; and (ii) The net award for the Taking shall
be paid to and first used by LANDLORD, subject to the rights of
the mortgagee, to restore the portion of the Demised Premises and
the Building remaining after the Taking to substantially the same
condition and tenantability (hereinafter called "Pre-Taking
Condition") as existed immediately preceding the date of the
Taking. (c) In the event of a Taking of less than the whole of the
Demised Premises which occurs during the period of one (1) year
next preceding the date of expiration of the term of this Lease,
LANDLORD, (unless TENANT has exercised or is still permitted to
exercise its option to renew) or TENANT may elect to terminate
this Lease by giving notice to the other party to this Lease of
such election, not more than forty-five (45) days after the actual
Taking by the condemnation authority, which notice shall state the
date of termination, which date of termination shall be not mote
than thirty (30) days after the date on which such notice of
termination is given, and upon the date specified in such notice,
this Lease and the term hereof shall cease and expire and all rent
and additional rent paid under this Lease for a period of such
date of termination shall be promptly refunded to TENANT. On or
before such date of termination, TENANT shall vacate the Demised
Premises, and any of TENANT's property remaining in the Demised
Premises subsequent to such date of termination shall be deemed
abandoned by TENANT and shall become the property of the LANDLORD.
(d) In the event of a Taking of the Demised Premises, or any part
thereof, and whether or not this Lease is terminated, TENANT shall
have no claim against LANDLORD or the condemning authority for the
value of the unexpired term of this Lease but TENANT may claim
against the condemning authority for the value, if any, of its
moving expenses and fixtures installed by TENANT at TENANT's
expense. (e) In the event of a Taking of all or any portion of the
Demised Premises for a limited period (hereinafter called "Limited
Taking"), then unless TENANT shall be thereby unable to utilize
the remaining portion of the Demised Premises for the intended
purpose, this Lease shall not terminate and TENANT shall continue
to pay the rent and additional rent except for an abatement of the
pro rata portion of the rent applicable to the Limited Taking, and
continue to perform and observe all of its obligations under this
Lease as though such Limited Taking has not occurred except to the
extent that TENANT may be prevented from so doing by reason of
such Limited Taking. In the event that the Limited Taking ends on
of before the date of expiration of the term of this Lease, as
such term may be renewed, the entire amount of the award made for
such Limited Taking, whether paid by way of damages, rent or
otherwise, shall be payable to TENANT. In the event that the
Limited Taking ends after the date of expiration of the term of
this Lease as such term may be renewed, the portion of the amount
of the award made for such Limited Taking, whether paid by way of
damages, rent or otherwise, payable for the period of time from
the commencement of the Limited Taking to the date of expiration
of the term of this Lease, as such term may be renewed, shall be
payable to TENANT and the balance of any such award shall be
payable to LANDLORD. At the end of the Limited Taking, LANDLORD
shall restore the Demised Premises as nearly as reasonably
possible to the Pre-Taking Condition, reasonable wear and tear and
damage by fire or other cause excepted, and LANDLORD shall be
entitled to the full amount of any award of payment made in
respect of such Limited Taking to the extent of such restoration.
DEFAULT: 16.(a) If during the term of this Lease the TENANT
shall: (i) Apply for, or consent in writing to, the
appointment of a receiver, trustee or liquidator of the TENANT or
of all or substantially all of its assets; (ii) File a voluntary
petition in bankruptcy, or admit bankruptcy, or admit in writing
its inability to pay its debts as they become due; (iii) Make a
general assignment for the benefit of creditors; (iv) File a
petition or an answer seeking reorganization (other than a
reorganization not involving the liabilities of the TENANT) or
arrangement with creditors, or take advantage of any insolvency
law; or (v) File an answer admitting the allegations of insolvency
in a petition filed against it in any bankruptcy, reorganization
or insolvency proceeding; or if any department of the State or
Federal Government or any officer thereof, duty authorized, shall
take possession of the business or property of the TENANT by
reason of insolvency of the TENANT, or if an order, judgment or
decree shall be entered by any court of competent jurisdiction on
the application of a creditor adjudicating the TENANT a bankrupt,
or insolvent, or approving a petition seeking re-organization of
the TENANT (other than re-organization not involving the
liabilities of the TENANT) or appointment of a receiver, trustee
or liquidator of the TENANT, or of all or substantially all its
assets, the LANDLORD may, at its option, give to the TENANT a
notice of intention to end the term of this Lease at the
expiration of ten (10) days from the date of service of such
notice, and at the expiration of said ten (10) days, the term of
this Lease, and all right, title and interest of the TENANT
hereunder, shall expire as fully and completely as if that day
were the date herein specifically fixed for the expiration of the
term, and the TENANT will then quit and surrender the Demised
Premises to the LANDLORD, but the TENANT shall remain liable as
hereinafter provided, Notwithstanding the foregoing, LANDLORD may
not take such action unless TENANT is in default beyond the
applicable grace period in the payment of rent and additional rent
or unless TENANT is otherwise in default hereunder beyond
applicable grace periods. (b) If, during the term of this Lease,
the TENANT shall default in fulfilling any of the covenants of
this Lease other than the covenants for the payment of basic
annual rent, additional rent or other charges payable by the
TENANT hereunder, the LANDLORD may give to the TENANT notice of
any such default and, if at the expiration of thirty (30) days
after the service of such a notice the default upon which said
notice was based shall continue to exist, or in the case of a
default which cannot with due diligence be cured within a period
of thirty (30) days, if the TENANT fails to proceed promptly after
the service of such notice and with all due diligence to cure the
same and thereafter to prosecute the curing of such default with
all due diligence (it being intended that, in connection with a
default not susceptible of being cured with due diligence within
thirty (30) days, the time of the TENANT within which to cure the
same shall be extended for such period as may be necessary to
complete the same with all due diligence), the LANDLORD may give
to the TENANT a notice of intention to end the term of this Lease
at the expiration of ten (10) days from the date of the service of
such second notice, and at the expiration of said ten (10) days,
the term of this Lease and all right, title and interest of the
TENANT hereunder shall expire as fully and completely as if that
day were the date herein specifically fixed for the expiration of
the term and the TENANT will then quit and surrender the Demised
Premises to the LANDLORD, but the TENANT shall remain liable as
hereinafter provided. (c) If the TENANT shall default in the
payment of the basic annual rent, or any part of the same, and
such default shall continue for a period of ten (10) days after
notice, or shall default in the payment of any item of additional
rent or any other charge required to be paid by the TENANT
hereunder, or any part of the same, and such default shall
continue for a period of twenty (20) days after notice thereof by
the LANDLORD, or shall have its rent checks returned unpaid by its
bank on more than two occasions within any six month period and
shall not provide LANDLORD with a reasonable explanation within
ten (10) days after notice thereof, then at the expiration of such
ten (10) day period, if the default has not been cured by TENANT,
the LANDLORD may dispossess or remove the TENANT, or any other
occupant of the Demised Premises, by summary proceedings or
otherwise, or LANDLORD may serve an additional five (5) day notice
upon the TENANT declaring that the Lease will end at the
expiration of said five (5) day period unless the default shall be
cured prior to such date, and in the event such default is not
cured within said five (5) day period, this Lease shall terminate
as if such date were the original date fixed herein for the
termination of this Lease, and LANDLORD may remove TENANT's
effects and hold the Demised Premises as if this Lease had not
been made. (d) If this Lease shall be terminated as provided in
"(a)", "(b)", or "(c)" of this Article, the LANDLORD, or the
LANDLORD's agent and servants, may immediately or at any time
thereafter re-enter the Demised Premises and remove all persons
and all or any property therefrom, either by summary dispossess
proceedings, or by any suitable action or proceeding at law, or by
force or otherwise, without being liable to indictment,
prosecution or damages therefor, and repossess and enjoy the
Demised Premises, as of their former estate, together with all
additions, alterations and improvements and movable trade
fixtures, Furniture and furnishings. (e) Upon the termination of
the term of this Lease by reason of the happening of any of the
events hereinabove described in "(a)", "(b)", or "(c)" of this
Article, or under any provision of law now or at any time
hereinafter in force, by reason of or based upon or arising out of
default under or breach of this Lease on the part of the TENANT,
or upon the LANDLORD recovering possession of the Demised Premises
in the manner or in any of the circumstances hereinabove
mentioned, or in any other manner or circumstances whatsoever,
whether with or without legal proceedings, by reason of or based
upon or arising out of a default under, or breach of this Lease on
the part of the TENANT, the LANDLORD may, at its option, at any
time and from time to time, relet the Demised Premises or any part
or parts thereof, for the account of the TENANT or otherwise, and
receive and collect the rents therefor, applying the same first to
the payment of such expenses as the LANDLORD may have incurred in
recovering possession of the Demised Premises, including legal
expenses and reasonable attorneys' fees, and for putting the same
in good order or condition, expenses, commissions and charges
paid, assumed or incurred by the LANDLORD in and about the
reletting of the Demised Premises, and then to the fulfillment of
the covenants of the TENANT hereunder. LANDLORD shall have a duty
to relet or otherwise mitigate any damages occasioned by such
termination of the Lease except that LANDLORD shall be entitled to
seek to lease its comparable vacant space before it seeks to lease
the Demised Premises. TENANT hereby waives any right it may
otherwise have to assert in any proceeding that the LANDLORD
failed to relet or attempt to relet so as to mitigate TENANT's
damages. Any such reletting herein provided for may be for the
remainder of tile term of this lease, or for a longer or shorter
period. In any such case and whether or not the Demised Premises
or any part thereof be relet, the TENANT shall pay to the LANDLORD
the basic annual rent and all other charges required to be paid by
the TENANT up to the time of such termination of this Lease, or of
such recovery of possession of the Demised Premises by the
LANDLORD, as the case may be, and thereafter, the TENANT covenants
and agrees, if required by tile LANDLORD, to pay to the LANDLORD
until the end of the term of this Lease the equivalent of the
amount of the total rent reserved herein, and all other charges
required to be paid by the TENANT, less the net avails of
reletting, if any, and the same shall be due and payable by the
TENANT to the LANDLORD on the several rent days above specified,
that is to say, upon each of such rent days the TENANT shall pay
to the LANDLORD the amount of the deficiency then existing. (f)
The TENANT waives any and all rights of redemption provided for in
any statute now or hereafter in force in case the TENANT shall be
dispossessed by a judgment or by warrant of any court or judge.
The term "enter", "re-enter", "entry", or "re-entry", as used in
this Lease, are not restricted to their respective technical
meanings. (g) It is mutually agreed to by LANDLORD and TENANT that
they do hereby waive trial by jury in any action or proceeding
brought by either of them against the other on any matter arising
out of or in any way connected with this Lease. It is further
agreed that in the event the LANDLORD shall commence any summary
proceeding for non-payment of rent, additional rent, or any other
charges to be paid by the TENANT hereunder, or to recover
possession of the Demised Premises, that the TENANT will not
interpose any counterclaim or set-off of any nature whatsoever in
such proceedings unless such counterclaim or set-off will be
waived in any action or proceeding because it had not been
asserted in this proceeding and involves a substantial covenant
hereunder. (h) In the event the LANDLORD shall commence any action
or other proceeding against the TENANT, based upon a default by
TENANT hereunder, in which the LANDLORD shall be successful, the
TENANT agrees to reimburse the LANDLORD for reasonable attorneys'
fees in connection with such action or proceeding. In the event
that TENANT shall commence any action or proceeding against the
LANDLORD, based upon a default by LANDLORD hereunder, in which the
TENANY shall be successful, the LANDLORD agrees to reimburse the
TENANT for reasonable attorneys' fees in connection with such
action or proceeding.
REMEDIES: 17. The specific remedies to which the LANDLORD
or the TENANT may resort under the terms of this
Lease are cumulative and are not intended to be
exclusive of any other remedies or means of redress to which they
may be lawfully entitled in case of any breach or threatened
breach by either of them of any provisions of this Lease. The
failure of the LANDLORD to insist in any one or more instances
upon the strict performance of any of the covenants of this Lease,
or to exercise any option herein contained, shall not be construed
as a waiver or relinquishment for the future of such covenant or
option. Receipt by the LANDLORD of rent with knowledge of the
breach of any covenant, condition or obligation of TENANT under
this Lease shall not be deemed a waiver of such breach, and no
waiver, change, modification or discharge by either party hereto
of any provision in this Lease shall be deemed to have been made
or shall be effective unless expressed in writing and signed by
both the LANDLORD and the TENANT. In addition to the other
remedies in this Lease provided, the LANDLORD shall be entitled to
restraint by injunction of any violation, or attempted or
threatened violation, of any of the covenants, conditions or
provisions of this Lease or to a decree compelling performance of
any of such covenants, conditions or provisions.
SUBORDINATION: 18. It is hereby expressly agreed that this Lease,
and all rights of the TENANT hereunder, shall be
subject and subordinate at all times to any mortgage or mortgages
and any existing renewals, replacements, extensions,
consolidations or modifications thereof, which may not be liens on
the Demised Premises, or the land and Building of which the same
form a part, provided that tile holder of any future mortgage(s)
enters into an agreement with TENANT substantially similar to the
Subordination Attornment, and Non-Disturbance Agreement entered
into by TENANT and GECC simultaneously with the execution of the
lease for + 48,000 rentable square feet between the parties (tile
"Main Lease").
QUIET 19. The LANDLORD convents and agrees that the
ENJOYMENT: TENANT, upon paying the basic annual rent and all
other charges herein provided and observing and keeping the
covenants, agreements and conditions of this Lease on its part to
be kept, shall and may peaceably and quietly hold, occupy and
enjoy the Demised Premises during the term of this Lease.
NOTICES: 20. (a) All notices, demands and requests which
may or are required to be given by either party to the other shall
be in writing. They shall be deemed given upon receipt or first
refusal and may be given by counsel on behalf of his/its client.
All notices, demands and requests by the LANDLORD to the TENANT
shall be deemed to have been properly given if sent by United
States registered or certified mail, postage prepaid, or by hand,
or by Federal Express, addressed to the TENANT at the Demised
Premises, Attn: Mr. David Savitsky, Executive Vice-President, with
a copy of legal notices to tile General Counsel and a copy of
operational notices to the Operations Building Manager, or at such
other place as the TENANT may from time to time designate in a
written notice to the LANDLORD. All notices, demands and requests
by the TENANT to the LANDLORD shall be deemed to have been
properly given if sent by United States registered or certified
mail, postage prepaid, or by hand or by Federal Express, addressed
to the LANDLORD at the address first above written, or at such
other place as the LANDLORD may from time to time designate in a
written notice to the
TENANT. (b) It is understood and agreed that wherever in this
Lease a time period is stated for the performance of some act by
either party, or the sending of some notice by either party, that
said time periods are of the essence and either party shall not be
excused for any delay in connection therewith.
DEFINITIONS: 21. (a) The captions of this Lease are for
convenience and reference only and in no way
define, limit or describe the scope or intention of this Lease or
in any way affect this Lease. (b) The term "TENANT" as referred to
hereunder shall refer to this TENANT and any successor or assignee
of this TENANT. (c) The term "LANDLORD" as used hereunder shall
mean only the owner for the time being of the land and building of
which the Demised Premises form a part, so that in the event of
any sale or sales, or in the event of a lease of said land and
Building, this LANDLORD shall be and hereby is entirely free and
relieved of an covenants and obligations of LANDLORD hereunder,
and it shall be deemed and construed without further agreement
between the parties, or their successors in interest, that the
purchaser or bona fide, arms length lessee of the Building has
agreed to carry out all of the terms and covenants and obligations
of the LANDLORD hereunder incurred from and after the date of
sale.
INVALIDITY OF 22. If any term or provision of this Lease, or
PARTICULAR the application thereof to any person or
PROVISIONS: circumstance, shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not
be affected thereby, and each term and provision of this Lease
shall be valid and be enforced to the fullest extent permitted by
law.
COVENANTS TO 23. It is further covenanted and agreed by and
BIND AND between the parties hereto that the covenants and
BENEFIT agreements herein contained shall bind and inure
to RESPECTIVE the benefit of the LANDLORD, its successors and
PARTIES: assigns, subject to the provisions of this Lease.
INSURANCE: 24. (a) TENANT shall at all times during the term
hereof carry Public Liability Insurance naming
LANDLORD as a named insured with single limit of
$3,000,000.00 (by basic or by excess coverage) for injury to any
one person, for any one accident, and for property damage. (b)
Prior to taking possession, TENANT shall deliver to the LANDLORD a
certificate of the insurance company certifying that the aforesaid
liability policy is in full force and effect. A certificate
evidencing the renewal of such liability insurance policy shall be
delivered to the LANDLORD at least twenty (20) days before the
expiration thereof, and each such renewal certificate shall
include the LANDLORD as an insured. TENANT may carry the
aforesaid insurance as part of a blanket policy provided, however,
that a certificate thereof naming the LANDLORD as an insured is
delivered to the LANDLORD as aforesaid. Such policy of insurance
or certificate shall also provide that said insurance may not be
cancelled or terminated unless ten (10) days! notice is given to
the LANDLORD prior to such cancellation and that the insurance as
to the interest of the LANDLORD shall not be invalidated by any
act or neglect of the TENANT. (c) TENANT shall, prior to doing any
work in the Demised Premises, obtain any and all permits necessary
therefor and will provide Workmen's Compensation Insurance and
Liability Insurance in the limits provided for in Article "24 (a)"
hereof (d) TENANT shall include in its fire insurance policies, if
any, covering damage or loss to its furniture, furnishings,
fixtures mid other property removable by TENANT under the
provisions of the Lease, appropriate clauses pursuant to which the
insurance carriers: (i) Waive all rights of subrogation
against LANDLORD with respect to losses payable under such
policies, or (ii) Agree that such policies shall not be
invalidated should the insured waive in writing prior to a loss
any or all right of recovery against any party for losses covered
by such policies. If TENANT, at any time, is unable to obtain
such inclusion of either of the clauses described in the preceding
sentence, TENANT shall, if possible, have LANDLORD named in such
policies as one of the insured, but should any additional premium
be exacted for any of such clauses or namings, then TENANT shall
be released from the obligation hereby imposed unless LANDLORD
shall agree to pay such additional premium within twenty (20) days
after receipt of written notice from TENANT that such additional
premium is required. (e) If at any time during the term of this
Lease TENANT shall bring anything in the Demised Premises or use
the Demised Premises in any manner which will increase the rate of
fire insurance premiums because of the extra hazardous nature of
that brought into the Demised Premises or the use thereof, (normal
office equipment shall not be deemed "extra Hazardous"), then and
in that event TENANT shall pay the entire amount of any increase
in fire and any other insurance premiums for insurance carried by
the LANDLORD on the Building of which the Demised Premises forms a
part. Notwithstanding anything to the contrary contained in this
Lease, if by reason of anything brought upon the Demised Premises
by any other tenant, or the use to which any other tenant may put
its premises the insurance premiums carried by the LANDLORD on
said Building shall be increased, this TENANT shall not be
responsible for any portion of such increase. (f) TENANT does
hereby indemnify and save LANDLORD harmless from and against any
and all claims arising during the term of this Lease for (i)
damages or injuries to goods, wares, merchandise and property
and/or for any personal injury or loss of life in, upon or about
the Demised Premises or (ii) claims due to TENANT's negligence in
the hallways, sidewalks, parking areas and other common areas,
except such claims as may be the result of the negligence of
LANDLORD, its agents, employees or contractors, or the failure of
LANDLORD to perform any of its obligations under this Lease in
which event LANDLORD shall indemnify TENANT.
USE, ASSIGNMENT 25. (a) Unless the LANDLORD shall have given its
SUBLETTING AND consent thereto, which consent LANDLORD agrees
ATTORNMENT: shall not be unreasonably withheld or delayed,
this Lease may not be assigned, nor may the
Demised Premises be sublet, in whole or in part.
If LANDLORD approves an assignment of all or part of the Demised
Premises, or unreasonably fails or refuses to so consent, TENANT
shall be relieved of liability as to that which is assigned as of
the effective date of the assignment. (b) Provided TENANT is not
then in default, after notice and the opportunity to cure, beyond
any grace period provided for under the terms, covenants and
conditions of this Lease, TENANT may have the right in whole or in
part to assign or sublet the Demised Premises subject to and upon
the Following terms and conditions: (i) The TENANT shall submit to
LANDLORD all of the terms and conditions of the proposed sublease
or assignment, together with all of the pertinent information
regarding the proposed subtenant or assignee and the proposed
subtenant's or assignee's credit information, as reasonably
requested by the LANDLORD; (ii) The LANDLORD may, upon receipt of
the aforesaid information, either approve or disapprove of the
proposed subtenant or assignee, and approval, if any, shall not be
unreasonably withheld; however, in determining reasonableness,
there shall be taken into consideration the reputation, financial
responsibility, and the general nature of said proposed
subtenant's or assignee's business and its general impact on the
Building and project as a whole. LANDLORD shall not be required
to consent to any sublet or assignment to any organization which
will use the space as an employment or payment office, school
(training programs are not deemed a "school") of any kind, or a
drug or welfare program of any kind, or any similar type of high-
traffic business and (iii) In the event the LANDLORD does approve
TENANT's subtenant or assignee, and subject to the provisions of
subparagraph (a) of this Article 25, TENANT shall remain liable
and responsible for all of the obligations and all of the terms,
conditions and covenants of this Lease and the TENANT shall pay to
the LANDLORD, as additional rent, any difference between the rent
and additional rent reserved in this Lease and the rent and
additional rent reserved in such sublease or assignment. (c)
TENANT covenants and agrees that if for any reason the interest
reason the interest of the LANDLORD in the Demised Premises is
terminated, the TENANT will attorn to the then holder of the
reversionary interest or to anyone who shall succeed to the
interest of the LANDLORD and will recognize each such successor in
interest to the LANDLORD as the TENANT's landlord of this Lease,
subject to the Following requirements. The TENANT agrees, upon
receipt of an executed non-disturbance agreement the same as or
substantially similar to the Subordination, Attornment and Non-
Disturbance Agreement between TENANT and General Electric Capital
Corporation signed simultaneously with the execution of the Main
Lease, to execute and deliver, at any time and from time to time,
upon the request of the LANDLORD, any instrument which may be
necessary or appropriate to evidence such attainment. Subject to
the foregoing, the TENANT further waives the provisions of any
statute or rule of law now or hereafter in effect which may give
or purport to give the TENANT any right of election to terminate
this Lease or to surrender possession of the Demised Premises in
the event any proceeding is brought by the Lessor under any
underlying lease to terminate the same, and agrees that this Lease
shall not be affected in any way whatsoever by any such
proceeding. (d) In the event that the TENANT should at any time
desire to assign or sublet this Lease, the TENANT shall not
advertise in any media, without the LANDLORD's prior written
consent, the fact that the space is available unless the
advertisement does not mention a price or mentions a price not
lower than the current asking price in the Building. (e) In no
event shall the TENANT be permitted to assign any portion of the
Demised Premises to any existing TENANT of the Building, nor shall
the LANDLORD be required to approve any such assignment. In
addition, TENANT may assign or sublet the Demised Premises without
LANDLORD's prior written consent subject, however, to the
following conditions: (1) TENANT shall have the right to assign or
sublease to a publicly traded, quality company whose net worth is
at least equal to the net worth of TENANT as of the date of this
Lease; and (2) To the extent that the TENANT subleases or assigns
at a Rent and Additional Rent above that which TENANT is paying to
LANDLORD, TENANT agrees that fifty percent (50%) of such overage
as and when paid by assignee or subleases shall be paid by TENANT
to LANDLORD for the sole use and benefit of the LANDLORD as an
item of Additional Rent after recoupment by TENANT of its
reasonable expenses in assigning or subletting, which expenses may
include reasonable brokerage and reasonable costs to prepare the
space for the subtenant; to the extent it is less with respect to
a sublease, TENANT shall be relieved of liability only to the
extent of the Rent and Additional Rent LANDLORD receives from an
approved subtenant. Notwithstanding anything contained herein to
the contrary, LANDLORD consents to a sublet or assignment to an
affiliate or subsidiary of TENANT provided nothing shall relieve
TENANT thereafter from full responsibility under the Lease.
RULES AND 26. TENANT agrees that it will abide by all of the
REGULATIONS: rules and regulations imposed by the LANDLORD
for the Building which the Demised Premises form a
part, as set forth on Schedule "B" annexed hereto, provided that
all future ones are reasonable, nondiscriminatory, do not
adversely affect TENANT's obligations herein and are promulgated
on twenty (20) days' notice.
LANDLORD'S 27. In the event that the LANDLORD shall default
LIABILITY: under the terms of this Lease and the TENANT
shall recover a judgment against the LANDLORD by
reason of such default, or for any other reason arising out of the
tenancy or use of the Demised Premises by the TENANT, or this
Lease, the LANDLORD's liability hereunder shall be limited to the
LANDLORD's interest in the land and Building of which the Demised
Premises form a part, and no further, and the TENANT agrees that
in any proceeding to collect such judgment, the TENANT's rights to
recovery shall be limited to the LANDLORD's interest in the land
and Building of which the Demised Premises form a part.
LANDLORD's liability (exclusive of insurance proceeds) in the
event of a judgment against LANDLORD as a result of a default
under the terms of this Lease is limited to two years' rent (and
additional rents), as defined in this Lease, and actually paid by
TENANT to LANDLORD in the two year period preceding the day on
which final judgment in favor of the TENANT was granted.
ENTIRE 28. This instrument contains the entire agreement
AGREEMENT: between the parties hereto and the same may not be
changed, modified or altered except by a document in
writing, executed and acknowledged by the parties hereto. Neither
LANDLORD nor LANDLORD's agents have made any representations or
promises with respect to the physical condition of the Building,
the land upon which it is erected, or the Demised Premises, the
rents, leases, expenses of operation or any other matter of thing
affecting or related to said premises except as herein expressly
set forth and no rights, easements or licenses are acquired by
TENANT by implication or otherwise except as expressly set forth
in the provisions of this Lease. TENANT has inspected the
Building and the Demised Premises and is thoroughly acquainted
with their condition, and agrees to take the same "as is" except
as set forth elsewhere herein.
All understandings and agreements heretofore made between the
parties hereto are merged in this contract, which alone fully and
completely expresses the agreement between LANDLORD and TENANT,
and any executory agreement hereafter made shall be ineffective to
change, modify, discharge or effect an abandonment of it, in whole
or in part, miless such executory agreement is in writing and
signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.
CERTIFICATES: 29. (A) Within fifteen (15) days of request by
either party, the other party agrees to execute
any certificate or certificates evidencing the commencement date
of the term of the Lease and the fact that the Lease is in full
force and effect, if such is the case, and that there are no set-
offs or other claims against the requesting party, or stating
those claims which the TENANT might have against the requesting
party. (B) Within five (5) days of request by the requesting
party, the other party agrees to execute a Memorandum of this
Lease, and any additional forms necessary for recording purposes,
in recordable form, which Memorandum shall set forth the
commencement date and termination date of the Lease and any other
required information needed to effectuate the recording.
SECURITY: 30. INTENTIONALLY OMITTED.
BROKER: 31. TENANT and LANDLORD represent to each other
that each dealt with no broker other than Sutton &
Edwards, Inc., in connection with the negotiations
and execution of this Lease and each party hereby indemnifies and
holds the other party harmless from any claims, suits, judgments,
or any expenses in connection with the foregoing by reason of any
claim made by any other broker with whom it may have dealt in
connection with this Lease other than the above named broker.
LANDLORD shall be responsible for the brokerage fees to said
broker pursuant to separate agreement and shall hold TENANT
harmless for said fees.
CONDITION
PRECEDENT: 32. INTENTIONALLY OMITTED.
SIGNAGE: 33. LANDLORD, at LANDLORD's expense, will furnish
and install, adjacent to suite entrance, a building
standard plaque which will exhibit the suite number
and the TENANT's name and/or the name of TENANTs affiliate or
subsidiary actually using said space. Additional names will be
deemed to be in excess of building standard. If TENANT wishes to
exceed building standard, TENANT must receive LANDLORD's prior
written consent, which consent LANDLORD shall not unreasonably
withhold. TENANT must submit a sample of the proposed signage which
must match LANDLORD's quality, style, color and all other
particulars of LANDLORD's building standard signage. The size of
TENANT's signage may be as large as the signage of any other tenant
in the Building. TENANT shall be entitled to the building standard
quality and size of building directory listing.
WORKLETTER: 34. LANDLORD, at its sole cost and expense, shall
design (including electric, telephone, computer
wiring and work station setup), furnish and install
with reasonable diligence all work and materials set forth in
Exhibit "A" attached hereto and made a part hereof. The
installation is intended by the parties to duplicate the quality
and provide the same pro-rata quantities utilized in the Main
Lease. To the extent the installation exceeds those standards,
TENANT shall be solely responsible for the cost and expense of the
excess. The parties shall agree, prior to the commencement of the
installation work, to what extent, if any, TENANT shall be
responsible for the cost and expense of the installation.
To the extent TENANT shall be responsible, LANDLORD or its
affiliate shall submit a Tenant Work Proposal for each item of
materials and/or work, which Tenant Work Proposal shall be
approved by TENANT before any such materials are supplied or work
is performed. TENANT shall receive a bill after the materials are
supplied and/or the work is performed. The Tenant Work Proposal
and the bill shall include a 1O% charge for overhead and an
additional 1O% charge for profit. TENANT agrees to pay that bill
promptly, as an item of additional rent, provided the materials
are properly supplied and the work properly performed. Hunter
Real Estate Construction Corp. ("Hunter"), an affiliate of
LANDLORD, shall be the general contractor for the installation
work, subject to and conditioned upon the consent of (GECC.
LANDLORD hereby guarantees to TENANT the work of Hunter. In the
event that Hunter shall be in material default in performing the
installation work, TENANT shall notify LANDLORD in writing, with a
copy to GECC.
TENANT'S 35. (a) LANDLORD, at LANDLORD's sole cost and
DRAWINGS: expense, agrees to furnish to TENANT complete
detailed architectural working drawings and
specifications for TENANT's partition layout, a reflected ceiling,
electrical duplex receptacles, and other installations required
for the performance of LANDLORD's Building Standard Work. (b)
TENANT agrees that its instructions for said plans and
specifications referred to in subsection (a) hereinabove will be
communicated to the LANDLORD. TENANT and LANDLORD shall mutually
cooperate on a timely basis in finalizing such drawings and
specification. (c) Within thirty (30) days of completion of
LANDLORD's above work, LANDLORD shall submit to TENANT an "as
built" reproducible tracing together with four (4) blueprint
copies thereof of all improvements in TENANT's Demised Premises.
ELECTRICITY: 36. The electricity from the Demised Premises will
be measured by LANDLORD attaching, at its sole cost
and expense, the wiring from the Demised Premises to
the separate meter already installed for the Main Lease. TENANT
will pay to LILCO directly the amount billed by LILCO. Any
default by TENANT in the timely payment to LILCO of all sums
billed by LILCO shall constitute a default under this Lease only
if LILCO withholds electricity from the Building, or otherwise
penalizes LANDLORD, as a result of TENANT's said default hi timely
payment, or unless such penalty is curable and is cured by TENANT
on a timely basis.
RIGHT OF 37. Provided that (a) has given LANDLORD seven (7)
CANCELLATION: months prior written notice that it will exercise
this right of cancellation and (b) is not in default
under the terms, conditions or covenants of this Lease beyond
applicable notice and grace periods on the date when notice is
given or on the date when this tight of cancellation is exercised,
TENANT may exercise this right of cancellation oil or after May
31, 2000 by paying to LANDLORD, in seven (7) equal monthly
installments, commencing upon notifying LANDLORD that it will
exercise this right of cancellation, a total sum computed as
follows: total cost of initial tenant installation divided by 105
months and multiplied by the number of months from the date the
cancellation becomes effective to the end of the lease term. If
this Lease is terminated during said seven (7) month period, an
payments due under this Article shall thereafter cease provided
that TENANT is not in default under the terms, conditions and
covenants of this Lease beyond applicable notice and grace
periods. If TENANT does not elect to cancel on or before May 31,
2000, then LANDLORD, at its sole cost and expense, shall repaint
and replace any carpeting having a useful life of less than six
(6) years in the Demised Premises (other than the Storage Space)
using similar paint and/or carpeting as used in Article 34 above,
with the work to be done during regular business hours. TENANT
agrees to cooperate in a commercially reasonable manner and
LANDLORD agrees to have the work performed in a commercially
reasonable manner.
CLEANING: 38. TENANT, at its sole cost and expense, shall
provide cleaning service within its Demised Premises.
LANDLORD shall not provide any cleaning service within TENANT's
Demised Premises and shall have no responsibility or liability to
TENANT for the, work or for any damage to persons or property
occasioned by TENANT's cleaning service. TENANT hereby agrees to
indemnify LANDLORD against any liability to anyone caused by or
attributable to TENANT's cleaning service and agrees to obtain
from said cleaning service insurance from a New York licensed
insurance company, with commercially reasonable policy limits,
against personal injury and personal property claims from third
parties, which insurance shall name as additional insureds both
LANDLORD and LANDLORD's managing agent.
