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 28, 1997
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 May 23, 1997, was
$49,249,466.
The number of shares of Class A Common Stock and Class B Common Stock
outstanding on May 23, 1997 was 22,419,833 and 1,458,696 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 services. In addition, it provides supplemental
staffing and home health care management consulting services to
health care institutions. As of February 28, 1997, the Company had
252 offices located in 37 states and the District of Columbia
through which services were provided by approximately 40,000
caregivers. Of these offices, 50 were owned and operated by the
Company and 202 were operated by 87 franchisees.
The Company's 252 field office locations included 33
locations which were added from 19 acquisitions made during the
year ended February 28, 1997 ("Fiscal 1997"). Included in these
transactions was the acquisition on September 6, 1996 of a provider
of supplemental staffing in the metropolitan New York area which
contributed $8.5 million of revenues. On October 7, 1996, the
Company acquired a home health provider consisting of three
locations in the state of Washington which contributed $3.2 millon
of revenues. On June 15, 1996, the Company acquired five home
health care locations in northern California which contributed $2.3
million in revenues. Further, in fiscal 1997, the Company acquired
certain assets, consisting primarily of licenses, permits,
Certificates of Need and provider numbers required for the
operation of each location and employee and customer lists, of 16
other service providers in 24 locations which contributed $10.6
million of revenues. During the fiscal year ended February 29,
1996 ("Fiscal 1996"), the Company acquired eleven home health care
providers which added 30 locations. During the fiscal year ended
February 28, 1995 ("Fiscal 1995"), the Company acquired 20
supplemental staffing locations in two separate transactions and 12
home health care locations in seven transactions.
Home Health Care
The Company provides a broad range of home health care
services by its licensed health care personnel including services
such as skilled nursing treatments, patient and family education,
physical therapy, occupational therapy, speech therapy and social
services. The Company also provides, unskilled care by home health
aides and other unlicensed personnel who assist patients with
activities of daily living.
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
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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 as prescribed by a physician. During the
intake process, the Company contacts third-party payors to confirm
the extent of insurance coverage.
In seven locations, the Company operates hospices in
accordance with the Federal Medicare program. Hospice services
include a full range of medical and nursing services as well as
spiritual and emotional support, specialized pain management and
bereavement counseling and support.
The Company has a home care management consulting
division which provides support services to hospital-based home
health agencies. Services provided under these management
contracts include administrative and regulatory support, clinical
and quality management support and fiscal and administrative
support services including automated billing.
Home health care services, including hospice and
management consulting services provided to hospital-based home
health agencies, accounted for approximately 89%, 90% and 91% of
revenues for fiscal 1997, 1996 and 1995, respectively. The primary
payment sources for home health care revenues are Medicare,
Medicaid, insurance 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's supplemental staffing operations provide
clients with medical technicians, registered nurses, licensed
practical nurses, and other personnel. Health care institutions use
supplemental staffing to cover permanent positions for which they
have openings, for peak periods, vacations and emergencies and to
accommodate periodic increases in the number of patients.
The Company's revenues from supplemental staffing were
$49.1 million, $38.1 million and $28.8 million in fiscal 1997, 1996
and 1995, respectively. Fiscal 1997 revenues included $8.5 million
resulting from the acquisition on September 6, 1996 of a provider
in the metropolitan New York area. The majority of the Company's
supplemental staffing revenues are provided through ATC Healthcare
Services, Inc. ("ATC"), a wholly-owned subsidiary. At the time of
the Company's acquisition of ATC in July 1994, ATC operated
thirteen offices in seven states, and in November 1994, ATC
acquired seven additional offices in five states.
Local offices are generally familiar with the
operations, procedures and policies of the institutions in their
service areas and use this knowledge in providing the training and
orientation to their personnel. Accordingly, the personnel
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provided are able to assume responsibility quickly and work
effectively with permanent staff members.
Supplemental staffing operations accounted for
approximately 11%, 10% and 9% of revenues for fiscal 1997, 1996 and
1995, respectively.
Franchisees
Of the Company's 252 field office locations, 202 were
operated by 87 franchisees pursuant to the terms of a franchise
agreement with the Company. The locations operated by franchisees
contributed approximately $398 million, $334 million and $251
million, or approximately 83%, 82% and 77% of the Company's service
revenues for fiscal 1997, 1996 and 1995, respectively.
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 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. When converting independently owned agencies into
franchises, the Company negotiates the terms of 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 franchisee 60% of the gross profit
attributable to the non-Medicare operations of the franchise. The
payment to the Company's franchisees related to Medicare operations
is adjusted for cost limitations and reimbursement of allowable
Medicare costs. For fiscal 1997, 1996 and 1995, total franchisee
distributions of approximately $89 million, $75 million and $57
million, respectively, were included in the Company's general and
administrative expenses.
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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 operates a distributed data processing
network (including payroll, billing and other administrative
functions) for its home health care operations which connects its
field offices with its corporate headquarters in Lake Success, New
York. The headquarters for the home care management consulting
division is in Clearwater, Florida and 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. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Recruiting and Training
The Company and its franchisees recruit 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. The Company has an
in-service training program for its home health personnel which
satisfies the requirements for certification required by certain
states.
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
meet the same qualifications required of Company personnel.
Quality Control and Operations
As a service business, the quality and reputation of the
Company's personnel and operations is critical to the Company's
success. The Company maintains 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
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Company to rate the quality of care provided. These programs are
administered at the national and local levels. The Company's
clinical staff conduct periodic on-site reviews to determine
compliance with all regulations.
In addition to the on-site reviews conducted by Company
personnel, the Company seeks to maintain and improve the quality of
its home health care operations by seeking accreditation from the
Joint Commission on Accreditation of Healthcare Organizations
("JCAHO"). Currently, the Company has approximately 150 offices
which have been accredited by JCAHO.
The Company has developed the Staff Builders Clinical
Outcomes and Resource Evaluation System ("SCORES"TM). SCORES is a
clinical management system that identifies and analyzes patient
potential for variances upon admission to home care; customizes a
transdisciplinary plan of care; quantifies clinical outcomes,
resource utilization and cost of care. SCORESTM is currently being
used in fourteen locations and the Company plans to significantly
expand the number of locations using SCORESTM during the current
fiscal year.
The Company has developed a number of proprietary
disease-specific programs designed to be used in the home. These
programs include the areas of asthma, cardiac disease, diabetes,
hospice, maternity, mental health, total knee replacement and wound
care.
The Company offers 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. The Company
provides support including brochures, training seminars, and
materials to assist in developing patient care programs as needed
within each community.
Local efforts principally involve communicating with
hospital discharge planners, nursing management, physicians and
other individuals at hospitals, nursing homes and other health care
facilities to advise them of the array of services available from
the Company.
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,
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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.
Competition
Although there are national home health care and
supplemental staffing companies, the industry is highly fragmented
and competitors are often localized in particular geographical
markets. In general, there has been a trend toward consolidation
in the health care industry which is expected to continue. 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
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 1997, no single client or group contract accounted
for ten percent or more of the consolidated revenues.
Reimbursement
Revenues generated from the Company's home health care
services are paid by insurance carriers, health maintenance
organizations and individuals, Medicare, Medicaid and other state
and local government health insurance programs. During fiscal 1997
approximately 14% of the Company's total revenues represented
reimbursement from insurance carriers, health maintenance
organizations and individuals; 55% came from Medicare; and 20% 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 is designed to pay for certain
health care and medical services provided to low income individuals
without regard to age.
The Company has 149 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
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claims on behalf of the Federal government. As of February 28,
1997, the Company has 79 offices which participate in Medicare's
periodic interim payments ("PIP") program. Under PIP, the Company
receives regular bi-weekly payments based on past Medicare activity
of participating 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 home health care
offices are approved to provide services to Medicaid recipients.
Medicaid reimbursement procedures vary from state to state.
Service Marks
The Company believes that its service marks, Staff
Builders, Staffline, the stick figure logo, Tender Loving Care
and the ATC logo have significant value and are important to the
marketing of its services. These names and marks 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 Staffline service mark will remain in effect through August 1,
1999. The registration of the stick figure logo service mark will
remain in effect through August 16, 1998. The registration of the
Tender Loving Care service mark will remain in effect through
January 8, 2005. The ATC and design service mark will remain in
effect through January 9, 2000. 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 149
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 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 12% of the
Company's revenues in fiscal 1997. 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 and certain state laws
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 offer and sell franchises, the Company
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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 44 states and the
District of Columbia.
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 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. In addition, franchisees are required to maintain
general liability insurance providing for coverage of at least $1
million.
Personnel and Employees
At February 28, 1997, the Company employed approximately
3,250 full-time administrative and management personnel.
Approximately 2,850 of these employees were located at the
Company's branch offices, 380 were located at its corporate
headquarters in Lake Success, New York, and 20 were located at its
medical staffing division headquarters in Atlanta, Georgia.
Additionally, the Company has approximately 40,000
individuals who render home health care and medical staffing
services. 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. The Company is not a party to
any collective bargaining agreement and considers its relationship
with its employees to be satisfactory.
ITEM 2. PROPERTIES
The Company's corporate headquarters consists of
approximately 63,000 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
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provides for a current base rent of approximately $114,500 per
month, which increases annually by three percent.
The Company maintains its medical staffing division
headquarters 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 annual increases of 4.5 percent.
The Company believes that its 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 28, 1997, there were 252 offices
including 50 operated by the Company and 202 operated by
franchisees; 12 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.
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 $175,000 at
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February 28, 1997 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 $1.5 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 1997.
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 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
Fiscal Year Ended February 28, 1997
1st Quarter $ 3.94 $ 2.50
2nd Quarter 4.50 2.88
3rd Quarter 3.63 2.25
4th Quarter 3.13 2.19
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.
(B) Holders
As of May 23, 1997, there were approximately 325 holders
of record of Class A Common Stock (including brokerage firms
holding stock in "street name" and other nominees) and 550 holders
of record of Class B Common Stock.
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(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.
SELECTED FINANCIAL DATA (in thousands, except per share data)
<CAPTION>
Years Ended
February February February February February
28, 1997 29, 1996 28, 1995 28, 1994 28, 1993
<S> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATIONS DATA:
Revenues $480,355 $410,160 $325,111 $246,082 $198,627
Costs and expenses:
Operating costs 301,508 256,719 201,365 152,824 128,331
General and administrative expenses 167,550 143,704 111,462 83,682 62,075
Provision for doubtful accounts 2,740 2,678 2,431 2,400 2,352
Amortization of intangible assets 2,623 1,823 1,237 884 775
Interest expense 1,601 948 1,237 2,189 2,244
Interest income (896) (976) (796) (605) (565)
Other (income) expense, net (1,487) 1,791 (22) 36 (370)
Total costs and expenses 473,639 406,687 316,914 241,410 194,842
Income from operations
before income taxes 6,716 3,473 8,197 4,672 3,785
Provision for income taxes 2,955 1,459 3,462 1,308 1,211
Net income $ 3,761 $ 2,014 $ 4,735 $ 3,364 $ 2,574
Income applicable to
common stockholders $ 3,761 $ 2,014 $ 4,735 $ 3,954 $ 2,174
Income per common and common
equivalent share:
Primary $ .16 $ .08 $ .20 $ .20 $ .14
Fully diluted $ .16 $ .08 $ .20 $ .20 $ .13
Cash dividends per common share $ - $ - $ - $ - $ -
Weighted average number of common
and common equivalent shares
outstanding:
Primary 24,591 25,340 24,073 22,175 16,073
Fully diluted 24,648 25,532 24,376 22,175 16,488
CONSOLIDATED BALANCE SHEET DATA:
Total assets $156,172 $120,527 $103,486 $ 87,310 $ 66,983
Working capital 27,245 12,007 22,038 26,855 17,214
Current portion of long-term liabilities 5,230 2,356 1,267 827 1,797
Long-term liabilities 37,998 9,611 9,186 14,021 13,768
Total liabilities 96,706 65,217 51,135 48,035 37,708
Redeemable Class B Preferred Stock
and accrued dividends - - - - 6,034
Stockholders' equity 59,466 55,310 52,351 40,976 23,241
<FN>
<F1>
Certain prior period amounts have been reclassified to conform with the fiscal 1997 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 28, 1997 ("Fiscal 1997"), February 29, 1996
("Fiscal 1996") and February 28, 1995 ("Fiscal 1995")
Revenues. Total revenues increased by $70.2 million or
17.1% to $480.4 million in fiscal 1997 from $410.2 million in
fiscal 1996. This increase included $24.6 million of revenues from
acquisitions made in fiscal 1997. Additionally, revenues from
acquisitions made in fiscal 1996 which are included in the full
fiscal 1997 period and continued expansion of the Company's
franchise program to new locations resulted in increased revenues
of $19.0 million in fiscal 1997. Existing locations which were
included for the entire two fiscal periods generated increased
revenues of $26.6 million, or 7%, in fiscal 1997 over fiscal 1996.
Total revenues increased by $85.1 million or 26.2% to $410.2
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 thereafter. 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 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 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 million due to a revision in
the methodology used to allocate corporate overhead, as required by
the Medicare fiscal intermediary.
-15-
The increase in Medicare and Medicaid revenues during the
three years ended February 28, 1997 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 105 as of
February 28, 1995, to 149 as of February 28, 1997. 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
28, 1997 29, 1996 28, 1995
<S> <C> <C> <C>
Medicare 55.6% 57.7% 56.5%
Medicaid and other local
government programs 19.8 19.4 20.1
Insurance and individuals 14.0 13.4 14.5
Hospitals, nursing homes and
other health care institutions 10.3 9.3 8.9
Other 0.3 0.2 -
Total 100.0% 100.0% 100.0%
</TABLE>
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 $11 million, or 28.9%, to $49.1
million in fiscal 1997 from $38.1 million in fiscal 1996, as
compared to $28.8 million in fiscal 1995. The increase in fiscal
1997 included $8.5 million resulting from the acquisition on
September 6, 1996 of a provider of supplemental staffing services
to medical establishments in the metropolitan New York area. The
increase in fiscal 1996 included $8.6 million from the ATC
locations acquired in July 1994.
The service revenues attributable to franchise offices
increased to 83% in fiscal 1997 from 82% in fiscal 1996 and from
77% in fiscal 1995. The increase in revenues attributable to
franchise offices was due to the increase in the number of
locations operated by franchisees from 94 locations operated by 57
franchisees as of February 28, 1994 to 202 locations operated by 87
franchisees as of February 28, 1997. These increases result from
the Company's continuing efforts to expand its operations in
additional markets primarily through the recruitment of new
franchisees.
-16-
Operating Costs. Operating costs were 62.9%, 62.8% and
62.1% of service revenues in fiscal 1997, 1996 and 1995,
respectively. Operating costs represent the direct costs of
providing services to patients, including wages, payroll taxes,
travel costs, insurance costs, medical supplies and the cost of
contracted services. The increase in the percentage of operating
costs in fiscal 1996 was primarily due to the reduction in Medicare
revenues due to a revision in the methodology used to allocate
corporate overhead.
The payroll fringe costs, consisting primarily of payroll
taxes and workers compensation insurance, represents 15.9%, 14.6%
and 17.3% of direct service wages in fiscal 1997, 1996 and 1995,
respectively. The variations in payroll fringe costs as a
percentage of direct service wages were primarily due to costs for
workers compensation insurance.
The cost of contracted services represents 6.5%, 8.1% and
9.8% of service revenues in fiscal 1997, 1996 and 1995,
respectively.
The revenues, operating costs and resultant gross margins
generated by the Company's franchise and Company-owned locations
are as follows:
<TABLE> ($ in millions)
Years Ended
February February February
28, 1997 29, 1996 28, 1995
<S> <C> <C> <C>
Total revenues - Franchise $398 $334 $251
Total revenues - Company-Owned 82 76 74
Total revenues $480 $410 $325
Operating costs - Franchise $248 $207 $154
Operating costs - Company-Owned 54 50 47
Operating costs $302 $257 $201
Gross margin - Franchise $150 $127 $ 97
Gross margin - Company-Owned 28 26 27
Gross margin $178 $153 $124
</TABLE>
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 $23.8 million or 16.6% in
fiscal 1997 as compared to fiscal 1996 and increased by $32.2
-17-
million or 28.9% in fiscal 1996 as compared to fiscal 1995. These
costs expressed as a percentage of service revenues were 35.0%,
35.1% and 34.4% in fiscal 1997, 1996 and 1995, respectively. The
increase in general and administrative expenses in fiscal 1997 was
due to approximately $13.2 million resulting from expansion of the
Company's franchise program for the amounts distributed to new
franchisees which were added in fiscal 1997 and the addition of new
franchise locations during fiscal 1996 which were included in the
entire fiscal 1997 period. Additionally, an increase of
approximately $3.4 million resulted from locations operated by the
Company and acquired in fiscal 1997 and locations added during
fiscal 1996 which were included in the entire fiscal 1997 period.
Further, approximately $4.3 million was incurred in fiscal 1997 to
expand the capabilities of the Company's information systems and to
develop specialized programs to augment the Company's home health
care operations. 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 were
included in the entire 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. Included in general and administrative expenses are
reserves and write-offs of notes receivable from franchisees of
$169 in fiscal 1996. There was no expense incurred in fiscal 1997
and 1995 related to reserves and write-offs of notes receivable.
Provisions for Doubtful Accounts Receivable. The
provisions represented 0.6%, 0.7% and 0.8% of service revenues in
fiscal 1997, 1996 and 1995, respectively.
Amortization of Intangible Assets. Amortization of
intangible assets was approximately $2.6 million in fiscal 1997 as
compared to $1.8 million in fiscal 1996 and $1.2 million in fiscal
1995. The increases are due to business acquisitions made in the
1997 and 1996 fiscal years.
Interest Expense. Interest expense was approximately
$1.6 million in fiscal 1997 as compared to $900 in fiscal 1996 and
$1.2 million in fiscal 1995. The increase in interest expense in
fiscal 1997 over fiscal 1996 was primarily due to an increase in
the level of borrowings under the Company's revolving line of
credit and increases in the amount of capital leases and other
interest bearing debt. The reduction in interest expense in fiscal
1996 from fiscal 1995 was 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.
-18-
Interest Income. Interest income includes interest on
franchise notes receivable of $527, $788 and $676 in fiscal 1997,
1996 and 1995, respectively. Interest earned on franchise notes
receivable is generally at the prime rate plus three percent.
Other (Income) Expense, Net. Other (income) expense, net
in fiscal 1997 includes income of approximately $1.2 million
resulting from the sale of a Company division. Fiscal 1996 expense
included $1,580 to provide for the costs to close two divisions,
$358 in costs associated with the Company's recapitalization and
$165 for settlement of litigation.
Provision for Income Taxes. The provision for income
taxes reflects an effective rate of 44%, 42% and 42% in fiscal
1997, 1996 and 1995, respectively.
Net Income. Net income for fiscal 1997 was $3.76
million, or $.16 per share, compared to $2.01 million, or $.08 per
share,in fiscal 1996 and $4.74 million, or $.20 per share,in fiscal
1995.
Liquidity and Capital Resources
In January 1997, the Company obtained a new secured
revolving credit facility with its existing bank which consists of
a revolving line of credit, an acquisition line of credit and a
standby letter of credit facility, under which it can borrow an
aggregate amount of $50 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 and any outstanding letters of credit.
The acquisition line of credit provides for borrowings up to $15
million without collateral to finance acquisitions, provided that
the sum of all borrowings do not exceed $50 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 $6.3 million, $1.4 million, and
$3.3 million in fiscal 1997, 1996 and 1995, respectively.
Trade accounts receivable at the end of fiscal 1997,
1996, and 1995 were outstanding for an average of approximately 57,
48 and 54 days, respectively. As of February 28, 1997, the Company
has 79 offices which participate in Medicare's periodic interim
payments ("PIP") program. Under PIP, the Company receives regular
bi-weekly payments based on past Medicare activity, which is
adjusted quarterly for actual volume.
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
-19-
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 obtained contractually from the Company
for which the related cost is deducted from monthly distributions
paid.
During fiscal 1997, 1996 and 1995, the Company purchased
and retired a total of 1,518,774 shares of its common stock at a
cost of $4.3 million.
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 $7.1 million and $3.8 million at February 28, 1997
and February 29, 1996, respectively.
At February 28, 1997, the Company's debt obligations due
within the next twelve months were approximately $5.2 million.
The Company expects that its existing working capital,
cash from operations and its credit facilities will be sufficient
to meet its needs for at least the next twelve months.
Effect of Inflation
The rate of inflation was immaterial during the 1997
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
In February 1997, the FASB issued SFAS No. 128 "Earnings
per Share" which is effective for the Company in financial
statements issued after December 15, 1997. SFAS 128 supersedes APB
15 and replaces the presentations of primary EPS with a
presentation of Basic EPS. It also requires presentation of Basic
and Diluted EPS on the income statement for all entities with
complex capital structures. The Company does not expect the
adoption of SFAS 128 to have a material effect on earnings per
share.