OPTION TO RENEW: 39. LANDLORD hereby gives TENANT an option to
extend the term of this Lease for a period of
five (5) years on the same terms, covenants and
conditions herein except for this option to renew, the workletter,
the premises concession clause and the rent abatement clause. The
exercise of this option shall require strict compliance with the
following:
(a) TENANT shall notify LANDLORD in writing of its exercise of
the option no later than nine
(9) months prior to the expiration date of the initial term of
this Lease; and (b) at the time of
giving such written notice of election, and on the last day of the
initial term of the Lease, TENANT shall not be in default under
any of the terms, conditions or covenants of this Lease beyond
applicable notice and grace periods.
ADDENDUM TO 40. Notwithstanding anything to the contrary
ARTICLES 8, 14 contained herein, including, without
AND 15: limitation, any provisions of Articles 8, 14, and
15 above to the contrary, if the Demised Premises
are damaged or destroyed by fire or other casualty (collectively,
the "Casualty"), or if all or a portion of the Demised Premises
shall be taken permanently, or for a limited period by any
applicable condemning authority (collectively, the "Taking") or in
the event LANDLORD shall be required or shall otherwise elect (to
the extent such election is permitted by the terms of this Lease)
to make any repairs and/or maintenance to the Demised Premises
(the "Repairs and Maintenance") (the Casualty, the Taking and the
Repairs and Maintenance are hereinafter sometimes referred to in
this Article singly as a "Triggering Event" or collectively as the
"Triggering Events") then, provided TENANT is not in material
default beyond any applicable grace period and to the extent that
any of the Triggering Events shall prevent TENANT from utilizing
twenty-five (25%) percent or more of the Demised Premises or in
the event any such Triggering Event shall otherwise materially
adversely affect TENANT's intended uses and purposes of the
Demised Premises for a period (i) with respect to Repairs and
Maintenance of ninety (90) days or more or (ii) with respect to a
Casualty or Taking, of one (1) year or more (any of such periods
hereinafter referred to as the "Termination Period"), or in the
event the time to restore or repair the Demised Premises after the
occurrence or commencement of the Triggering Event is estimated to
take in excess of the Termination Period, then and in any such
event, TENANT shall be entitled at its sole discretion to
terminate this Lease by notice (the "Termination Notice") to the
LANDLORD within thirty (30) days after the later to occur of the
date of the Triggering Event or the date when TENANT first becomes
aware that LANDLORD'S obligations in connection with or by reason
of the Triggering Event shall not be completed prior to the end of
the Termination Period. In the event TENANT shall elect to
terminate this Lease as set forth above, (i) this Lease shall
terminate as of the date of the Triggering Event, (ii) all base
rent and other amounts payable under this Lease shall be
apportioned as of the date of the Triggering Event, (iii) TENANT
shall have a period of up to six (6) months from the effective
date of the Termination Notice in order to vacate and surrender
the Demised Premises but TENANT shall be required to pay all rent
and additional rent due hereunder on the portion of the Demised
Premises being used or occupied, and (iv) upon such apportioned,
vacating of the Demised Premises and any other obligations to be
performed by either party hereunder by reason of, or in connection
with such termination, the parties shall thereafter have no
obligations hereunder except for those obligations which
specifically survive the termination of this Lease. Also, in the
event any such Triggering Event shall occur within the last year
of the term of this Lease (or any renewal tenn) the Termination
Period shall be reduced (i) with regard to Repairs and
Maintenance, to sixty (60) days or more and (ii) with regard to a
Casualty or a Taking, to ninety (90) days or more.
Notwithstanding the ninety (90) day Termination Period with regard
to Repairs and Maintenance set forth above, in the event LANDLORD
shall be unable to complete such Repairs and Maintenance within
such ninety (90) day period for reason (s) beyond LANDLORD's
control as described in Article 8 (e) of this Lease and notifies
TENANT prior to the expiration of such ninety (90) day period
specifying in detail the reasons that such Repairs and Maintenance
could not be completed within such ninety (90) day period,
enclosing whatever documentation LANDLORD has or could readily
obtain to support those reasons and confirming in such notice that
to the best of LANDLORD's knowledge, such Repairs and Maintenance
will be completed within an additional 30-day period, then and in
only that event, LANDLORD shall have an additional period of
thirty (30) days in which to complete the Repairs and Maintenance.
TENANT during such additional thirty (30) day period shall retain
its right to terminate this Lease if the Repairs and Maintenance
shall, in fact, not be completed prior to the expiration of such
additional thirty (30) day period. In addition, TENANT agrees to
send copies of notices that TENANT sends to LANDLORD hereunder,
contemporaneously with the giving of such notices to LANDLORD,
also to the existing Mortgagee on the Building, General Electric
Capital Corporation, North Tower, Suite 3000, 100 Prospect Street,
Stamford, Connecticut 06927, Attention: Commercial Real Estate
Financial Department.
LANDLORD DEFAULTS: 41. A. The provisions of this Article shall
take precedence over all other Articles in
this Lease to the extent any provisions of such other Articles
are contradictory or inconsistent with the terms of this Article,
but the provisions of this Article are otherwise in addition to
any other tights and/or remedies afforded to TENANT by other
provisions of this Lease.
B.(i) For purposes of this Article, a failure
by LANDLORD to perform its obligations under paragraphs (a) and
(b) of Article 7 of this Lease shall be deemed a "default" by
LANDLORD immediately upon LANDLORD's failure to perform such
obligations without TENANT having any obligation to provide notice
of such failure to LANDLORD, except with regard to the first
default by LANDLORD under Article 7 (b) of this Lease with regard
to LANDLORD's provision of heat and/or air conditioning, which
shall not be deemed a default until LANDLORD fails to perform its
obligations under such paragraph for a period of five (5) days
after notice from TENANT to LANDLORD of such failure to perform.
(ii) Any other failure by LANDLORD to
perform its obligations under this Lease shall only be deemed a
"default" under this Article if LANDLORD fails to perform such
obligation within a period of five (5) days after notice from
TENANT to LANDLORD of such failure to perform.
(iii) It is understood and agreed that the
only difference for purposes of this Article between a default by
LANDLORD under subparagraph (i) above and a default under
subparagraph (H) above is whether LANDLORD is entitled to a period
of time to cure such failure to perform before it is classified as
a "default" under this Article. Once LANDLORD has failed to cure
such default after the appropriate cure period as set forth above,
if any, such failure shall constitute a "default" entitling TENANT
to exercise the remedies set forth in this Article (and other
provisions of this Lease). With regard to performance by LANDLORD
under Article 7 (b) of this Lease, it is understood that
LANDLORD's failure to provide the required amount of heat and/or
air conditioning shall be covered by subparagraph (i) above but a
true mechanical breakdown building-wide (or substantially
building-wide) affecting the Demised Premises shall be subject to
the notice and cure requirements of subparagraph (ii).
(iv) In order to measure objectively whether
the temperature in the Demised Premises is in compliance with the
provisions of Article 7 above, LANDLORD shall be required to
install at its expense a sufficient number of appropriate
measuring devices and recording devices in various locations of
the Demised Premises, the number of which and the location of
which shall be subject to the approval of TENANT and TENANT's HVAC
engineer or advisor, which approval shall not be unreasonably
withheld or delayed. The temperature readings on such appropriate
measuring devices, absent mechanical breakdown, shall be binding
upon LANDLORD and TENANT and shall serve as the basis for
determining whether LANDLORD has complied with its obligations as
specified in the letter dated March 23, 1994.
(v) TENANT shall be required to send copies
of any notices that TENANT gives under this Article to LANDLORD,
contemportaneously with the giving of such notices to LANDLORD,
also to the existing Mortgagee on the Building, General Electric
Capital Corporation, North Tower, Suite 3000, 100 Prospect Street,
Stamford, CT 06927, Attention: Commercial Real Estate Financing
Department.
(vi) It is further understood that with
regard to defaults by LANDLORD which are subject to the notice and
cure provisions set forth in subparagraph (ii) above, the
provisions of Article 8 (e) shall be applicable as a justifiable
basis for LANDLORD's failure to perform its obligations on a
timely basis provided: (1) LANDLORD continues with all due
diligence to correct the problem notwithstanding such force
majeure occurrence, (2) LANDLORD notifies TENANT prior to the end
of the five (5) day cure period specifying in detail the reasons
that such obligations could not be satisfied within such five (5)
day period, enclosing whatever documentation LANDLORD has or could
readily obtain to support these reasons and confirming in such
notice when, to the best of LANDLORD's knowledge, such obligation
will be satisfied and (3) such force majeure occurrence has not
been caused in any manner by LANDLORD's own economic situation,
LANDLORD's failure to operate the entire facility as a first-class
office building and/or LANDLORD's willful acts which adversely
affect or affected LANDLORD's failure to timely perform its
obligations hereunder. It is understood that it will be presumed
that LANDLORD's failure to perform its obligations under the Lease
were for non-force majeure reasons and the burden is absolutely
and solely upon LANDLORD to show that such failure to perform was
caused by an event covered by Article 8 (e) of this Lease.
C. (i) For purposes of this Article, a "Lease
Year" shall be deemed to run for a period of twelve (12) months as
of any particular day during the term of this Lease (including
renewal terms).
(ii) Upon the occurrence of the first "default"
by LANDLORD hereunder in any Lease Year, TENANT shall be entitled
to offset against base rent or any other amounts due from TENANT
to LANDLORD hereunder, TENANT's actual expenses necessary to cure
LANDLORD's default (the "Cure Expenses"), which cure TENANT shall
be entitled to perform at TENANT's sole option but without any
obligation to do so ("TENANTs Cure").
(iii) Upon the occurrence of the second
"default" by LANDLORD hereunder in any Lease Year, TENANT shall be
entitled to offset against base rent or any other amounts due from
TENANT to LANDLORD hereunder, an amount equal to the higher of
$2,500 or TENANT's Cure Expenses incurred in performing TENANT's
Cure.
(iv) Upon the occurrence of the third "default"
by LANDLORD hereunder in any Lease Year, TENANT shall be entitled
to offset against base rent or any other amounts due from TENANT
to LANDLORD hereunder, an amount equal to the higher of $ 15,000
or TENANT's Cure Expenses incurred in performing TENANT's Cure.
(v) Upon the occurrence of the fourth "default"
by LANDLORD hereunder in any Lease Year, TENANT shall be entitled
to offset against base rent or any other amounts due from TENANT
to LANDLORD hereunder, an amount equal to the higher of $15,000 or
TENANT's Cure Expenses incurred in performing TENANT's Cure.
(vi) Upon the occurrence of the fifth "default"
by LANDLORD hereunder in any Lease Year, TENANT shall be entitled
to offset against base rent or any other amounts due from TENANT
to LANDLORD hereunder, an amount equal to the higher of $30,000 or
TENANT's Cure Expenses incurred in performing TENANT's Cure.
(vii) Upon the occurrence of the sixth "default"
by LANDLORD hereunder in any Lease Year, TENANT shall be entitled
to offset against base rent or any other amounts due from TENANT
to LANDLORD hereunder, an amount equal to the higher of $50,000 or
TENANT's Cure Expenses incurred in performing TENANTs Cure.
(viii) Upon the occurrence of the seventh
"default" by LANDLORD hereunder in any Lease Year, TENANT shall be
entitled to offset against base Tent or any other amounts due from
TENANT to LANDLORD hereunder, an amount equal to the higher of
$75,000 or TENANT's Cure Expenses incurred in performing TENANTs
Cure.
(ix) Upon the occurrence of the eighth and
subsequent "defaults" by LANDLORD hereunder in any Lease Year, the
base amount to be offset by TENANT shall be increased by $25,000
over the amount for the previous default by
LANDLORD.
(x) Notwithstanding the foregoing, TENANT shall
be entitled to the offsets set forth in subparagraphs (vi), (vii),
(viii) and (ix) during any Lease Year only in the event the
defaults covered by such subparagraphs occurred due to the
negligence, willfulness, recklessness, disregard or otherwise
through a pattern of neglect by LANDLORD in its obligations
hereunder. It is understood, however, that it will be presumed
that defaults by LANDLORD and remedies under those subparagraphs
shall be fully applicable and the burden will be upon the LANDLORD
to show that the occurrence of such defaults were (1) due to the
normal wear and tear and maintenance requirements of the Building
(taking into account LANDLORD's obligation to operate this
Building as a first-class office building) or (2) otherwise not
due to the negligence, willfulness, recklessness, disregard or
pattern of neglect of LANDLORD, such as under certain
circumstances or events which occur due to reasons beyond
LANDLORD's control.
D. In addition to the foregoing, during the Lease
Year in which the expiration date of the term of this Lease (or
renewal term as the case may be) shall occur, TENANT shall be
entitled, at its sole option, at such time as the base rent and
other amounts due from TENANT to LANDLORD hereunder shall be
insufficient to reimburse TENANT in full for LANDLORD's defaults
hereunder based upon the number of defaults at any given time
during that year, to terminate this Lease upon fifteen(15) days
notice to LANDLORD in which event upon the exercise of such option
by TENANT, this Lease shall terminate with the same force and
effect as if such termination date were the expiration date of
this Lease except that TENANT shall have a period of up to the
shorter of (1) six months from the date of TENANT's notice of
termination, or (2) the remaining term of this Lease, to vacate
and surrender the Demised Premises to LANDLORD, but TENANT shall
be required to pay all rent and additional rent due hereunder on
the Demised Premises being used or occupied during that period to
the extent such rent obligation exceeds the credit to which TENANT
is otherwise entitled.
IN WITNESS WHEREOF, LANDLORD and TENANT have respectively signed
and sealed this Lease as of the day and year first above written.
WITNESS FOR LANDLORD: TRIAD III ASSOCIATES
By: TRIAD LAND ASSOCIATES
/S/ Sylvia Feldman By:/S/ Irving Feldman
WITNESS FOR TENANT: STAFF BUILDERS, INC.
/S/ Edward McNicholas By:/S/ David Savitsky
EXHIBIT
10.76<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (hereinafter referred to as the
"AGREEMENT") is made and entered into as of the 30th day of
August,1995, by and between STAFF BUILDERS SERVICES, INC.,a New
York Corporation (the "BUYER") , MEDVISIT, INC., a North
Carolina Corporation (the "SELLER") and ROGER JACKSON PLEASANT,
as President and Sole Stockholder of MEDVISIT, INC. ("PLEASANT").
BACKGROUND
WHEREAS, PLEASANT owns all of the issued and outstanding
capital stock (the "Stock") of MEDVISIT, INC., a North Carolina
Corporation;
WHEREAS, Pleasant is the President and Sole Stockholder of
MEDVISIT, INC.;
WHEREAS, SELLER owns and operates certified home health care
agencies pursuant to Certificates of Need dated May 3, 1982 and
January 10,1992 as well as licensed and certified home agencies
serving the following counties: Rockingham, Caswell, Person,
Granville, Vance, Warren, Guilford, Alamance, Orange, Durham,
Franklin and Wake (the "Business"); and
WHEREAS, PLEASANT and SELLER desire to transfer and sell to
BUYER, and BUYER desires to purchase and acquire from PLEASANT
and SELLER, the Stock of MEDVISIT, INC., in accordance with the
terms and provisions hereafter set forth.
NOW, THEREFORE, for and in consideration of the mutual
agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby,
PLEASANT,SELLER and BUYER covenant, represent, warrant, stipulate
and agree as follows:
ARTICLE 1. PURCHASE AND SALE OF STOCK
1.1 Purchase and Sale of Stock. At the Closing (as
hereinafter defined) , subject to the terms of and conditions of
this AGREEMENT, PLEASANT and SELLER agree to sell, transfer,
convey, deliver and assign to BUYER all right, title and interest
in and to the Stock of MEDVISIT, INC., free and clear of all
liens and encumbrances except for those set forth herein, for the
consideration hereinafter set forth.
ARTICLE 2. CLOSING DATE: TRANSFER OF STOCK
2.1 Closing and Closing Date. The Closing hereunder (the
"Closing") shall take place at the offices of Wyrick, Robbins,
Yates,& Ponton L.L.P., 4101 Lake Boone Trail, Suite 300, Raleigh,
North Carolina 27619, at 9:00 a.m., on August 30, 1995, or on
such other earlier date and time as may be agreed to in writing
by PLEASANT, SELLER and BUYER. The date upon which the Closing
occurs shall be the "Closing Date".
2.2 Transfer of Stock. PLEASANT shall, at the Closing on
the Closing Date, deliver to BUYER a certificate for the Stock,
together with a stock power duly endorsed in favor of BUYER.
ARTICLE 3. PURCHASE PRICE FOR THE STOCK
3.1 Purchase Price for the Stock. The purchase price (the
"Purchase Price") for the Stock payable by Buyer to PLEASANT for
the Stock shall be an amount equal to the sum of Six Million Five
Hundred Thousand Dollars ($6,500,000.00), payable as follows: a
Promissory Note from the BUYER to PLEASANT in the aggregate
amount of ($2,975,000.00), a copy of which is attached hereto as
Exhibit I; a payout under the Non-Competition Agreement in the
aggregate amount of Two Million Twenty-Five Thousand Dollars
($2,025,000.00), a copy of which is attached hereto as Exhibit
II; and the balance of One Million Five Hundred Thousand
($1,500,000.00) (the "CASH"), less the setoffs described herein,
due and payable at Closing pursuant to Section 3.3.
3.2 Payment of the Purchase Price. The CASH to be paid by
BUYER to PLEASANT and the persons and/of entities listed on
Schedule 4.21 at the time of Closing shall be in cash, via Fed
Wire Transfer to be credited to the bank accounts of PLEASANT and
the parties listed on schedule 4.21 before noon on the day of the
Closing. The CASH to be paid at Closing is subject to adjustment
as hereinafter provided in Section 3.3 In consideration of the
purchase of the Stock of SELLER from PLEASANT, BUYER agrees to
assume all liabilities of any kind or type of the SELLER existing
or owing on the Closing Date which were disclosed to the BUYER,
on Schedule 4.6(b) or listed on the audited financial statements
and records of SELLER previously furnished to BUYER, or incurred
by SELLER between the date of the audited financial statements
and the date of Closing, only so far as set forth on Schedule
4.6(b) or which are the result of Medicare or Medicaid audit
activities for any period(s) up through the Closing Date relating
to items submitted in the ordinary course of business and
consistent with prior business practices.
3.3 Adjustment to Purchase Price. (a) The Purchase Price
CASH due and payable by BUYER to PLEASANT at Closing is subject
to adjustment as a result arising out of: (1) The receivable(s)
due from officer(s) of SELLER in the amounts set forth on
Schedule 3.3; (2) The intercompany receivable and/or investment
in Always Vinyl, Inc., in the amounts set forth on Schedule 3.3;
(3) Interest and penalties due and payable as a result of any
underpayment of payroll taxes as on the originally filed second
and third calendar quarters 1995 federal and state payroll tax
returns and reports from May 1,1995 through Closing in the
amounts set forth on Schedule 3.3; (4) An amount of $160,000.00
representing a final audit adjustment of Medicare receivables as
reflected on the June 30,1995 audited financial statements; and
(5) Payment to Edgewater Capital Corporation in the amount of
$75,000.00, as set forth on Schedule 3.3.
(b) BUYER hereby agrees to advance sufficient funds on
behalf of SELLER, required to settle in full the federal and
state payroll tax liabilities arising from the second and/or
third calendar quarters 1995, including all penalties and
interest as negotiated by Coopers & Lybrand L.L.P. when requested
by PLEASANT. Said funds advanced for the benefit of SELLER which
are utilized solely for the payment of the interest and penalties
due on any unpaid or underpaid tax liabilities shall be included
on Schedule 3.3 as a setoff of the monies due to PLEASANT at the
time of the Closing.
(c) If and when the proposal to the University of North
Carolina Hospitals from MEDVISIT, INC. for Home Health Care
Provisions submitted in response to RFP 14658 is finalized,then
BUYER shall pay to PLEASANT the full amounts adjusted in Section
3.3(a)(3) and Section 3.3 (a)(4) above upon execution of the
proposed agreement with UNC.
ARTICLES 4. REPRESENTATIONS AND WARRANTIES OF SELLER
SELLER hereby represents and warrants to BUYER both as of
the date hereof and the Closing Date as follows:
4.1 Organization of SELLER; Good Standing; Qualifications;
Charter and By-Laws. SELLER is a corporation, duly organized,
validly existing and in good standing under the laws of the State
of North Carolina. SELLER has the requisite corporate power and
authority to own, lease, and operate its properties and to
conduct its business as currently conducted. No actions or
proceedings to dissolve SELLER are pending.
4.2 Authority. (a) SELLER has full power and has taken all
corporate action necessary to execute, deliver and perform this
AGREEMENT and to carry out the transactions contemplated hereby.
The execution, delivery and performance of this AGREEMENT and the
other Transaction Documents (as hereinafter defined) to which it
is a party constitute the legal, valid and binding obligation of
SELLER enforceable against SELLER in accordance with its terms,
except to the extent that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights generally, and (ii)
equitable principles which may limit the availability of certain
equitable remedies (such as specific performance) in certain
instances. For purposes of this AGREEMENT, "Transaction
Documents" shall mean this AGREEMENT and the schedules hereto,
each certificate delivered pursuant hereto, each exhibit hereto,
in executed form and all other documents and agreements executed
and delivered to BUYER pursuant hereto at the Closing.
(b) Neither the execution or delivery of this AGREEMENT and
the other Transaction Documents nor the consummation of the
transactions contemplated hereby will (i) except for obtaining
the required consents as set forth on Schedule 4.2 and except for
obtaining any consent were the failure to obtain such consent
would not materially or adversely affect the asserts or the
financial conditions of the SELLER, conflict in any material
respect with, constitute a material breech, violation or
termination of any provision of any contracts and other
agreements to which the SELLER is a party or by which either of
them is bound,(ii) conflict with or violate the Articles of
Incorporation or By-Laws of SELLER, or (iii) to the knowledge of
SELLER, materially violate any statute,law, regulation,
judgement, rule, order or any other restriction of any kind or
character applicable to SELLER, except for any statute, law,
regulation, judgement, rule, order, license, permit, or any other
restriction, were the violation thereof would not materially or
adversely affect the Stock, the assets or the financial
conditions of the SELLER, as the case may be.
4.3 Approvals, Other Authorizations - SELLER.
Except as set forth on Schedule 4.2, no consent, waiver,
authorization or approval of, giving of notice to or registration
or filing or taking of any other action in connection with, any
governmental authority or of any other person is necessary in
connection with the execution and delivery of this AGREEMENT by
SELLER and the consummation of the transactions contemplated
hereby, except were the failure to obtain such consent would not
materially and/or adversely affect the assets or financial
condition of SELLER.
4.4 Capitalization of SELLER. (a) SELLER is a corporation,
duly organized, validly good standing under the laws of the State
of North Carolina. Neither the nature of its assets or business
requires SELLER to register to conduct business in any other
jurisdictions. A true and complete copy of the Articles of
Incorporation and the By-Laws of SELLER as currently in effect
have been delivered heretofore to BUYER. SELLER has no
subsidiaries and is not a partner in any partnership nor a
participant in any joint venture, other than is set forth on
Schedule 4.4.
(b) The authorized capital stock of SELLER consists of
100,000 shares of common stock, par value $1.00 per share of
which 10,000 are issued and outstanding to PLEASANT. The 10,000
shares of stock of SELLER issued to PLEASANT are all of the
issued and outstanding shares of the SELLER. The Stock has been
duly authorized and validly issued and is fully paid and
nonassessable. The Stock is owned by PLEASANT free and clear of
any liens, claims, pledges or other encumbrances, except for
those disclosed on Schedule 4.4 and/or Schedule 13.5. The Stock
has not been issued in violation of any preemptive right of
shareholders and there are no outstanding warrants, calls,
options, or other rights or claims with respect to the Stock or
the issuance or transfer of the Stock. There are no Shareholder
agreements or voting trust agreements or other agreements with
respect to the Stock. At Closing, PLEASANT shall transfer good
and valid title to the Stock to BUYER, free and clear of any
liens, claims, pledges, rights or other encumbrances. There is no
outstanding right, subscription, warrant, call, unsatisfied
preemptive right, option to other agreement of any kind to
purchase or otherwise to receive from SELLER any of the
outstanding, authorized but unissued, unauthorized or treasury
shares of the capitol stock or any other security of any kind of
the SELLER, and there is no outstanding security of any kind
convertible into such capital stock.
(c) SELLER has heretofore delivered to BUYER true and
complete copies of the Certificate of Incorporation and By-Laws
of the SELLER as in effect as of the date hereof. The minute
books of the SELLER contain true and complete records in all
material respects of all meetings of the Board of Directors, and
committees of the Board, and of the stockholders since the time
of the SELLER's incorporation and accurately reflect all
transactions referred to in such minutes and consents in lieu
meeting. The stock books and ledgers of SELLER are true and
complete.
(d) The sale of the Stock by the SELLER to BUYER is exempt
from registration under applicable federal and state Securities
laws.
4.5 Approvals, Licenses and Other Authorizations - SELLER.
All material licenses, permits and other governmental
authorizations and approvals of all federal, state, and local
governmental authorities required or necessary for SELLER to
operate have been duly obtained and are in full force and effect,
except where the failure to so comply would not have a material
adverse effect upon the financial condition of the SELLER. The
sale of the Stock and the consummation of the transaction
contemplated by this AGREEMENT and the other Transaction
Documents will not result in the termination or revocation of any
license,permit or other governmental authorizations of SELLER.
SELLER has, in all material respects, operated its business in
accordance with all applicable federal, state and local laws,
rules and regulations except noncompliance would not have a
material and adverse impact on the financial condition or
Business of SELLER. There are no proceedings pending or, to the
best of SELLER's knowledge, threatened to restrict, revoke or
modify such licenses, permits or other governmental
authorizations and approval of SELLER or to the best of the
SELLER's knowledge, matters which could give rise to such
proceedings.
4.6 Financial Statements; Liabilities. (a) SELLER will
have delivered to Buyer prior to closing a copy of the audited
balance sheet of SELLER as of June 30, 1995, and the related
audited statement of revenues and expenses, changes in fund
balances and statement of cash flows (the "Financial Statement")
The Financial Statements have been prepared from the books and
records of SELLER on a consistent basis in accordance with
generally accepted accounting principles, as of the date and for
the period then ended. The Financial Statements are based upon
the books and records of the SELLER and fairly represent the
financial position of SELLER and its result of operations for the
period then ended.
(b) Attached hereto as Schedule 4.6(b) is a true and
complete list of SELLER's liabilities as of June 30,1995,
complete with a list of those incurred from July 1,1995 to the
date of Closing, except as incurred in the ordinary course of
business and consistent with prior business practices. Other than
as disclosed in the Financial Statements, as supplemented by
Schedule 4.6 (b), SELLER has no knowledge of any threatened
claims, actions or investigations which would result in the
incurrence of any additional liabilities by SELLER, which are
required under generally accepted accounting principles to be
included on financial statements.
(c) SELLER has no material indebtedness, liability or
obligation of any character whatsoever, whether or not accrued,
whether known or unknown, fixed or unfixed, choated or unchoated,
liquidated or unliquidated, contingent or otherwise, including
without limitation liabilities for taxes, other governmental
charges or pending lawsuits, other than (i) liabilities reflected
in the Financial Statements, or (ii) liabilities incurred in the
ordinary course of business and consistent with prior business
practices since the date of the
Financial Statements, (iii) as otherwise permitted by this
AGREEMENT.
4.7 Absence of Certain Events. Since June 30,1995, SELLER
has operated his business in the ordinary and normal course and,
except as disclose to BUYER in writing on Schedule 4.7, there has
not been:
(a) any material damage, destruction or loss, whether
covered by insurance or not, adversely affecting the assets,
properties and/or Business of SELLER;
(b) except as set forth in Schedule 4.7, any increase or
decrease in the compensation payable or to become payable to any
of SELLER's officers or management employees or material change
in any insurance,pension, or other benefit plan, payment or
arrangement made to, for or with any of SELLER's officers or
management employees, any material commission or bonus paid to
any of such officers or management employees or any material
amendment to any employment or benefit plan;
(c) any sale, assignment, transfer, lease or other
disposition of any material asset of SELLER except as set forth
in Schedule 4.7, other than in the ordinary cause of business
consistent with past practices;
(d) any acquisition of any assets, other than in the
ordinary course of business consistent with past practices;
(e) Any material transaction, contract or commitment entered
into which is not in the ordinary course of business and
consistent with past practices;
(f) any material adverse change in the assets, Business or
financial condition of SELLER except as disclosed to Buyer in
writing;
(g) any amendment to the Articles of Incorporation or By-
Laws of SELLER;
(h) any issuance by SELLER of any options or rights of any
commitment to pay dividends as to any of its capital stock;
(i) any loan or advance by SELLER to any shareholder,
director, officer, employee, agent, consultant or other
representative of SELLER other than in the ordinary course of
business;
(j) any payment or commitment to pay severance or
termination pay any officer, director, employee, agent,
consultant or representative of SELLER other than in the ordinary
course of business; or
(k) except as set forth on Schedule 4.7, any debt or
liability other than in the ordinary course of business or as
otherwise permitted pursuant to the terms of this AGREEMENT.
4.8 Title to and Condition if Properties. (a) Schedule 4.8
hereto contains a list of all real property owned or leased by
SELLER, and a true and complete copy of the deed therefor and
each such lease with respect thereto has been delivered to BUYER.
Without limiting the generality of the foregoing, as to leasehold
estates leased by SELLER, as lessee, SELLER has quiet and
peaceable possession of each of the leased properties and other
than statutory rights of distraint or similar rights of
landlords, and SELLER has not pledged, assigned, mortgaged or
otherwise encumbered its leasehold interest in any such
leasehold estate. All leases and subleases to which SELLER is a
party are in all material respects in full force and effect, and
there are no material defaults thereunder. With respect to such
leases, no default or event of default on the part of the SELLER,
as lessee, and to the knowledge of SELLER, no default or event of
default on the part of the lessor, under the provisions of any
said leases, and no event which with the giving of notice or
passage of time,or both, would constitute such default or event
of default on the part of the SELLER, or to the knowledge of
SELLER,on the part of any such lessor, has occurred and is
continuing unremedied or unwaived when such default would have a
material adverse effect on the assets and the business of SELLER.
(b) SELLER has good and valid title to all of its assets and
properties, including without limitation, a valid leasehold
interest in all leased property and real estate of SELLER, free
and clear of all liens, security interests, and other
encumbrances, except as set forth on Schedule 4.8(b) hereto.
(c) The assets of SELLER including, but not limited to, all
machinery, equipment, furniture and fixtures are in good
operating condition and repair for assets of such age and type,
subject to ordinary wear and tear and the use to which such
assets have been employed.
(d) A list of all tangible personal property as recorded on
the books and records of SELLER is included on Schedule 4.8.
Schedule 4.8 also contains a list of all lease of personal
property under which SELLER is a lessee or lessor involving
tangible personal property requiring annual lease payments or
revenue in excess of $1000.00 (true, accurate and complete copies
of which leases have been previously been delivered to BUYER).
4.9 Contracts and Commitments. (a) Except as set forth on
Schedule 4.9(a), as of the date hereof, SELLER has not made any
other contract or agreement or granted an option to sell or
otherwise transfer any part of its assets or entered into any
understanding or agreement in principle respecting any such
transaction with anyone other than BUYER.
(b) As of the date hereof, SELLER has not made any contract
or agreement or granted any option to sell or otherwise transfer
the Stock or any part thereof or entered into any understanding
or agreement in principle respecting any such transaction with
anyone other than BUYER.
4.10 Section intentionally omitted.
4.11 Tax Returns and Tax Audits. (a) SELLER, has filed with
all appropriate governmental agencies all tax or information
returns and tax reports required to be filed and has paid or
established accruals for all federal, state and local income,
franchise, sales, property, excise, ad valorem, employment
(including applicable withholdings for FICA, FUTA and other
required federal, state or municipal withholdings) and all
interest, penalties, assessments or deficiencies claimed to be
due by any such taxing authority for all periods prior to the
current taxable period, other than those disclosed on Schedule
4.11. No extension of time to file any tax returns of SELLER have
been requested that are currently effective.
(b) SELLER is not a party to any pending or threatened
action or proceeding by any governmental taxing authority for
assessment or collection of taxes, and no claim for assessment or
collection of taxes has been asserted against SELLER other than
those disclosed on Schedule 4.11. SELLER is not subject to any
pending audit or examination by any governmental taxing authority
for assessment or collection of taxes other than those disclosed
on Schedule 4.11.