Forward Looking Statements
Certain statements in this report on Form 10-K constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
typically identified by their inclusion of phrases such as "the
Company anticipates", "the Company believes" and other phrases of
similar meaning. Such forward-looking statements involve known and
unknown risks, uncertainties, and other factors that may cause the
-20-
actual results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements.
GOVERNMENT REGULATION. As a home health care provider, the Company
is subject to extensive and changing state and Federal regulations
relating to the licensing and certification of its offices and the
sale and delivery of its products and services. The Federal
government and Medicare fiscal intermediaries have become more
vigilant in their review of Medicare reimbursements to home health
care providers generally, and are becoming more restrictive in
their interpretation of those costs for which reimbursement will be
allowed to such providers. Changes in the law and regulations as
well as new interpretations enforced by the relevant regulatory
agencies could have an adverse effect on the Company's operations
and the cost of doing business.
THIRD-PARTY REIMBURSEMENT AND MANAGED CARE. Because the Company is
reimbursed primarily for its services by the Medicare/Medicaid
programs, insurance companies, managed care companies and other
third-party payors, the implementation of alternative payment
methodologies for any of these payors could have an impact on
revenues and profit margins. Generally, managed care companies
have sought to contain costs by reducing payments to providers.
Continued cost reduction efforts by managed care companies could
adversely affect the Company's results of operations.
HEALTH CARE REFORM. As Congress and state reimbursement entities
assess alternative health care delivery systems and payment
methodologies, the Company cannot predict which reforms may be
adopted or what impact they may have on the Company. Additionally,
uncertainties relating to the nature and outcomes of health care
reforms have also generated numerous realignments, combinations and
consolidations in the health care industry which may also have an
adverse impact on the Company's business strategy and results of
operations.
BUSINESS CONDITIONS. The Company must continue to establish and
maintain close working relationships with physicians and physician
groups, managed care organizations, hospitals, clinics, nursing
homes, social service agencies and other health care providers.
There can be no assurance that the Company will continue to
establish or maintain such relationships. The Company expects
additional competition will develop given the increasing level of
demand for the type of services offered.
ATTRACTION AND RETENTION OF FRANCHISEES AND EMPLOYEES. Maintaining
quality franchisees, managers and branch administrators will play
a significant part in the future success of the Company. The
Company's professional nurses and other health care personnel are
also key to the continued provision of quality care to the
Company's patients . The possible inability to attract and retain
qualified franchisees, skilled management and sufficient numbers of
credentialed health care professionals and para-professionals could
adversely affect the Company's operations and quality of service.
-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 28, 1997
and February 29, 1996 F-2
Consolidated Statements of Income
for the Years ended February 28, 1997, February
29, 1996 and February 28, 1995 F-3
Consolidated Statements of Stockholders' Equity
for the Years ended February 28, 1997, February
29, 1996 and February 28, 1995 F-4
Consolidated Statements of Cash Flows
for the Years ended February 28, 1997, February
29, 1996 and February 28, 1995 F-5
Notes to Consolidated Financial Statements F-6
FINANCIAL STATEMENT SCHEDULE FOR THE YEARS ENDED
FEBRUARY 28, 1997, FEBRUARY 29, 1996
AND FEBRUARY 28, 1995
II - Valuation and Qualifying Accounts F-23
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 28, 1997 and
February 29, 1996, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended February 28, 1997. 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 28, 1997 and February 29, 1996 and the results of
their operations and their cash flows for each of the three years in the
period ended February 28, 1997 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 18, 1997
F-1
<PAGE>
<TABLE>
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<CAPTION>
February February
ASSETS 28, 1997 29, 1996
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,006 $ 8,710
Accounts receivable, net of allowance
for doubtful accounts of $2,800
and $2,200, respectively 77,103 52,957
Deferred income tax benefits 1,855 2,403
Prepaid expenses and other current assets 4,989 3,543
Total current assets 85,953 67,613
FIXED ASSETS, net 12,082 7,436
INTANGIBLE ASSETS, net 51,022 41,877
OTHER ASSETS 7,115 3,601
TOTAL $156,172 $120,527
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,429 $ 9,003
Accrued expenses 17,307 16,478
Accrued payroll and payroll related expenses 21,742 27,769
Current portion of long-term liabilities 5,230 2,356
Total current liabilities 58,708 55,606
LONG-TERM LIABILITIES 37,998 9,611
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' EQUITY:
Common stock - - -
Class A Common Stock - $.01 par value;
50,000,000 shares authorized; 22,343,970 and
22,036,313 outstanding at February 28, 1997
and February 29, 1996, respectively 223 220
Class B Common Stock - $.01 par value;
1,554,936 shares authorized; 1,462,361 and
1,501,007 outstanding at February 28, 1997
and February 29, 1996, respectively 15 15
Preferred stock, 10,000 shares authorized;
Class A - $1.00 par value; 666 2/3 shares
outstanding at February 28, 1997 and
February 29, 1996 1 1
Additional paid-in capital 73,159 72,767
Accumulated deficit (13,932) (17,693)
Total stockholders' equity 59,466 55,310
TOTAL $156,172 $120,527
<FN>
<F1>
See notes to consolidated financial statements
</FN>
</TABLE>
F-2
<PAGE>
<TABLE>
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
<CAPTION>
Years Ended
February February February
28, 1997 29, 1996 28, 1995
<S> <C> <C> <C>
REVENUES:
Service revenues $479,029 $408,873 $324,013
Sales of franchises and fees, net 1,326 1,287 1,098
Total revenues 480,355 410,160 325,111
COSTS AND EXPENSES:
Operating costs 301,508 256,719 201,365
General and administrative expenses 167,550 143,704 111,462
Provision for doubtful accounts 2,740 2,678 2,431
Amortization of intangible assets 2,623 1,823 1,237
Interest expense 1,601 948 1,237
Interest income (896) (976) (796)
Other (income) expense, net (1,487) 1,791 (22)
Total costs and expenses 473,639 406,687 316,914
INCOME BEFORE INCOME TAXES 6,716 3,473 8,197
PROVISION FOR INCOME TAXES 2,955 1,459 3,462
NET INCOME $ 3,761 $ 2,014 $ 4,735
EARNINGS PER COMMON SHARE:
Primary earnings per share $ .16 $ .08 $ .20
Fully diluted earnings per share $ .16 $ .08 $ .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>
Preferred Additional
Common Stock Stock Paid-In Accumulated
Shares Amount Class A Capital Deficit Total
<S> <C> <C> <C> <C> <C> <C>
Balances, March 1, 1994 20,919,219 $ 210 $ 1 $ 65,207 $(24,442) $ 40,976
Additional common stock in
connection with a 1987 acquisition 600 - -
Common stock issued -
exercise of stock options 35,450 - 95 95
Exercise of common stock warrants 250,000 2 500 502
Common stock issued-acquisitions 2,570,388 26 8,456 8,482
Common stock issued-employee
stock purchase plan 139,166 1 396 397
Purchase and retirement of common stock (977,774) (10) (2,826) (2,836)
Net Income 4,735 4,735
Balances, February 28, 1995 22,937,049 229 1 71,828 (19,707) 52,351
Additional common stock in
connection with a 1987 acquisition 1,360 - -
Common stock issued-exercise of
stock options, net of 683,054 shares
used to pay for shares and
withholding taxes, net of related
tax benefits of $772 437,681 4 405 409
Exercise of common stock warrants 398,016 4 1,126 1,130
Common stock issued-employee
stock purchase plan 149,214 2 429 431
Purchase and retirement of common stock (386,000) (4) (1,021) (1,025)
Net Income 2,014 2,014
Balances, February 29, 1996 23,537,320 235 1 72,767 (17,693) 55,310
Additional common stock in
connection with a 1987 acquisition 4,870 - - -
Common stock issued - exercise of
stock options, net of 15,232 shares
used to pay for shares 23,768 0 29 29
Exercise of common stock warrants 160,680 2 193 195
Common stock issued-employee
stock purchase plan 234,693 2 579 581
Purchase and retirement of common stock (155,000) (1) (409) (410)
Net Income 3,761 3,761
Balances, February 28, 1997 23,806,331 $ 238 $ 1 $ 73,159 $(13,932) $ 59,466
<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
28, 1997 29, 1996 28, 1995
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 3,761 $ 2,014 $ 4,735
Adjustments to reconcile net income to
net cash provided by (used in) operations:
Depreciation and amortization of fixed assets 2,757 2,120 1,378
Amortization of intangibles and other assets 2,623 1,823 1,237
Increase (decrease) in other long term liabilities (758) 477 296
Allowance for doubtful accounts 600 450 350
Deferred income taxes 548 (1,013) 513
Gain on sale of business division (472) - -
Change in operating assets and liabilities:
Accounts receivable (23,443) 3,993 (2,452)
Prepaid expenses and other current assets (1,193) (1,447) (212)
Accounts payable and accrued expenses (1,610) 12,750 6,576
Income taxes payable 62 (1,098) (398)
Other assets (3,654) (10) (595)
Net cash provided by (used in)
operating activities (20,779) 20,059 11,428
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (8,202) (7,981) (3,956)
Additions to fixed assets (2,334) (1,127) (2,101)
Proceeds from disposal of fixed assets - 14 3
Net cash used in investing activities (10,536) (9,094) (6,054)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Employee Stock Purchase Plan 581 431 397
Exercise of stock options 29 409 95
Exercise of warrants 195 1,130 502
Purchase and retirement of common stock (410) (1,025) (2,836)
Borrowings under revolving line of credit 21,565 (6,461) (5,094)
Proceeds from other note payable 5,727 - -
Payment of notes payable and other
long-term liabilities (3,076) (1,247) (1,260)
Net cash provided by (used in) financing
activities 24,611 (6,763) (8,196)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (6,704) 4,202 (2,822)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,710 4,508 7,330
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,006 $ 8,710 $ 4,508
SUPPLEMENTAL DATA:
Cash paid for:
Interest $ 1,081 $ 806 $ 962
Income taxes, net $ 1,867 $ 3,485 $ 2,846
Fixed assets purchased through
capital lease agreements $ 4,770 $ 2,425 $ 1,330
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 28, 1997 ("Fiscal 1997"), FEBRUARY 29, 1996
("Fiscal 1996") AND FEBRUARY 28, 1995 ("Fiscal 1995")
(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 1997 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 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.
F-6
For fiscal 1997, 1996 and 1995, total franchisee
distributions of approximately $88.6 million, $75.4 million and $56.9
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 equipment, furniture
and fixtures, and leasehold improvements, are stated at cost and
depreciated over the estimated useful lives of the assets using the
straight-line method. The estimated useful lives of the related assets
are generally five to seven 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 28, 1997 and February 29,
1996, was $9,126 and $7,282, respectively. During fiscal 1997 and
fiscal 1996, the Company wrote off $659 and $1,014 of fully amortized
intangible assets, respectively.
Impairment Accounting
In fiscal 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
This Statement requires that certain assets be reviewed for impairment
and, if impaired, remeasured at fair value, whenever events or changes
in circumstances indicate that the carrying amount of the asset may
not be recoverable. The adoption of SFAS No. 121 at February 28, 1997
and its application during fiscal 1997, had no material impact on the
Company's financial position or results of operations.
F-7
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).
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. 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 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 28, 1997 and February 29, 1996 amounted to
$1,953 and $1,560, net of deferred income reflected as a valuation
reserve for financial reporting purposes of $5,600 and $5,735,
respectively. The net balances of these notes at February 28, 1997
and February 29, 1996 include $302 and $191 in Prepaid Expenses and
Other Current Assets and $1,651 and $1,369 in Other Assets,
respectively. During fiscal 1997, 1996 and 1995, $444, $526 and $381,
respectively, of notes receivable previously not recognized into
income were collected and included in revenues.
F-8
Sales of franchises and fees, net include $827, $761 and
$480 of initial franchise fees for fiscal 1997, 1996 and 1995,
respectively. The initial franchise fees received in fiscal 1997,
1996 and 1995 include $488, $507 and $452 for health care franchises
and $339, $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 in fiscal
1996. There was no expense incurred in fiscal 1997 and 1995 related
to reserves and write-offs of notes receivable.
Interest income on franchise notes receivable is included
in other income.
On September 6, 1996, in connection with the acquisition of
a supplemental staffing business (see Note 3), a corporation acquired
the rights to operate this business as a franchise and paid a fee of
$75 to the Company. A majority of the stock of this corporation is
owned by two family members of one of the Company's executive
officers.
In April 1992, one of the franchisees was acquired by a
corporation owned by a family member of one of the Company's executive
officers. The purchase price for the franchise included the
assumption of a note payable to the Company of $845 of which $729
remains outstanding at February 28, 1997. The note bears interest at
the prevailing prime lending rate and matures in 2009.
Two of the Company's executive officers own a portion of
three franchises. One of these officers owns a portion of a franchise
for which a note payable was issued to the company of $300 of which
$244 remains outstanding at February 28, 1997. The other Company
officer owns a portion of two franchises for which liabilities to the
Company of $36 and $46, respectively, remain outstanding at February
28, 1997.
3. ACQUISITIONS
On October 7, 1996, the Company acquired the assets of
Assured Home Health and Hospice, Inc., a regional home health care
provider consisting of three locations in the state of Washington.
This transaction was accounted for as a purchase for which aggregate
consideration of approximately $500 included cash paid of
approximately $100 and net obligations assumed of approximately $400.
On September 6, 1996, the Company acquired the assets of
All Care Nursing Service, Inc., a provider of supplemental staffing
in the metropolitan New York area. The transaction was accounted for
as a purchase for aggregate consideration of approximately $2.5
million, including cash paid of $1.3 million and a note payable of
$1.2 million.
F-9
On June 15, 1996, the Company acquired the assets of
Central California Premier Health Services, Inc., a regional home
health care provider consisting of five locations in northern
California, in a transaction accounted for as a purchase. Aggregate
consideration included cash paid of $1.1 million and a note payable
of $600.
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 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 franchise rights 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 subsequently operated these
locations as a franchise of the Company. This transaction 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 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.
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 28, 1997, if the fiscal 1997 acquisitions had
occurred on March 1, 1996, would have approximated $493 million, $4.6
million and $.19, respectively. Revenues, net income and earnings per
share on an unaudited pro forma basis for the year ended February 29,
F-10
1996, if the fiscal 1997 and 1996 acquisitions had occurred on March
1, 1995, would have approximated $448 million, $2.6 million and $.10,
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.
Additionally, the Company acquired certain assets,
consisting primarily of licenses, permits, Certificates of Need and
provider numbers required for the operation of each location and
employee and customer lists, of other home health care providers in
fiscal 1997, 1996 and 1995 for aggregate consideration of
approximately $7,659, $4,693 and $3,147, respectively. The fiscal
1997 consideration included cash paid, notes payable and liabilities
assumed of $5,755, $1,313 and $591, respectively. The fiscal 1996
consideration included cash paid of $2,933 and $1,760 in notes payable
(see Note 7). The fiscal 1995 consideration was paid in cash. The
fiscal 1997, 1996 and 1995 acquisitions consisted of sixteen, eleven
and seven separate entities, respectively, and were accounted for as
purchase transactions.
In connection with the fiscal 1997 and 1996 acquisitions,
assets acquired and consideration paid was as follows:
1997 1996
Fair value of assets acquired $12,310 $15,440
Net cash paid for acquired
assets and stock (8,202) (7,981)
Liabilities assumed and notes
payable issued for acquisitions $ 4,108 $ 7,459
4. FIXED ASSETS
Fixed assets consist of the following:
February February
28, 1997 29, 1996
Equipment under capital leases
(see Note 7) $ 9,972 $ 5,341
Office equipment, furniture
and fixtures 7,053 5,988
Leasehold improvements 1,000 752
Land and buildings 181 106
Total, at cost 18,206 12,187
Less accumulated depreciation
and amortization 6,124 4,751
Fixed assets, net $12,082 $ 7,436
During fiscal 1997 and fiscal 1996, the Company wrote off fully
depreciated fixed assets of approximately $1.4 million and $1.7
million, respectively.
F-11
5. ACCRUED EXPENSES
Accrued expenses include $7,424 and $7,185 at February 28, 1997
and February 29, 1996, respectively, of accrued franchise
distributions. Also included in accrued expenses at February 28, 1997
and February 29, 1996 was $7,372 and $7,036, 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
28, 1997 29, 1996
Accrued payroll $ 8,142 $11,781
Accrued insurance 5,447 10,569
Accrued payroll taxes 5,002 3,131
Other 3,151 2,288
Total $21,742 $27,769
7. LONG-TERM LIABILITIES
Long-term liabilities consist of the following:
February February
28, 1997 29, 1996
Borrowings under a secured revolving
line of credit(a) $21,565 $ -
Obligations under capital leases(b) 6,768 3,755
Rent escalation liability(c) 1,049 1,086
Notes payable and other liabilities
related to acquisitions(d) 7,177 5,428
Other note payable (e) 5,438 -
Other 1,231 1,698
Total 43,228 11,967
Less current portion 5,230 2,356
Long-term liabilities(f) $37,998 $ 9,611
(a) The Company has a secured credit facility which expires on July
31, 2000. The credit facility consists of a revolving line of credit,
an acquisition line of credit and a standby letter of credit facility,
under which the Company can borrow up to an aggregate amount of $50
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 book net worth,
a minimum ratio of net income before depreciation and amortization to
the sum of payments made for long term debt, unfunded capital
expenditures, stock repurchases and permitted acquisitions, and a
F-12
maximum ratio of senior debt to book net worth, (ii) limit the amount
of unfunded capital expenditures, and (iii) prohibit the declaration
or payment of cash dividends.
The amounts available for borrowing based on collateral under the
credit facility were $16.4 million at February 28, 1997 and $24.8
million at February 29, 1996. The maximum amounts borrowed under the
credit facility for fiscal 1997 and 1996, were $26.4 million and $10
million and the average interest rates were 7.96% and 8.98%,
respectively.
The credit facility bears interest at the prevailing prime
lending rate and, at the Company's option, borrowings may bear
interest based upon the London Interbank Offered Rate (LIBOR) plus
1.50% to 2.25%. At February 28, 1997, $20 million of borrowings were
bearing interest at the LIBOR option, which was 7.50%, and borrowings
in excess thereof were bearing interest at the prime rate which was
8.25%. 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 $85.
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 and any
outstanding letters of credit. The acquisition line of credit
provides for borrowings up to $15 million without collateral to
finance acquisitions, provided that the sum of all borrowings do not
exceed $50 million. Amounts borrowed under the acquisition line of
credit are subject to the Bank's approval and must be repaid over
twelve to forty-eight months as determined by the Bank, at .75% over
prime or, at the Company's option, at LIBOR plus 2.75%. There have
been no borrowings under the acquisition line of credit.
(b) At February 28, 1997, 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
$7.1 million and $3.8 million at February 28, 1997 and February 29,
1996, 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 28, 1997, the Company had a balance of notes payable
and other liabilities related to acquisitions made during fiscal 1997
of $2.436 million and $155, respectively. The notes payable bear
interest at 4.0% to 8.25% and have maturity dates through April 2006.
Additionally, in connection with acquisitions made in prior fiscal
years, the Company had a balance of notes payable and other
liabilities of $4.018 million and $568, respectively. These notes
payable bear interest at 7.5% to 8.0% and mature at dates through
September 2010.
F-13
(e) The Company has a secured term loan which bears interest at 6.69%
and requires monthly payments of $176 through December 1999.
(f) Long-term liabilities maturing subsequent to February 28, 1997
are as follows:
Obligations
Under
Capital Other
Years Ending February Leases Debt Total
1998 $2,241 $ 2,989 $ 5,230
1999 2,080 2,927 5,007
2000 1,665 2,293 3,958
2001 768 22,124 22,892
2002 12 702 714
Thereafter 2 5,425 5,427
Total $6,768 $36,460 $43,228
8. INCOME TAXES
The provision for income taxes consists of the following:
Years Ended
February February February
28, 1997 29, 1996 28, 1995
Current:
Federal $ 1,709 $1,829 $2,208
State 558 643 741
Deferred 688 (1,013) 513
Total $ 2,955 $1,459 $3,462
The deferred tax assets (liabilities) at February 28, 1997
and February 29, 1996 are comprised of the following:
February February
28, 1997 29, 1996
Current:
Allowance for doubtful
accounts receivable $ 903 $ 647
Nondeductible accruals 951 1,756
Current 1,854 2,403
Non-Current:
Revenue recognition 464 407
Accelerated depreciation (516) (370)
Other assets (liabilities) (195) 65
Non-current (247) 102
Total $1,607 $2,505
The non-current deferred tax assets (liabilities) are included in
Other Assets and Long-Term Liabilities on the accompanying balance
sheets.