4.12 Insurance. Attached hereto as Schedule 4.12 is a list
and description of all general liability, director and officer,
property and casualty insurance policies currently in force
providing coverage on behalf of SELLER including, without
limitation, for the following: malpractice or negligent or
grossly negligent acts or omissions by SELLER, general casualty,
property damage and flood insurance. Except as set forth on
Schedule 4.12, all of such insurance is now in full force and
effect and premiums with respect to such policies have been paid
to keep such insurance in full force and effect through the dates
set forth in Schedule 4.12. True and complete copies of all such
policies and any endorsements thereof have been previously
delivered to BUYER. There are no outstanding unpaid claims for
insurance with respect to the insurance policies of SELLER.
Seller has not received any notice of cancellation or nonrenewal
with respect to the insurance policies providing coverage of
SELLER.
4.13 No Litigation, Adverse Events or Violations. (a)
Except as set forth on Schedule 4.13 hereto, there is no action,
suit, claim, or other proceeding pending against SELLER. There
is not action, suit, claim or other proceeding, or to the best of
SELLER's knowledge, threatened against SELLER. There are no
injunctions or orders entered, pending or, to the best of
SELLER's knowledge, threatened against seller.
(c) There are no actions, suits, claims, or proceedings
pending or to the knowledge of SELLER, threatened that would give
rise to any right of indemnification on the part of any director
or officer of SELLER or the heirs, executors or administrators of
any such director, officer, against SELLER.
4.14 Labor Agreements. SELLER is not and has never been a
party to and is not bound by any collective bargaining agreement.
4.15 Employee Benefit Plans. (a) To the knowledge of
SELLER, except as set forth on Schedule 4.15 hereto, SELLER does
not have any Benefit Plans, as defined in paragraph (1) below,
nor has SELLER maintained or contributed to any Benefit Plans
subject to Title IV of ERISA.
(b) To the knowledge of SELLER, all persons who participate
in the operations of each Benefit Plan (including but not limited
to the members of any plan committee, all plan fiduciaries, all
plan administrators, SELLER, its Board of Directors, and all
relevant employees of SELLER), act and have always acted with
respect to each Benefit Plan in all material respects in
reasonable accordance with the material requirements of all
applicable laws (including but not limited to the Employee
Retirement Income Security Act of 1974, as amended, and any rules
and regulations promulgated thereunder ("ERISA"), and the
Internal Revenue Code of 1986, as amended, and any and all rules
and regulations promulgated thereunder (the "Code")), and in
reasonable accordance with the material terms and conditions of
each such Benefit Plan.
(c) To the knowledge of SELLER, all Benefit Plans are now,
and have always been established, maintained and operated in all
material respect in accordance with all applicable laws
(including but not limited to ARISE and the Code) and in
accordance with the terms and conditions of each such Plan.
(d) All returns, reports, disclosure statements and
elections required to be made on Form 5500 for Seller's 401(k)
plan have been timely and accurately filed, delivered, or made.
(e) To the knowledge of SELLER, with respect to any of the
Benefit Plans, no reportable events (within the meaning of ARISE
and the Code, respectively), prohibited transactions (within the
meaning of Section 4975 of the Code) or party-in-interest
transactions (within the meaning of Section 406 of ERISA) have
occurred.
(f) To the knowledge of SELLER, except as described in
Schedule 4.15 hereto and except with respect to income taxed on
benefits paid or provided, no income, excise or other tax or
penalty (federal or state) has been waived or excused, has been
paid or is owed by any person (including and SELLER) with respect
to any Benefit Plan. To the knowledge of SELLER, no action has
been taken nor has there been any failure to take any action, or
is any action contemplated, that would subject any person or
entity to any liability for any tax or penalty in connection with
any Benefit liability for any tax or penalty in connection with
any Benefit Plan (including but not limited to any tax or penalty
for the failure to withhold income taxes in connection with
fringe benefits).
(g) To the knowledge of SELLER, except as set forth on
Schedule 4.15, all contributions required to be made to or with
respect to each Benefit Plan have been completely and timely
made.
(h) To the knowledge of SELLER, all Benefits or other
payments required to be made under or by any Benefit Plan have
been completely and timely made.
(i) To the knowledge of SELLER, there has been no merger,
consolidation or transfer of assets or liabilities (including but
not limited to a split up or split off) with respect to any
Benefit Plan.
(j) To the knowledge of SELLER, there are no actions, suits,
or claims (other than routine claims for benefits) pending or
threatened against the Benefit Plans or their assets, or arising
out of such Benefit Plans, including but not limited to any
action, suit or claim by or on behalf of the Benefit Plans or by
any employee of the Seller alleging a breach or beaches of
fiduciary duties or violations of applicable state or federal law
which could result in liability on the part of either SELLER or
the Benefit Plans under ERISA or any other law, and, to SELLER's
best knowledge, no facts exist which could give rise to any such
actions, suits or claims.
(k) SELLER has therefore delivered to BUYER, to the
knowledge of SELLER true and complete copies of all current and
prior material documents, including all amendments thereto, with
respect to each of the Benefit Plans set forth in Schedule 4.15
hereto, and SELLER hereby agrees to transfer to BUYER, upon
Closing, all records in connection with each Benefit Plan to be
assumed by Buyer hereunder. All such records shall accurately
state the history of each participant and beneficiary in
connection with each Benefit Plan and accurately state the
benefits earned by and/or owed to each such person under each
Benefit Plan.
(1) For purposes of this Section 4.15, the term "Benefit
Plan" includes but is not limited to (i) pension, retirement,
profit sharing, stock bonus, and nonqualified deferred
compensation plans, (ii) disability, medical, dental, worker's
compensation, health insurance, life insurance, and incentive
plans, (iii) vacation benefits and fringe benefits, (iv) any
other employee benefit plan as such term is defined in Section
3(3) of ERISA, and (v) any cafeteria plan, accident and health
plan (including self-insured medical reimbursement plan), or
dependent care assistance program (as such terms are defined in
Sections 125, 105 and 129, respectively, of the Code).
(m) SELLER has complied in all material respects with the
continuation coverage requirements of Section 4980B of the Code
which applies to any employees of SELLER prior to the Closing.
4.16 Trade Names. SELLER does not conduct business under any
name other than listed on Schedule 4.16.
4.17 Bank Accounts. Schedule 4.17 contains a list setting
forth the name of each bank, savings and loan or other financial
institution in which SELLER has any account, safe deposit box,
holds any certificates of deposit or other investments, including
the type of each such account, the names in which each account,
safe deposit box, certificates of deposit or other investments
are held, the names of each person authorized to draw thereon or
have access thereto, and the amounts held in each such account or
such boxes or the fair market value of such certificates of
deposit or other investments as of the date designated on
Schedule 4.17.
4.18 Accounts Receivable and Notes Receivable. All accounts
receivable and notes receivable of SELLER represent and
constitute bona fide indebtedness-owing to SELLER in the amounts
indicated in the Financial Statements of SELLER, with no known
material setoffs (other than SELLER's customary allowances for
uncollectible accounts and contractual adjustments as indicated
thereon and adjusted for estimated for recovery of bad debt).
4.19 Licenses and Permits. Set forth on Schedule 4.19, to
the knowledge of SELLER, is a true and complete listing of all
material licenses, permits, certificates of need and approvals
from any governmental authority required for the operation of
SELLER's Business as conducted at present. To the knowledge of
SELLER, each such license, permit, certificate of need and
approval held by SELLER to conduct its Business is in full force
and effect. Seller is in compliance with all of its obligations
with respect thereto, and to the best knowledge of SELLER, no
event has occurred which permits or with the giving of notice or
the passage of time or both would permit, the revocation or
termination of any therefor, except as set forth on Schedule 4.19
hereto. The sale of the Stock and the consummation of the
transactions contemplated by this AGREEMENT will not result in
the termination or revocation of any such license, permit,
certificate of need or approval by which SELLER is bound or to
which SELLER is subject.
4.20 Directors, Officers and Employees. Set forth on
Schedule 4.20 is a true and complete list of the directors and
officers of SELLER, and each employee of SELLER, together with
the current position of each such employee and the current amount
of salaries and bonuses of each such employee. Schedule 4.20
also sets forth whether SELLER has entered into a written
employment agreement with any such person, and a true and
complete copy of each such employment agreement has been
heretofore delivered to BUYER.
4.21 Discharge Fees. SELLER and PLEASANT have not, directly
or indirectly, retained any financial advisor, broker, agent, or
finder or paid or agreed to pay any financial advisor, broker,
agent or finder on account of this AGREEMENT or the transaction
contemplated thereby, except as set forth on Schedule 4.21,
including the amounts owed to businesses or professionals hired
by SELLER or PLEASANT in connection with the sale, negotiation or
closing contemplated by this AGREEMENT or the preparation of
financial statements required hereunder.
4.22 No Adverse Action. There are no actions, suits, claims
or other proceedings pending or, to the best of SELLER's
knowledge, threatened, or injunctions or orders entered, pending
or, to the best knowledge, threatened against SELLER to restrain
or prohibit the consummation of the transactions contemplated
hereby.
4.23 Full Disclosure. To the knowledge of SELLER, SELLER has
disclosed to BUYER all material facts relating to SELLER and its
operations and/or Business and has not omitted to disclose to
BUYER any material fact relating to SELLER, or its operations,
necessary to make the statements made herein not misleading.
4.24 Severance Pay. The Closing of this transaction
contemplated hereunder shall not result in any severance
obligations with respect to employees of SELLER, except as
established in SELLER's Employee Handbook, which is attached as
Schedule 4.24.
4.25 Contracts. Schedule 4.25 contains a list of each
contract which individually constitutes more than five percent
(5%) of the annual revenues of SELLER.
ARTICLE 5.REPRESENTATIONS AND WARRANTIES OF BUYER
BUYER represents and warrants to SELLER both as of the date
hereof and as of the Closing Date, as follows:
5.1 Organization of BUYER; Good Standing. BUYER is a
corporation, duly organized, validly existing and in good
standing under the laws of the State of New York. BUYER has the
requisite corporate power and authority to own, lease and operate
its properties and to conduct its business as currently
conducted.
5.2 Authority. (a) BUYER has the full corporate power and
has taken all action necessary to execute, delivery and perform
this AGREEMENT and to carry out the transactions contemplated
hereby. The execution, delivery and performance of this
AGREEMENT and the other Transaction Documents to which BUYER is a
party constitute legal, valid and binding obligations of BUYER
enforceable against BUYER in accordance with its terms, except to
the extent that such enforceability may be limited by (i)
equitable principles which may limit the availability of certain
equitable remedies (such as specific performance) in certain
instances.
(b) Neither the execution or delivery of this AGREEMENT and
the other Transaction Documents nor the consummation of the
transactions contemplated hereby will (i) except for obtaining
any consent, where the failure to obtain such consent would not
materially or adversely affect the assets or the financial
condition of BUYER, conflict with, constitute a breach, violation
or termination of any provision of any contracts and other
agreements to which BUYER is a party or by which it is bound,
(ii) conflict with or violate the Articles of Incorporation or
By-Laws of BUYER, or (iii) violate any law, regulation, judgment,
rule, order or any other restriction of any kind or character
applicable to BUYER or any of its properties or assets, the
violation of which could have a material adverse effect on the
financial condition or business operations of BUYER.
5.3 No Adverse Action. There are no actions, suits, claims
or other proceedings pending or, to the best of BUYER's
knowledge, threatened, or injunctions or orders entered, pending
or, to the best of BUYER's knowledge, threatened against BUYER to
restrain or prohibit the consummation of the transactions
contemplated hereby.
5.4 Access; Restriction on Stock. BUYER represents that it
has had and SELLER represents that it has given access to the
books and records generally of SELLER, and all of the material
agreements, licenses, permits, contracts, properties, and assets
of SELLER. BUYER has knowledge and experience in financial and
business matters and investments of this type and is capable of
evaluating the merits and risks of investment in the Stock.
BUYER has the financial ability to bear the risk of investment in
the Stock and is acquiring the Stock solely for investment with
no present intention to resell. BUYER is aware that the Stock is
not registered under the Securities Act of 1933, as amended (the
"Securities Act"), or under any state securities laws and must be
held indefinitely unless it is registered under the Securities
Act or is exempt from registration under the Securities Act.
Buyer will not further transfer the Stock without compliance with
the registration and other provisions of all applicable
securities laws.
ARTICLE 6. COVENANTS AND AGREEMENTS
6.1 Actions Pending Closing. From the date hereof to the
Closing, except as otherwise contemplated by this AGREEMENT,
SELLER covenants and agrees as follows:
(a) SELLER will be operated in the usual and ordinary manner
consistent with past practices and will preserve its present
business organization intact, and preserve its present
relationships with persons having business dealings with it and
to take such actions as are reasonably necessary and to cause the
transition of such business operations and employee and other
relationships to BUYER as of the Closing Date, as contemplated by
this AGREEMENT.
(b) SELLER will not, without BUYER's consent, increase or
decrease the compensation payable or to become payable by SELLER
to any officer or employee of SELLER, or make any material change
in any insurance, pension or other employee benefit plan, pay any
commission or bonus to any of such officers or employees, other
than in the normal course of business consistent with existing,
personnel policies, nor will SELLER amend any employment
agreement between SELLER and any employee of SELLER.
(c) Except as otherwise provided herein, SELLER will not(i)
mortgage,pledge, create or permit to exist any lien or security
interest against any of its assets, except for the liens and
security interests set forth on Schedule 6.1 hereto and except
for the liens securing property acquired by SELLER in the
ordinary course of business and as otherwise permitted pursuant
to this AGREEMENT (the "Permitted Exceptions"), (ii) fail to
maintain its assets in the usual and ordinary course of business
consistent with past practices; (iii) sell, assign, transfer,
lease or otherwise therein, except in each case in the usual and
ordinary course of business, (iv) terminate, modify or change any
of the contracts, as set forth herein on Schedule 6.1; and (v)
enter into any material transaction, contract or commitment
obligating SELLER in excess of $1,000.00 which is not in the
usual and ordinary course of Seller business.
(d) All assets of SELLER will be used, operated, maintained
and repaired in the usual and ordinary course of SELLER's
business consistent with past practices.
(e) SELLER will not permit any insurance policy naming it as
a beneficiary or a loss payable payee covering any of its assets
or its operations to be cancelled, terminated or modified or any
of the coverage thereunder to lapse, unless simultaneously with
such termination or cancellation, replacement policies,
reasonably satisfactory to BUYER, providing substantially the
same coverage, are in full force and effect.
(f) SELLER will timely file (including all applicable
extensions) all tax returns and reports required to be filed with
any federal, state or local governments or governmental agencies.
SELLER will timely file (including all applicable extensions) the
federal and state income tax returns with respect to SELLER's
operations for the period January 1, 1995 through and including
the Closing Date and make all payments required in connection
therewith.
(g) SELLER shall not make or institute any methods of
collections, credit, billing, management, accounting or operation
which are not in the usual and customary course of its business,
consistent with SELLER's past practices.
(h) Except as set forth on Schedule 6.1(h), SELLER shall not
transfer any of its assets, other than in the ordinary course of
business. SELLER shall not transfer any of the Stock. SELLER
shall not pledge, create or permit any lien, claim or other
encumbrance against any of the Stock nor issue any options,
warrants or other rights with respect thereto.
(i) With respect to any contract of SELLER as set forth on
Schedule 6.1 which, in accordance with their terms, will
terminate due to the expiration of the term thereof prior to the
Closing Date, SELLER shall use good faith efforts to extend such
contracts' provided, however, that in the event any such
extension would require payment of rentals or other compensation
by SELLER in excess of that currently paid or would require
SELLER to agree to terms which are materially and adversely
different from the present terms of such contract, then SELLER
shall not extend such contract without obtaining BUYER's prior
written consent to such terms and extension.
(j) From the date hereof, through and including the Closing
Date, SELLER shall not amend its Articles of Incorporation or By-
Laws.
(k) Seller will operate its business through the Closing
Date so that the representations and warranties of SELLER made to
BUYER in this AGREEMENT shall be true and correct at the Closing
Date as if made on the Closing Date (except for representations
and warranties made in Sections 4.4, 4.6, 4.17 and 4.18 with
respect to financial statements and other financial information
of SELLER which expressly relate to an earlier date or time,
which representations shall be true and correct on and as of the
specific date or times referred to therein); provided, however,
that SELLER shall promptly disclose to BUYER any information
contained in the Schedules to this AGREEMENT which, because of an
event occurring after the date hereof, is incomplete or is no
longer correct as of all times after the date hereof until the
Closing Date and was incorrect when made; provided, however, that
any such disclosures shall be deemed to modify, amend, or
supplement the representations and warranties of SELLER in the
Schedules hereto, unless such amendment shall have a material
adverse affect on the assets and/or financial condition of
SELLER.
6.2 Consents SELLER shall use good faith efforts and
cooperate with BUYER in obtaining all necessary consents required
for the transfer of the Stock to BUYER.
ARTICLE 7. COVENANTS AND AGREEMENTS OF BUYER
BUYER hereby covenants and agrees with SELLER as follows:
7.1 Consents. From and after the date hereof, BUYER shall
use good faith efforts and cooperate with SELLER on obtaining all
necessary consents required for the transfer of the Stock to
BUYER.
7.2 Post-Closing Access to Information. SELLER, PLEASANT and
BUYER acknowledge that subsequent to Closing each party may need
access to information or documents in the control or possession
of the other party for the purposes of concluding transactions
herein contemplated, audits, compliance with governmental
requirements and regulations, and the prosecution or defence of
third party claims. Accordingly, SELLER, PLEASANT and BUYER agree
that after Closing each will make reasonably available to the
other's agents,independent auditors and/or governmental agencies
upon written request and at the expense of the requesting party
such documents and information as may be available relating to
the Stock or SELLER for periods prior and subsequent to Closing
to the extent necessary to facilitate concluding the transactions
herein contemplated, audits, compliance with governmental
requirements and regulations and the prosecution or defense of
claims.
ARTICLE 8. CONDITIONS TO BUYER'S OBLIGATION TO
CONSUMMATE THE TRANSACTION
Each and every obligation of BUYER to be performed hereunder
is subject to the satisfaction on or prior to the Closing Date of
the conditions set forth below, any one or more of which may be
waived in writing by BUYER:
8.1 Compliance with AGREEMENT. SELLER and PLEASANT shall
have performed all of their obligations and agreements, and
complied, in all material respects, with all covenants,warranties
and conditions contained in this AGREEMENT which are required to
be performed or complied with by them on or prior to the Closing
Date, and the President of SELLER shall have delivered a
certificate to such effect to BUYER at Closing.
8.2 Representations and Warranties. The representations and
warranties of SELLER contained in this AGREEMENT and the other
Transaction Documents shall be true, complete and correct, in all
material respects, on and as of the date made and as of the
Closing Date with the Same Force and Effect as though such
representations and warranties had been made or given on the
Closing Date, and the President of Seller shall have delivered a
certificate to such effect to BUYER at Closing.
8.3 Approvals and Consents. The consents, approvals and
waivers as set forth on Schedule 8.3 hereto necessary in order to
consummate the transactions contemplated hereby shall have been
obtained.
8.4 No Litigation. No action or proceeding before a court or
any other governmental agency or body shall have been instituted
or threatened to restrain or prohibit the transactions herein
contemplated or which would prohibit BUYER's purchase of the
Stock.
8.5 No Material Adverse Change. No event or condition
resulting in a materially adverse change in the financial
condition or Business of SELLER or its assets shall have occurred
and be continuing that has not been disclosed to BUYER in writing
on Schedule 8.5.
8.6 Opinion of Counsel. BUYER shall have received an opinion
of SELLER's legal counsel, dated the Closing Date, substantially
in the form of Exhibit III hereto.
8.7 Non-Competition Agreement. BUYER shall have received the
Non-Competition Agreement substantially in the form of Exhibit IV
hereto duly executed by PLEASANT, and such Non-Competition
Agreement Shall be in full force and effect and constitute a
legal, valid and binding obligation of PLEASANT enforceable
against PLEASANT in accordance with its terms. Payments shall be
made annually on the anniversary date of the execution date of
the Non-Competition Agreement to ROGER JACKSON PLEASANT, his
executors or heirs, or assigns according to the following
schedule:
Years 1-5 $105,000.00 annually
Years 6-15 $150,000.00 annually
Buyer is prohibited from applying offsets or adjustments
against amounts due PLEASANT under the terms of the Non-
Competition Agreement, except following a judicial order.
8.8 Deliveries. BUYER shall have received from SELLER all of
the other documents required to be delivered by them pursuant to
Section 11.1(a) of this AGREEMENT.
ARTICLE 9. CONDITIONS TO SELLER'S OBLIGATION
TO CONSUMMATE THE TRANSACTION
Each and every obligation of SELLER to be performed at or
before the Closing hereunder is subject to the satisfaction on or
prior to the Closing Date of the conditions set forth below, any
one or more of which may be waived in writing by SELLER.
9.1 Compliance with AGREEMENT. BUYER shall have performed
all of its obligations and agreements and complied, in all
material respect, with all covenants, warranties and conditions
contained in this AGREEMENT which are required to be performed or
complied with by BUYER on or prior to the Closing Date, and the
President of BUYER shall have delivered a certificate to such
effect to SELLER on the Closing Date.
9.2 Representations and Warranties. The representations and
warranties of BUYER contained in this AGREEMENT and the other
Transaction Documents shall be true, complete and correct, in all
material respects, on and as of the date made and as of the
Closing Date with the same force and effect as though such
representations and warranties had been made or given on the
Closing Date, and the President of BUYER shall have delivered a
certificate to such effect to SELLER at Closing.
9.3 Approvals and Consents. The material consents, approvals
and waivers as set forth on Schedule 8.3 hereto necessary in
order to consummate the transactions contemplated hereby shall
have been obtained.
9.4 No Litigation. No action or proceeding before a court or
any other governmental agency or body shall have been instituted
or threatened to restrain or prohibit the transactions herein
contemplated or which would prohibit BUYER's purchase of the
Stock.
9.5 Guaranty of STAFF BUILDER'S INC. SELLER shall have
received from STAFF BUILDERS, INC., a Delaware corporation, a
duly authorized and executed Guaranty in the form of Exhibit IV
hereto, and such Guaranty shall be in full force and effect and
constitute a legal, valid and binding obligation of STAFF
BUILDERS, INC., enforceable against STAFF BUILDERS, INC., in
accordance with its terms.
9.6 Deliveries. SELLER shall have received from BUYER all of
the other documents required to be delivered by them pursuant to
Section 11.1(b) of this AGREEMENT.
ARTICLE 10. TERMINATION
10.1 Termination Prior to the Closing Date. Notwithstanding
anything herein to the contrary, this AGREEMENT may be terminated
at any time:
(i) On or prior to the Closing Date by mutual written
consent of BUYER and SELLER;
(ii) By BUYER, if the conditions specified in Article
8 have not been satisfied or waived by BUYER as of
the Closing Date.
(iii) By SELLER, if the conditions specified in Article
9 have not been satisfied or waived by SELLER as
of the Closing Date;
(iv) At the election of the SELLER prior to the Closing
Date, if the BUYER has breached any
representation, warranty, covenant or agreement
contained in this AGREEMENT, and such breach has
not been cured within seven (7) days after notice
is given to terminate this AGREEMENT as a result
of such breach;
(v) At the election of the BUYER prior to the Closing
Date, if the SELLER has breached any material
representation, warranty, covenant or agreement
contained in this AGREEMENT, and such breach has
not been cured within seven (7) days after notice
is given to terminate this AGREEMENT as a result
of such breach; or
(vi) At the election of the SELLER or the BUYER, if any
legal proceeding is commenced or threatened by any
court or governmental agency directed against the
consummation of the Closing or any other
transaction contemplated under this AGREEMENT.
In the event of the termination of this AGREEMENT pursuant to
this Section 10.1, this AGREEMENT shall automatically terminate
and be of no further force and effect, and there shall be no
liability hereunder (except if termination occurs pursuant to
clauses (iv) or (v) above), or in respect of the transaction
contemplated hereby.
ARTICLE 11. DELIVERIES AT AND AFTER CLOSING.
11.1 Deliveries at Closing.
(a) At Closing, SELLER shall deliver to BUYER:
(i) a certificate for the Stock, together with a
stock power duly endorsed in favor of BUYER;
(ii) certificates, dated the Closing Date, required
to be delivered by BUYER to SELLER pursuant to
Sections 9.1 and 9.2 hereof,
(iii) a certificate of an authorized officer of BUYER
certifying that all necessary corporate action by
the Board of Directors has been taken to authorize
the consummation of the transactions provided for
in this AGREEMENT. Such certificate shall attached
or set forth verbatim the resolutions adopted by
the Board of Directors of BUYER;
(iv) the Guaranty required pursuant to Section 9.5
hereof;
(v) The Non-Competition Agreement to PLEASANT required
pursuant to Section 8.7 hereof; and
(vi) the Note payable to PLEASANT in connection with
the Purchase Price.
ARTICLE 12. INDEMNIFICATION.
12.1 Indemnity of BUYER.
(a) PLEASANT and SELLER shall indemnify BUYER and hold
it harmless from and against:
(i) any and all damages, expenses and losses
suffered, paid or incurred, or to be
suffered, paid or incurred in the future, by
BUYER arising out of (a) any inaccuracies in
or any material breach of any representation,
covenant, agreement or warranty on the part
of SELLER herein contained or in any other
Transaction Document, (b) any material breach
of representations made by a Director or
Officer of Seller of the Representations
made in the Resignation and Certification of
such Director or Officer; and (c) any claim
against SELLER of a Director or Officer of
SELLER who fails to deliver at Closing to
BUYER a Resignation and Certification; and
(ii) any and all reasonable costs and expenses of
BUYER related to clause (i) above, including
reasonable attorney's fees in connection with
the prosecution, defense or appeal of any
suit or action in connection therewith.
(All of such items described in paragraphs (i) and (ii)
above are collectively referred to herein after as the "BUYER's
Loss.")
(b) Whenever it shall come to the attention of BUYER that it
has suffered or incurred, or may suffer or incur, any BUYER's
Loss, BUYER shall give prompt written notice to SELLER of such
anticipated or actual loss, damage, cost or expense, and BUYER
will permit SELLER, at SELLER's option and expense, to conduct
the defense against any such claim or actions, and will cooperate
with SELLER in such defense in such manner as SELLER may
reasonably request. If SELLER elects not to, or fails to, defend
against such claims or actions, BUYER shall have the right to
defend against such claims at SELLER's expense. If BUYER shall
defend against such claim or action at SELLER's expense, BUYER
agrees that it will not settle or permit the settlement of any
matter giving rise to any BUYER's Loss without the prior written
consent of SELLER (which consent will not be unreasonably
withheld).
(c) BUYER's right to assert a claim against PLEASANT and
SELLER for indemnification pursuant to this Section 12.1 shall
survive the Closing and shall expire:
(i) with respect to breaches of representations,
warranties, covenants and agreements of SELLER,
on the date one year from the execution date of
this AGREEMENT.
(d) (i) Notwithstanding any provisions to the contrary in
Section 12 of this AGREEMENT, no claim, either
individually or in aggregate, for indemnification
by PLEASANT and SELLER hereunder, shall be valid
and assertable unless it is equal to or greater
than Fifty Thousand Dollars($50,000.00) (the
"Basket Deductible"), at which time, subject to
the limitations set forth in Section 12.2(d)
(ii), the indemnifying party shall be liable for
amounts above the Basket Deductible.
(ii) In no event shall the aggregate liability of
PLEASANT and SELLER for indemnification hereunder
or otherwise arising out of or relating to this
AGREEMENT exceed One Million Five Hundred
Thousand Dollars ($1,500,000.00).
(iii) any and all reasonable costs and expenses of
BUYER related to clause (c) (i) above, including
reasonable attorney's fees in connection with the
prosecution, defense or appeal of any suit or
action in connection therewith.
12.2 BUYER's Indemnity of PLEASANT and/or SELLER. (a) BUYER
shall indemnify PLEASANT and/or SELLER and hold them harmless
from and against:
(i) any and all damages, expenses and losses
suffered, paid or incurred, or to be suffered,
paid or incurred in the future, by PLEASANT,
arising out of any failure of BUYER to make any
payments as required by this AGREEMENT or the
Non-Competition Agreement attached hereto and
referred to herein;
(ii) any and all damages, expenses and losses
suffered, paid or incurred, or to be suffered,
paid or incurred in the future, by SELLER, except
as referred to in 12.2(i) above, arising out of
any inaccuracies in or breach of any
representation, covenant, agreement or warranty
on the part of BUYER herein contained or in any
other Transaction Document;
(iii) any and all reasonable costs and expenses of
PLEASANT and/or SELLER related to clauses (i) or
(ii) above, including reasonable attorney's fees in
connection with the prosecution, defense or
appeal of any suit or action in connection
therewith.
(All of such items described in paragraphs (i) and (ii)
above are collectively referred to hereinafter as the "SELLER's
Loss.").
(b) Whenever it shall come to the attention of SELLER or
PLEASANT that it has suffered or incurred, or may suffer or
incur, any SELLER's Loss, or SELLER shall give prompt written
notice to BUYER of such anticipated or actual loss, damage, cost
or expense, and SELLER will permit BUYER, at BUYER's option and
expense, to conduct the defense against any such claim or
actions, and will cooperate with BUYER in such defense in such
manner as BUYER may reasonably request. If BUYER elects not to,
or fails to, defend against such claims or actions, SELLER shall
have the right to defend against such claims at BUYER's expense.
IF SELLER shall defend against such claim or action at BUYER's
expense. If SELLER shall defend against such claim or action at
BUYER's expense, SELLER agrees that it will not settle or permit
the settlement of any matter giving rise to any SELLER's Loss
without the prior written consent of BUYER (which consent will
not be unreasonably withheld).
(c) PLEASANT's or SELLER's right to assert a claim against
BUYER for indemnification pursuant to this Section 12.2 shall
survive the Closing and shall expire on the date which is one
year subsequent to the final date that any payments are due under
this AGREEMENT or any of the Transaction Documents.
(d) It is expressly agreed that SELLER or PLEASANT shall not
be entitled to any indemnification of SELLER or PLEASANT by
BUYER, pursuant to Section 12.1 (b), and SELLER shall not be
entitled to any indemnification from BUYER, whether pursuant to
this Section 12.2 or otherwise arising out of the sale of the
Stock to BUYER or the transaction contemplated by this AGREEMENT,
the Non-Competition Agreement or the Notes due hereunder or any
of the other Transaction Documents plus reasonable attorney's
fees and expenses if so ordered by the court.
ARTICLE 13. MISCELLANEOUS
13.1 Survival. Notwithstanding any right of BUYER to fully
investigate the business and operations of SELLER or the Stock,
the BUYER shall be entitled to rely fully on the material
representations, warranties, covenants and agreements of SELLER
contained in this AGREEMENT and the other Transaction Documents.
The representations, warranties, covenants and agreements made by
the parties herein shall survive the Closing as set forth in
Article 12. This Section 13.1 is not intended to create any
rights in any third party beneficiaries.
13.2 Expenses. At the Closing, SELLER and BUYER shall each
be responsible for their own respective costs incurred regarding
this AGREEMENT and the related documents, and for any and all
other transactions contemplated by this AGREEMENT, unless
otherwise agreed to by the parties in writing.
13.3 Notices. Any notice, request, consent or communication
under this AGREEMENT shall be effective only if it is in writing
and personally delivered or sent by a nationally recognized
overnight delivery service, with delivery confirmed, or telexed
or telecopies, with receipt confirmed (provided that if telexed
or telecopied, with a copy also sent by regular United States
mail), or deposited in the United States mail, with postage
prepaid thereon, Certified or registered mail, return receipt
requested, addressed as follows:
If to SELLER or to an Indemnitee:
MEDVISIT, INC.
c/o Mr.Roger Jackson Pleasant
465 Yarborough Road
Roxboro, NC 27573
With a copy to SELLER's legal counsel:
Larry E. Robbins, Esq.
Wyrick, Robbins, Yates & Ponton L.L.P.
4101 Lake Boone Trail, Suite 300
Raleigh, NC 27607
Facsimile Number 919-751-4865
If to BUYER:
STAFF BUILDERS, INC.
Mr.Stephen Savitsky
1983 Marcus Avenue
Lake Success, NY 11042
Facsimile Number 316-358-9128
With a copy to BUYER's legal counsel:
Joan M. Mitchell, Esq.
Mitchell Law Offices, P.A.
2110 South Miami Boulevard
Durham, NC 27703
Facsimile Number 919-598-9090
or such other persons and/or such other persons and/or addresses
as shall be furnished in writing by any party to the other party,
and shall be deemed to have been given as of the date when so
personally delivered, or the next day when delivered during
business hours to such overnight delivery service properly
addressed or when receipt of a telex of telecopy is confirmed, or
upon the earlier to occur of receipt or five (5) business days
after mailing as provided above, as the case may be, unless the
sending party has actual knowledge that such notice was not
received by the intended recipient.
13.4 Parties in Interest and Assignment. (a) This AGREEMENT
is binding upon and is for the benefit of the parties hereto and
their respective successors and assigns.
(b) Neither this AGREEMENT nor any of the rights or duties
of any party hereto may be transferred or assigned to any person
except by a written agreement executed by all of the parties
hereto; provided, however, that BUYER may assign its rights or
delegate its duties hereunder to a wholly owned subsidiary or
franchisee of BUYER. If the BUYER assigns its rights or
delegates its duties hereunder, the obligations and payments due
under the Note and the Non-Competition Agreement will continue to
be the primary obligation of Staff Builders, Inc. or guaranteed
by Staff Builders, Inc., as the case may be.
(c) It is expressly agreed that this AGREEMENT is not
intended to create any rights in respect to any third party
beneficiaries.
13.5 Indebtedness of SELLER. As set forth on Schedule 13.5,
all indebtedness or obligations of SELLER, including indebtedness
underlines of credit, bank loans, credit cards, leases, etc.,
involving personal guarantees of stockholders and/or officers of
SELLER, or liens of any kind on assets will be assumed by BUYER,
or will be paid by SELLER from cash on hand, such that such
stockholders and/or officers of SELLER are relapsed from such
guarantees. Buyer shall use its best efforts to release PLEASANT
from any and all guaranties before or at closing. If any item may
be paid or satisfied at closing by payment in cash, the Buyer
agrees to pay said money at closing to satisfy such obligations.
If Buyer is unable to obtain the release of PLEASANT harmless
pursuant to the provisions of Section 12.3, and said
indemnification shall survive the Closing until all obligations
are paid, satisfied and released to the satisfaction of PLEASANT.
Buyer shall provide a schedule to PLEASANT upon request within 30
days of closing notifying PLEASANT of any obligations where he
has not been released and evidencing to PLEASANT that the Buyer
is the primary obligor.
13.6 Review and Approval. This transaction shall be subject
to the review and approval, if any is required, by appropriate
local, state and federal agencies, and the usual and normal due
diligence to be conducted as expeditiously as possible by BUYER
of the business affairs of SELLER. This due diligence shall be
conducted beginning the week of July 31, 1995 and shall be
completed by August 15, 1995, or sooner.
13.7 Modification. This AGREEMENT may not be amended or
modified except by writing signed by an authorized officer of
each of the parties hereto. No waiver of the performance or
breach of, or default under, any condition or obligation hereof
shall be deemed to be a waiver of any other performance, or
breach of, or default under the same or any other condition or
obligation of this AGREEMENT.
13.8 Entire AGREEMENT. This AGREEMENT, together with those
related agreements contemplated by this AGREEMENT, embodies the
entire agreement between the parties hereto and cancels and
supersedes all previous agreements and understandings relating to
the subject matter of this AGREEMENT, written or oral, between
the parties hereto, including without limitation, the Letter of
Intent dated July 26, 1995, and the Modification to Letter of
Intent Dated August 8, 1995. There are no agreements,
representations, or warranties between the parties other than
those set forth or provided herein.
13.9 Arbitration. The parties agree to use good faith
negotiation to resolve any dispute, claim or controversy that may
arise under or relate to this Agreement, the Non-Competition
Agreement or the Promissory Note. in the event that the parties
are not able to resolve any dispute, claim or controversy by
negotiation, any such dispute, claim or controversy may be
settled by mediation which shall be conducted in Durham, North
Carolina.
13.10 Execution in Multiple Counterparts. This AGREEMENT may
be executed in multiple counterparts, each of which shall be
deemed an original but all of which together shall constitute one
and the same instrument.
13.11 Headings. The headings contained in this AGREEMENT are
for reference purposes only and shall not affect in any way the
meaning or interpretation of this AGREEMENT.
13.12 Governing Law. This AGREEMENT shall be governed by and
construed, interpreted and enforced in accordance with the laws
of the State of North Carolina, including all matters of
enforcement, validity and performance. All litigation brought or
held on the basis of this AGREEMENT shall be brought and held in
the appropriate state court in Durham, Durham County, North
Carolina, or in the federal court for the Middle District of
North Carolina, in Durham, North Carolina.
13.13 Schedules. All of the Schedules attached hereto are
incorporated herein and made a part of this AGREEMENT by this
reference thereto.
13.14 Severability. In case one or more of the provisions
contained in this AGREEMENT shall for any reason be held to be
invalid, illegal or unenforceable in any respect, the invalidity
or illegality or unenforceability shall not affect any other
provision and this AGREEMENT shall be construed as if the
invalid, illegal or unenforceable provision had never been
contained in it.
13.15 Certain Post Closing Matters. Following the Closing,
SELLER and PLEASANT agree to cooperate with BUYER and shall take
such reasonable actions, deliver such documents to BUYER and
execute such documents as BUYER may reasonably request in order
to carry out the purpose of this AGREEMENT and the other
Transaction Documents.
IN WITNESS WHEREOF, the parties hereto have duly executed
this AGREEMENT as of the date and year first above written.
MEDVISIT, INC.
ATTEST:
/s/ Sandra L. Pleasant By: /s/ Jack Pleasant
Its: President
ROGER JACKSON PLEASANT
WITNESS:
/s/ Sandra L. Pleasant /s/ Roger Jackson Pleasant
STAFF BUILDERS SERVICES, INC.
ATTEST:
/s/ Renee Silver, Asst. Secy. By: /s/ David Savitsky
Its: Executive Vice President
The obligations under this Agreement are guaranteed by the
full faith and credit of Staff Builders, Inc., hereby and under a
separate Guaranty Agreement of even date herewith.
STAFF BUILDERS, INC.
A Delaware Corporation
By: /s/ David Savitsky
Its: Executive Vice President
(Corporate Seal)
ATTEST
_____________________________
_______________Secretary
EXHIBIT
10.77
<PAGE>
ASSET PURCHASE AND SALE AGREEMENT
ASSET PURCHASE AND SALE AGREEMENT made as of the First day of Spetember,
1995, by and among STAFF BUILDERS SERVICES, INC., a New York corporation, with
its principal executive offices located at 1983 Marcus Avenue, Lake Success,
New York 11042, (the "Buyer") and ACCREDICARE INC., with its principal place
of business at 622 Georges Road, North Brunswick, NJ, 08902 (the "Seller").
W I T N E S S E T H:
WHEREAS, Seller is in the business of providing home health care
services in the Central New Jersey, area; and
WHEREAS, Seller is desirous of selling to Buyer, and Buyer is
desirous of purchasing from Seller, certain assets utilized by Seller in
conjunction with Seller's home health care services business being conducted
at 622 Georges Road, North Brunswick, NJ, 08902; 2 Industrial Way, Eatontown,
NJ, 07724; 211 College Road East, Princeton, NJ, 08540; 1081 Rte 22 West,
Bridgewater, NJ, 08807; Ewing Professional Bldg., Suite 13A, 1901 N. Olden
Avenue, Trenton, NJ, 08618 (the "Businesses").
NOW, THEREFORE, it is agreed as follows:
1. Transfer of Assets
a. Seller agrees, on the date hereof, or on such other closing date
mutually agreed to by the parties (the "Closing Date") to sell, convey and
transfer to the Buyer, and the Buyer agrees to purchase from Seller on the
Closing Date, all customer, applicant and temporary employee lists, records
and agreements, if any, relating to employees, business records and files,
assignments of existing telephone numbers, work in progress and provider
contracts, oral and written, all of which have been used in connection with or
have been at any time a part of the Business utilized by the Seller in
connection with the Business, except all accounts receivable generated by
Accredicare prior to the operation of the franchise. ("Transferred Assets"). The
Transferred Assets being sold hereunder shall be delivered to Buyer on the
Closing Date at Seller's location (the "Branch"). The sale and transfer shall
be effected by bills of sale, assignments, or other instruments of transfer, in
form and substance satisfactory to Buyer. Seller agrees that it will, at any
time after the Closing Date, upon the request of the Buyer execute,
acknowledge and deliver all such further conveyances, assignments and
transfers, as may be required and necessary for the purpose of assigning,
transferring, conveying and granting to the Buyer good and valid title to any
and all of the Transferred Assets being sold hereunder.
b. It is understood and expressly agreed by the parties hereto that
Buyer shall not assume or be liable for any of Seller's liabilities,
contracts, commitments and other obligations of Seller of any kind, whether
accrued, absolute, contingent, unliquidated, or otherwise, and that Buyer's
purchase of the Transferred Assets shall be exclusive of any and all
liabilities of Seller.
2. Purchase Price and Payment Thereof
The purchase price for the Transferred Assets is ONE MILLION TWO
HUNDRED THOUSAND ($1,200,000) DOLLARS.
3. Closing Date
3.1 The Closing shall take place at such time and place as
shall be mutually agreed to by the parties hereto.
3.2 The effectiveness of this Agreement and all provisions
herein are subject to Buyer receiving required approvals, if required, from
governmental authorities for licensure.
3.3 Between the date hereof and the Effective Date of the
Franchise Agreement between Buyer (or Buyer's affiliate) and Seller's
successor, the parties shall use their respective best efforts, and to the
full extend of their ability, at their sole cost and expense, to obtain all
required governmental approvals, including, without limitation, responding
promptly to inquiries and comments, furnishing all documents and information
requested and making their premises, personnel, files and business records
available for inquiry and inspection by such entities in connection with
seeking such approval.
4. Representation, Warranties and Covenants of Seller.
a. The Seller warrants and represents to Buyer as follows:
(i) To the best of Seller's knowledge, all of the contracts
and agreements are in full force and effect and constitute legal, valid and
binding obligations of the parties thereto, enforceable against such parties
in accordance with the terms thereof. No default of, event or circumstance
which, with notice or the passage of time, or both would constitute a default
under any of the contracts, exists.
(ii) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey and has full
power and authority to carry on its business as now conducted at the Branch
and as contemplated under this Agreement and to own and operate its assets,
properties and business;
(iii) This Agreement and all other documents and instruments
executed and delivered by Seller hereunder have been duly and validly
executed and delivered by Seller and constitute valid and binding agreements
of Seller, enforceable against Seller in accordance with their respective
terms. The execution and delivery of this Agreement by Seller and the
consummation by Seller of the transactions contemplated hereby will not: (i)
violate any provision of the Certificate of Incorporation or By-Laws of
Seller; or (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any agreement to which Seller is a party, or by
which its properties or assets are bound; or (iii) violate any statute, law,
rule or regulation of any state or federal government or any agency or
authority thereof; or (iv) violate any order, writ, injunction or decree of
any court or other governmental authority.
(iv) Neither the execution, delivery or performance of this
Agreement and all related agreements by Seller requires the authorization or
approval of any other person or entity, governmental or otherwise, except as
pertains to Buyer receiving approval from governmental authorities for
licensure.
(v) Except for required governmental approval for licensure, no
consent from, or other approval of, any governmental entity is necessary in
connection with the transfer of the Transferred Assets.
(vi) Seller has good and valid title to the Transferred
Assets, free and clear of all liens, mortgages, encumbrances, security
interests, equities or claims of any kind or character, and the delivery to
Buyer of the Transferred Assets will transfer good and valid title, free and
clear of any liens, mortgages, encumbrances, security interests or equities or
claims of any kind or character.
(vii) There are no strikes or labor proceedings pending or,
to the knowledge of Seller, pending or threatened with regard to the Business.
(viii) All Federal, state and local income, excise, property
and other tax returns which are required to be filed by Seller with regard to
the Business have been filed and all taxes, license fees or other charges
levied, assessed or imposed upon Seller in connection with the operation of
the Business have been paid in full.
(ix) Seller is not in violation or default of any order of
any court or federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality wherever located.
(x) There are no actions, suits or proceedings (including
without limitation, administrative or regulatory proceedings) or any
governmental audits or surveys pending or threatened against the Business or
the Seller.
b. Seller shall deliver to Buyer at Closing:
(i) a Bill of Sale for the Transferred Assets;
(ii) such other documents and instruments as are required
to be executed and/or delivered by Seller under the terms of this Agreement.
c. The provisions of this Section 4 shall survive Closing hereunder.
5. Representations, Warranties and Covenants of Buyer.
a. Buyer warrants and represents to Seller as follows:
That it is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York and has all corporate power and
authority to enter into, execute and deliver this Agreement and consummate
the transactions contemplated herein.
b. The Buyer shall deliver to Seller at Closing:
(i) payment of $1,200,000; and
(ii) such other documents and instruments as are required to
be executed and/or delivered by Buyer under the terms of this Agreement.
c. The provisions of this Section 4 shall survive Closing hereunder.
6. Additional Agreements.
Seller agrees to indemnify Buyer against and hold Buyer harmless
from any losses, claims or damages which arise from any of ("Losses") the
following:
(i) any liabilities of Seller, including without limitation,
any liabilities related to the Business;
(ii) any breach of any representation and warranty of Seller
contained in this Agreement;
(iii) all Losses incurred by Buyer, and relating to the
conduct of the operation of the Transferred Assets and/or the Business prior
to the Closing; and
(iv) all costs and expenses, including reasonable
attorneys' fees and disbursements, incurred by Buyer in connection with any
of the matters contemplated by clauses (i) (ii) and (iii) above.
2. Buyer shall give Seller written notice within ten (10) days of
any written claim asserted against it for which Seller may be liable under this
Section 6.
7. Notice
a. All communications, notices, requests and demands required or
appropriate to be given under this Agreement shall be in writing and shall,
unless otherwise provided herein, be deemed to have been duly given when
either (i) delivered in person and a written receipt therefor is obtained or
(ii) mailed by registered or certified mail, postage prepaid, return receipt
requested, properly addressed to the party for whom intended as follows:
If to Seller: Staff Builders Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
Attention: President
With a copy to: Staff Builders Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
Attention: General Counsel
If to Buyer: Accredicare, Inc.
622 Georges Road
North Brunswick, NJ 08902
Attention: Barbara Van Alstyne,
President
or to any other address or addresses which may hereafter be designated by any
party hereto by like notices.
8. Survival of Closing; Incorporations.
Whenever in this Agreement, and not specifically provided to the
contrary, there is an act, duty, obligation or covenant to be performed, in
whole or in part, or obligation to be assumed by any party, in whole or in
part, subsequent to Closing, said act, duty, obligation or covenant shall
survive the Closing hereunder. Representations, warranties and indemnities,
unless specifically provided to the contrary, shall survive Closing. Any
Schedule attached hereto is incorporated herein and made a part hereof.
9. Subject Headings.
The subject headings of the Sections of this Agreement are
included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
10. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which when executed and delivered shall be an original, but all such
counterparts shall constitute one and the same instrument.
11. Enforcement of Provisions.
The authority to enforce any provision of this Agreement or to
require at any time performance by a party of any provision hereof, whether or
not exercised, shall in no way be construed to be a waiver of the provision or
to affect the validity of this Agreement, or any part hereof, or the right of
any party thereafter to enforce each and every provision of this Agreement in
accordance with the terms of this Agreement.
12. Governing Law and Forum.
All questions pertaining to the validity, construction,
execution and performance of this Agreement shall be construed in accordance
with and governed by the internal laws of the State of New York without
regard to principles of conflict of law.
13. Entire Agreement; Amendment.
This Agreement constitutes the entire Agreement between the parties
hereto with respect to the matters contained herein and supersedes all prior
agreements and understandings between the parties and may not be changed or
terminated orally, and no attempted change, termination or waiver of any of the
provisions hereof shall be binding, unless in writing and signed by the
parties hereto.
IN WITNESS WHEREOF, Seller and Buyer have each signed or caused this
Agreement to be signed by its duly authorized officer as of the date and year
first above written.
STAFF BUILDERS SERVICES, INC. ACCREDICARE, INC.
ATTEST: ATTEST:
/s/ Peter Barry /s/ James J. Kelly
By: /s/ Ed Teixeira By: /s/ Barbara Van Alstyne
Ed Teixeira, Senior Vice President Barbara Van Alstyne, President
WP\ASSETPUR\ASSETPUR.AI
EXHIBIT
10.78<PAGE>
ASSET PURCHASE AND SALE AGREEMENT
ASSET PURCHASE AND SALE AGREEMENT made as of the 29th day of
September, 1995, by and among STAFF BUILDERS SERVICES, INC., a New
York corporation, with its principal executive offices located at
1983 Marcus Avenue, Lake Success, New York 11042, (the "Buyer") and
Care Star, Inc., an Ohio Corporation with its principal place of
business at 1150 Harrison Avenue, Suite 202, Harrison, Ohio (the
"Seller").
W I T N E S S E T H:
WHEREAS, Seller is in the business of providing home health
care services in the Ohio, Southern Indiana and Manassas, Viriginia
market areas; and
WHEREAS, Seller is desirous of selling to Buyer, and Buyer is
desirous of purchasing from Seller, certain assets utilized by
Seller in conjunction with Seller's home health care services
business (the "Business").
NOW, THEREFORE, it is agreed as follows:
1. Transfer of Assets
a. Seller agrees, on the date hereof, or on such other
closing date mutually agreed to by the parties (the "Closing Date")
to sell, convey and transfer to the Buyer, and the Buyer agrees to
purchase from Seller all the business assets of Seller as set forth
below:
1. Certain equipment (as listed in Exhibit "A");
2. Certain furniture;
3. Certain fixtures owned by Seller;
4. All customer, applicant and temporary employee
lists and records;
5. Agreements, if any, relating to employees;
6. Business records and sales records;
7. Work in progress; and
8. Provider Contracts, oral and written ("Provider
(Contracts");
all of which have been used in connection with or have been at any
time a part of the Business at any and all of Seller's locations
("Transferred Assets"), except furniture, fixtures and equipment at
the Cincinnati, Ohio, Southern Indiana, and Virginia offices (see
paragraph 2a).
Except as set forth below, the Transferred Assets being sold
hereunder shall be delivered to Buyer on the Closing Date at
Seller's locations.
On such date as Seller commences operations as Staff Builders
Franchisee, (the "Conversion Date"), receivables accruing after
said date shall be the property of Buyer. Transferred assets
expressly do not include receivables, cash-on-hand, prepaid
expenses, deposits and cash equivalents prior to the Conversion
Date, which shall remain the property of the Seller. Buyer and
Seller acknowledge that Seller is a plaintiff in a class-action
lawsuit (Case # 94-03530 Ohio Counsel for Home Care, Inc. v. Ohio
Department of Human Services, filed March 8, 1994 and pending
before the Ohio Court of Claims), seeking payment to Seller for
unfairly computed rates for Medicaid Services performed since 1985
by Seller. It is expressly understood and agreed that any and all
awards, payments or settlements of the claims in this lawsuit, for
periods prior to the Conversion Date, are and shall be the
exclusive property of Seller and not a Transferred Asset or part
thereof. As of the Closing Date, the parties intend the Conversion
Date to be on or about November 1, 1995.
The sale and transfer shall be effected by Bills of Sale,
Assignments, or other instruments of transfer, in form and
substance satisfactory to Buyer. Seller agrees that it will, at
any time after the Closing Date, or Conversion Date, upon the
request of the Buyer execute, acknowledge and deliver all such
further conveyances, assignments and transfers, as may be required
and necessary for the purpose of assigning, transferring, conveying
and granting to the Buyer good and valid title to any and all of
the Transferred Assets being sold hereunder.
b. It is understood and expressly agreed by the parties
hereto that the Buyer shall not assume or be liable for any of
Seller's general liabilities, Provider Contracts prior to
Conversion Date, contracts of any date other than Provider
Contracts, commitments and other obligations of Seller of any kind,
whether accrued, absolute, contingent, unliquidated, or otherwise,
and that Buyer's purchase of the Transferred Assets shall be
exclusive of any and all liabilities of Seller.
c. It is also agreed, acknowledged, and understood that as
part of the transaction completed herein, Seller will receive
franchises to operate as Staff Builders Franchisee in the
Cincinnati, Ohio, Southern Indiana, and Virginia locations which
Seller previously operated independently, with certain assets used
in these locations owned by Buyer (Franchisor), as set forth in
paragraph 2a below and, additionally, will receive Buyer's existing
Cincinnati, Ohio franchise. The grant of these franchises and
terms and conditions thereof are set forth in a Franchise Agreement
of even date herewith.
2. Purchase Price and Payment Thereof
The purchase price for the Transferred Assets is as
follows:
a. SEVEN HUNDRED NINETY THOUSAND DOLLARS ($790,000) for
the purchase of the assets of the Southern Indiana,
Cincinnati, Ohio and Virginia Offices (excluding
furniture, fixtures and equipment, but including all
other assets referred to in paragraph 1a.
b. ONE MILLION THREE HUNDRED NINETY THOUSAND DOLLARS
($1,390,000) for purchase of the assets (see
Paragraph 1a) of Lancaster, Newark and Mt. Vernon,
Ohio Offices, subject to adjustment provision as set
forth below.
3. Payment
The purchase price shall be payable as follows:
a. SEVEN HUNDRED NINETY THOUSAND DOLLARS ($790,000)
shall be paid (see Paragraph 2a above) as follows:
(i) FOUR HUNDRED THOUSAND DOLLARS ($400,000) shall
be paid upon the execution of this Agreement
by Buyer to Seller at the Closing.
(ii) THREE HUNDRED NINETY THOUSAND DOLLARS
($390,000) shall be held in escrow and paid
to Seller upon the earlier of: transfer of the
Indiana license and the Cincinnati, Ohio,
Indiana, and Virginia Provider Numbers to
Buyer, or sixty (60) days from Closing.
b. ONE MILLION THREE HUNDRED NINETY THOUSAND DOLLARS
($1,390,000) shall be paid as follows:
(i) ONE MILLION DOLLARS ($1,000,000) shall be
paid at Closing.
(ii) THREE HUNDRED NINETY THOUSAND DOLLARS
($390,000) shall be held in escrow and paid to
Seller upon the earlier of: transfer of the
provider numbers for the Mt. Vernon and
Lancaster, Ohio, offices to Buyer, or sixty
(60) days from Closing, subject to the
adjustment provision as set forth below.
(Paragraph 4)
c. The Closing shall be held at the offices of Kepley,
MacConnell and Eyrich, Suite 2200, 525 Vine Street, Cincinnati,
Ohio, on September 29, 1995 at 1:00 p.m.
4. Adjustment to Purchase Price
Seller acknowledges and agrees that whereas Buyer is
currently engaged in efforts to acquire existing Staff Builders
franchise offices in the Columbus market area, and Seller has
acknowledged an interest in participating in the Acquisition (the
"Acquisition") up to a limit of THREE HUNDRED THOUSAND DOLLARS
($300,000.00), this amount ("Escrowed Funds"), shall be part of the
funds held in escrow out of the funds held pursuant to paragraph
3b(ii) (total held will be $780,000.00, $300,000.00 of which will
be Escrowed Funds for the potential acquisition). In the event
Acquisition is not consummated within thirty (30) days from the
date of the Closing, the Escrowed Funds shall be immediately and
unconditionally released to Seller. It is further understood that
the Acquisition is at the exclusive option of Seller, and that
Seller may terminate its participation in the Acquisition at any
time during the 30-day period, in which case Seller Shall by
entitled to the Escrowed Funds.
5. Representation, Warranties and Covenants of Seller.
a. The Seller warrants and represents to Buyer as follows:
(i) All of the contracts and agreements are in full
force and effect and constitute legal, valid and binding
obligations of the parties thereto, enforceable against such
parties in accordance with the terms thereof. No default of, event
or circumstance which, with notice or the passage of time, or both
would constitute a default under any of the contracts, exists.
(ii) Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of
California and has full power and authority to carry on its
business as now conducted at the Branch and as contemplated under
this Agreement and to own and operate its assets, properties and
business;
(iii) This Agreement and all other documents and
instruments executed and delivered by Seller hereunder have been
duly and validly executed and delivered by Seller and constitute
valid and binding agreements of Seller, enforceable against Seller
in accordance with their respective terms. The execution and
delivery of this Agreement by Seller and the consummation by Seller
of the transactions contemplated hereby will not: (i) violate any
provision of the Certificate of Incorporation or By-Laws of Seller;
or (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any agreement
to which Seller is a party, or by which its properties or assets
are bound; or (iii) violate any statute, law, rule or regulation of
any state or federal government or any agency or authority thereof;
or (iv) violate any order, writ, injunction or decree of any court
or other governmental authority.
(iv) Neither the execution, delivery or performance of this
Agreement and all related agreements by Seller requires the
authorization or approval of any other person or entity,
governmental or otherwise.
(v) Except for required governmental approval for licensure
and certification, no consent from, or other approval of, any
governmental entity is necessary in connection with the transfer of
the Transferred Assets.
(vi) Seller has good and valid title to the Transferred
Assets, free and clear of all liens, mortgages, encumbrances,
security interests, equities or claims of any kind or character,
and the delivery to Buyer of the Transferred Assets will transfer
good and valid title, free and clear of any liens, mortgages,
encumbrances, security interests or equities or claims of any kind
or character.
(vii) There are no strikes or labor proceedings pending or,
to the knowledge of Seller, pending or threatened with regard to
the Business.
(viii) All Federal, state and local income, excise, property
and other tax returns which are required to be filed by Seller
with regard to the Business have been filed and all taxes, license
fees or other charges levied, assessed or imposed upon Seller in
connection with the operation of the Business have been paid in
full.
(ix) Seller is not in violation or default of any order of any
court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality
wherever located.
(x) There are no actions, suits or proceedings (including
without limitation, administrative or regulatory proceedings) or
any governmental audits or surveys pending or threatened against
the Business or the Seller.
b. Seller shall deliver to Buyer at Closing:
(i) a Bill of Sale for the Transferred Assets;
(ii) such other documents and instruments as are required
to be executed and/or delivered by Seller under the terms of this
Agreement.
c. The provisions of this Section 5 shall survive Closing
hereunder for a period of three (3) years.
6. Representations, Warranties and Covenants of Buyer.
a. Buyer warrants and represents to Seller as follows:
That it is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York and has
all corporate power and authority to enter into, execute and
deliver this Agreement and consummate the transactions contemplated
herein.
b. The Buyer shall deliver to Seller at Closing:
(i) payment of $1,400,000 (see Paragraphs 3c(i) and
3d(i).
(ii) such other documents and instruments as are
required to be executed and/or delivered by Buyer
under the terms of this Agreement.
c. The provisions of this Section 4 shall survive Closing
hereunder.
7. Additional Agreements.
Seller agrees to indemnify Buyer against and hold Buyer
harmless from any losses, claims or damages which arise from any of
("Losses") the following:
(i) any liabilities of Seller, including without
limitation, any liabilities related to the
Business;
(ii) any breach of any representation and warranty of
Seller contained in this Agreement;
(iii) all Losses incurred by Buyer, and relating to the
conduct of the operation of the Transferred Assets
and/or the Business prior to the Closing; and
(iv) all costs and expenses, including reasonable
attorneys' fees and disbursements, incurred by
Buyer in connection with any of the matters
contemplated by clauses (i) (ii) and (iii) above.
2. Buyer shall give Seller written notice within fifteen (15)
days of any written claim asserted against it for which Seller may
be liable under this Section 7.
8. Notice
a. All communications, notices, requests and demands
required or appropriate to be given under this Agreement
shall be in writing and shall, unless otherwise provided
herein, be deemed to have been duly given when either (i)
delivered in person and a written receipt therefor is
obtained or (ii) mailed by registered or certified mail,
postage prepaid, return receipt requested, properly
addressed to the party for whom intended as follows:
If to Buyer: Staff Builders Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
Attention: President
With a Copy to: Staff Builders Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
Attention: General Counsel
If to Seller: CareStar, Inc.
1150 Harrison Avenue, Suite 202
Harrison, Ohio 45030
Attention: Thomas J. Gruber,
President
With a copy to: K. Gregory Kepley, Esq.
Kepley, MacConnell & Eyrich
525 Vine Street, Suite 2200
Cincinnati, Ohio 45202
or to any other address or addresses which may hereafter be
designated by any party hereto by like notices.
9. Survival of Closing; Incorporations.
Whenever in this Agreement, and not specifically provided
to the contrary, there is an act, duty, obligation or covenant to
be performed, in whole or in part, or obligation to be assumed by
any party, in whole or in part, subsequent to Closing, said act,
duty, obligation or covenant shall survive the Closing hereunder.
Representations, warranties and indemnities, unless specifically
provided to the contrary, shall survive Closing for a period of
three (3) years. Any Schedule attached hereto is incorporated
herein and made part hereof.
10. Subject Headings.
The subject headings of the Sections of this Agreement are
included for purposes of convenience only and shall not affect the
construction or interpretation of any of its provisions.
11. Counterparts.
This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be an
original, but all such counterparts shall constitute one and the
same instrument.
12. Enforcement of Provisions.
The authority to enforce any provision of this
Agreement or to require at any time performance by a party of any
provision hereof, whether or not exercised, shall in no way be
construed to be a waiver of the provision or to affect the
validity of this Agreement, or any part hereof, or the right of any
party thereafter to enforce each and every provision of this
Agreement in accordance with the terms of this Agreement.
13. Governing Law and Forum.
All questions pertaining to the validity, construction,
execution and performance of this Agreement shall be construed in
accordance with and governed by the internal laws of the State of
New York without regard to principles of conflict of law. Any such
dispute shall first be submitted by the parties to non-binding
arbitration or other alternate dispute resolution.
14. Entire Agreement; Amendment.
This Agreement constitutes the entire Agreement between
the parties hereto with respect to the matters contained herein and
supersedes all prior agreements and understandings between the
parties and may not be changed or terminated orally, and no
attempted change, termination or waiver of any of the provisions
hereof shall be binding, unless in writing and signed by the
parties hereto.
IN WITNESS WHEREOF, Seller and Buyer have each signed or
caused this Agreement to be signed by its duly authorized officer
as of the date and year first above written.
STAFF BUILDERS SERVICES, INC.
ATTEST:
/S/ Dominick DiCorcia By: /S/Edward Teixeira
Secretary Edward Teixeira
Sr. Vice President
CARESTAR, INC.
ATTEST:
/S/ Donald L.Brown By: /S/Thomas J. Gruber
Secretary Thomas J. Gruber
President
WP\ASSETPUR\ASSETPUR.doc
EXHIBIT
10.88
<PAGE>
ATC Healthcare Services, Inc.
a Staff Builders company
Franchise Agreement<PAGE>
ATC Healthcare Services, Inc.
Franchise Agreement
TABLE OF CONTENTS
Page
I. GRANT OF FRANCHISE AND LICENSE.................... 2
II. TERRITORY......................................... 2
III. INITIAL TERM; RENEWAL TERM........................ 4
IV. PAYMENTS TO FRANCHISOR............................ 7
V. BILLINGS, DEDUCTIONS AND REMITTANCES.............. 10
V-A. CREDIT APPROVAL; DELINQUENT ACCOUNTS; COLLECTIONS. 13
VI. PROPRIETARY MARKS................................. 16
VII. CONFIDENTIAL OPERATING MANUALS.................... 18
VIII. CONFIDENTIAL INFORMATION.......................... 19
IX. ADVERTISING....................................... 19
X. SITE SELECTION REQUIREMENTS AND ASSISTANCE........ 21
XI. DUTIES OF FRANCHISOR.............................. 24
XII. DUTIES OF FRANCHISEE.............................. 30
XIII. RECORDS, AUDITS AND REPORTING REQUIREMENTS........ 41
XIV. RELATIONSHIP OF THE PARTIES....................... 43
XV. COVENANTS NOT TO COMPETE.......................... 44
XVI. ASSIGNMENT; RIGHT OF FIRST REFUSAL................ 46
XVII. TERMINATION....................................... 51
XVIII. FURTHER OBLIGATIONS AND RIGHTS OF THE
PARTIES UPON TERMINATION OR EXPIRATION............ 57
XIX. WAIVER AND DELAY.................................. 60
XX. FRANCHISORS RIGHT TO CURE DEFAULTS ............... 60
XXI. INTEGRATION OF AGREEMENT.......................... 61
XXII. NOTICES........................................... 61
XXIII. MISCELLANEOUS..................................... 62
XXIV. COSTS OF ENFORCEMENT.............................. 63
XXV. LIABILITY OF MULTIPLE OWNERS --
PERSONAL GUARANTEES............................... 63
XXVI. SURVIVAL.......................................... 64
XXVII. ACKNOWLEDGEMENTS.................................. 64
XXVIII. SUBMISSION OF AGREEMENT........................... 66
EXHIBIT A - FRANCHISED TERRITORY
<PAGE>
ATC Healthcare Services, Inc.
Franchise Agreement
THIS AGREEMENT is made and entered into this _____ day of
________________, 19___, between "ATC HEALTHCARE SERVICES, INC.", a
Georgia corporation, with its principal office at 1983 Marcus
Avenue, Lake Success, New York 11042 (hereinafter referred to as
ATC, Franchisor or the Company) and ______________________
________________________, whose principal address is
(hereinafter referred to as Franchisee).