F-14
The following is a reconciliation of the effective income
tax rate to the Federal statutory rate:
Years Ended
February February February
28, 1997 29, 1996 28, 1995
Federal statutory rate 34.0% 34.0% 34.0%
State and local income taxes,
net of Federal income
tax benefit 7.6 8.7 6.9
Tax credits (0.4) (3.9) (0.1)
Goodwill amortization 4.6 8.9 2.9
Reversal of prior year
accrual (2.3) (7.4) -
Other 0.5 1.7 (1.5)
Effective rate 44.0% 42.0% 42.2%
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
1998 $ 4,150
1999 3,341
2000 2,666
2001 2,015
2002 1,444
Thereafter 2,668
Total $16,284
Certain leases require additional payments based upon property
tax and maintenance expense escalations.
Aggregate rental expense for fiscal 1997, 1996 and 1995
approximated $3,967, $3,409 and $2,850, respectively.
The Company has entered into employment or consulting
agreements with several officers and other individuals which
require minimum aggregate payments of approximately $2,575, $2,181,
$1,517, $1,306 and $1,330, 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.
F-15
The Company is a guarantor of a mortgage in the amount of $518
as of February 28, 1997 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, 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 $175 at February 28, 1997
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 $1.5 million.
10. 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.
F-16
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
The Company has adopted the disclosure provisions of the
Statement of Financial Accounting Standards No. 123, Accounting for
Stock-Based Compensation ("SFAS 123"). Accordingly, no compensation
expense has been recognized for the stock option plans. Had the
Company recorded compensation expense for the stock options based
on the fair value at the grant date for awards in fiscal years
ended 1997 and 1996 consistent with the provisions of SFAS 123, the
Company's net income and net income per share would have been
reduced to the following pro forma amounts:
February February
28, 1997 29, 1996
Net income-as reported $ 3,761 $ 2,014
Net income-pro forma 3,708 2,008
Primary earnings per share-as reported .16 .08
Primary earnings per share-pro forma .15 .08
Fully diluted earnings per share-as reported .16 .08
Fully diluted earnings per share-pro forma .15 .08
Because the SFAS 123 method of accounting has not been applied
to options granted prior to March 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected
in future years.
The fair value of each option grant is estimated on the date
of grant using the Black Scholes option pricing model with the
following weighted-average assumptions used for grants in fiscal
years 1997 and 1996: expected volatility of 48%; risk-free interest
rate averaging 7.1%; and expected lives of 10 years.
During the year ended February 28, 1994 ("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.
F-17
A total of 894,000 stock options were granted under the 1993
Stock Option Plan, at prices ranging from $2.63 to $3.87, of which
712,000 remain outstanding at February 28, 1997. A summary of
activity under the 1993 Stock Option Plan, the 1986 NQSO Plan and
the 1983 ISO Plan is as follows:
<TABLE>
<CAPTION>
Options
for Shares Price per Share
<S> <C> <C>
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
Granted 222,500 $2.50 to $3.19
Exercised (39,000) $2.27
Terminated (213,500) $2.19 to $6.38
Options outstanding at
February 28, 1997 2,473,030 $1.63 to $6.13
</TABLE>
Included in the outstanding options are 808,633 ISO's and
1,426,857 NQSO's which were exercisable at February 28, 1997. The
remaining options to purchase 237,540 shares become exercisable at
various dates through March 2000.
The following tables summarize information about stock options
outstanding at February 28, 1997:
Options Outstanding
Weighted
Average Weighted
Range of Remaining Average
Exercise Number Contractual Life Exercise
Prices Outstanding (In Years) Price
$1.63 to $2.50 1,414,530 3.3 $1.97
$2.51 to $3.50 617,000 3.9 $2.99
$3.51 to $6.13 441,500 6.7 $3.77
2,473,030 4.0 $2.56
F-18
Options Exercisable
Weighted
Average Weighted
Range of Remaining Average
Exercise Number Contractual Life Exercise
Prices Exercisable (In Years) Price
$1.63 to $2.50 1,308,322 3.3 $1.94
$2.51 to $3.50 490,668 2.8 $3.00
$3.51 to $6.13 436,500 6.7 $3.77
2,235,490 3.8 $2.53
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
share 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. Since inception of this
plan a total of 523,073 shares were issued.
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, 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,
warrants to purchase 200,000 units at an exercise price of $9.90
per unit. Each unit consisted of four shares of common stock.
During fiscal 1997, warrants to purchase 2,670 units were exercised
and the Company issued 10,680 shares and received proceeds of $26.
The remaining underwriter warrants expired January 31, 1997.
F-19
During the year ended February 29, 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. During fiscal 1997, warrants to
purchase 150,000 shares were exercised and the company received
proceeds of $168. The warrants to purchase 250,000 shares expired
February 13, 1997.
In connection with the establishment of the Company's
revolving line of credit in February 1992, 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.
Preferred Stock, Class A
Each issued and outstanding share of 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 Preferred
Stock, Class A do not have any voting rights except on matters
concerning the substantive rights, privileges and preferences of
the Preferred Stock, Class A and on issues related to certain
business combinations.
Common Shares Reserved
The following represents common shares reserved and available for
issuance, at February 28, 1997, 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 2,573,030 244,000
1993 Employee Stock Purchase Plan - 476,927
Other 45,349 -
Total 4,848,379 1,890,927
11. 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, 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 1997 and 1995 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.
F-20
The following table presents information necessary to calculate
earnings per share calculations for fiscal 1997, 1996 and 1995 (in
thousands):
<TABLE>
<CAPTION>
Years Ended
February February February
28, 1997 29, 1996 28, 1995
<S> <C> <C> <C>
Primary
Shares outstanding:
Weighted average outstanding 23,668 23,598 22,389
Share equivalents 923 1,742 1,684
Adjusted outstanding 24,591 25,340 24,073
Net income $ 3,761 $ 2,014 $ 4,735
Add interest savings, net
of tax provision 55 - -
Adjusted net income applicable
to common stockholders $ 3,816 $ 2,014 $ 4,735
Primary earnings per share $ .16 $ .08 $ .20
Fully Diluted
Shares outstanding:
Weighted average outstanding 23,668 23,598 22,389
Share equivalents 980 1,934 1,987
Adjusted outstanding 24,648 25,532 24,376
Net income $ 3,761 $ 2,014 $ 4,735
Add interest savings, net
of tax provision 64 - 25
Adjusted net income applicable
to common stockholders $ 3,825 $ 2,014 $ 4,760
Fully diluted earnings per share $ .16 $ .08 $ .20
</TABLE>
12. UNAUDITED QUARTERLY FINANCIAL DATA
Summarized unaudited quarterly financial data for fiscal 1997
and 1996 are as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C>
Fiscal 1997
Revenues $113,421 $114,824 $123,307 $128,803
Gross profit $ 42,803 $ 43,705 $ 45,754 $ 46,585
Net Income $ 884 $ 979 $ 989 $ 909
Income per common share:
Primary $ .04 $ .04 $ .04 $ .04
Fully diluted $ .04 $ .04 $ .04 $ .04
Weighted average number
of common shares:
Primary 24,610 24,827 24,734 24,195
Fully diluted 24,917 24,827 24,785 24,451
F-21
First Second Third Fourth
Quarter Quarter Quarter Quarter
Fiscal 1996
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
</TABLE>
During the fourth quarter ended February 28, 1997, the Company
recorded a gain of approximately $834 from the sale of a closed
division.
The Company reduced its revenues by $3 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 divisions, $165 for settlement of litigation and $358 of
costs associated with the Company's recapitalization (see Note 10).
13. SUBSEQUENT EVENT
On March 18, 1997, the Company sold its stock in American
HomeCare Management Corp., which represented 90% of the issued and
outstanding capital stock. Total consideration consisted of
approximately $2.1 million including cash received of $100 and a
promissory note of approximately $2 million, which approximated the
Company's carrying value of its investment.
F-22
SCHEDULE II
<TABLE>
<CAPTION>
STAFF BUILDERS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
Years Ended
February February February
28, 1997 29, 1996 28, 1995
<S> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Balance, beginning of period $ 2,200 $ 1,750 $ 1,400
Charged to costs and expenses 2,740 2,678 2,431
Deductions (2,140) (2,228) (2,081)
Balance, end of period $ 2,800 $ 2,200 $ 1,750
ACCUMULATED AMORTIZATION OF
INTANGIBLE ASSETS:
Balance, beginning of period $ 7,282 $ 6,532 $ 5,342
Charged to costs and expenses 2,503 1,764 1,190
Deductions ( 659) (1,014) -
Balance, end of period $ 9,126 $ 7,282 $ 6,532
DEFERRED INCOME (NETTED AGAINST
FRANCHISE NOTES RECEIVABLE):
Balance, beginning of period $ 5,735 $ 5,050 $ 5,761
Charged to notes receivable 341 1,315 481
Deductions ( 476) ( 630) (1,192)
Balance, end of period $ 5,600 $ 5,735 $ 5,050
</TABLE>
F-23<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 28, 1997.
(C) Exhibits
-22-
<PAGE>
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. (E)
3.10 Plan Of Recapitalization dated as of May 12,
1995. (E)
3.11 Amended and Restated By-Laws of the Company. (A)
4.1 Specimen Class A Common Stock Certificate. (F)
4.2 Specimen Class B Common Stock Certificate. (G)
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).
- ---------------------
See Notes to Exhibits
Exhibit No. Description
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. (H)
10.8 1986 Non-Qualified Stock Option Plan of the
Company. (I)
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. (J)
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. (K)
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.)
- ---------------------
See Notes to Exhibits
Exhibit No. Description
10.17 Stock Option Agreement, dated May 26, 1992, under
the Company's 1983 Incentive Stock Option Plan
between the Company and Stephen Savitsky. (A)
10.18 Stock Option Agreement, dated April 22, 1993,
under the Company's 1983 Incentive Stock Option
Plan between the Company and Stephen Savitsky. (A)
10.19 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)
10.20 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)
10.21 Stock Option Agreement, dated February 3, 1994,
under the Company's 1993 Stock Option Plan between
the Company and Stephen Savitsky. (A)
10.22 Stock Option Agreement, dated October 1, 1994,
under the Company's 1994 Performance-Based Stock
Option Plan between the Company and Stephen
Savitsky. (A)
10.23 Stock Option Agreement, dated May 26, 1992, under
the Company's 1983 Incentive Stock Option Plan
between the Company and David Savitsky. (A)
10.24 Stock Option Agreement, dated April 22, 1993,
under the Company's 1983 Incentive Stock Option
Plan between the Company and David Savitsky. (A)
10.25 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)
10.26 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)
10.27 Stock Option Agreement, dated February 3, 1994,
under the Company's 1993 Stock Option Plan between
the Company and David Savitsky. (A)
- ---------------------
See Notes to Exhibits
Exhibit No. Description
10.28 Stock Option Agreement, dated October 1, 1994,
under the Company's 1994 Performance-Based Stock
Option Plan between the Company and David
Savitsky. (A)
10.29 Stock Option Agreement, dated May 26, 1992, under
the Company's 1983 Incentive Stock Option Plan
between the Company and Gary Tighe. (A)
10.30 Stock Option Agreement, dated April 22, 1993,
under the Company's 1983 Incentive Stock Option
Plan between the Company and Gary Tighe. (A)
10.31 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)
10.32 Stock Option Agreement, dated October 1, 1994,
under the Company's 1994 Performance-Based Stock
Option Plan between the Company and Gary Tighe.(A)
10.33 Stock Option Agreement, dated June 17, 1991, under
the Company's 1983 Incentive Stock Option Plan
between the Company and Edward Teixeira. (A)
10.34 Stock Option Agreement, dated May 26, 1992, under
the Company's 1983 Incentive Stock Option Plan
between the Company and Edward Teixeira. (A)
10.35 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)
10.36 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)
10.37 Stock Option Agreement, dated as of September 25,
1996, under the Company's 1993 Stock Option Plan
between the Company and Edward Teixeira.
10.38 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
Exhibit No. Description
10.39 Stock Option Agreement, dated April 22, 1993,
under the Company's 1983 Incentive Stock Option
Plan between the Company and Sharon Hamilton. (A)
10.40 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)
10.41 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)
10.42 Stock Option Agreement, dated as of March 1, 1996,
under the Company's 1993 Stock Option Plan,
between the Company and Larry Campbell.
10.43 Employment Agreement, dated as of June 1, 1987,
between the Company and Stephen Savitsky. (A)
10.44 Amendment, dated as of October 31, 1991, to the
Employment Agreement between the Company and
Stephen Savitsky. (A)
10.45 Amendment, dated as of December 7, 1992, to the
Employment Agreement between the Company and
Stephen Savitsky. (A)
10.46 Employment Agreement, dated as of June 1, 1987,
between the Company and David Savitsky. (A)
10.47 Amendment, dated as of October 31, 1991, to the
Employment Agreement between the Company and David
Savitsky. (A)
10.48 Amendment, dated as of January 3, 1992, to the
Employment Agreement between the Company and David
Savitsky. (A)
10.49 Amendment, dated as of December 7, 1992, to the
Employment Agreement between the Company and David
Savitsky. (A)
10.50 Employment Agreement, dated as of May 15, 1993,
between the Company and Gary Tighe. (L)
- ---------------------
See Notes to Exhibits
Exhibit No. Description
10.51 Employment Agreement, dated as of December 1,
1996, between Staff Builders, Inc. (NY) and Edward
Teixeira.
10.52 Employment Agreement, dated as of March 1, 1996,
between Staff Builders, Inc. (NY) and Larry
Campbell. (M)
10.53 Agreement and Release, dated as of February 28,
1997, between Staff Builders, Inc. (NY) and Larry
Campbell.
10.54 Employment Agreement, dated as of May 1, 1993,
between Staff Builders, Inc. (NY) and Sharon
Hamilton. (L)
10.55 Amended and Restated Loan and Security Agreement,
dated as of January 8, 1997, between the Company,
its subsidiaries and Mellon Bank, N.A.
10.56 Master Lease Agreement dated as of December 4,
1996, between the Company and Chase Equipment
Leasing, Inc.
10.57 Premium Finance Agreement, Disclosure Statement
and Security Agreement dated as of December 26,
1996, between the Company and A.I. Credit Corp.
10.58 Promissory Note and Mortgage, dated August 23,
1984, of U.S. Ethicare Corporation to Niasher
Realty, Inc. (I)
10.59 Agreement of Lease, dated as of October 1, 1994,
between Triad III Associates and Staff Builders,
Inc. (NY). (A)
10.60 Supplemental Agreement, dated as of January 21,
1994, between General Electric Capital
Corporation, Triad III Associates and Staff
Builders, Inc. (NY) (A)
10.61 Agreement of Lease, dated as of June 19, 1995,
between Triad III Associates and Staff Builders,
Inc. (NY). (E)
10.62 Agreement of Lease, dated as of February 12, 1996,
between Triad III Associates and Staff Builders,
Inc. (NY). (E)
- ---------------------
See Notes to Exhibits
Exhibit No. Description
10.63 License Agreement, dated as of April 23, 1996,
between Matterhorn One, Ltd. and Staff Builders,
Inc. (NY).
10.64 License Agreement, dated as of January 3, 1997,
between Matterhorn USA, Inc. and Staff Builders,
Inc. (NY)
10.65 License Agreement, dated as of January 16, 1997,
between Matterhorn USA, Inc. and Staff Builders,
Inc. (NY).
10.66 Lease Agreement, dated as of November 4, 1996,
between Airport Landing Center, L.L.C. and Staff
Builders Home Health Care, Inc.
10.67 Asset Purchase Agreement dated as of June 22,
1993, between Albert Gallatin Home Care, Inc and
Albert Gallatin Visiting Nurse Association, Inc.
(C)
10.68 Stock Purchase Agreement, dated as of June 22,
1993, between Staff Builders, Inc. (NY) and Albert
Gallatin Planning and Development Corporation. (C)
10.69 Stock Purchase Agreement, dated as of August 30,
1995, between Staff Builders Services, Inc.,
MedVisit, Inc. and Roger Jack Pleasant. (E)
10.70 Asset Purchase and Sale Agreement, dated as of
September 1, 1995, between Staff Builders
Services, Inc. and Accredicare, Inc. (E)
10.71 Asset Purchase and Sale Agreement, dated as of
September 29, 1995, between Staff Builders
Services, Inc. and Carestar, Inc. (E)
10.72 Management and Stock Option Agreement, dated as
of February 29, 1996, between Staff Builders, Inc.
and Time Insurance Company.
10.73 Stock Purchase Agreement and Receipt, dated as of
February 28, 1997, between the Company and Time
Insurance Company.
- ---------------------
See Notes to Exhibits
Exhibit No. Description
10.74 Asset Purchase and Sale Agreement, dated as of
September 6, 1996, by and among ATC Healthcare
Services, Inc. and Staff Builders, Inc. and
William Halperin and All Care Nursing Service,
Inc. (N)
10.75 Stock Redemption Agreement, dated as of March 18,
1997, between the Company and American HomeCare
Management Corp.
10.76 Indemnification Agreement, dated as of September
1, 1987, between the Company and Stephen
Savitsky. (A)
10.77 Indemnification Agreement, dated as of September
1, 1987, between the Company and David
Savitsky. (A)
10.78 Indemnification Agreement, dated as of September
1, 1987, between the Company and Bernard J.
Firestone. (A)
10.79 Indemnification Agreement, dated as of September
1, 1987, between the Company and Jonathan
Halpert. (A)
10.80 Indemnification Agreement, dated as of May 2,
1995, between the Company and Donald Meyers.
10.81 Indemnification Agreement, dated as of February
10, 1992, between the Company and Gary Tighe. (A)
10.82 Indemnification Agreement, dated as of February
10, 1992, between the Company and Sharon
Hamilton. (A)
10.83 Indemnification Agreement, dated as of May 2,
1995, between the Company and Edward Teixeira. (A)
10.84 Form of Home Health Care Services Franchise
Agreement. (B)
10.85 Form of Medical Staffing Services Franchise
Agreement (E)
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 exhibit
booklet to its Form 10-K for the fiscal year ended
February 28, 1996 (File No. 0-11380), filed with the
Commission on May 13, 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 Form 8-A
filed with the Commission on October 24, 1995.
(H) 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.
(I) Incorporated by reference to the Company's Registration
Statement on Form S-4, as amended (File No. 33-9261),
dated April 9, 1987.
(J) 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.
(K) 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.
(L) 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.
(M) Incorporated by reference to the Company's Form 10-Q
for the quarterly period ended May 31, 1996 (File No.
0-11380), filed with the Commission on July 15, 1996.
(N) Incorporated by reference to the Company's Form 10-Q
for the quarterly period ended November 30, 1996 (File
No. 0-11380), filed with the Commission on January 14,
1997.
<PAGE>
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 27, 1997
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 27, 1997
Stephen Savitsky President and Chief
Executive Officer
(Principal Executive
Officer) and Director
/S/ DAVID SAVITSKY Executive Vice President, May 27, 1997
David Savitsky Chief Operating Officer,
Secretary, Treasurer
and Director
/S/ GARY TIGHE Senior Vice President, May 27, 1997
Gary Tighe Finance and Chief
Financial Officer
(Principal Financial
and Accounting Officer)
* Director May 27, 1997
Bernard J. Firestone,
Ph.D.
* Director May 27, 1997
Jonathan Halpert,
Ph.D.
* Director May 27, 1997
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-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 2006
<SECURITIES> 0
<RECEIVABLES> 79903
<ALLOWANCES> 2800
<INVENTORY> 0
<CURRENT-ASSETS> 85953
<PP&E> 18206
<DEPRECIATION> 6124
<TOTAL-ASSETS> 156172
<CURRENT-LIABILITIES> 58708
<BONDS> 0
0
1
<COMMON> 238
<OTHER-SE> 59227
<TOTAL-LIABILITY-AND-EQUITY> 156172
<SALES> 0
<TOTAL-REVENUES> 480355
<CGS> 0
<TOTAL-COSTS> 301508
<OTHER-EXPENSES> 240
<LOSS-PROVISION> 2740
<INTEREST-EXPENSE> 1601
<INCOME-PRETAX> 6716
<INCOME-TAX> 2955
<INCOME-CONTINUING> 3761
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3761
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
EXHIBIT 10.37
<PAGE>
STAFF BUILDERS, INC.
1993 STOCK OPTION PLAN
September 25, 1996
Edward Teixeira
Re: Grant of Nonqualifying Stock Options
to Purchase Shares of the Class A Common
Stock of Staff Builders, Inc.