W I T N E S S E T H:
WHEREAS, Franchisor as a result of the expenditure of time,
skill, effort and money has developed a unique and proprietary
system for opening, operating and developing businesses
(hereinafter ATC Healthcare Services Centers or Centers)
specializing in providing temporary personnel services to the
health care community, exclusive of home health care personnel
and personnel for heavy or light industry and products and
services related thereto; and, in general, a style, system and
technique of business operation and procedure developed through
and by reason of Franchisors business experience (hereinafter
referred to as the ATC Healthcare Services System or the
System);
WHEREAS, Franchisor continues to expend time, skill and
money to develop and integrate into the System new or substitute
programs, procedures, systems, products and services;
WHEREAS, Franchisor is the owner of certain trademarks,
service marks, copyrights and logotypes, including (but not
limited to) the mark ATC and such other trademarks, trade names,
service marks, copyrights and logotypes as are now designated and
may hereafter be designated by Franchisor for use in connection
with businesses which it may own and operate and which it
franchises to others to own and operate and products and
services related thereto (such names, logotypes and marks
hereinafter referred to as the Proprietary Marks);
WHEREAS, Franchisor continues to develop, use and control
the use of such Proprietary Marks in order to identify for the
public the source of services and products marketed thereunder
and to represent the high standards of quality associated with
such services and products;
WHEREAS, Franchisee desires to obtain a franchise to operate
one (1) ATC Healthcare Services Center in the Territory defined
and described below utilizing Franchisors Proprietary Marks and
the System; and,
WHEREAS, Franchisor desires to grant to Franchisee a
franchise of the type specified in Section 1.01 hereof upon the
terms and subject to the conditions of this Agreement.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
I. GRANT OF FRANCHISE AND LICENSE
1.01 Grant of Franchise
Franchisor hereby grants to Franchisee, and Franchisee
hereby accepts, the right to operate one (1) franchised ATC
Healthcare Services Center, and to offer and sell temporary and
permanent medical personnel services, programs, products and
activities, exclusive of home health care personnel services and
personnel services for heavy or light industry; and to use the
System, as it may be changed, improved and further developed from
time to time, in the Territory as defined hereafter in this
Agreement and upon the terms and subject to the provisions of
this Agreement and all documents ancillary hereto.
1.02 Grant of License
Franchisor hereby grants to Franchisee, and Franchisee
hereby accepts, a non-exclusive license to use Franchisors
Proprietary Marks which pertain to the franchise contemplated
herein and the System solely in connection with Franchisees
operation of one (1) Center in the Territory described below,
upon the terms and subject to the provisions of this Agreement
and all documents ancillary hereto.
II. TERRITORY
2.01 Territorial Grant
Franchisee's right to engage in the business of establishing
and operating a Center is restricted to the geographic area (the
Territory) delineated in Exhibit A to this Agreement.
Franchisee may operate its Center at such permanent
location(s) situated within the Territory as may be required or
approved by Franchisor. As used herein, permanent location as
(hereinafter defined) shall mean that location selected by
Franchisee and approved by Franchisor from which the Franchisee
shall operate its franchised business, and such Center satellites
as shall be permitted under Section 10.04 hereof, continuously
and without interruption throughout the term of this Agreement.
2.02 Franchisor Restrictions
Franchisor agrees that, for so long as this Agreement is in
effect, Franchisor will not, directly open a Company-owned Center
of the type franchised hereunder or grant a license for the
operation of a similar or competitive business within the
Territory, except as provided hereafter in Section 2.04 of this
Agreement.
2.03 Franchisee Acknowledgement
Franchisee expressly acknowledges and understands that it
shall be primarily obligated to develop and exploit its business
within the Territory granted herein. Franchisee's recruitment
activities are restricted to the Territory in accordance with the
specifications set forth in the manuals.
2.04 Rights Reserved By Franchisor
A. General
Franchisee expressly understands and agrees that Franchisor
has the right, if it deems appropriate in its sole discretion:
to itself own and operate (outright, through contracts,
joint-ventures or otherwise) Centers and other businesses outside
of the Territory; to grant licenses and/or franchises for the
operation of Centers and other businesses outside of the
Territory as Franchisor determines; to offer and sell services
and products within the Territory which do not comprise a part of
the System and, in connection therewith, to exploit its
Proprietary Marks, name, reputation and know-how; within the
Territory to itself own, operate, and grant licenses or
franchises for the operation of Centers and other businesses
which offer and provide those categories of personnel services,
programs and activities, and services and products related
thereto, which are not embraced within the franchise conveyed
hereunder (as specified in Section 1.01 of this Agreement), and,
in connection therewith, Franchisor may use and exploit its
Proprietary Marks, name, reputation and know-how and itself offer
and sell within Franchisee's Territory those programs and
services which this Agreement contemplates Franchisee will offer
and sell upon the occurrence of certain contingencies or events
set forth hereafter in this Agreement.
B. Mergers and Acquisitions
Franchisee expressly understands and agrees that this
Agreement contemplates that Franchisor may acquire, merge with,
or be acquired by an entity which offers or sells within the
Territory some or all of the services, programs and activities
which this Agreement contemplates will be offered and sold by
Franchisee, and that in connection therewith, no violation of
this Agreement will have occurred, and Franchisee hereby
expressly releases, waives and discharges any and all claims,
causes of action, demands, or other rights which may be asserted
or undertaken upon such occurrence.
III. INITIAL TERM; RENEWAL TERM
3.01 Initial Term The initial term of this Franchise
Agreement (Initial Term) shall be ten (10) years commencing on
the date of execution hereof unless sooner terminated in
accordance with the provisions of this Agreement.
3.02 Renewal Terms If Franchisee shall have complied with
the conditions for renewal set forth in Paragraph 3.03 below,
Franchisee shall have the right, but not the obligation, to enter
into renewal Franchise Agreements for two additional five (5)
year terms (the Renewal Terms). The first Renewal Term shall
commence on the expiration of the Initial Term, and the second
Renewal Term shall commence on the date of expiration of the
first Renewal Term.
3.03 Conditions Precedent to Renewal Franchisees right to
enter into a renewal Franchise Agreement is contingent upon
Franchisees fulfillment of the following conditions:
(a) Upon Franchisees exercise of such right and at
the commencement of any Renewal Term, Franchisee shall have fully
performed all of its obligations under the Agreement.
(b) Franchisee, prior to the commencement of any
Renewal Term, shall satisfy: (i) Franchisors then-current
standards applicable to the System; (ii) the requirements of the
then-current Franchise Agreement and all other agreements
ancillary thereto; and (iii) the standards set forth in
Franchisors then-current Confidential Operations Manuals (the
Manuals).
(c) Franchisee shall not be in default of any
provision of this Agreement or any other agreement with
Franchisor or any of its affiliates, subsidiaries, or designees,
if any.
(d) Franchisee shall have satisfied all monetary
obligations to Franchisor and any of its affiliates,
subsidiaries, and designees, if any, and shall have met such
obligations in a timely and responsible manner throughout the
Initial Term and any Renewal Term.
(e) Prior to the commencement of the Renewal Term,
Franchisee shall have refurbished, redesigned and/or remodelled
its franchised business facility, and shall have provided for
such upgrading and replacement of painting and decorating,
lighting, equipment, signs, materials, inventory and furnishings,
as Franchisor has reasonably specified in: (i) Franchisors
then-current specifications for its franchised Center; (ii) the
requirements set forth in Franchisor's then-current Franchise
Agreement; and, (iii) Franchisor's Confidential Operating Manuals
(the Manuals); and Franchisors reasonable judgment as to the
condition, state of repair and general appearance of the
Franchisees premises.
(f) Franchisee shall have executed a general release,
in form and substance satisfactory to Franchisor or its counsel,
of any and all present as well as future claims against
Franchisor and any of its affiliates, subsidiaries, and
designees, and their respective officers, directors,
shareholders, agents, contractors, and employees, in their
corporate and individual capacities, arising out of or related to
this Agreement (or any subsequent franchise agreement).
(g) Franchisee shall be in compliance with
Franchisors then-current qualification and training requirements
as set forth in the Manuals or elsewhere.
(h) There shall be no additional franchise fee paid
upon commencement of the Renewal Term.
Franchisee shall also have the right normally denominated a
right of first refusal to purchase from the Franchisor a Staff
Builders general personnel (or similarly designated) business in
the territory granted hereunder at the purchase price initially
established by the Franchisor for such a franchise. It should be
understood, however, that the Franchisor has no present intention
of creating or offering any general personnel franchise.
Franchisor might never offer any such business opportunity.
3.04 Form and Manner of Renewal: If Franchisee wishes to
exercise its right to enter into a renewal Franchise Agreement,
it shall do so by executing Franchisors then-current form of the
Franchise Agreement, which agreement shall supersede this
Agreement and be modified to provide that Franchisee shall have
no right to renew the franchise upon expiration of the Renewal
Term. If upon the expiration of the Renewal Terms, the
Franchisee wishes to continue to operate the Franchised Business
for an additional term (the Additional Term), then, subject to
Franchisors absolute discretion and in the manner prescribed by
Franchisor, Franchisee may be permitted to enter into
Franchisors then-current form of Franchise Agreement, provided
that, at a minimum, Franchisee shall have fulfilled the
conditions set forth in Paragraph 3.03 (a)-(h) hereof.
The terms of the Renewal Agreement may differ from the terms
of this Agreement or any prior Renewal Agreement, except that:
(i) the Territory conferred upon Franchisee hereunder shall
remain the same; (ii) the right to renew the Renewal Agreement
and any applicable Renewal Management Agreement(s) at the
expiration of the Renewal Term shall be identical to that set
forth herein; (iii) no additional initial franchise fee shall be
imposed upon Franchisee; and, (iv) the royalties and any other
fees imposed upon Franchisee upon renewal shall not be greater
than those royalties and any other fees then imposed by
Franchisor system-wide upon similarly situated franchisee's
executing Franchisor's then-current Franchise Agreement.
Franchisee shall exercise its right to renew for a Renewal
Term or an Additional Term in the following manner:
(a) Not less than one hundred eighty (180) days but
not more than two hundred forty (240) days prior to the
expiration of the Initial Term (or any Renewal Term), Franchisee
shall, by written notice, inform Franchisor of its intention to
exercise its renewal right.
(b) Within sixty (60) days after receipt of
Franchisees request, if Franchisee has complied with all
conditions precedent to renewal set forth above, Franchisor shall
deliver to Franchisee a copy of its then-current Offering
Circular (including its then-current form of Franchise
Agreement), and within fifteen (15) business days from the
receipt of same Franchisee shall, in writing, acknowledge the
receipt thereof.
(c) No sooner than ten (10) business days but no more
than twenty (20) business days after Franchisee receives the
then-current Offering Circular (including the then-current
Franchise Agreement), Franchisee shall, by written notice, notify
Franchisor as to whether or not he/she elects to execute
Franchisors then-current form of Franchise Agreement.
(d) Promptly upon receipt of Franchisee's notice of
its election to execute Franchisors then-current Franchise
Agreement, Franchisor shall deliver to Franchisee three (3)
copies of said agreement. Within fifteen (15) business days of
receipt thereof, Franchisee shall execute three (3) copies of
said agreement and return same to Franchisor.
(e) If Franchisee shall fail to perform any of the
acts or fail to deliver any of the notices required pursuant to
the provisions of subsections (a), (b), (c) or (d) of this
Paragraph 3.04 in a timely fashion, such failure shall be deemed
an election by Franchisee not to renew, and such failure shall
cause Franchisees renewal right to expire without further notice
or action by Franchisor.
(f) If Franchisee exercises its renewal right in the
manner described above, and if on the date the Initial Term (or a
Renewal Term) expires Franchisee has complied with all of the
conditions set forth in Paragraph 3.03 hereof, Franchisor shall
execute the renewal Franchise Agreement previously executed by
Franchisee and shall, promptly after expiration of the Initial or
a Renewal Term, deliver one (1) fully executed copy of the
renewal Franchise Agreement to Franchisee.
3.05 Notice of Expiration: If applicable law requires that
Franchisor give notice of expiration to Franchisee prior to the
expiration of the Initial Term, this Agreement shall be deemed to
remain in effect on a month-to-month basis until Franchisor has
given to Franchisee that notice of expiration so required and the
applicable period required to pass before the notice becomes
effective shall have expired.
IV. PAYMENTS TO FRANCHISOR
4.01 Initial Fee
As an Initial Fee, Franchisee shall pay to Franchisor the
sum of Nineteen Thousand Five Hundred ($19,500) Dollars, which
shall be due in full upon the execution of this Agreement by
Franchisee. Staff Builders International, Inc., another company
in Franchisors corporate family that offers a Home Health Care
franchise, reserves the right to offer the franchise contemplated
herein to its current franchisees for a reduced franchisee fee of
Ten Thousand Dollars ($10,000), on such terms and conditions as
it deems appropriate, on the condition that the territory of such
franchise might not be of the same dimensions or size as the
territory of the given franchisee's Home Health Care franchise.
This Initial Fee shall be deemed fully earned when paid, and
shall not be refundable in whole or in part except as follows:
If Franchisor, in its sole and exclusive discretion
determines that Franchisee (and/or its designated Center Manager,
if any) has failed to successfully complete Franchisor's Initial
Training Program (as provided for in Article XI Section 11.03)
then this Agreement shall, at Franchisor's option, be deemed
terminated and of no further force and effect, except as to the
provisions of Article XVIII hereof which shall remain in full
force and effect. Thereupon, Franchisor will refund to
Franchisee seventy-five (75%) percent of the Initial Fee paid to
Franchisor, provided that Franchisee has returned all materials
given it, and will retain the balance thereof, to defray its
expenses in connection with deferring its opportunity to offer
and sell the franchise to another; furnishing (or attempting to
furnish) Franchisors Initial Training Program; and rendering
pre-opening assistance and services to Franchisee. Franchisor
may, from time to time, under certain circumstances, and at its
sole discretion, finance the initial franchise fee.
4.02 Definitions To Be Used In Connection With Calculation
of Fees and Allocation of Gross Margin
Gross Sales -- The total amount of all sales generated
by Franchisee's Center for personnel
services, and services and products
related to personnel services, whether
received in cash, in services, in kind
or on credit (and if on credit, whether
or not payment is received therefor),
including liquidated damages.
Net Sales -- Gross Sales less the amount of all sales
taxes or similar taxes which, by law,
are chargeable to clients of Franchisee
(but only to the extent they have been
included), if such taxes are separately
stated when the client is charged and
paid to the appropriate taxing
authority, and the amount of any
authorized and documented credits, sales
allowances, discounts and/or rebates
given to clients by Franchisee in good
faith and in accordance with provisions
of this Agreement and Franchisors
Manuals.
Direct Costs -- The wages actually paid to temporary
employees, plus any employment-related
or wage-related taxes, insurance and
fringe benefits (including, without
limitation, FICA, Workers Compensation,
health and hospitalization insurance;
fidelity bonding, liability insurance,
Unemployment Insurance and, if required,
Disability Insurance, vacation programs
and, if applicable, sick pay programs)
applicable to temporary employees. Fees
to Independent Contractors (as defined
below) are Direct Costs.
Independent
Contractor -- A person who performs work assignments
as a self-employed, independent business
person or free-lancer and has entered
into an Independent Contractor Agreement
with ATC. Such a person is responsible
for withholding and remitting taxes to
government agencies and is not entitled
to any benefits.
4.03 A.T.C. Health Care Services -- Allocation of Gross
Margin
Franchisor is entitled to retain forty percent (40%) of
Franchisee's Gross Margin arising from or relating to providing
of personnel services including the provision of the services of
Independent Contractors, defined and calculated as follows:
Net Sales Minus Direct Costs Equals Gross Margin
4.04 Additional Products and Services Royalty
Franchisor is entitled to retain a royalty equal to forty
percent (40%) of all revenues received by Franchisor or
Franchisee from, through, by or on account of Franchisee's
rendition of services or sales of products not otherwise
specified herein.
4.05 Commencement of Payment Obligations
Except as herein expressly provided, all royalties and fees
due hereunder shall begin accruing on the day that Franchisee
commences operation of the franchised business and shall continue
to be due during the entire term of this Agreement.
Commencement of operation of the franchised business is defined
to be the first day that Franchisees franchised business is
either opened for business, engages in any of the activities
contemplated by this Agreement or offers of any of its services
or products for sale.
4.06 Product and Service Purchase Payments
As set forth in detail hereunder, and in Franchisor's
Manuals and elsewhere, in order to provide personnel services of
the highest quality and in the most professional, expeditious and
cost-conscious manner, and in order to guarantee uniformity of
concept and quality, Franchisee is required to purchase certain
equipment, supplies and materials necessary to conduct the
franchised business in accordance with the System.
4.07 Application of Funds
If Franchisee is delinquent in the payment of any obligation
to Franchisor, or under any other agreement with Franchisor,
Franchisor shall have the right to deduct and remit to itself
from Franchisee's share of Gross Margin and other funds due to
Franchisee any such amounts, or to apply any payment made by
Franchisee to the oldest obligation due.
4.08 Late Fees
If any payment required to be made pursuant to this
Agreement is not made when due, then Franchisor shall have the
right to deduct the amount of such payment from Franchisees
allocable share of Gross Margin and other amounts due Franchisee,
and Franchisor shall be entitled to charge Franchisee interest on
the outstanding payment (accruing from the date when such payment
was first due) at a rate equal to two (2) points above the prime
interest rate then in effect at Citibank, N.A., New York, New
York or, if said rate is unavailable, the average of the prime
rates then in effect at Chemical Bank and Morgan Guaranty Trust.
V. BILLINGS, DEDUCTIONS AND REMITTANCES
PREAMBLE
All payroll and billing activities related to Franchisees
provision of personnel services shall be accomplished by
Franchisor, based upon information submitted to Franchisor by
Franchisee. Franchisor shall have the principal responsibility
for credit and collection activities. Franchisor shall be the
legal employer of temporary employees assigned or available for
assignment to clients and shall be responsible for compensating
such temporary employees (except in certain circumstances and in
certain locations which may be specified from time to time in
Franchisors Manuals).
Franchisor will deduct from collections made by it all
Direct Costs (as hereinabove defined) and its share of Gross
Margin any fees, sums due for supplies, advertising and
promotional materials, insurance, as a consequence of
indemnification, or any other payment or amount due to Franchisor
by Franchisee pursuant to this Agreement. Franchisor shall also
remit to Franchisee Franchisees allocable share of Gross Margin
and other amounts in accordance with the provisions of Articles
IV and V of this Agreement.
5.01 Billings
(a) Franchisor will alone conduct all billing
activities related to Franchisees Center.
(b) Franchisee shall not generate or otherwise create
bills to be sent to any of its clients for any personnel services
rendered or other services or products sold by Franchisee under
this Agreement or any ancillary agreements.
(c) Franchisee shall inform its clients that all
payments are to be made directly to Franchisor.
(d) Franchisee may not engage in any barter or exchange
of services or products and shall not agree with any client to
perform services for any consideration other than cash payable to
Franchisor.
(e) If any payment is made to the order of Franchisee
which should have been made to the order of Franchisor,
Franchisee shall promptly and properly endorse same in favor of
Franchisor and deliver such payment(s) in their original form to
Franchisor in accordance with the procedure set forth in the
Manuals.
(f) Franchisee shall not maintain any bank account
under the name" Staff Builders", "Staf"f," Builders"," ATC" or
any variant thereof, or any name confusingly similar thereto.
5.02 Business Reports
(a) Franchisee agrees to forward to Franchisor either
electronically or by overnight or express mail (as may be
specified from time-to-time by the Franchisor) weekly reports of
all activities of the Center franchised hereunder during the
prior week in the form, content and on the day of the week
specified by Franchisor.
(b) Franchisee hereby agrees to cause to be
transmitted or forwarded to Franchisor such reports in the order
that they are received by Franchisor on the day of the week
specified. Such reports shall contain all information which
Franchisor requests and must be accompanied by the copies
required by Franchisor of all related time sheets, job orders,
sales and marketing reports, recruitment records and such other
documents as Franchisor requests.
(c) Franchisee expressly authorizes Franchisor to
retrieve such information as it requires directly from
Franchisee's computer, and Franchisee agrees to cooperate with
Franchisor's retrieval of such information. Franchisee further
agrees to maintain at all times printouts of all computerized
records and make the same available to Franchisor upon request.
(d) Franchisor reserves the right to change at any time
the number, scope, format, content or time for submission of
reports which Franchisee is required to send to Franchisor,
whether manually or by computer interface.
5.03 Remittances to Franchisee; Deductions
(a) During the Initial Term, Franchisor shall transmit
to Franchisee within forty-five (45) days of the end of each
month of the term hereof, a statement (the "Monthly Report")
reporting all Gross Sales, deductions, additions and Gross Margin
attributable to Franchisee for the preceding period and at such
time furnish to Franchisor all of the information, reports and
other items required to be furnished by Franchisee to Franchisor.
(b) Concurrently with the submission of each such
monthly report, Franchisor shall remit to Franchisee the full
amount of Franchisees share of Gross Margin and any other monies
due to Franchisee for the month covered by said Report.
(c) Franchisor shall deduct from Franchisee's share of
Gross Margin any other amounts due Franchisor as follows:
1) the amount of charges against Franchisee
arising from or related to any delinquent account (as provided
for hereafter in this Agreement);
2) any monies paid to temporary employees or
otherwise by Franchisor which Franchisor shall subsequently
determine to have been paid based upon forged or erroneous time
sheets; fraudulent, erroneous or improper authorizations; for
standby time (amounts paid to temporary employees for time not
worked for a client; or for any reason not billable to a client;
or for unconfirmed (as provided for in Manuals or otherwise)
overtime paid to temporary employees;
3) amounts refunded to a client through the
exercise of any guarantee, or for any other reason.
(d) Franchisor may also deduct from Franchisees
monthly remittance of Gross Margin and other amounts due
Franchisee any applicable outstanding franchise fees or
royalties; other fees or expenses due under this Agreement;
invoices for purchases by Franchisee of equipment, supplies,
promotional materials or advertising including telephone
directory advertising; any sums due to Franchisor for any other
debts or obligations of Franchisee; any amounts Franchisor
reasonably determines are necessary to secure itself pursuant to
the indemnification provisions of this Agreement; any amounts
Franchisor expends to purchase bonding and insurance pursuant to
this Agreement (if Franchisee has failed to do so); and any
amounts required to escrow or pay Franchisee's payroll taxes,
other taxes, local licenses, permits and/or fees and employee
deductions and benefits (if Franchisee has failed to do so).
(e) If at any time, upon making applicable deductions
from amounts due Franchisee from its share of Gross Margin and
any other monies due to Franchisee, a condition exists which
creates a balance owed to Franchisor by Franchisee, then said
balance must be tendered to Franchisor and received by it within
twenty (20) days of Franchisee's receipt of (or the first
attempted delivery to Franchisee of) the aforementioned Monthly
Report. Franchisee acknowledges that failure to tender such
balance owed to Franchisor within the above time limit shall
constitute a material breach of this Agreement.
V-A. CREDIT APPROVAL; DELINQUENT ACCOUNTS; COLLECTIONS
5-A.01 Credit
Prior to opening or establishing any new account, Franchisee
shall request from Franchisor's Credit Department credit approval
and credit limits for each such new account pursuant to the
procedures set forth in Franchisor's Manuals. Franchisee agrees
to strictly adhere to Franchisors credit approval policies and
procedures (as described in the Manuals) and other pertinent
systems, procedures and policies pertaining to the granting of
credit to clients of Franchisee. It is anticipated that, from
time to time, Franchisor will be called upon by Franchisee to
provide financing, directly or indirectly, for payroll funding,
employee leasing programs or similar programs that will require
the Franchisor to make a substantial financial commitment. In
such event, Franchisor shall have the right to evaluate each such
program from the standpoint of creditworthiness and the most
efficient deployment of its own resources, given the variety of
opportunities available to use such resources at any particular
time. Franchisor shall be free to exercise its absolute
discretion in deciding whether or not to participate in any such
proposed program.
5-A.02 Delinquent Accounts -- Collection
An invoice for temporary personnel services shall be deemed
"delinquent" if it remains unpaid in whole or in part for ninety
(90) days after its date and as indicated on Franchisees Trial
Balance Aging Report (a reporting form required in the Manual),
and an invoice for permanent placement shall be deemed
delinquent if it remains unpaid in whole or in part ten (10)
days beyond the payment date agreed to by the client (it being
understood by the Franchisee that the Franchisors normal payment
terms are net cash ten (10) days after start date and that any
extension of time requires the approval of Franchisor), or if
Franchisor, following collection efforts or upon its receipt of
an updated credit report, deems such invoice(s) to be delinquent
in its sole and exclusive discretion. Franchisee hereby
acknowledges that it is the policy of the Franchisor to cancel
any guarantee given to a client who is delinquent in the payment
of any fee due for a particular placement.
Franchisor hereby assumes responsibility to conduct
collection efforts from the time an invoice is generated until it
is either collected or deemed to be uncollectible by Franchisor.
Franchisee hereby agrees to cooperate fully with Franchisor in
connection with Franchisors collection activities. Franchisee
understands and agrees that Franchisor shall have the right to
pursue whatever collection activities Franchisor alone deems
appropriate and further agrees that Franchisor has the right to
negotiate or settle any such delinquent invoices in any fashion
which Franchisor determines. Finally, Franchisee understands and
agrees that Franchisor may determine not to pursue any collection
activities regarding any particular account or invoice
whatsoever, and Franchisor's decision with regard thereto shall
be final.
If Franchisor deems a delinquent invoice to be
uncollectible, Franchisor may furnish to Franchisee a copy of
such invoice(s) or a written or computer-generated report
relating thereto. Upon receipt thereof, Franchisee may, with the
cooperation and assistance of Franchisor, institute subsequent
and further collection proceedings. Franchisee agrees to deliver
to Franchisor copies of all correspondence, litigation documents,
settlements and releases arising from or relating to any attempts
by Franchisee to collect such unpaid amounts from its clients.
The proceeds of all collections are the property of Franchisor,
regardless of Franchisee's assistance in obtaining such
collections.
5-A.03 Delinquent Accounts -- Allocation of Loss
1. Allocation of Loss: If Franchisee has strictly adhered
to Franchisor's credit approval policies and procedures and other
pertinent procedures set forth in Franchisor's Manuals, and
Franchisee has furnished to Franchisor all of the assistance,
reports and properly prepared documentation requested by
Franchisor, then Franchisee's liability for a delinquent invoice
after ninety (90) days shall be limited to fifty (50%) percent of
the sale amount attributable to said delinquent invoice.
If Franchisee has not strictly adhered to Franchisor's
credit approval policies and procedures and other pertinent
procedures set forth in Franchisor's Manuals, then Franchisee
shall be liable for one hundred (100%) percent of the sale amount
attributable to said delinquent invoice(s).
In either instance, Franchisee authorizes Franchisor to
remit to itself from collections made by Franchisor for
Franchisee, and from Franchisee's applicable allocation of Gross
Margin or other income, the amount(s) due to Franchisor by reason
of such delinquent invoice(s).
2. Other: If Franchisee has strictly adhered to
Franchisor's credit approval policies and procedures, other
pertinent procedures set forth in Franchisor's Manuals and the
product or service in question is either an authorized product or
service of the Franchisor or a normal part of providing its
services, including, but not necessarily limited to, such
expenses as reimbursement for travel, supplies, duplicating and
rent for temporary workspace, and provided that Franchisee has
furnished to Franchisor all of the assistance, reports and
properly prepared documentation requested by Franchisor, then
Franchisee's liability for a delinquent invoice for such other
product or service shall be limited to fifty (50%) percent of the
sale amount attributable to said delinquent invoice.
If Franchisee has not strictly adhered to Franchisor's
credit approval policies and procedures and other pertinent
procedures set forth in Franchisor's Manuals, or such product or
service is not an authorized product or service of Franchisor or
a normal part of providing services, then Franchisee shall be
liable for one hundred (100%) percent of the cost attributable to
said delinquent invoice(s). Franchisee authorizes Franchisor to
remit to itself from collections made by Franchisor for
Franchisee and from Franchisee's applicable allocation of Gross
Margin or other income, the amount(s) due to Franchisor by reason
of such delinquent invoice(s). In making such allocations,
Franchisor shall deduct any Gross Margin or other income
previously paid to or retained by Franchisor arising from or
related to the delinquent invoice(s).
5-A.04 Deficit Accounts
In the event Franchisee assigns a temporary employee or
places a permanent employment candidate and the Direct Costs
related to such assignment or placement exceed the Net Sales
derived therefrom, Franchisee shall assume the entire deficit
from such transaction.
5-A.05 Collection of Previously Delinquent Accounts
Any amounts collected after an account has been deemed to be
delinquent or uncollectible shall be divided equally between
Franchisee and Franchisor, after deduction and reimbursment to
the party incurring the expenses connected with collection
efforts.
VI. PROPRIETARY MARKS
6.01 Non-Ownership of Trademarks, Trade Names and
Copyrighted Material by Franchisee: The non-exclusive license
granted in Paragraph 1.02 hereof does not grant Franchisee any
right, title or interest, at law or in equity, in or to any of
Franchisor's Proprietary Marks, trade names or copyrighted
materials, except as provided by said license. Further, such
license applies only to those Proprietary Marks, trade names and
copyrighted materials which have been, or may be, designated in
writing by Franchisor for use by Franchisee in conjunction with
the operation of the franchise granted hereby. Franchisee shall
not represent to others, or conduct him or herself in any manner
that might indicate to others, that he or she possesses any other
legal or equitable rights in Franchisor's Proprietary Marks,
trade names or copyrighted materials by virtue of the license
granted hereunder.
6.02 Acts in Derogation of the Proprietary Marks, Trade
Names and Copyrighted Materials: Franchisee shall not commit or
permit any act in derogation of any of the rights of Franchisor
to its Proprietary Marks, trade names and copyrighted materials.
6.03 Prohibition Against Disputing Franchisor's Rights:
Franchisee shall not contest or dispute Franchisor's title to the
Proprietary Marks, trade names or copyrighted materials.
6.04 Use of the Proprietary Marks, Trade Names and
Copyrighted Materials: Franchisee shall use and display the
Proprietary Marks and trade names and use the copyrighted
materials in accordance with the specifications set forth in the
Manual.
6.05 Franchisee's Trade Name: Franchisee shall not use
Franchisor's Proprietary Marks, trade names or copyrighted
materials, or any words, symbols or materials which Franchisor
deems confusingly similar thereto, in its trade name.
Specifically, Franchisee shall not use "Staff Builders," "Staff",
"Builders", "ATC", or any variant thereof as part of its trade
name.
6.06 Franchisee's Bank Accounts: Franchisee shall not use
Franchisor's Proprietary Marks, trade names or copyrighted
materials, or any words, symbols or materials which Franchisor
deems confusingly similar thereto, on its bank accounts or on its
checks. Specifically, Franchisee shall not use "Staff Builders,"
"Staff", "Builders", "ATC" or any variant thereof in connection
with its banking activities.
6.07 Telephone Listing: Franchisee agrees that, after the
expiration or termination of this Agreement, Franchisee shall
discontinue the use of the telephone number(s) of the Franchised
Business and shall not advertise in any telephone directory under
the name "Staff Builders", "ATC", or any other name used by the
System. Alternatively or additionally, as the case may be, upon
demand of the Franchisor, Franchisee shall direct its local
telephone company to transfer such telephone number(s) to
Franchisor or its designee. If Franchisee fails promptly to
direct its telecommunications vendor(s) to effect such transfer,
Franchisee hereby irrevocably appoints Franchisor as his
attorney-in-fact so to act.
6.08 Defense of Proprietary Marks, Trade Names and
Copyrighted Materials by Franchisor: If Franchisee receives
notice of, or learns of any actual or potential claim, suit or
demand that has been or may be asserted against him or her or
Franchisor involving any alleged infringement, unfair
competition, or similar matter relating to the use of the
Proprietary Marks, trade names or copyrighted materials,
Franchisee shall promptly notify Franchisor of any such actual or
potential claim, suit or demand. Thereupon, Franchisor shall
promptly take such action as it may deem necessary to address any
such claim. Franchisor shall have the sole right to defend,
compromise or settle any such claim, using attorneys of its own
choosing, and Franchisee agrees to cooperate fully with
Franchisor in connection with the defense of any such claim.
Franchisor shall protect, defend and indemnify Franchisee in
connection with such claim unless the claim, suit or demand
arises out of or relates to Franchisee's use of the Proprietary
Marks, trade names and copyrighted materials in violation of this
Agreement, the Manual or otherwise.
6.09 Prosecution of Infringers: If Franchisee learns of any
unauthorized use of the Proprietary Marks, trade names or
copyrighted materials or any variant thereof, Franchisee shall
promptly notify Franchisor of the facts relating to such alleged
infringing use. Franchisor shall, in its discretion, determine
whether or not to take any action with respect to such
information. Franchisee shall have no right to take any action
with respect to any unauthorized use of the Proprietary Marks,
trade names or copyrighted materials.
6.10 Discontinuation or Substitution of Proprietary Marks:
Franchisor reserves the right to modify, discontinue or
substitute the use of any mark, name, symbol or other corporate
identification. In such case, Franchisee shall conform his or her
use of such identification as directed by Franchisor. Thereupon,
Franchisor's sole obligation shall be to reimburse Franchisee for
the documented tangible costs of compliance with Franchisor's
direction.
VII. CONFIDENTIAL OPERATING MANUALS
7.01 Loan of Manuals
1. Franchisor shall lend Franchisee one (1) copy of the
Manuals upon the execution of this Agreement. Franchisee shall
conduct the operation of his or her Center in strict accordance
with the Manuals.
2. The Manuals shall remain the property of Franchisor.
Franchisee shall treat the Manuals as confidential. Franchisee
shall not copy, duplicate, or otherwise reproduce the Manuals nor
otherwise make the Manuals available to any non-management
personnel. Upon the expiration or other termination of this
Agreement, Franchisee shall return the Manuals to the Franchisor.
3. Franchisee shall ensure that his or her copy of the
Manuals is kept current. In the event of any dispute as to
Franchisee's compliance with the provisions of the Manuals, the
master copy of the Manuals maintained by Franchisor shall be
controlling.
4. Franchisee shall conduct the operation of its Center in
strict compliance with Franchisor's operational systems,
procedures, policies, methods and requirements as prescribed from
time to time in the Manuals and in any supplemental bulletins and
notices, revisions, modifications, or amendments thereto, all of
which shall be deemed a part thereof.
5. Franchisee agrees to immediately adopt and use the
programs, services, methods, standards, policies and procedures
set forth in the Manuals, as same may be modified by Franchisor
from time to time. Franchisee acknowledges that Franchisor is
the owner of all proprietary rights in and to the System, the
Manuals and all Supplements to the Manuals.
VIII. CONFIDENTIAL INFORMATION
8.01 Restriction on Use of Confidential Information
Franchisee shall not, during the term of this Agreement or
at any time thereafter, communicate, divulge or use for the
benefit of any other person, persons, partnership, association,
corporation or entity any of the confidential information,
knowledge or know-how concerning the systems of operation;
services; products; procedures; policies; standards; techniques;
criteria; employees; employee lists; candidates for employment;
applicants for employment (including applications and resumes);
records pertaining to orders, clients, or billing; job orders;
time sheets; recruitment advertising "pseudonyms"; or, clients of
the Center or the System which may be communicated to
Franchisee. Franchisee and its Manager (if any), who are
required to successfully complete the Training Program, shall
divulge only such confidential information and only to such of
its employees as must have access to it in order to participate
in the operation of the franchised business, and Franchisee shall
take those precautions as shall be necessary to insure that its
employees retain such information in confidence, including the
execution by each such employee of Franchisor's Agreement
Pertaining to Restrictions on the Use of Confidential
Information/Covenant Not to Compete or a similar agreement prior
to the commencement of employment. Franchisee shall submit
copies of all such executed Agreements for receipt by Franchisor
within ten (10) days of the commencement of employment of any
employee.
Any and all information, knowledge, know-how, techniques,
lists and other information which Franchisor designates as
confidential shall be deemed confidential for purposes of this
Agreement, except information which Franchisee can demonstrate
came to its attention prior to disclosure thereof by Franchisor
or which, at or after the time of disclosure by Franchisor to
Franchisee, had become or becomes a part of the public domain
through publication or communication by others.
IX. ADVERTISING
9.01 Advertising Standards
Franchisee shall only use such advertising, identification
and promotional materials and programs which have been furnished
by Franchisor or, alternatively, have been approved in writing in
advance by Franchisor.
All advertising by Franchisee which utilizes the Proprietary
Marks or refers in any way to the franchised business, regardless
of medium, shall be conducted in a dignified manner and shall
conform to such standards, specifications and requirements as
Franchisor may specify from time to time in writing in its
Manuals or otherwise.
9.02 Client Grand Opening Advertising
Within thirty (30) days following the commencement of
operation of Franchisee's Center, unless otherwise agreed to by
Franchisee and Franchisor, Franchisor shall assist Franchisee in
conducting a grand opening advertising and sales promotion
campaign. In connection therewith, Franchisor and Franchisee
shall expend a minimum of One Thousand ($1,000) Dollars each in
value of goods or services on local advertising, publicity, sales
promotion, services and items of such categories and nature as
Franchisor shall designate or as Franchisor may, in its sole
discretion, approve upon request of Franchisee, which approval
shall not be unreasonably withheld.
9.03 Advertising Materials
Franchisor may, from time to time, develop advertising and
sales promotion campaigns, materials and merchandising
techniques. If Franchisee determines to procure from Franchisor
any such advertising materials, then Franchisee shall pay
Franchisor for any such materials purchased on such terms and at
such times as Franchisor sets forth at the time of offer or sale.
Franchisee agrees that one method of payment for such materials
which may be selected by Franchisor is deduction by Franchisor of
the purchase price of said materials from that portion of
Franchisee's Gross Margin or other income which otherwise would
be remitted to Franchisee by Franchisor.
9.04 Local Advertising
Franchisee is obligated to expend, on an annual basis, the
greater of one (1%) percent of its previous year's Gross Sales or
Twelve Thousand ($12,000) Dollars on local advertising and
promotion of its Center. All local advertising shall be
conducted in accordance with the specifications and standards set
forth in Franchisor's Manuals.
Franchisee shall furnish Franchisor, in conjunction with the
submission of the annual financial statement required by Section
13.01, an accurate accounting of all expenditures for local
advertising made in a calendar year.
Franchisee shall be entitled to a credit against its minimum
local advertising requirement for contributions made to an
advertising cooperative but shall not be entitled to any offset
or credit for the placement of Yellow Pages/White Pages
advertisements.
9.05 Telephones; Yellow/White Page Advertising
Franchisee agrees to maintain a business telephone with at
least four (4) telephone lines, and to list its Center in the
"White Pages" directories (alphabetic directory) serving
Franchisee's Territory and advertise its Center continually in
the "Yellow Pages" under headings designated by Franchisor, using
designs and art work furnished at no additional charge by
Franchisor. The procedures and requirements for the placement
and content of "Yellow Pages" advertisements are set forth in
Franchisor's Manuals.
X. SITE SELECTION REQUIREMENTS AND ASSISTANCE
10.01 Franchised Location
Franchisee shall operate its Center at such permanent
location(s) and such satellite location(s) as may be required or
approved by Franchisor. As used herein, "permanent location"
shall mean that location within the Territory selected by
Franchisee and approved by Franchisor from which Franchisee shall
operate its Center and/or satellites, as permitted or approved of
by Franchisor, continuously and without interruption throughout
the term of this Agreement.
Upon the execution of this Agreement, Franchisor shall
furnish to Franchisee certain materials which Franchisee may use
to assist itself in selecting an appropriate permanent location
for the franchised business.
Franchisee agrees to use its best efforts to find an
acceptable permanent location for its Center within the Territory
utilizing its own resources, skills and know-how and the
foregoing materials, and to follow all procedures, techniques and
requirements set forth by Franchisor in its Site Selection
Handbook or otherwise. Said location shall be subject to prior
written approval of Franchisor, whose determination in this
regard shall be final.
As a condition precedent to approving any permanent location
proposed by Franchisee, Franchisor may require Franchisee to
submit to it site analyses, maps, completed checklists,
photographs, copies of proposed leases, diagrams of the premises
with measurements and such further information and materials as
Franchisor may reasonably require to evaluate Franchisee's
proposed permanent location, and Franchisor may further conduct
an on-site inspection of the proposed permanent location (at
Franchisor's sole cost and expense).
Franchisee acknowledges that Franchisor's suggestions and
its exercise of its rights of inspection and/or approval provided
for in this Agreement shall in no way give rise to any liability
of Franchisor with regard to the viability of the permanent
location, nor shall same be construed as any express or implied
warranty of Franchisor regarding the viability, satisfactory
nature or profitability of said permanent location.
It is of the essence of this Agreement that Franchisee
secure such a permanent location approved by Franchisor and
execute a lease for its permanent location within three (3)
months following the date of execution of this Agreement by
Franchisor. In the event that a permanent location is not
secured, this Agreement may be terminated by Franchisor and all
funds paid by Franchisee to Franchisor shall be deemed earned by
Franchisor, with the exception that Franchisor shall return to
Franchisee seventy-five (75%) percent of the Initial Fee which
Franchisee paid to acquire the franchise (fifty [50%] percent if
Franchisor has furnished its Initial Training Program to
Franchisee) provided that Franchisee has returned all materials
given it, and this Agreement will thereafter be null and void
(except for those post-termination and post-expiration
obligations of this Agreement, which by their terms shall remain
binding).
10.02 Location Lease
(a) Upon the written approval of Franchisor of a
proposed permanent location for the operation of the Center,
Franchisee shall deliver to Franchisor a copy of any lease
proposed to be entered into for that location, or any other
documents proposed to be executed by Franchisee in connection
with the lease of such location. Any such lease, sublease or
other rental agreement is subject to Franchisor's prior written
approval.
(b) Any and all leases, subleases or other agreements
entered into by Franchisee to secure the permanent location must,
at a minimum, contain provisions in form acceptable to
Franchisor which provide that:
1. Franchisee shall neither create nor purport to create any
obligations on behalf of Franchisor, nor grant or purport to
grant to the landlord thereunder any rights against Franchisor,
nor agree to any other term, condition, or covenant which is
inconsistent with any provision of this Franchise Agreement.
2. In the event of expiration or termination of this
Agreement (or the lease) for any reason whatsoever, Franchisor
shall have the option for thirty (30) days to assume, subject to
paragraph b(5) below, the obligations of and replace Franchisee
as the lessee under said lease, and at any time thereafter to
reassign the lease to another franchisee;
3. The lessor (or sublessor) and Franchisee will furnish to
Franchisor written notice specifying any default and the method
of curing any such default under any such lease, and shall allow
Franchisor thirty (30) days after receipt thereof to cure such
defaults (except that if default is in the nature of non-payment
of rent, Franchisor shall have fifteen [15] days from receipt of
such notice to cure said default) and exercise its option to
succeed to Franchisee's interest in such lease;
4. The lessor (or sublessor) and Franchisee will accept
Franchisor as a substitute tenant under the terms and provisions
of the lease upon notice from Franchisor that it is exercising
its option to succeed to the interest of Franchisee in such
lease;
5. The lessor (or sublessor) and Franchisee acknowledge that
Franchisee and Franchisee alone is responsible for all debts,
payments and performances due prior to the time that Franchisor
is given actual possession of the premises pursuant to its rights
hereunder;
6. Any such lease, sublease or other rental arrangement must
explicitly permit Franchisee to display the Franchisor's standard
signage relating to the Center; and,
7. Any lease entered into by Franchisee shall provide that
it may not be modified or amended without Franchisor's prior
written consent, and Franchisor shall be promptly provided with
copies of all such proposed modifications or amendments and, when
executed, true and correct copies of such executed modifications
or amendments.
(c) Notwithstanding any of the provisions set forth
herein or elsewhere in this Agreement, it shall be the sole
responsibility of Franchisee to seek and obtain the approval,
consent or license of any governmental or quasi-governmental
authority required to enable Franchisee to lawfully operate the
Center, unless Franchisor is itself required to obtain such
approval, consent or license.
10.03 Relocation of The Franchised Business
Franchisee shall not relocate its Center to another location
without the prior written approval of Franchisor. In connection
therewith Franchisor may, at its option, conduct an on-site
inspection of the proposed location, and Franchisee shall pay to
Franchisor a reasonable per diem charge for each employee of
Franchisor involved and reimburse all out-of-pocket expenses
incurred by Franchisor (including, without limitation, the cost
of travel, room and board) in conducting such on-site
inspections.
10.04 Center Satellites
Franchisee may, in accordance with the procedures as
specified by Franchisor in its Manuals and with Franchisor's
approval, open and operate one or more ATC Healthcare Services
Center Satellites located within the Territory. Franchisee may
be permitted to engage in certain of the business activities
contemplated by this Agreement; however, certain activities (as
set forth in the Manual) are expressly prohibited from being
engaged in, performed at or discharged from a Satellite Center.
XI. DUTIES OF FRANCHISOR
11.01 Confidential Operating Manuals
As provided for above, Franchisor shall lend and deliver to
Franchisee one (1) copy of Franchisor's Confidential Operating
Manuals during the course of Franchisor's Initial Training
Program (as described hereafter).
11.02 Method of Operation
In addition to any other training provided for herein,
Franchisor shall from time to time furnish to Franchisee such
information, instructions, techniques, data, instructional
materials, forms, computer hardware or software and other
operational developments pertaining to the offer, sale and
administration of the System's programs, services and products,
and other products and services related thereto, as may be
developed by Franchisor from time to time in connection with its
operation of the System.
11.03 Training and Supervision
(a) Subsequent to Franchisee's securing a location for
its Center and prior to the opening of Franchisee's Center,
Franchisor will offer and Franchisee will be required to attend
and successfully complete an Initial Training Program (the
"Initial Training Program") of such duration as Franchisor shall
determine and at such location(s) as Franchisor shall designate.
(b) Franchisor shall notify Franchisee concerning the
date of commencement, location and duration of the applicable
Initial Training Program which Franchisee will be required to
attend and successfully complete.
(c) If Franchisor shall reasonably conclude that
Franchisee has failed to successfully complete Franchisor's
Initial Training Program, Franchisee shall be entitled to
re-enroll in Franchisor's next scheduled Initial Training Program
at no additional charge. Franchisee expressly agrees that
Franchisor may terminate this Agreement if, following
Franchisee's Initial Training Program (including re-enrollment
training as provided for in the sentence immediately preceding),
Franchisor in its sole and exclusive discretion determines that
Franchisee has failed to successfully complete Franchisor's
Initial Training Program, whereupon all funds paid by Franchisee
to Franchisor hereunder shall be deemed earned by Franchisor,
with the exception that Franchisor shall return to Franchisee
seventy-five (75%) percent of the Initial Fee which Franchisee
paid to acquire the franchise once Franchisee has returned all
materials given it, and this Agreement will thereafter be null
and void (except for those post-termination and post-expiration
obligations contained herein which, by their nature, will survive
in full force and effect).
(d) If Franchisee elects to designate a Center Manager
to assume and discharge the day-to-day management activities and
functions for the franchised business, then its duty to
successfully complete the Initial Training Program shall be
discharged by such designated Center Manager. Further, any Center
Manager hired by Franchisee subsequent to the commencement of
operation of Franchisee's Center must likewise successfully
complete Franchisor's next scheduled Initial Training Program in
accordance with the procedures set forth in Franchisor's Manuals,
or otherwise.
(e) Franchisor will impose no additional charge for
furnishing its Initial Training Program to Franchisee.
Franchisor will pay no compensation for any services that may be
performed incidental to training by trainees enrolled in
Franchisor's Initial Training Program or any subsequent training.
Franchisee shall pay all expenses incurred by its trainees in
connection with and during all such training, including, but not
limited to, transportation costs, meals, lodging and other living
expenses.
(f) Franchisor reserves the sole and exclusive right to
determine the duration of, and which subjects are to be included,
in the curriculum of its Training Programs, and to train any
number of individuals from any number of Centers, whether
franchised or otherwise affiliated with Franchisor, at the same
time.
(g) At no charge, Franchisor shall furnish to
Franchisee, within ninety (90) days from the commencement of
operation of Franchisee's Center, the services of a
representative(s) of Franchisor for an aggregate of three (3)
working days, during which period said Franchisor representative
shall provide training, consultation and assistance to Franchisee
and its staff pertaining to the operation and management of
Franchisee's Center.
(h) Further, during each year thereafter Franchisor
shall dispatch a representative to visit Franchisee's Center for
a minimum of one (1) day, to conduct an on-site review of the
operations, management, sales activities and physical appearance
of Franchisee's Center, and to render consultation in connection
therewith. All expenses connected with such visits, scheduled by
Franchisor at its convenience, shall be borne by Franchisor
exclusively.
Franchisee may request additional on-site reviews at any
time, so long as such requests are communicated to Franchisor in
accordance with those guidelines specified in Franchisor's
Manuals. Franchisor will impose no fee or charge for such
additional on-site visits, provided that such visits consume no
more than a total of six (6) days per calendar year. For each
day of such on-site visits in excess of six (6) days per calendar
year, Franchisor may impose a fee as forth in Franchisor's
Manuals.
(i) In addition to the foregoing, following the
commencement of operation of Franchisee's Center, Franchisor
shall furnish to Franchisee certain consultation services which
may include the rendering of advice with respect to any or all
programs, procedures, guidelines, systems, specifications or
techniques pertaining to the operation of Franchisee's Center.
(j) Franchisor shall provide such additional assistance
and training as Franchisor deems advisable in connection with
operation of the Center, on such terms and conditions as
Franchisor determines and sets forth in its Manuals, or
otherwise.
11.05 On-Going Training
Franchisor will, from time to time, conduct sales, marketing
and operations training programs to provide Franchisee and its
staff with continued training pertaining to the marketing of the
services and the operation of the Center.
In addition to the foregoing, Franchisor may, at its option,
from time-to-time, conduct an annual conference or convention.
The duration, curriculum and location of any training provided by
the Franchisor shall be determined by Franchisor in its sole and
exclusive discretion.
Franchisee and its Center Manager (if any) shall be required
to attend at their cost and expense, a minimum of one training
program annually.
11.06 Required Center Equipment; Layout and Design
Following Franchisee's execution of an acceptable lease for
its permanent location, Franchisor shall furnish to Franchisee
specifications (based upon a diagram of the premises with
accurate measurements provided by Franchisee in accordance with
Franchisor's specifications) which may set forth drawings,
specifications, designs, advice and criteria pertaining to the
layout, design, telephone system, furnishing, equipping, lighting
and traffic flow of a Center.
Franchisee shall, in all respects, and at its sole expense
(except for work done at landlord's expense) comply with such
advice, specifications and criteria unless Franchisor shall, in
writing, agree to modifications thereof.
If Franchisor shall request, Franchisee shall immediately
furnish to Franchisor: the names and addresses of any contractor,
subcontractor and/or vendor to be involved in such construction,
furnishing or design activities; copies of all permits, licenses,
contractors' liability insurance certificates or other items
required for the lawful construction, equipping and operation of
the franchised Center; and copies of all construction contracts
and documents, and originals of all lien waivers, as Franchisor
may require.
11.07 Promotional and Advertising Materials; Forms
Prior to, or within sixty (60) days of the commencement of
operations of the franchised business, Franchisor shall furnish
to Franchisee, at no additional charge, an opening inventory of
advertising and promotional materials and forms (in such
quantities as Franchisor determines). Thereafter, Franchisor
shall make available for sale certain advertising and promotional
materials at such prices as may be set forth in the Manuals.
11.08 Accounting Systems
Franchisor may specify the accounting procedures, systems
and formats to be utilized by Franchisee in the operation of
Franchisee's Center.
11.09 Sources of Supply
Certain products, supplies, equipment, materials and
services required for the operation of the Center franchised
hereby must be purchased by Franchisee only from suppliers
designated or approved in writing by Franchisor, or from
suppliers selected by Franchisee and approved by Franchisor, as
specified in Franchisor's Manuals. Franchisor may offer and sell
on a non-exclusive basis some or all of such products, services,
supplies, equipment and materials. Payments for any products or
services purchased from Franchisor (or a subsidiary, affiliate or
designee thereof) by Franchisee shall be tendered to Franchisor
(or its subsidiary, affiliate or designee, as appropriate) or, at
Franchisor's option, deducted from Franchisee's share of Gross
Margin and other amounts due Franchisee.
Franchisor will exercise its right of approval of suppliers
selected by Franchisee in accordance with procedures set forth in
the Manuals.
Franchisor shall, at all times during the term of this
Agreement, endeavor to maintain a continuing source or sources of
supply of those non-proprietary products and services which are
required to be procured by Franchisee hereunder.
Specifications governing the minimum standards of such
independently obtained products or services may, from
time-to-time, be forthcoming from Franchisor and communicated to
Franchisee in the Company's Manuals.
Franchisor (or its subsidiary, affiliate or designee) may
offer and sell to Franchisee any and all such non-proprietary
products and services at such prices as Franchisor (or its
subsidiary, affiliate or designee) shall, in its sole and
exclusive discretion, determine. It is expressly understood that
Franchisor reserves the right to earn a profit from the sale to
Franchisee of such non-proprietary goods and services.
Franchisee is under no obligation to purchase any such
non-proprietary products or services from Franchisor.
11.10 Staffing of Franchisee's
ATC Healthcare Services Center
Franchisor shall furnish to Franchisee specifications,
requirements and restrictions pertaining to the management and
administrative staffing of Franchisee's Center, and the
selection, hiring and training of the Center's personnel.
11.11 Temporary Employees
Franchisor shall be the legal employer of the franchised
Center's temporary employees as set forth in Article V of this
Agreement, except as otherwise specified in Franchisor's Manuals.
11.12 Pricing
(a) Temporary Personnel Placement: From time to time,
and particularly whenever there is a change in mandatory taxes,
benefits or the economy which will or might affect prices,
mark-ups and margins, Franchisor shall prepare and produce for
Franchisee rate range price sheets which apply to temporary
personnel services and/or products offered and sold by Franchisee
to its clients and which will set forth suggested prices,
mark-ups and margins that are suggested to apply to such sales.
Any such list or schedule of rate ranges, mark-ups or margins
shall be a suggestion only, and is not to be construed as
mandatory upon Franchisee. Nothing contained herein shall be
deemed a representation by Franchisor that the use of
Franchisor's suggested prices, mark-ups or margin will, in fact,
increase or optimize the revenues or profitability of
Franchisee's Center. If Franchisee obtains any requests for bids
on contract work for which Franchisor will be the contracting and
responsible party and Franchisee only will be the designated
provider of the contracted services, then Franchisor, with
Franchisee's input and assistance, will analyze the requirements
of such requests for bids and make any decisions as to pricing
and handling. Franchisee agrees to obtain whatever further
information Franchisor requires for the latter to analyze the
scope and nature of the work and to prepare the bid.
(b) Other: Prices for all other goods and/or services
offered and sold by Franchisee's Center shall, from time-to-time,
be suggested by Franchisor. Such suggested prices, mark-ups and
margins will be based solely upon the experience of Franchisor,
its analysis of the cost of Franchisee delivering such services,
and prices charged by competitive businesses. Franchisor and
Franchisee agree that any such list or schedule of prices,
mark-ups or margins shall be deemed to be recommendations only,
and are not to be construed as mandatory upon Franchisee.
11.13 Nature of Obligations
All of the obligations of Franchisor under this Agreement
are to Franchisee and Franchisee alone, and no other party is
entitled to rely on, enforce or obtain relief for breach of any
such obligations, either directly or by subrogation.
11.14 Unavoidable Delays
Delays in the performance of any duties hereunder which are
not the fault or within the reasonable control of Franchisor,
including, but not limited to fire, flood, natural disasters,
Acts of God, delays in deliveries by common carriers and/or the
U. S. Postal Service, governmental acts or orders, late
deliveries of goods or furnishing of services by third party
vendors, or civil disorders shall not cause a default hereunder,
but Franchisor shall extend the time of performance for the
period of such delay or for such other, longer reasonable period
of time as Franchisor shall agree to in writing.
XII. DUTIES OF FRANCHISEE
12.01 Payments to Franchisor
In addition to all other payments provided for herein,
Franchisee shall pay to Franchisor (or its subsidiary, affiliate
or designee, if any) promptly when due:
1. The amount of all sales taxes, use taxes, personal
property taxes and similar taxes imposed upon, required to be
collected or paid by Franchisor on the account of services or
goods furnished by Franchisor to Franchisee through sale, lease
or otherwise or on account of collection by Franchisor of the
Initial Fee, Royalties or Continuing Service Fees pursuant to
this Agreement.
2. All amounts advanced by Franchisor, or which Franchisor
has paid, or for which Franchisor has become obligated to pay on
behalf of Franchisee for any reason whatsoever.
3. All amounts due to Franchisor, or its subsidiary,
affiliate or designee (if any), for products or services
purchased by Franchisee from Franchisor (or its subsidiary,
affiliate or designee, if any).
Franchisee hereby expressly authorizes Franchisor to
effectuate all or part of such payments by withholding and
remitting to itself the allocable share of Gross Margin or other
amounts otherwise due to be remitted to Franchisee by Franchisor.
12.02 Commencement of Operations
Franchisee agrees to commence operation of its franchised
Center within one hundred and twenty (120) days of the date of
execution of this Agreement by Franchisor (unless Franchisor, in
its sole and exclusive discretion, agrees to a longer period of
time) and, as a condition precedent to such commencement of
operations, to fulfill all of the pre-opening obligations called
for by this Agreement.
Franchisee shall be excused from the timely performance of
its obligations under this Section 12.02 only as a result of
delays due to causes beyond the reasonable control of Franchisee
such as strikes, material shortages, fires, and other Acts of God
which Franchisee could not, by the exercise of due diligence,
have avoided.
12.03 Manner of Operation
Franchisee understands and hereby acknowledges that every
component of the System is vital to Franchisor, to other ATC
franchisees and to the operation of the Center franchised hereby,
and that compliance with the System is of the essence to this
Agreement. Franchisee shall at all times conduct the activities
and operations of its Center in compliance with the System,
including all standards, procedures and policies as Franchisor
may from time to time establish (in its Manuals or otherwise), as
though all were specifically set forth in this Agreement.
12.04 National Accounts
Franchisee shall be obligated to participate in any national
account programs that may be established from time to time. At
present, Franchisor has established no such national account
programs.
12.05 Computer System
Franchisor shall loan to Franchisee certain computer
hardware and software intended to assist Franchisee to take and
fill orders, schedule temporary personnel, search and match
personnel to open orders and provide input to Franchisor's
computer system for payroll, billing and management information
service. Franchisee agrees, at its expense, to provide full
insurance to cover all computer hardware and software lent to
Franchisee.
Franchisee shall install at its Center, such loaned computer
hardware, required dedicated telephone and power lines, modem,
printers and other computer-related accessory or peripheral
equipment as Franchisor provides or specifies in its Manuals, or
otherwise, unless Franchisor agrees, in its sole discretion, that
other installation arrangements may be appropriate. Franchisee
is further required to provide any assistance required by
Franchisor to input all necessary data and to bring such computer
system "on-line" with Franchisor's host computer at Franchisor's
headquarters at the earliest possible time. Franchisee also
agrees to purchase or lease from Franchisor any software for
testing temporary candidates that is presently available or may
be made available in the future.
Franchisee further understands that at a certain point in
time it may become necessary for the Franchisor to replace or
upgrade the Initial Configuration. Franchisee further understands
and agrees that computer designs and functions change
periodically and that Franchisor may have to make, as a result
of, for example, changes in operational requirements or
technological changes, substantial modifications to its loaned
computer systems, or to have installed entirely different
systems, during the term of this Agreement, or upon renewal
thereof.
Franchisee agrees, at its expense, to keep the loaned
computer system in good maintenance and repair, and to, at its
expense, install such additions, changes, modifications,
substitutions and/or replacements to its computer hardware,
software, telephone and power lines and other computer-related
facilities as Franchisor directs, and on those dates and within
those times specified by Franchisor in its sole and exclusive
discretion.
Upon termination or expiration of this Agreement all
computer hardware, software and database disks and tapes or other
magnetic storage media shall be returned to Franchisor in good
condition allowing for normal wear and tear on hardware.
12.06 Maintenance and Repair
(a) Franchisee shall, at all times during the term of
this Agreement, and at its sole expense, maintain the interior
and exterior of its Center and keep and maintain all equipment,
furniture and decorating contained therein and signs in or at the
franchised location, and all appurtenances thereto, in good
condition and repair. Franchisee will repair, replace, repaint
and refurbish same as may be necessary to conform and maintain
its Center facility in accordance with Franchisor's standards of
appearance, quality, layout and design as set forth in
Franchisor's Manuals.
12.07 Staffing Requirements and Qualifications
of Franchisee's Employees
Franchisee shall staff its Center with management and
administrative staff in accordance with the criteria,
specifications and directions set forth in detail in Franchisor's
Manuals. Franchisee is required to comply with all
specifications, requirements and restrictions regarding the
selection, hiring and training of its personnel as are set forth
in said Manuals.
12.08 Modifications To The System
Franchisee understands and agrees that due to changes in
competitive circumstances, presently unforeseen economic and
political activity, presently unforeseen changes in the needs of
the sectors served by Franchisor and Franchisee and/or
technological innovations, the System must not remain static, in
order that it best serve the interests of both Franchisor,
Franchisee and the System. Accordingly, Franchisee expressly
understands and agrees that Franchisor may from time to time
change the components of the System including, but not limited
to, altering the programs, services, methods, standards, forms,
policies and procedures of the System; adding to, deleting or
modifying those services which Franchisee's Center is authorized
to offer; and, changing, improving or modifying the Proprietary
Marks. Franchisee expressly agrees to abide by any such
modifications, changes, additions, deletions and alterations,
provided, however, that such changes do not unreasonably and
materially increase Franchisee's obligations hereunder.
12.09 Compliance with Laws, Rules and Regulations
Franchisee shall operate the Center in strict compliance
with all applicable laws, rules and regulations of all
governmental authorities and shall comply with all applicable
wage, hour and other laws and regulations of the federal, state
and local governments.
12.10 Franchisee Participation In Operation of Business
Franchisee shall serve as Center Manager or shall designate
a Center Manager, who shall have day-to-day management
responsibility of Franchisee's Center and shall be required to
exercise on-premises supervision and to personally participate in
the direct operation of the Center franchised hereby. The
definition, duties and scope of responsibilities of the Center
Manager are set forth in Franchisor's Manuals. Franchisee must
inform Franchisor in writing as to the identity of its Center
Manager and any successors thereto.
Upon the death, disability or termination of employment of
Franchisee's designated Center Manager, for any cause or reason,
Franchisee shall immediately notify Franchisor and shall
designate a successor or acting Center Manager promptly and, in
any event, no later than ten (10) business days following the
death, disability or termination of the predecessor Center
Manager. Each such successor Center Manager must possess those
credentials set forth in Franchisor's Manuals, must successfully
complete Franchisor's next scheduled Initial Training Program and
must attend and successfully complete such other reasonable
training at such time as Franchisor specifies. The failure to so
employ and train such a successor or replacement Center Manager
shall be deemed to constitute a material breach of this
Agreement.
12.11 Indemnification
Franchisee agrees at all times to defend at its own cost,
and to indemnify and hold harmless to the fullest extent
permitted by law, Franchisor, its corporate subsidiaries,
affiliates, successors, assigns and designees, and the respective
directors, officers, employees, agents, shareholders, designees,
and representatives of each (Franchisor and all other hereinafter
collectively "Indemnitees") from all losses and expenses (as
hereinafter defined) incurred in connection with any action,
suit, proceeding, claim, demand, investigation or inquiry,
(whether formal or informal and regardless of whether same is
reduced to judgment) or any settlement thereof which arises out
of Franchisee's operation of the franchise.
For the purpose of this Section 12.10, the term "losses and
expenses" shall be deemed to include all losses, compensatory,
exemplary or punitive damages, fines, charges, costs, expenses,
lost profits, attorneys' fees, experts' fees, court costs,
settlement amounts, judgments, compensation for damages to the
Franchisor's reputation and goodwill, costs of or resulting from
delays, financing, costs of advertising material and media
time/space, and costs of changing, substituting or replacing the
same, and any and all expenses of recall, refunds, compensation,
public notices and other such amounts incurred in connection with
the matters described.
Franchisee agrees to give Franchisor notice of any such
action, suit, proceeding, claim, demand, inquiry or
investigation. At the expense and risk of Franchisee, Franchisor
may elect to assume (but under no circumstance is obligated to
undertake) the defense and/or settlement of any such action,
suit, proceeding, claim, demand, inquiry or investigation. Such
an undertaking by Franchisor shall in no manner or form, diminish
Franchisee's obligation to indemnify Franchisor and to hold it
harmless.
In order to protect persons or property or its reputation or
goodwill or the reputation or goodwill of others, Franchisor may,
at any time and without notice as it in its judgment deems
appropriate, offer, order, consent or agree to settlements or
take such other remedial or corrective actions as it deems
expedient with respect to the action, suit, proceeding, claim,
demand, inquiry or investigation.
12.12 Hours of Operation
Franchisee shall follow the procedures enumerated in
Franchisor's Manuals to determine the appropriate hours of
operation for Franchisee's Center.