Dear Ed:
You and Staff Builders, Inc., a Delaware corporation (the
"Corporation"), hereby agree as follows:
1. Reference. This is the Stock Option Agreement
referred to in Section 7(k) of the Corporation's 1993 Stock Option
Plan (the "Plan"). The stock option this Agreement grants is a
Nonqualifying Stock Option, as set forth in Section 2 below. This
Agreement incorporates all terms, conditions and provisions of the
Plan.
2. Stock Option. The Corporation hereby grants to the
Optionee the option (the "Stock Option") to purchase that number of
shares of Class A Common Stock of the Corporation, par value $.01
per share, set forth on Schedule A. The Corporation will issue
these shares as fully paid and nonassessable shares upon the
Optionee's exercise of the Stock Option. The Optionee may exercise
the Stock Option in accordance with this Agreement any time prior
to the tenth anniversary of the date of grant of the Stock Option
evidenced by this Agreement, unless earlier terminated according to
the terms of this Agreement. Schedule A sets forth the date or
dates after which the Optionee may exercise all or part of the
Stock Option, subject to the provisions of the Plan.
3. Exercise of Stock Option. The Optionee may exercise
the Stock Option in whole or in part by written notice delivered to
the Corporation in the form of Schedule B to this Agreement. If
exercisable Stock Options as to 100 or more shares are held by an
Optionee, then such Stock Options may not be exercised for fewer
than 100 shares at any time, and if exercisable Stock Options for
fewer than 100 shares are held by an Optionee, then Stock Options
for all such shares must be exercised at one time. The Optionee
shall enclose with each such notice payment by cash or by valid
check in an amount equal to the number of shares as to which his
exercise is made, multiplied by the option price therefor;
provided, however, that if the Committee appointed by the Board of
Directors pursuant to Section 2 of the Plan shall, in its sole
discretion, approve, payment upon exercise of the Stock Option in
whole or in part may be made by surrender to the Corporation in due
form for transfer of shares of Class A Common Stock of the
Corporation. In the case of payment in the Corporation's Class A
Common Stock, such stock shall be valued at its Fair Market Value
(as defined in Section 7(b) of the Plan) as of the date of
surrender of the stock.
4. Purchase Price. The option price per share shall
be that set forth on Schedule A.
5. No Rights in Option Stock. Optionee shall have no
rights as a stockholder in respect of any shares subject to the
Stock Option unless and until Optionee has exercised the Stock
Option in complete accordance with the terms hereof, and shall have
no rights with respect to shares not expressly conferred by this
Agreement.
6. Shares Reserved. The Corporation shall at all times
during the term of this Agreement reserve and keep available such
number of shares of Class A Common Stock as will be sufficient to
satisfy the requirements of this Agreement, and shall pay all
original issue taxes on the exercise of the Stock Option, and all
other fees and expenses necessarily incurred by the Corporation in
connection therewith.
7. Nonassignability. The Stock Option and this
Agreement shall not be encumbered, disposed of, assigned or
transferred in whole or part, and, except as described in the Plan,
may only be exercised by the Optionee unless the prior written
consent of the Committee has been obtained. All shares purchased
pursuant to this Agreement shall be purchased for investment by the
Optionee.
8. Effect Upon Employment. Nothing in this Agreement
shall confer on the Optionee any right to continue in the
employment of the Corporation or shall interfere in any way with
the right of the Corporation to terminate Optionee's employment at
any time.
9. Successors. This agreement shall be binding upon
any successor of the Corporation.
In order to indicate your acceptance of the Stock Option
on the above terms and conditions, kindly sign the enclosed copy of
this letter agreement and return it to the Corporation.
STAFF BUILDERS, INC.
By:/s/Stephen Savitsky
Accepted and Agreed to:
/s/Edward Teixeira
Edward Teixeira
Schedule A
Nonqualifying Stock Options
Date of Grant: September 25, 1996
Name of Optionee: Edward Teixeira
Number of Shares as to
which the Option is Granted: 10,000
Option Price per Share: $3.19
Exercisability of Options:
Number of Shares Date after which the
as to which the Option is Exercisable
Optionee May Exercise (anniversaries refer
the Option Granted to the Date of Grant
Hereby of the Stock Option
3,334 September 25, 1996
3,333 September 25, 1997
3,333 September 25, 1998
Schedule B
NOTICE OF ELECTION TO EXERCISE
Staff Builders, Inc.
Attention:
Gentlemen:
I hereby irrevocably elect to exercise the Stock Option
held by me under the 1993 Stock Option Plan of Staff Builders, Inc.
(the "Corporation") to purchase shares of the Class A Common Stock,
par value $.01 per share, of the Corporation at an option price of
$ per share.
Enclosed is a check, payable to the order of the
Corporation, in the amount of $ .
A completed Exercise of Stock Option Payment Remittance
Form is attached.
Please instruct [ ], Transfer
Agent, to issue certificate(s) for shares each and,
if applicable, a separate certificate for the remaining
shares in my name as shown below. The following address is for the
records of the Transfer Agent for mailing stockholder
communications:
Name
Taxpayer I.D. Number
(i.e. Social Security/Insurance Number)
Number and Street
City State Zip Code
Please forward the certificate(s) to me at the following address:
Number and Street
City State Zip Code
This election incorporates, and is subject to, all terms
and conditions of the Plan and my Stock Option Agreement with the
Corporation. The Stock Option I am exercising is stated to be:
[Check one] ( ) Incentive Stock Option
( ) Nonqualifying Stock Option
I am acquiring the foregoing shares for investment
purposes only, and not with a view to their sale or distribution.
Dated:
Signature
Print Name
Schedule B-1
STAFF BUILDERS, INC.
1993
STOCK OPTION PLAN
Exercise of Stock Option Payment Remittance Form
In fulfillment of the accompanying Notice of Election to
Exercise, which advises you of my intention to exercise options to
purchase shares of Staff Builders, Inc. Common Stock at
an option price of $ per share, for a total purchase
price of $ , I enclose in full payment of the purchase
price:
bank check in the amount of . . . . . . $
made payable to Staff Builders, Inc.
Dated:
Signature
( ) Incentive Stock Option
( ) Nonqualifying Stock Option
Type Name
ed/teixopt
EXHIBIT 10.42
<PAGE>
STAFF BUILDERS, INC.
1993 STOCK OPTION PLAN
March 1, 1996
Larry Campbell
13626 Ashley Run
Houston, TX 77077-1509
Re: Grant of Nonqualifying Stock Options
to Purchase Shares of the Class A Common
Stock of Staff Builders, Inc.
Dear Larry:
You and Staff Builders, Inc., a Delaware corporation (the
"Corporation"), hereby agree as follows:
1. Reference. This is the Stock Option Agreement
referred to in Section 7(k) of the Corporation's 1993 Stock Option
Plan (the "Plan"). The stock option this Agreement grants is a
Nonqualifying Stock Option, as set forth in Section 2 below. This
Agreement incorporates all terms, conditions and provisions of the
Plan.
2. Stock Option. The Corporation hereby grants to the
Optionee the option (the "Stock Option") to purchase that number of
shares of Class A Common Stock of the Corporation, par value $.01
per share, set forth on Schedule A. The Corporation will issue
these shares as fully paid and nonassessable shares upon the
Optionee's exercise of the Stock Option. The Optionee may exercise
the Stock Option in accordance with this Agreement any time prior
to the tenth anniversary of the date of grant of the Stock Option
evidenced by this Agreement, unless earlier terminated according to
the terms of this Agreement. Schedule A sets forth the date or
dates after which the Optionee may exercise all or part of the
Stock Option, subject to the provisions of the Plan.
3. Exercise of Stock Option. The Optionee may exercise
the Stock Option in whole or in part by written notice delivered to
the Corporation in the form of Schedule B to this Agreement. If
exercisable Stock Options as to 100 or more shares are held by an
Optionee, then such Stock Options may not be exercised for fewer
than 100 shares at any time, and if exercisable Stock Options for
fewer than 100 shares are held by an Optionee, then Stock Options
for all such shares must be exercised at one time. The Optionee
shall enclose with each such notice payment by cash or by valid
check in an amount equal to the number of shares as to which his
exercise is made, multiplied by the option price therefor;
provided, however, that if the Committee appointed by the Board of
Directors pursuant to Section 2 of the Plan shall, in its sole
discretion, approve, payment upon exercise of the Stock Option in
whole or in part may be made by surrender to the Corporation in due
form for transfer of shares of Class A Common Stock of the
Corporation. In the case of payment in the Corporation's Class A
Common Stock, such stock shall be valued at its Fair Market Value
(as defined in Section 7(b) of the Plan) as of the date of
surrender of the stock.
4. Purchase Price. The option price per share shall
be that set forth on Schedule A.
5. No Rights in Option Stock. Optionee shall have no
rights as a stockholder in respect of any shares subject to the
Stock Option unless and until Optionee has exercised the Stock
Option in complete accordance with the terms hereof, and shall have
no rights with respect to shares not expressly conferred by this
Agreement.
6. Shares Reserved. The Corporation shall at all times
during the term of this Agreement reserve and keep available such
number of shares of Class A Common Stock as will be sufficient to
satisfy the requirements of this Agreement, and shall pay all
original issue taxes on the exercise of the Stock Option, and all
other fees and expenses necessarily incurred by the Corporation in
connection therewith.
7. Nonassignability. The Stock Option and this
Agreement shall not be encumbered, disposed of, assigned or
transferred in whole or part, and, except as described in the Plan,
may only be exercised by the Optionee unless the prior written
consent of the Committee has been obtained. All shares purchased
pursuant to this Agreement shall be purchased for investment by the
Optionee.
8. Effect Upon Employment. Nothing in this Agreement
shall confer on the Optionee any right to continue in the
employment of the Corporation or shall interfere in any way with
the right of the Corporation to terminate Optionee's employment at
any time.
9. Successors. This agreement shall be binding upon
any successor of the Corporation.
In order to indicate your acceptance of the Stock Option
on the above terms and conditions, kindly sign the enclosed copy of
this letter agreement and return it to the Corporation.
STAFF BUILDERS, INC.
By:/s/Stephen Savitsky
Accepted and Agreed to:
/s/ Larry Campbell
Larry Campbell
Schedule A
Nonqualifying Stock Options
Date of Grant: March 1, 1996
Name of Optionee: Larry Campbell
Number of Shares as to
which the Option is Granted: 100,000
Option Price per Share: $2.9375
Exercisability of Options:
Number of Shares Date after which the
as to which the Option is Exercisable
Optionee May Exercise (anniversaries refer
the Option Granted to the Date of Grant
Hereby of the Stock Option
33,334 March 1, 1996
33,333 March 1, 1997
33,333 March 1, 1998
________________________________________
Schedule B
NOTICE OF ELECTION TO EXERCISE
Staff Builders, Inc.