12.13 Temporary and Permanent Employee Candidates
Franchisee's agrees, at its sole expense, to utilize every
effort to recruit applicants for temporary employment and
candidates for permanent placement, screen, interview, test,
check references, classify, maintain files and pertinent data
base of applicants, candidates and employees to perform searches
and match such applicants, candidates and employees to client job
orders, assign, supervise, place and dispatch experienced or
trained temporary personnel and permanent placement candidates
having the skills, knowledge, appearance and moral qualifications
required by Franchisor, Franchisee's clients and the applicable
job or employment situation. In the absence or unavailability of
an employee, applicant or candidate who meets the qualifications
required by Franchisee's client, Franchisee shall attempt to have
the client adjust such requirements but shall never knowingly
misrepresent, or ask applicants, candidates or employees to
misrepresent the qualifications of an employee, applicant or job
candidate. Franchisee agrees to utilize those recruiting
methods, screening techniques, testing procedures, reference
checking systems, training, performance criteria and appearance
standards for its temporary and permanent personnel applicants
and candidates in full compliance with Franchisor's policies,
procedures, standards and specifications, set forth in its
Manuals or otherwise. Franchisee shall not knowingly assign any
temporary employee or send out permanent employee who fails to
comply with Franchisor's applicable standards for experience,
training, performance, job qualifications, appearance and/or
moral qualities. Franchisee agrees to obtain a complete
application form from each temporary employment applicant or
permanent placement candidate on Franchisor's then-standard
forms, to procure such other information and documentation as
Franchisor may require prior to assignment of a temporary
employee or placement of a permanent candidate.
12.14 Best Efforts; Cooperation With Franchisor
Franchisee agrees to use its best efforts to develop and
expand the market for the services offered by its franchised
Center within the Territory, shall devote its full-time energy
and effort to the development and operation of its Center and
shall cooperate with Franchisor in accomplishing the purposes of
this Agreement.
12.15 Forms
Franchisee shall utilize all forms specified by Franchisor
in the conduct of Franchisee's Center. Franchisee agrees to use
only the latest version of any form or system designated as
current by Franchisor, in its Manuals or otherwise, and not to
permit any unauthorized or obsolete form to be utilized in the
course of the operation of Franchisee's Center.
12.16 Corporate Franchisee Records
If Franchisee or any assignee of Franchisee is a
corporation, Franchisee and any such assignee shall provide
Franchisor with its Articles of Incorporation and By-Laws and any
amendments thereto; a list of officers, directors and
shareholders (including number and percentage of shares held)
simultaneously with the execution of this Agreement; and,
Franchisee shall promptly notify Franchisor of any change in such
documents of the information contained therein.
12.17 Continuing Training of Franchisee Staff Personnel
In order to impart to its employees the latest procedures,
techniques, policies and standards of the System, Franchisee
shall conduct such in-house meetings, training programs or other
programs as are specified by Franchisor in its Manuals or
otherwise, utilizing materials provided by Franchisor for such
purpose.
12.18 Requirements Regarding, and Restrictions Relating To,
Services and Products Offered and Sold By Franchisee
1. Franchisee shall offer and sell all personnel services
and products which are a part of the System applicable to the
type of franchise granted hereby (as specified in Section 1.01 of
this Agreement).
2. Franchisee shall not accept, directly or indirectly, any
order for temporary employee assignment, or other request for
temporary service or permanent placement, where such order,
assignment or request is:
(a) Subject to or conditioned upon race, creed, color,
religion, age, sex, sexual orientation, national origin,
disability, marital status, veteran status or in violation of any
federal, state or municipal laws concerning employment
discrimination;
(b) In violation of any federal, state or municipal
wage and hour law, the Fair Labor Standards Act or the
Occupational Safety and Health Administration Act ("OSHA") or any
other law, act or regulation of any governmental body or
accreditation organization to which Franchisor subscribes;
(c) Intended to accomplish the goal of replacing
employees of a client whose employees are engaging in a strike or
other lawful work stoppage;
(d) Denied authorization by Franchisor; or,
3. Further, Franchisee shall not accept from any client an
order for personnel services of the following nature, unless
prior written consent has been procured from Franchisor:
(a) Where the charge to be imposed or paid, or any
part of the charge or payment to the temporary employee, is not
an hourly rate, except for reimbursement or charges for travel,
supplies, materials and incidentals provided in connection with
the furnishing of temporary help;
(b) Where the client is a firm in which Franchisee, or
any member of Franchisee's family, has a direct or indirect
financial interest greater than ten (10%) percent;
(c) Where the services to be performed are physically
to be performed upon Franchisee's business premises, or premises
rented or leased by Franchisee for the purpose of performing such
services, despite the fact that Franchisor's advertising may
offer such services;
(d) From clients who have not been approved for credit
by Franchisor; from clients who have reached or exceeded credit
limits; upon notification by Franchisor, from a client which has
violated or is violating Franchisor's rules and requirements with
regard to the payment of its invoices; or, from a client
Franchisor reasonably believes is experiencing financial
difficulty;
(e) Where a prospective client, or category of
prospective client, has been deemed by Franchisor to be a poor
credit risk for the amount of credit being requested (Franchisee
may accept and fill orders for such a prospective client, or
client, by demanding and receiving payment in advance according
to procedures and information appearing in the Franchisor's
Manuals); from a client that is on a "credit hold" by Franchisor,
or from a client which has outstanding invoices rendered by
Franchisor which are over ninety (90) days old and unpaid, as
determined from the accounts receivable aging report provided to
Franchisee by Franchisor; or,
(f) Where temporary employees will handle, control or
have unsupervised access to valuable property, cash, negotiable
securities or telephones, unless the client has signed an
agreement in form satisfactory to Franchisor holding both
Franchisor and Franchisee harmless from any liability or loss of
any kind suffered or incurred as a result of any such assignment.
12.19 Insurance
1. To standardize insurance and to afford Franchisee,
Franchisor and clients protection against insurable risks,
Franchisor imposes and prescribes minimum standards and limits
for certain types of insurance coverage required to be purchased
by Franchisee. Such standards and limits may be established
through Franchisor's Manuals, and Supplements thereto, or by
other written notice. At a minimum, Franchisor shall require
that Franchisee purchase at its sole expense, and maintain in
effect at all times during the term of this Agreement, the
following categories of insurance coverage through licensed and
admitted insurance companies:
(a) Worker's Compensation and Employer's Liability
Insurance for Franchisee's staff employees in statutory amounts.
(b) Unemployment Insurance for Franchisee's staff
employees.
(c) Broad Form General Liability Insurance in an
amount not less than One Million ($1,000,000) Dollars per
occurrence.
(d) Employers' Non-Ownership and Hired Automobile
Insurance covering Franchisee's staff employees.
(e) Temporary Help Services Errors & Omissions
Insurance with limits of One Million ($1,000,000) Dollars per
occurrence/One Million ($1,000,000) Dollars aggregate.
(f) Permanent Employment Agency Errors & Omissions
Insurance with limits of One Million ($1,000,000) Dollars per
occurrence/One Million ($1,000,000) Dollars aggregate.
(g) State Disability Insurance for Franchisee's staff
employees (as required by governing law).
(h) License Bond (if required by state law).
(i) Professional Malpractice Insurance (if
applicable).
(j) Fidelity Bonding against losses from dishonest
acts by Franchisee's staff employees in the amount of One Hundred
Thousand ($100,000) Dollars with a maximum deductible of Five
Thousand ($5,000) Dollars. This bond is to also extend to cover
any loss to the Franchisor.
(k) All risk coverage in an amount to cover the full
replacement cost of all equipment loaned to the Franchisee by
Franchisor. This policy is to include a loss payee clause in
favor of the Franchisor.
2. If Franchisee fails to purchase insurance and bonding
conforming to the standards and limits prescribed by Franchisor,
Franchisor may (but is not required to) obtain, through agents
and insurance companies of its choosing, such insurance and
bonding as is necessary to meet such standards on behalf of
Franchisee. Payments for such insurance and bonding shall be
borne by Franchisee. Nothing contained herein shall be construed
or deemed to impose any duty or obligation upon Franchisor to
obtain or maintain any specific forms, kinds or amounts of
insurance and bonding for or on behalf of Franchisee.
3. Nothing contained herein shall be construed or considered
an undertaking or representation by Franchisor that such
insurance and bonding as may be required to be obtained by
Franchisee, or by Franchisor for Franchisee, will insure
Franchisee against any or all insurable risks of loss which may
or can arise out of or in connection with the operation of
Franchisee's Center.
4. Except for the insurance coverages provided in (a), (b),
(g) and (h) above, all insurance and bonding purchased by
Franchisee (or by Franchisor for Franchisee) shall name
Franchisor and the other Indemnitees identified in Section 12.11
of this Agreement as additional insureds for its original term
and any renewal terms thereof, and shall provide that Franchisor
shall be given at least thirty (30) days prior written notice of
any termination, amendment, cancellation or modification thereof.
All fidelity bonding shall, in addition, provide coverage for
third-party (client) losses and claims due to any dishonest acts
of the Franchisee's staff employees. Franchisee shall promptly
provide Franchisor with Certificates of Insurance and Bonding
evidencing such coverage no later than ten (10) days prior to the
date the franchised Center will commence operations. All
insurance and bonding policies and documents shall be renewed,
and upon such renewal, a renewal Certificate of Insurance and/or
Bonding shall be furnished to Franchisor prior to the expiration
date of the existing term of the policy(ies) in question. The
Franchisor may at any time require the Franchisee to forward to
Franchisor full copies of all or any insurance policies.
5. Franchisee shall notify Franchisor of any and all claims
or demands against Franchisee, the franchised business, its
temporary personnel and/or Franchisor within three (3) days of
Franchisee receiving actual notice of any such claim or demand.
Franchisee agrees to respond to all claims within the time
required by law, rule or regulation. Franchisee shall cooperate
with Franchisor (or its designee) in every fashion possible to
defend Franchisor and Franchisee against any and all claims made
by employees and clients. Franchisee shall, when necessary, make
appearances at administrative or other hearings to present or
reinforce such defenses.
6. Failure by Franchisee to purchase any insurance required
by this Agreement, or failure to reimburse Franchisor for its
purchase of such insurance on behalf of Franchisee, is deemed to
constitute a material breach of this Agreement entitling
Franchisor to terminate same.
7. The minimum limits of insurance coverage required to be
procured by Franchisee may be modified from time to time by
Franchisor, in its sole and exclusive discretion, by written
notice transmitted by Franchisor to Franchisee. Upon delivery
(or attempted delivery) of such written notice, Franchisee shall
be obligated to immediately purchase insurance conforming to the
newly-established standards and limits prescribed by Franchisor.
8. Franchisor suggests, but does not require, that
Franchisee purchase and maintain other categories of insurance
coverage for Franchisee, the franchised business and its staff
employees. Those recommended types of insurance coverage are
listed in the Manuals.
12.20 Inspection
Franchisee agrees that Franchisor, or any of its authorized
agents or representatives, may at any time during normal business
hours enter upon the premises of the Center franchised hereby for
the purpose of examining and inspecting same, including without
limitation Franchisee's files, records, books, ledgers, etc., to
determine compliance with this Agreement and with Franchisor's
Manuals, policies, procedures, programs, standards,
specifications and techniques. Following such inspections,
Franchisee agrees to incorporate into its franchised Center any
changes, corrections or modifications required by Franchisor in
order to maintain the reasonable standards of quality and
uniformity prescribed by Franchisor in its Manuals or otherwise.
12.21 Bonuses, Premiums and Other Employment Incentives
Any bonus or premium paid or given to persons being
recruited by Franchisee candidates for temporary personnel
services assignments or for permanent (which bonus or premium may
be illegal in some jurisdictions) shall be borne by Franchisee,
unless Franchisor agrees in writing beforehand to a different
arrangement regarding specific situations, programs or
circumstances. Any volume monetary rebate(s) or discounts given
to clients of Franchisee by Franchisee shall be borne by
Franchisee alone, unless Franchisor agrees in writing beforehand
to a different arrangement regarding specific accounts, programs
and/or situations. The full cost of any items, products,
services, money or other valuable consideration offered as sales
or performance incentive rewards by Franchisee to clients or
employees shall be borne by Franchisee alone unless Franchisor
agrees in writing beforehand to a different arrangement regarding
specific promotions or situations.
12.22 Status of Accounts Receivable
Franchisee acknowledges that all accounts receivable are the
property of the Franchisor. Franchisee may be required to
execute any forms or documents necessary to confirm such
ownership.
12.23 Minimum Performance Requirements
If Franchisee has opened and operated a Center for more than
twelve (12) months, but less than twenty-four (24) months, and
fails to achieve a Gross Margin of seventeen thousand five
hundred dollars ($17,500.00) per calendar quarter, for two
consecutive calendar quarters, then Franchisee will be in default
of the terms of this Agreement. In such event, Franchisee shall
be required to achieve a Gross Margin of seventeen thousand five
hundred dollars ($17,500.00) per calendar quarter, for the next
two consecutive calendar quarters, or Franchisee will be in
default, and the Agreement will terminate immediately.
If Franchisee has opened and operated a Center for more than
twenty-four (24) months, and fails to achieve a Gross Margin of
thirty-five thousand dollars ($35,000.00) per calendar quarter,
for two consecutive calendar quarters, then Franchisee will be in
default of the terms of this Agreement. In such event,
Franchisee shall be required to achieve a Gross Margin of thirty-
five thousand dollars ($35,000.00) per calendar quarter, for the
next two consecutive calendar quarters, or Franchisee will be in
default, and the Agreement will terminate immediately.
XIII. RECORDS, AUDITS AND REPORTING REQUIREMENTS
13.01 Financial Statements
1. No later than thirty (30) days following the end of each
calendar quarter during the term of this Agreement, Franchisee
shall furnish to Franchisor, in a form approved by Franchisor, a
statement of the franchised Center's profit and loss for said
quarter and a balance sheet as of the end of said quarter, both
certified to be true and correct by Franchisee.
2. No later than forty-five (45) days following the end of
each fiscal year of Franchisee during the term of this Agreement,
Franchisee shall furnish to Franchisor, in a form approved by
Franchisor, a statement of the Center's profit and loss for said
fiscal year and a balance sheet as of the end of said fiscal
year, prepared on a "review" basis by an independent public
accountant and certified to be true and correct by Franchisee.
3. Both categories of the foregoing financial statements
must be prepared in accordance with generally accepted accounting
principles.
4. Franchisor shall furnish to Franchisee weekly, monthly
and annual reports concerning billing, payroll, Gross Margin and
other information pertaining to Franchisee's Center.
13.02 Financial Records
Franchisee shall record all revenues received by it, and
shall keep and maintain adequate records thereof in accordance
with the specifications set forth in the Manuals. Franchisee's
failure to maintain the required records shall constitute a
material breach of this Agreement and shall subject Franchisee to
termination pursuant to Article XVII below.
13.03 Audit
Franchisee shall keep and preserve various types and classes
of records for such retention periods as Franchisor sets forth in
its Manuals or otherwise, including all business, personnel,
financial and operating records relating to Franchisee's Center.
Franchisor shall have the right, at any time, with or without
notice, during regular hours to enter Franchisee's premises to
inspect, audit and make copies of all records and files of
Franchisee relating to temporary personnel services and permanent
placement services, other services and products sold and business
transacted by Franchisee.
If Franchisor should cause an audit to be made for any
period and Franchisor's share of Gross Margin, royalties and/or
continuing fees of any kind retained by Franchisor from
Franchisee's Gross Revenues and other income due Franchisee for
such period should be found to be understated by three (3%)
percent or more when compared with Franchisee's actual Gross
Sales and/or Gross Revenues, Franchisee shall immediately pay to
Franchisor the cost of such audit as well as the additional
amount payable as shown by such audit, plus interest on said
amount at the highest rate permitted by law or, if none is
provided by law, five (5) points above the prime interest rate
then in effect at Citibank, N.A., New York, New York or, if said
rate is unavailable, the average prime interest rate then in
effect at Chemical Bank and Morgan Guaranty Trust. Otherwise the
cost of such audit shall be paid by Franchisor. If same is found
to be understated by six (6%) percent or more, such
understatement shall constitute an incurable breach of this
Agreement, and this Agreement shall automatically terminate
without further notice.
XIV. RELATIONSHIP OF THE PARTIES
14.01 Independent Contractor
Franchisee understands and agrees that under this Franchise
Agreement, Franchisee is and shall be an independent contractor.
No staff employee of Franchisee shall be deemed to be an employee
of Franchisor. Nothing in this Franchise Agreement shall be
construed so as to create a partnership, joint venture or agency.
Franchisee shall not, without the prior written approval of
Franchisor, have any power to obligate Franchisor for any
expenses, liabilities or other obligations, other than as is
specifically provided for in this Agreement. Franchisor shall
not have the power to hire or fire Franchisee's management and
administrative staff employees and, except as herein expressly
provided, Franchisor may not control or have access to
Franchisee's funds or the expenditure thereof, or in any other
way exercise dominion or control over Franchisee's business.
It is expressly understood and agreed that neither
Franchisee nor any management and administrative staff employee
of Franchisee whose compensation for services is paid by
Franchisee may, in any way, directly or indirectly, expressly or
by implication, be construed to be an employee of Franchisor for
any purpose, most particularly with respect to any mandated or
other insurance coverage, tax or contributions, or requirements
pertaining to withholdings, levied or fixed by any city, state or
federal governmental agency.
Franchisee shall conspicuously identify itself at its
office, and in all dealings with its clients, contractors,
suppliers, public officials and others, as an independent
franchisee of Franchisor, and shall place such notice of
independent ownership on all forms, business cards, stationery,
advertising, signs and other materials and in such fashion as
Franchisor may, in its sole and exclusive discretion, specify and
require from time to time, in its Manuals or otherwise.
Except as otherwise expressly authorized by this Agreement,
neither party hereto will make any express or implied agreements,
warranties, guarantees or representations or incur any debt in
the name of or on behalf of the other party, or represent that
the relationship between Franchisor and Franchisee is other than
that of Franchisor and franchisee. Franchisor does not assume
any liability, and will not be deemed liable, for any agreements,
representations, or warranties made by Franchisee which are not
expressly authorized under this Agreement, nor will Franchisor be
obligated for any damages to any person or property which
directly or indirectly arise from or relate to the operation of
the Center franchised hereby.
XV. COVENANTS NOT TO COMPETE
15.01 In-Term Covenant Not to Compete
Franchisee agrees that during the term of this Agreement,
Franchisee will not, either directly or indirectly, engage in any
other business which offers or sells temporary personnel services
or permanent placement services for the categories of personnel
specified in the Franchise Agreement, or engage in any of the
activities which this Agreement contemplates will be engaged in
by Franchisee, or offer or sell any other product or service (or
component thereof) which comprises or may in the future comprise
a part of the System (or any product or service confusingly
similar thereto) either as a proprietor, partner, investor,
shareholder, director, officer, employee, principal, agent,
advisor, or consultant; nor shall Franchisee divert any business
that should be handled by the franchised business to any other
entity; nor shall Franchisee solicit any employees or clients of
ATC or its affiliates (except as required in connection with
Franchisee performing its duties under the Franchise Agreement).
Further, if Franchisee is a corporation, Franchisee shall cause
its shareholders, directors, officers, and employees to refrain
from such activities in any manner which Franchisor may
reasonably request (including, without limitation, execution of a
shareholders' agreement and employees' non-competition agreement,
setting forth and prohibiting the activities hereby precluded).
15.02 Post-Term Covenant Not to Compete
Franchisee agrees that for a period of one (1) year
immediately following the expiration or termination of this
Agreement, for any reason whatsoever, Franchisee will not, either
directly or indirectly, engage in any business which offers or
sells temporary personnel or permanent placement services of any
nature whatsoever, or engages in any of the activities which this
Agreement contemplates will be engaged in by Franchisee, or offer
or sell any other product or service (or component thereof) which
comprises or may in the future comprise a part of the System (or
any product or service confusingly similar thereto) either as a
proprietor, partner, investor, shareholder, director, officer,
employee, principal, agent, advisor, or consultant. Further,
Franchisee shall not solicit any employees or clients of ATC or
its affiliates.
15.03 Enforcement of Covenants Not To Compete
Franchisee acknowledges that violation of the covenants not
to compete contained in this Agreement would result in immediate
and irreparable injury to Franchisor for which no adequate remedy
at law may be available. Accordingly, Franchisee hereby consents
to the entry of an injunction prohibiting any conduct by
Franchisee in violation of the terms of those covenants not to
compete set forth in this Franchise Agreement. Franchisee
expressly agrees that it may conclusively be presumed that any
violation of the terms of said covenants not to compete was
accomplished by and through Franchisee's unlawful utilization of
Franchisor's confidential information, know-how, methods and
procedures. Further, Franchisee expressly agrees that the
existence of any claims it may have against Franchisor, whether
or not arising from this Agreement shall not constitute a defense
to the enforcement by Franchisor of the covenants not to compete
set forth in this Agreement. Franchisee further agrees to pay
all costs and expenses (including reasonable attorneys' fees)
incurred by Franchisor in connection with the enforcement of
those covenants not to compete set forth in this Agreement.
15.04 Procurement of Additional Covenants
At Franchisor's request, Franchisee shall require and obtain
the execution of covenants not to compete furnished by Franchisor
and similar to those set forth in this Agreement (including
covenants applicable upon the termination of a person's
relationship with Franchisee) from any or all of the following
persons: (i) prior to employment or prior to any promotion, all
Managers of Franchisee, and any personnel employed by Franchisee
who have received or will receive training from Franchisor or
from Franchisee and all other staff employees of Franchisee; (ii)
all officers, directors and shareholders of the Franchisee, if
incorporated, who may in any way be active in the Franchised
Center; (iii) all officers, directors and holders of a beneficial
interest of five (5%) percent or more of the capital stock of
Franchisee and of any corporation directly or indirectly
controlling Franchisee, if Franchisee is a corporation
(concurrent with the execution of this Agreement); (iv) the
general partners and any limited partners (including any
corporation which controls, directly or indirectly, any general
or limited partner, along with the officers, directors and
holders of a beneficial interest of five (5%) percent or more of
the capital stock of any such corporation), if Franchisee is a
partnership (concurrent with the execution of this Agreement);
and, (v) all of those persons enumerated in the covenants not to
compete set forth in this Agreement.
XVI. ASSIGNMENT; RIGHT OF FIRST REFUSAL
16.01 Assignment By Franchisor
Franchisor shall have the right to assign this Agreement,
and all of its rights and privileges hereunder, to any person,
firm, corporation or other entity provided that, with respect to
any assignment resulting in the subsequent performance by the
assignee of the functions of Franchisor: (i) the assignee shall,
at the time of such assignment, be financially responsible and
economically capable of performing the obligations of Franchisor
hereunder, and (ii) the assignee shall expressly assume and agree
to perform such obligations.
16.02 Assignment By Franchisee -- General
With respect to Franchisee's obligations hereunder, this
Franchise Agreement is personal, being entered into in reliance
upon and in consideration of the singular personal skill and
qualifications of Franchisee and the trust and confidentiality
reposed in Franchisee by Franchisor. Therefore, except as
hereafter provided, neither Franchisee's interest in this
Franchise Agreement, nor any of its rights or privileges
thereunder, nor the franchised business or any interest therein,
may be assigned, sold, transferred, shared, sublicensed or
divided, voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise, in any manner, without the prior
written consent of Franchisor procured in accordance with the
terms and conditions set forth in this Article XVI of this
Agreement and/or without first complying with Section 16.06 of
this Article XVI pertaining to Franchisor's right of first
refusal.
Any actual or attempted assignment, transfer or sale of this
Agreement, or any interest therein, or of the franchised
business, made or accomplished in violation of the terms of this
Article XVI shall be null and void and shall constitute an
incurable breach of this Agreement by Franchisee, and this
Agreement shall automatically terminate without further notice.
"Assignment" for the purposes of the Agreement includes the
transfer individually or in the aggregate in any eighteen (18)
month period of: more than twenty five (25%) percent of the
capital stock or voting power of any corporate franchisee; more
than twenty five (25%) percent partnership interest in a
franchisee that does business as a general partnership; or, more
than twenty five (25%) percent of a general partner's interest in
a franchisee that does business as a limited partnership.
16.03 Assignment By Franchisee -- To A Corporation Formed By
Franchisee
In the event Franchisee desires to transfer its interest in
this Franchise Agreement to a corporation formed by Franchisee
solely for the convenience of ownership, Franchisee must obtain
the prior written consent of Franchisor, which shall not be
unreasonably withheld if all of the following conditions are met:
1. The corporation is newly organized and duly incorporated,
and its activities are confined to acting exclusively as an ATC
franchisee.
2. Franchisee is the sole owner of all of the stock of the
corporation and is its principal officer (or Franchisee is the
sole owner of fifty-one (51%) percent or more of all stock of the
corporation, with the remaining stockholders being Franchisee's
spouse and/or adult children).
3. If Franchisee is more than one individual, each
individual shall have the right to a proportionate ownership
interest in the corporation as he/she had in the franchised
business prior to the transfer.
4. Franchisee and the corporation execute an agreement with
Franchisor pursuant to which Franchisee and the corporation
jointly and severally agree to be liable for all of the
obligations to Franchisor under this Agreement, and expressly
agree to be bound by all of the terms, conditions and covenants
of this Agreement. Each officer, director and shareholder of the
corporation shall agree in writing to personally guarantee the
performance by the corporation of its obligations hereunder, and
to be individually bound by all of the terms and conditions of
this Franchise Agreement and any other agreement(s) by and
between Franchisee and Franchisor.
5. All stock certificates of the corporation must be
endorsed with the following legend conspicuously placed:
"The transfer of this stock is subject to the terms and
conditions of a Franchise Agreement dated [date of this
Agreement] between ATC Healthcare Services, Inc. and
[Name of Franchisee] .
This certificate is not transferable and is not subject
to sale, assignment, pledge, mortgage, encumbrance, or
transfer, by operation of law or otherwise, without the
prior written consent of Staff Builders International,
Inc."; and,
6. The Articles of Incorporation, By-Laws and other
organizational documents of the corporation shall recite that the
issuance and transfer of any interest therein are restricted by
the terms of the Franchise Agreement.
Any transfer accomplished pursuant to this Section 16.03 of
this Agreement shall not be subject to Franchisor's rights of
first refusal set forth hereafter in this Agreement.
16.04 Assignment By Franchisee -- Sale To Third Party
Franchisee may not sell the franchise conveyed hereby or any
interest therein, to a third party without the prior written
consent of Franchisor. Should Franchisor not elect to exercise
its right of first refusal, as hereinafter provided, Franchisor's
consent to such assignment and sale shall not be unreasonably
withheld; provided, however, that it shall not be unreasonable
for Franchisor to impose, among other requirements, the following
conditions precedent to its consent to any such assignment: (i)
that Franchisee shall comply with the Right Of First Refusal
provisions set forth in Section 16.06 of this Agreement; (ii)
that the proposed assignee shall apply to Franchisor (which shall
include a personal interview at Franchisor's corporate office)
for acceptance as a franchisee; (iii) that the assignee (or the
principal officers, shareholders or directors of the assignee, in
the case of a corporate assignee) demonstrate that it has the
skills, qualifications, ethics, moral values and economic
resources necessary in Franchisor's judgment, reasonably
exercised, to conduct the business contemplated by this Franchise
Agreement, and to fulfill its obligations to the assignor; (iv)
that the proposed assignee shall have attended and successfully
completed Franchisor's Initial Training Program prior to the
assignment and such other training that Franchisor may reasonably
require the proposed assignee's own expense; (v) that as of the
date of any such assignment, the assignor and its principals
shall have fully complied with all of its obligations to
Franchisor and its affiliates and subsidiaries, both monetary and
otherwise, whether under this Franchise Agreement or any other
agreement with Franchisor; (vi) the assignee shall have executed
a separate Franchise Agreement in the form and on the terms and
conditions then being offered by Franchisor to prospective
franchisees similarly situated (except that the assignee shall
not be obligated to pay another Initial Franchise Fee and the
term of said separate Franchise Agreement shall expire on the
date of expiration of this Agreement); (vii) that the total sales
price not be such that, in Franchisor's sole determination, it
could jeopardize the continued economic viability and future
operations of the franchisee (viii) if the proposed assignee is
purchasing part, but not all, of an interest of the corporate
franchisee to this Agreement, then the proposed purchaser shall
execute a guarantee agreement in the same form as that called for
in Section 16.03 of this Agreement; (ix) that the assignor (and
all shareholders of a corporate assignor, and all partners of a
partnership assignor) execute a general release, in a form
satisfactory to Franchisor, of any and all claims, demands and
causes of action which Franchisee and, as applicable, its
partners, directors, officers, shareholders, executors,
administrators and assigns may or might have against Franchisor
and its officers, directors, shareholders and employees in their
corporate and individual capacities including, without
limitation, claims arising under federal, state and local laws,
rules and ordinances, provided however, that all rights enjoyed
by assignor, and any causes of action arising in its favor
pursuant to the provisions of Article 33 of the General Business
Law of New York (the "New York Franchise Act") and the
regulations issued thereunder, shall remain in force, it being
the intent of this proviso that the non-waiver provisions of said
law be satisfied; (x) that the assignor pay to Franchisor a
transfer fee equal to Seven Thousand Five Hundred ($7,500)
Dollars; (xi) if the assignee is a corporation, all of the
requirements set forth above under Section 16.03 of this
Agreement must be complied with, including the procurement of
guarantees executed by shareholders of the assignee; (xii) that
the assignor furnish to Franchisor a copy of the executed
contract of assignment; (xiii) that the assignee, at its expense,
upgrade the business premises to conform to the then-current
standards and specifications of the System, and shall complete
such upgrading within the time reasonably specified by
Franchisor; and, (xiv) that Franchisee shall remain liable for
all of the obligations to Franchisor arising out of or related to
this Agreement prior to the effective date of the transfer or
assignment, and shall execute all instruments reasonably
requested by Franchisor to evidence such liability.
16.05 Assignment By Franchisee -- Transfer Upon Death or
Incapacity
Upon the death or permanent incapacity of Franchisee,
demonstrated to Franchisor's reasonable satisfaction,
Franchisee's rights shall pass to Franchisee's estate, heirs,
legatees, guardians or representatives (as appropriate)
(hereinafter collectively referred to as the "Estate"), which
Estate may continue the operation of the franchised business if:
(i) the Estate provides a competent and qualified individual
acceptable to Franchisor to serve as Center Manager and operate
Franchisee's Center on a full-time basis; (ii) said individual
attends and successfully completes Franchisor's next offered
Initial Training Program; and, (iii) said individual assumes
full-time operation of the franchise as Center Manager within
three (3) months of the date Franchisee dies or becomes disabled.
Failure by the Estate's designated Center Manager to attend and
satisfactorily complete Franchisor's Initial Training Program and
to assume the full-time operation of the franchised business
within three (3) months, or failure by the Estate to
alternatively effectuate a sale of Franchisee's franchise within
three (3) months in accordance with the provisions of Section
16.04 of this Agreement, shall be deemed an incurable breach of
this Agreement, and this Agreement may thereafter be terminated
immediately upon notice and shall thereafter be null, void and of
no effect (except for those post-termination and post-expiration
provisions which, by their terms, survive).
From the date of death or disability until a fully trained
and qualified Center Manager assumes full-time operational
control of the franchised business, Franchisor may, at its sole
option, enter Franchisee's Center and operate the franchise.
During such period, Franchisor will deduct its expenses for
travel, lodging, meals, and all other expenses and fees from the
Center's share of Gross Margin and other income due the
Franchisee, plus a management fee equal to the greater of three
times the salary paid to the individual(s) assigned by Franchisor
to operate the Center or ten percent (10%) of the Center's weekly
Gross Sales which shall be in addition to Franchisor's share of
Gross Margin and royalty. Remaining funds (if any) will then be
remitted to Franchisee's Estate. Any deficiency in sums due to
Franchisor hereunder shall be paid by Franchisee's Estate to
Franchisor within ten (10) days of Franchisor's rendering to the
Estate a notice of such deficiency. Franchisor shall not be
obligated to so operate Franchisee's franchise and, if it does,
Franchisor shall not be responsible for any operational losses of
the franchise, nor shall it be obligated to continue operation of
the business, under the foregoing circumstances.
16.06 Right of First Refusal
The right of Franchisee to assign, transfer or sell its
interest in this Franchise Agreement or the franchised business,
(voluntarily or by operation of law) as provided above, shall be
subject to Franchisor's right of first refusal with respect
thereto, provided that: (i) Franchisor may substitute cash for
any form of payment proposed in such offer; (ii) Franchisor's
credit will be deemed equal to the credit of any proposed
purchaser; and, (iii) Franchisor shall be given not less than
sixty (60) days after notifying Franchisee of its election to
exercise its right of first refusal to prepare for closing.
Franchisor's said right of first refusal shall be exercised in
the following manner:
1. Franchisee shall serve upon Franchisor a written notice
setting forth all of the terms and conditions of the proposed
assignment or sale, and shall furnish to Franchisor upon request
additional information concerning the proposed assignment or sale
or assignee.
2. Within thirty (30) days after Franchisor's receipt of
such notice (or, if it shall request additional information,
within thirty (30) days after receipt of such additional
information), Franchisor may either consent or withhold its
consent to such assignment, in accordance with this Article, or
at its option, accept the assignment to itself or to its nominee,
upon the terms and conditions specified in the notice, provided,
however, that Franchisor shall be entitled to all of the
customary representations and warranties given by the seller of
assets of a business including, without limitation,
representations and warranties as to ownership, condition of and
title to assets, liens and encumbrances on the assets, validity
of contracts and agreements, and liabilities of Franchisee
affecting the assets, contingent or otherwise.
3. If Franchisor shall elect not to exercise its said right
of first refusal and shall consent to such assignment, Franchisee
shall, subject to the provisions of this Article, be free to
assign this Franchise Agreement or the franchised business to its
proposed assignee on the terms and conditions specified in said
notice. If, however, said terms shall be materially changed,
such changed terms shall be deemed a new proposal, and Franchisor
shall have such right of first refusal with respect thereto.
4. An election by Franchisor not to exercise its right of
first refusal with regard to any offer shall not affect its right
of first refusal with regard to any subsequent offer made to
Franchisee.
16.07 No Encumbrance
Franchisee shall not have the right to pledge, encumber,
hypothecate or otherwise give any third party a security interest
in this Agreement, the franchise conveyed hereunder, or the
franchised business in any manner whatsoever without the prior
written permission of Franchisor, which permission may be
withheld for any reason whatsoever in Franchisor's sole
subjective judgment.
XVII. TERMINATION
17.01 Termination By Franchisor -- Automatic Termination
Without Notice
Franchisee shall be deemed to be in default of this
Agreement, and all rights granted therein shall automatically
terminate without notice to Franchisee, if Franchisee and/or the
franchised business (or any principal thereof) shall become
insolvent or make a general assignment for the benefit of
creditors; or if a petition in bankruptcy is filed by Franchisee
(or its principals) or the franchised business or against
Franchisee (or any principal thereof) or the franchised business
and is not dismissed within sixty (60) days of the filing
thereof; or if Franchisee (or a principal thereof) or the
franchised business is adjudicated as bankrupt or insolvent; or
if a bill in equity or other proceeding for the appointment of a
receiver or other custodian of Franchisee or the franchised
business or its assets is filed and consented to by Franchisee or
the franchised business; or if a receiver or other permanent or
temporary custodian of Franchisee's assets or property, or any
part thereof or of the franchised business, is appointed by any
court of competent jurisdiction; or if proceedings for a
composition with creditors under any state or federal law should
be instituted by or against Franchisee or the franchised
business; or if a final judgment against Franchisee or the
franchised business remains unsatisfied or of record for thirty
(30) days or longer (unless a supersedeas bond is filed); or if
Franchisee or the franchised business is dissolved; or if a suit
to foreclose any lien or mortgage against the Franchisee or the
franchised business with respect to its personal, real or mixed
property is instituted against Franchisee or the franchised
business and is not dismissed within thirty (30) days from the
date such suit is instituted; or if execution is levied against
Franchisee or the franchised business or the property of either
of them; or if the real or personal property of Franchisee or the
franchised business shall be sold after levy thereupon by any
sheriff, marshal or constable.
17.02 Termination By Franchisor Upon Notice -- No Opportunity
To Cure
Franchisee shall be deemed to have materially breached this
Agreement and Franchisor may, at its option, terminate this
Agreement and all rights granted under each, without affording
Franchisee any opportunity to cure the default, effective
immediately upon receipt of notice by Franchisee (which notice,
whether sent by certified mail, registered mail, overnight
courier or by physically delivering said notice in person, shall
be deemed to have been received by Franchisee upon delivery or
attempted delivery of such notice to Franchisee's Center) upon
the occurrence of any of the following events:
1. Franchisee (or its principals) fails to commence
operations of the franchised business within ninety (90) days
after successful completion of the Initial Training Program, or
at any time ceases to operate the franchised business, or
abandons the franchise by failing to operate the business for
five (5) consecutive days during which the Franchisee is required
to operate the business under the terms of this Agreement (or any
shorter period of time after which it is not unreasonable under
the facts and circumstances for Franchisor to conclude that
Franchisee does not intend to operate the franchise), unless such
failure to operate is due to fire, flood, Acts of God or other
similar causes beyond Franchisee's control.
2. Franchisor and Franchisee agree in writing to terminate
the Franchise Agreement.
3. Franchisee loses the right to possession of the Permanent
Location, provided, however, that if any such loss of possession
results from the governmental exercise of the power of eminent
domain, or if, through no fault of Franchisee, the premises are
damaged or destroyed, then Franchisee shall have thirty (30) days
after either such event in which to apply to Franchisor for
approval to relocate and reconstruct the premises in accordance
with the applicable provisions of this Agreement, which approval
shall not be unreasonably withheld.
4. If Franchisee (or, if Franchisee is a corporation or
partnership, any principal of Franchisee) is convicted of a
felony, fraud, crime involving moral turpitude, or any other
crime or offense which Franchisor reasonably believes is likely
to have adverse effect on the System, the Proprietary Marks, the
goodwill associated therewith or Franchisor's interest therein.
5. If a threat or danger to public health or safety results
from the continued operation of the franchised business by
Franchisee (or its principals).
6. If Franchisee (or any principal of a corporate or
partnership franchisee) purports to transfer any rights or
obligations under this Agreement, or any interest in Franchisee
or the franchised business to any third party in violation of the
terms of this Agreement.
7. If Franchisee (or any principal of a corporate or
partnership franchisee) fails to comply with the covenant not to
compete set forth in Article XV of this Agreement during the term
of the Franchise Agreement or fails to obtain the execution of
the additional covenants required in Section 15.03 of this
Agreement.
8. If prior to commencement of operations, Franchisor in its
sole and exclusive discretion determines that, Franchisee and/or
its Center Manager has failed to successfully complete
Franchisor's Initial Training Program, provided, however, that
upon such termination for such cause Franchisor will refund to
Franchisee seventy-five percent (75%) of the Initial Fee paid to
Franchisor hereunder after Franchisee has returned all materials
given it.
9. If Franchisee (or any principal of a corporate or
partnership franchisee) violates those restrictions pertaining to
the use of confidential information in violation of this
Agreement, or fails to procure execution of additional covenants
with regard to such confidential information as required
hereunder.
10. If, following Franchisee's death or incapacity,
continued operation of the franchised business and/or an approved
assignment is not effectuated within that period of time
specified in Section 16.05 of this Agreement.
11. If Franchisee (or any principal of a corporate or
partnership franchisee) knowingly maintains false books or
records, or submits any false report to Franchisor.
12. If Franchisee (or any principal of a corporate or
partnership franchisee), after curing a default pursuant to
Section 17.03 hereof, commits the same act of default again
within twelve (12) months of the first act of default.
13. If Franchisee (or any principal of a corporate or
partnership franchisee) conceals revenues, job orders,
assignments or placements; instructs or suggests to any client
that it should forward payment for any services or products
provided by Franchisee to Franchisee, rather than to Franchisor;
falsifies information or otherwise defrauds or makes false
representations to Franchisor; takes or appropriates for
Franchisee's own use any wages due to temporary employees or any
amounts due to independent contractors or others; takes,
withholds, misdirects or appropriates for Franchisee's own use
any funds withheld from Franchisee's employees' wages and/or set
aside, or which should have been set aside, for the franchised
Centers employees' taxes, FICA, insurance or benefits; takes or
appropriates for Franchisee's own use any property or funds of
Franchisor; fails to deal fairly or honestly with Franchisee's
employees or clients; knowingly permits or, having discovered the
facts, fails to take any action against or to discharge any
agent, servant or employee who has embezzled any funds or
property of any clients, Franchisor or others; or, knowingly
permits or, having discovered the facts, fails to take any action
against, or to discharge, any employees who have falsified time
sheets or in any other way misrepresented the time worked, tenure
of employment, wage rate, wages due or otherwise revealed
themselves to be dishonest.
14. If Franchisee or a principal of Franchisee makes a
willful misrepresentation or fails to make a material disclosure
in connection with the acquisition of the franchise; the
operation of the franchise; or, any matter involving or affecting
the operations of Franchisee's Center.
15. If Franchisee or a principal of Franchisee offers, sells
or displays in or at its Center any unauthorized services, goods
or products.
16. If Franchisee or a principal of Franchisee refuses
Franchisor permission to inspect Franchisee's Center, books,
records, and other documents pursuant to Franchisor's right to do
so set forth in this Agreement.
17. If Franchisee or a principal of Franchisee interferes or
attempts to interfere with Franchisor's contractual relations
with other franchisees, clients, employees, bankers, investors,
market-makers, advertising agencies or any third parties.
18. If Franchisee or a principal of Franchisee interferes or
attempts to interfere with Franchisor's ability or right to
franchise or license others to use and employ Franchisor's
Proprietary Marks and the System.
17.03 Termination by Franchisor --Fifteen Days to Cure
Except as provided above, Franchisee shall have fifteen (15)
days after its receipt from Franchisor of a written notice of
termination within which to remedy any default hereunder (or, if
the default cannot reasonably be cured within such fifteen (15)
days, to initiate within that time all available substantial and
continuing action to cure the default), and to provide evidence
thereof to Franchisor. If any default is not cured within that
time (or, if appropriate, substantial and continuing action to
cure the default is not initiated within that time), or such
longer period as applicable law may require, this Agreement shall
terminate immediately upon expiration of the fifteen (15) day
period or such longer period as applicable law may require. A
Notice of Termination transmitted by Franchisor pursuant to this
Section shall be delivered in accordance with the terms of
Article XXIII of this Agreement, and all such notices, whether
sent by certified mail, registered mail, overnight courier or by
physically delivering said notice in person, shall be deemed to
have been received by Franchisee upon delivery or attempted
delivery of such notice to Franchisee's Center. Franchisee shall
be in default of this Agreement for any failure to substantially
comply with any of the requirements imposed upon Franchisee by
this Agreement, as it may from time to time be reasonably
supplemented by Franchisor's Manuals (and all Supplements
thereto), or to carry out the terms of this Agreement in good
faith. Such defaults shall include, without limitation, the
occurrence of the following events:
1. Franchisee or a principal of Franchisee fails, refuses
or neglects promptly to pay when due any monies owing to
Franchisor (or its subsidiaries, affiliates or designees, if any)
or to submit the financial and non-financial reports and other
information required to be submitted to Franchisor under this
Agreement, or makes any false statements in connection therewith.
2. Franchisee or a principal of Franchisee fails to
maintain any of the standards or follow any of the procedures
prescribed by Franchisor in this Agreement, Franchisor's Manuals
or other written notice.
3. Franchisee or a principal of Franchisee fails, refuses
or neglects to obtain Franchisor's prior written approval or
consent as required by this Agreement.
4. Franchisee or a principal of Franchisee engages in any
business or markets any service or product under a name or mark
which, in Franchisor's opinion, is confusingly similar to
Franchisor's Proprietary Marks.
5. Franchisee fails to pay employee taxes when due or
fails to pay any obligations to any third parties which may
result in liability to Franchisor.
6. Franchisee or a principal of Franchisee fails to
utilize the Proprietary Marks solely in the manner and for the
purposes directed by Franchisor.
7. Franchisee fails to maintain the insurance required by
this Agreement or to indemnify Franchisor as required hereunder.
8. Franchisee or a principal of Franchisee, by act or
omission, permits a continued violation in connection with the
operation of the franchised business of any law, ordinance, rule
or regulation of a governmental agency in the absence of a good
faith dispute over its application or legality and without
promptly resorting to an appropriate administrative or judicial
forum for relief therefrom.
17.04 Failure to Cure
Failure to cure any violation within the stated cure period
as provided for in this Article XVII shall result in termination
of this Agreement upon expiration of the applicable cure period.
17.05 Cross Default
Any default or breach by Franchisee (or its principals) of
any other agreement between Franchisor (or its affiliates and
subsidiaries) and Franchisee (and/or its principals and
affiliates) shall be deemed a default under this Agreement, and
any default or breach of this Agreement by Franchisee (and/or its
principals and affiliates) shall be deemed a default or breach
under any and all other agreements between Franchisor (or its
affiliates or subsidiaries) and Franchisee. If the nature of
such default under any other agreement would have permitted
Franchisor to terminate this Agreement had said default occurred
hereunder, Franchisor shall have the right to terminate all of
the other agreements between Franchisor and Franchisee, in the
same manner provided for herein for termination of this
Agreement.
17.06 Notice Required By Law
Notwithstanding anything to the contrary contained in this
Article XVII, in the event any valid, applicable law or
regulation of a competent governmental authority having
jurisdiction over this franchise and the parties to this
Agreement shall limit Franchisor's rights of termination
hereunder or shall require longer notice or cure periods than
those set forth above, this Agreement shall be deemed amended to
conform to the minimum notice or cure periods or restrictions
upon termination required by such laws and regulations.
Franchisor shall not, however, be precluded from contesting the
validity, enforceability or application of such laws or
regulations in any action, arbitration, hearing or dispute
relating to this Agreement or the termination thereof.
XVIII. FURTHER OBLIGATIONS AND RIGHTS
OF THE PARTIES UPON TERMINATION OR EXPIRATION
18.01 In the event of termination or expiration of this
Agreement, whether by reason of default, lapse of time or other
cause, Franchisee will cease to be an authorized Center
franchisee and will lose all rights to the use of Franchisor's
Proprietary Marks, the System, any and all confidential
information and know-how owned by Franchisor and any goodwill
engendered by the use of Franchisor's Proprietary Marks.
18.02 Upon termination or expiration of this Agreement for
whatever reason, Franchisee shall:
1. Immediately pay all sums due and owing to Franchisor (and
any subsidiary, affiliate or designee thereof). Franchisee
authorizes Franchisor to deduct from Franchisee's share of Gross
Margin and other amounts due Franchisee funds sufficient to pay
Franchisee's debts and obligations.
2. Immediately pay all sums due and owing by Franchisee to
any lessor, employees, taxing authorities, advertising agencies
and all other third parties.
3. Discontinue the use of the Proprietary Marks, and not
thereafter operate or do business under any name or in any manner
which might tend to give the general public the impression that
it is operating a Center, or any business similar thereto, and
Franchisee shall not thereafter use, in any manner, or for any
purpose, directly or indirectly, any of: Franchisor's
confidential information, trade secrets, procedures, forms,
techniques, know-how or materials; any telephone number listed in
any telephone directory under the name "Staff Builders" or "ATC",
or any similar designation or directory listing which relates to
the franchised business; any and all of the systems, procedures,
techniques, criteria, concepts, designs, advertising and
promotion techniques, product/service specifications, and all
other components, specifications and standards which comprise (or
in the future may comprise) a part of the System.
4. Take such action as may be necessary to cancel any
assumed name or equivalent registration which contains the
Proprietary Mark "ATC", "Staff Builders" or either of the words
"Staff" or "Builders", or any other Proprietary Mark of
Franchisor within fifteen (15) days following termination or
expiration of this Agreement. If Franchisee fails or refuses to
do so, Franchisor may, in Franchisee's name and on Franchisee's
behalf, execute any and all documents necessary to cause
discontinuance of Franchisee's use of the Proprietary Marks, and
Franchisor is hereby irrevocably appointed by Franchisee as
Franchisee's attorney-in-fact to do so.
5. In the event of termination of this Agreement for any
default by Franchisee, to pay to Franchisor all expenses incurred
by Franchisor as a result of the default, including all damages,
costs, and expenses, including reasonable attorneys' and experts'
fees, which obligation shall give rise to and remain, until paid
in full, a lien in favor of Franchisor against any and all of the
personal property, furnishings, equipment, signs, fixtures and
inventory owned by Franchisee or the franchised business at the
time of default and/or against any monies of Franchisee held or
otherwise in the possession of Franchisor.
6. At Franchisor's option, assign to Franchisor any interest
which Franchisee has in any lease, sublease, right or entry or
easement for the premises of the franchised business.
7. Strictly comply with the post-term covenant not to
compete set forth in Article XV of this Agreement.
8. Immediately deliver to Franchisor all training or other
manuals (including the Manuals, and Supplements thereto)
furnished by Franchisor to Franchisee, all computer hardware,
software and database material, all permanent and temporary
personnel employee and applicant lists (includine applications,
W-4 forms, I-9 forms and resumes), customer lists, records and
files, all advertising contracts, all sales presentations, sales
call reports, applicant traffic reports, price lists,
applications, job orders, supplies, video or audio tapes, all
forms and other materials or property of Franchisor, and any
copies thereof in Franchisee's possession which relate to the
operation of the franchised business, and Franchisee shall retain
no copy or record of any of the foregoing, except Franchisee's
copy of this Agreement, any correspondence between the parties
and any other documents which Franchisee reasonably needs for
compliance with any provision of law.
9. Within fifteen (15) days from the date of termination or
expiration, arrange with Franchisor for an inventory to be made
by Franchisor, at Franchisor's cost, of all of the personal
property, fixtures, equipment and supplies of Franchisee,
including, without limitation, any and all items bearing the
Proprietary Marks, related to the operation of the franchised
business. Franchisor shall have the option, to be exercised
within thirty (30) days after termination or expiration of this
Agreement, to purchase from Franchisee any or all such items at
fair market value. For the purposes of this Agreement, "fair
market value" is defined to mean depreciated book value. If the
parties cannot agree on a fair market value within a reasonable
time, an independent appraiser shall be designated by Franchisor,
and such appraiser's determination shall be binding. If
Franchisor elects to exercise any option to purchase herein
provided, it shall have the right to set off all amounts due from
Franchisee under this Agreement, and the cost of the appraisal,
if any, against any payments therefor.
10. Immediately execute any and all agreements necessary, in
Franchisor's opinion, to effectuate such termination in a prompt
and timely manner.
11. Cease and desist from the use of the telephone number(s)
listed in the "Yellow Pages" or "White Pages" of any telephone
directories under the name "ATC", "Staff Builders', or any other
name confusingly similar thereto or upon demand of Franchisor,
direct the telephone company servicing the franchised business to
transfer the telephone numbers utilized by or listed for the
franchised business in the then-current "Yellow Pages" and "White
Pages" of the telephone directory to Franchisor, or to such other
person at such location as Franchisor shall direct. If
Franchisee shall not promptly so direct the telephone company,
Franchisee hereby irrevocably appoints Franchisor as Franchisee's
attorney-in-fact to so direct the telephone company to make such
transfers.
12. Continue to abide by those restrictions pertaining to
the use of Franchisor's confidential information, trade secrets
and know-how set forth in detail in Article VIII of this
Agreement.
13. Maintain continuing responsibility for any outstanding
accounts receivable generated and owned by Franchisor, and take
all steps requested by Franchisor with regard to collection of
such accounts receivable as would be required if this Agreement
did not terminate or expire, and continue to assist Franchisor,
upon request, to collect accounts receivable generated by the
franchised business.
14. Upon written notice of Franchisor's exercise of its
option to accept assignment of Franchisee's lease, immediately
take all steps necessary to effectuate the transfer of the lease
to Franchisor (or a third party designated by Franchisor) and
vacate the premises of the Center.
18.03 The expiration or termination of this Agreement shall
be without prejudice to the rights of Franchisor against
Franchisee, and such expiration or termination shall not relieve
Franchisee of any of its obligations to Franchisor existing at
the time of expiration or termination, or terminate those
obligations of Franchisee which by their nature survive the
expiration or termination of this Agreement.
XIX. WAIVER AND DELAY
19.01 No waiver or delay in Franchisor's enforcement of any
breach of any term, covenant or condition of this Agreement shall
be construed as a waiver by Franchisor of any preceding or
succeeding breach, or any other term, covenant or condition of
this Agreement; and, without limitation upon any of the
foregoing, the acceptance of any payment specified to be paid by
Franchisee hereunder shall not be, nor be construed to be, a
waiver of any breach of any term, covenant or condition of this
Agreement.
XX. FRANCHISOR'S RIGHT TO CURE DEFAULTS
20.01 In addition to all other remedies herein granted, if
Franchisee shall default in the performance of any of its
obligations, or breach any term or condition of this Agreement,
or any related agreement, Franchisor may, at its election,
immediately or at any time thereafter, without waiving any claim
for breach hereunder and without notice to Franchisee, cure such
default on behalf of Franchisee, and the cost to Franchisor
thereof shall be deducted from Franchisee's share of Gross
Margin, or other income due Franchisee, or shall be due and
payable by Franchisee on demand.
XXI. INTEGRATION OF AGREEMENT
21.01 This Agreement, and all ancillary agreements executed
contemporaneously herewith constitute the entire agreement
between the parties with reference to the subject matter hereof
and supercede all prior negotiations, understandings,
representations and agreements, if any. Franchisee acknowledges
that it is entering into this Agreement, and all ancillary
agreements executed contemporaneously herewith as a result of its
own independent investigation of the business franchised hereby
and not as a result of any representations about Franchisor by
its agents, officers or employees which are contrary to the terms
herein set forth or which are contrary to the terms of any
offering circular, prospectus, disclosure document or other
similar document required or permitted to be given to Franchisee
pursuant to applicable law.
21.02 This Agreement may not be amended orally, but may be
amended only by a written instrument signed by the parties
thereto. Franchisee expressly acknowledges that no oral promises
or declarations were made to it and that the obligations of
Franchisor are confined exclusively to the terms herein.
Franchisee understands and assumes the business risks inherent in
this enterprise.
XXII. NOTICES
22.01 Any notice required or permitted to be given hereunder
shall be in writing; shall be served upon the other party
personally, or by certified mail, return receipt requested,
postage prepaid; and, shall be effective on the date that
delivery thereof is first attempted. Any notice to Franchisor
shall be addressed to Franchisor at:
ATC Healthcare Services, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
Attention: David Savitsky, Chief Operating Officer
22.02 Any notice to Franchisee shall be addressed to
Franchisee at:
Attention:
Either party to this Agreement may, in writing, upon ten
(10) days notice, inform the other of a new or changed address to
which notices hereunder should be sent.
XXIII. MISCELLANEOUS
23.01 Construction and Interpretation
1. The Agreement shall be governed by and construed in
accordance with the laws of the State of New York. The Franchise
(and/or its principals and affiliates) hereby submit to the
jurisdiction of the Courts of the State of New York with respect
to any dispute, claim, cause of action or the like arising from
or out of this Agreement (or any related Agreement, arrangement
or understanding) as if he or she, it or they were residents of
the State of New York for purposes of service of proces, and
Franchise further agrees that venue in any action, suit,
proceeding and the like arising from or out of this Agreement (or
any related agreement, arrangement or understanding) shall be
laid in Nassau County, New York.
2. The titles and subtitles of the various articles and
sections of this Agreement are inserted for convenience and shall
not be deemed to affect the meaning or construction of any of the
terms, provisions, covenants and conditions of this Agreement.
3. The language in all parts of this Agreement shall in all
cases be construed simply according to its fair and plain meaning
and not strictly for or against Franchisor or Franchisee.
4. It is agreed that if any provision of this Agreement is
capable of two constructions, one of which would render the
provision void and the other of which would render the provision
valid, then the provision shall have the meaning which renders it
valid.
5. Since the words "Franchisor" and "Franchisee" herein may
be applicable to one or more parties, the singular shall include
the plural, and the masculine shall include the feminine and
neuter. If there shall be more than one (1) party or person
referred to as Franchisee hereunder, then their obligations and
liabilities hereunder shall be joint and several.
23.02 Severability
Nothing contained in this Agreement shall be construed as
requiring the commission of any act contrary to law. Whenever
there is any conflict between any provision of this Agreement and
any law, ordinance or regulation, the latter shall prevail, but
in such event the provision of this Agreement thus affected shall
be modified to the extent necessary to bring it within the
requirements of the law. If any court of appropriate
jurisdiction deems any provision hereof (other than for the
payment of money) unreasonable, said court may declare a
reasonable modification hereof and this Agreement shall be valid
and enforceable, and the parties hereto agree to be bound by and
perform the same, as thus modified.
If any provision, specification, standard, reimbursement or
payment method, operating procedure or similar matter set forth
in this Agreement, or otherwise applicable to the operation of
the franchise granted hereby, is held to be unreasonable or
unenforceable and such holding(s) fundamentally alter the nature
and operation of the franchise granted hereby, Franchisor shall
have the right at its sole option to terminate this Agreement on
the ground of such commercial impracticality without further
liability or responsibility to Franchisee, provided, however,
that Franchisor shall exercise such right in good faith and only
in such jurisdiction(s) in which such impracticability in
performance or operation exists.
XXIV. COSTS OF ENFORCEMENT
24.01 Franchisor shall be entitled to recover from Franchisee
reasonable attorneys' fees, experts' fees, court costs and all
other expenses of litigation in any action instituted against
Franchisee in order to secure or protect those rights inuring to
Franchisor under this Agreement, or to enforce the terms thereof.
XXV. LIABILITY OF MULTIPLE
OWNERS -- PERSONAL GUARANTEES
25.01 If Franchisee consists of more than one person, each
proprietor, partner or shareholder of Franchisee shall be jointly
and severally liable for performing the duties and obligations
assumed by Franchisee hereunder.
25.02 Each proprietor, partner, officer, director and/or
shareholder (as the case may be) of Franchisee agrees to be bound
by all of the terms and conditions of this Franchise Agreement,
and does hereby agree to perform all of the duties and
obligations required of Franchisee, and does hereby personally
guarantee all of Franchisee's obligations set forth in this
Agreement, and all other agreements between Franchisor and
Franchisee.
XXVI. SURVIVAL
26.01 Any provision of this Agreement, which imposes an
obligation following the termination or expiration hereof shall
survive such termination or expiration and shall continue to be
binding upon the parties hereto.
XXVII. ACKNOWLEDGEMENTS
27.01 Franchisee acknowledges, warrants and represents to
Franchisor that:
1. No representation has been made by Franchisor (or any
employee, agent or salesperson thereof) and relied upon by
Franchisee as to the future or past income, expenses, sales
volume or potential profitability, earnings or income of the
Center franchised hereby, or any other ATC Healthcare Services
Center other than the information provided in Item XIX, if
applicable, to Franchisor's Offering Circular.
2. Prior to the execution of this Agreement, Franchisee
has had the opportunity to contact all existing franchisees of
Franchisor.
3. Franchisee has had the opportunity to independently
investigate, analyze and construe both the business opportunity
being offered hereunder, and the terms and provisions of this
Agreement utilizing the services of counsel, accountants or other
advisors.
4. No representation or statement has been made by
Franchisor (or any employee, agent or salesperson thereof) and
relied upon by Franchisee regarding the anticipated income,
earnings and growth of Franchisor, or the viability of the
business opportunity being offered hereunder.
5. Franchisor has certain rights reserved to it to own and
operate Centers and other business centers; to franchise other
Centers and other business centers; and, to otherwise use the
System, Proprietary Marks, know-how, techniques and procedures,
all as expressly set forth in this Agreement.
6. Franchisee has received from Franchisor a copy of
Franchisor's Offering Circular, together with a copy of all
proposed agreements relating to the sale of the franchise, at
least ten (10) business days prior to the execution to this
Agreement or at least ten (10) days prior to the payment by
Franchisee to Franchisor of any consideration in connection with
the sale or proposed sale of the franchise granted hereby.
7. No representation or statement has been made by
Franchisor (or any employee, agent or salesperson thereof) and
relied upon by Franchisee regarding Franchisee's ability to
procure any required license or permit that may be necessary to
the offering of one or more of the services contemplated to be
offered hereby.
8. Franchisee has been advised to consult with its own
advisors with respect to the legal, financial and other aspects
of this Agreement, the business franchised hereby, and the
prospects for that business. Franchisee has either consulted
with such advisors or has deliberately declined to do so.
9. The covenants not to compete set forth in this
Agreement are fair and reasonable, and will not impose any undue
hardship on Franchisee, since Franchisee has other considerable
skills, experience and education which afford Franchisee the
opportunity to derive income from other endeavors.
THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY<PAGE>
XVIII. SUBMISSION OF AGREEMENT
28.01 The submission of this Agreement does not constitute an
offer. This Agreement shall become effective only upon the
execution hereof by Franchisor and Franchisee. The date of
execution by the Franchisor shall be considered the date of
execution. THIS AGREEMENT SHALL NOT BE BINDING ON FRANCHISOR
UNLESS AND UNTIL IT SHALL HAVE BEEN ACCEPTED AND SIGNED BY AN
AUTHORIZED OFFICER OF FRANCHISOR.
FRANCHISEE HAS READ ALL OF THE FOREGOING AGREEMENT AND HEREBY
ACCEPTS AND AGREES TO EACH AND ALL OF THE PROVISIONS, COVENANTS
AND CONDITIONS THEREOF.
Dated: FRANCHISEE:
Attest:
Witness/Date
Attest:
Witness/Date
Dated: FRANCHISOR:
ATC HEALTHCARE SERVICES, INC.
Attest:
By: By:
EXHIBIT A
TERRITORY
EXHIBIT
21<PAGE>
Staff Builders, Inc. (DE)
Adultcare, Inc. (FL)
ATC Healthcare Services, Incorporated (GA)
ATC Nursing Services of Texas, Inc. (TX)
Albert Gallatin Home Care, Inc. (DE)
The Bergall Corporation (MA)
Careco, Inc. (MA)
T.L.C. Medicare Services, Inc. (DE)
T.L.C. Midwest, Inc. (DE)
Tender Loving Care Health Care Services, Inc.(CT)
Loving Home Care, Inc. (NY)
Home Health Care, Inc. (MD)
Personnel Industries, Inc. (MD)
T.L.C. Home Health Care, Inc. (FL)
T.L.C. Medicare Services of Dade, Inc. (FL)
T.L.C. Medicare Services of Broward, Inc. (FL)
Tender Loving Care Private Patient Company, Inc. (FL)
Tender Loving Care Home Care Services, Inc. (NY)
U.S. Ethicare Corporation (DE)
U.S. Ethicare Albany Corporation (NY)
U.S. Ethicare Chautauqua Corporation (NY)
U.S. Ethicare Erie Corporation (NY)
U.S. Ethicare Niagara Corporation (NY)
U.S. Ethicare Onondaga Corporation (NY)
Ethicare Certified Services, Inc. (NY)
Staff Builders Buffalo, Inc. (NY)
Staff Builders, Inc. (NY)
American Home Care Management Corp. (DE)
Advanced Management Solutions, Inc. (DE)
Albert Gallatin Services Corporation (PA)
S.B.H.F., Inc. (NY)
Staff Builders Services, Inc. (NY)
MedVisit, Inc. (NC)
Staff Builders Home Health Care, Inc. (DE)
Staff Builders International, Inc. (NY)
Staff Builders Personnel Services, Inc. (NY)
Professional Detail Services, Inc. (NY)
A Reliable Homemaker Inc. (FL)
St. Lucie Home Health Agency, Inc. (FL)
EXHIBIT
24<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of STAFF BUILDERS, INC., a Delaware corporation (the
"Corporation"), hereby constitutes and appoints David Savitsky or
Stephen Savitsky, his true and lawful attorney-in-fact and agent,
with full power to act for him and in his name, place and stead,
in any and all capacities, to sign the Corporation's Annual
Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 on Form 10-K for the Fiscal Year Ended February 28,
1996, or any amendments or supplements thereto, including without
limitation on Form 8, with power where appropriate to affix the
corporate seal of the Corporation thereto and to attest said
seal, and to file such Form 10-K and each such amendment and
supplement, with all exhibits thereto, and any and all other
documents in connection therewith, with the Securities and
Exchange Commission, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and
perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his
name as of the 3rd day of April, 1996.
/S/ Bernard J. Firestone
Bernard J. Firestone,
Director of the Corporation
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of STAFF BUILDERS, INC., a Delaware corporation (the
"Corporation"), hereby constitutes and appoints David Savitsky or
Stephen Savitsky, his true and lawful attorney-in-fact and agent,
with full power to act for him and in his name, place and stead,
in any and all capacities, to sign the Corporation's Annual
Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 on Form 10-K for the Fiscal Year Ended February 28,
1996, or any amendments or supplements thereto, including without
limitation on Form 8, with power where appropriate to affix the
corporate seal of the Corporation thereto and to attest said
seal, and to file such Form 10-K and each such amendment and
supplement, with all exhibits thereto, and any and all other
documents in connection therewith, with the Securities and
Exchange Commission, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and
perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his
name as of the 3rd day of April, 1996.
/S/ Jonathan J. Halpert
Jonathan J. Halpert,
Director of the Corporation
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of STAFF BUILDERS, INC., a Delaware corporation (the
"Corporation"), hereby constitutes and appoints David Savitsky or
Stephen Savitsky, his true and lawful attorney-in-fact and agent,
with full power to act for him and in his name, place and stead,
in any and all capacities, to sign the Corporation's Annual
Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 on Form 10-K for the Fiscal Year Ended February 28,
1996, or any amendments or supplements thereto, including without
limitation on Form 8, with power where appropriate to affix the
corporate seal of the Corporation thereto and to attest said
seal, and to file such Form 10-K and each such amendment and
supplement, with all exhibits thereto, and any and all other
documents in connection therewith, with the Securities and
Exchange Commission, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and
perform any and all acts and things requisite and necessary to be
done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his
name as of the 3rd day of April, 1996.
/S/ Donald Meyers
Donald Meyers,
Director of the Corporation