Attention:
Gentlemen:
I hereby irrevocably elect to exercise the Stock Option
held by me under the 1993 Stock Option Plan of Staff Builders, Inc.
(the "Corporation") to purchase shares of the Class A Common Stock,
par value $.01 per share, of the Corporation at an option price of
$ per share.
Enclosed is a check, payable to the order of the
Corporation, in the amount of $ .
A completed Exercise of Stock Option Payment Remittance
Form is attached.
Please instruct [ ], Transfer
Agent, to issue certificate(s) for shares each and,
if applicable, a separate certificate for the remaining
shares in my name as shown below. The following address is for the
records of the Transfer Agent for mailing stockholder
communications:
Name
Taxpayer I.D. Number
(i.e. Social Security/Insurance Number)
Number and Street
City State Zip Code
Please forward the certificate(s) to me at the following address:
Number and Street
City State Zip Code
This election incorporates, and is subject to, all terms
and conditions of the Plan and my Stock Option Agreement with the
Corporation. The Stock Option I am exercising is stated to be:
[Check one] ( ) Incentive Stock Option
( ) Nonqualifying Stock Option
I am acquiring the foregoing shares for investment
purposes only, and not with a view to their sale or distribution.
Dated:
Signature
Print Name
Schedule B-1
STAFF BUILDERS, INC.
1993
STOCK OPTION PLAN
Exercise of Stock Option Payment Remittance Form
In fulfillment of the accompanying Notice of Election to
Exercise, which advises you of my intention to exercise options to
purchase shares of Staff Builders, Inc. Common Stock at
an option price of $ per share, for a total purchase
price of $ , I enclose in full payment of the purchase
price:
bank check in the amount of . . . . . . $
made payable to Staff Builders, Inc.
Dated:
Signature
( ) Incentive Stock Option
( ) Nonqualifying Stock Option
Type Name
ed/cambop
EXHIBIT 10.51<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of the
1st day of December, 1996 by and between STAFF BUILDERS, INC.
("Staff Builders"), a New York corporation, located at 1983 Marcus
Avenue, Lake Success, New York, 11042 and EDWARD TEIXEIRA
("Executive"), an individual residing at 76 Manchester Lane, Stony
Brook, New York, 117906
WHEREAS, Staff Builders and the Executive have previously
entered into an Employment Agreement dated as of July 26, 1993, the
term of which expired on November 30, 1996 (the "Current Employment
Agreement"); and
WHEREAS, the parties hereto wish to set forth the terms and
conditions of an employment agreement to become effective as of
December 1, 1996.
NOW, THEREFORE, in consideration of their mutual promises and
other adequate consideration, Staff Builders and the Executive do
hereby agree as follows:
1. EMPLOYMENT. Staff Builders will employ the
Executive as Senior Vice President, Franchise Operations.
2. DUTIES. The Executive shall be responsible for
the management of Staff Builders Franchising Division. The
Executive shall report to, and be subject to the supervision of,
the Board of Directors of Staff Builders and the Chairman of the
Board. The Executive shall devote his best efforts and attention
to the diligent performance of his duties hereunder and to the
advancement of the business and interests of Staff Builders.
3. TERM. This Agreement shall be effective on
December 1, 1996 and shall remain in effect until November 30, 1999
unless terminated prior to such date.
4. COMPENSATION.
(a) Salary. The Executive shall be paid a salary
during the term hereof in weekly installments at the following
rates:
December 1, 1996 - November 30, 1997 $175,000.00
December 1, 1997 - November 30, 1998 $185,000.00
December 1, 1998 - November 30, 1999 $195,000.00
(b) Vacation and Benefits. The
Executive is entitled to four (4) weeks annual vacation. The
Executive shall be eligible to receive and participate in all
benefits which Staff Builders provides or makes available to its
employees and/or officers.
(c) Expenses. Staff Builders shall reimburse the
Executive for all reasonable and necessary business expenses upon
submission by the Executive of receipts, accounts or such other
documents reasonably requested by Staff Builders.
(d) Car Allowance. Executive shall be entitled
to a car allowance of $6,600 per year, payable monthly.
5. SEVERANCE.
(a) If after a Change of Control (as defined
below.) the Executive's employment hereunder, is terminated by
Staff Builders within 180 days after the change of control for any
reason (other than the commission of a felony or the perpetrating
of a fraud against Staff Builders), the Executive shall be entitled
to receive an amount equal to twelve (12) months salary, which
shall be payable within fifteen (15) business days after the date
of termination.
(b) A "Change of Control" shall occur hereunder if
a person, corporation, partnership association or entity (i)
acquires a majority of Staff Builders' outstanding voting
securities, (ii) acquires securities of the Company bearing a
majority of the voting power with respect to the election of
Directors of the Company, or (iii) acquires all or substantially
all of Staff Builders' assets.
6. NOTICES. Any written notice permitted or
required under this Agreement shall be deemed sufficient when hand
delivered or posted by certified or registered mail, postage,
prepaid, and addressed to:
Staff Builders, Inc. Edward Teixeira
1983 Marcus Avenue 76 Manchester Lane
Lake Success, New York 11042 Stony Brook, New York 11790
Attention: President
Either party may, in accordance with the provisions of this
Section, give written notice of a change of address, in which event
all such notices and requests shall therefore be given as above
provided at such changed address.
7. NON-COMPETITION BY EXECUTIVE.
(a) Upon termination of Executive's employment
hereunder for any reason (including, without limitation,
resignation of the Executive), Executive agrees not to compete, in
the manner described hereinafter, with the business currently
conducted by Staff Builders in the United States, for a period of
six (6) months following such termination. Executive agrees that
during such period, he will not be employed by, work for, advise,
consult with, serve or assist in any way, directly or indirectly,
any party whose activities or business is similar to that of Staff
Builders. The foregoing restrictions on competition by Executive
shall be operative for the benefit of Staff Builders and of any
business owned or controlled by Staff Builders, or any successor or
assign of any of the foregoing.
(b) If the period of time or geographical areas
specified under this Section should be determined to be
unreasonable in any judicial proceeding, then the period of time
and areas of the restriction shall be reduced so that this
Agreement may be enforced in such areas and during such period of
time as shall be determined to be reasonable.
8. BINDING EFFECT.
This Agreement shall be binding
upon and inure to the benefit of Staff Builders, its successors and
assigns and the Executive, his heirs and executors.
9. SEVERABILITY. The invalidity or unenforceability
of any provision of this Agreement shall in no way, affect the
validity or enforceability of any other provision, or any part
thereof.
10. APPLICABLE LAW This Agreement shall be
governed by and construed in accordance with the laws of the State
of New York.
11. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the
subject matter hereof and supersedes all prior and contemporaneous
agreements understandings, negotiations, and discussions, whether
oral or written, of the parties, and there, are no warranties,
understandings, representations, or other agreements between the
parties in connection with the subject matter hereof except as
specifically set forth herein.
12. MODIFICATION TERMINATION, OR WAIVER. This
Agreement may only be amended or modified by a written instrument
executed by the party to be charged. The failure of any party at
any time to require performance of any provision of this Agreement
shall in no manner affect the right of such party at a later time
to enforce the same.
IN WITNESS WHEREOF, Staff Builders and the Executive
have executed this Agreement as of the date first written above.
STAFF BUILDERS, INC.
BY: /s/ Stephen Savitsky
Stephen Savitsky
/s/ Edward Teixeira
Edward Teixeira
teixeira
EXHIBIT 10.52<PAGE>
EMPLOYMENT AGREEMENT
Employment Agreement, effective as of March 1, 1996, by
and between STAFF BUILDERS, INC., a New York corporation ("Staff
Builders" or the "Corporation"), and Larry Campbell who resides at
13626 Ashley Run, Houston, Texas 77077-1509 ("Executive").
WHEREAS, Staff Builders wishes to secure the services of the
Executive on the terms and conditions set forth below;
AND WHEREAS, the Executive represents that he has no
restrictions on employment arising out of any previous employment
agreements and the Executive is willing to accept employment with
Staff Builders on such terms and conditions.
NOW, THEREFORE, in consideration of their mutual promises and
other adequate consideration, Staff Builders and the Executive do
hereby agree as follows:
1. EMPLOYMENT. Staff Builders will employ the Executive
as Executive Vice President for National Health Care Operations,
in accordance with the terms and provisions of this Agreement.
2. DUTIES. The Executive shall report to the President-CEO
of Staff Builders and shall be responsible for the management of
all aspects of the home health care business of Staff Builders. The
Executive shall perform such other duties as shall be assigned to
the Executive by the President-CEO of Staff Builders. The
Executive shall devote his full business time, attention and skill
to the performance of his duties hereunder and to the advancement
of the business and interests of Staff Builders. During the term
of this Agreement, the Executive shall be required to base his
business office at the Lake Success Corporate office location. The
Executive's base business office shall not be changed without his
prior consent.
3. TERM. This Agreement shall be effective on March 1,
1996, and shall remain in effect until February 28, 1999, unless
terminated earlier pursuant to the terms hereof.
4. COMPENSATION.
(a) Salary. The Executive shall be paid a salary
during the term hereof in weekly installments at the following
rates:
March 1, 1996 to February 28, 1997 = $180,000
March 1, 1997 to February 28, 1998 = $190,000
March 1, 1998 to February 28, 1999 = $200,000
(b) Sign-on Bonus. The Executive shall receive a one
time sign-on bonus in the amount of $80,000, payable by Staff
Builders upon commencement of employment. In the event the
Executive voluntarily terminates this Agreement prior to February
28, 1997, Executive shall repay to Staff Builders the full amount
of the sign-on bonus; in the event the Executive voluntarily
terminates this Agreement prior to February 28, 1998, the Executive
shall repay to Staff Builders the sum of $50,000; and in the event
the Executive voluntarily terminates this Agreement prior to
February 28, 1999, the Executive shall repay to Staff Builders the
sum of $25,000.
(c) Benefits. The Executive shall be eligible to
receive and participate in all health, medical or other insurance
benefits which Staff Builders provides or makes available to its
employees.
(d) Expenses. Staff Builders shall reimburse the
Executive for all reasonable moving expenses from Houston to New
York, and necessary temporary housing which shall be previously
approved by the President-CEO. Otherwise, Staff Builders shall
reimburse the Executive for all reasonable and necessary expenses
upon submission by the Executive of receipts, accounts or such
other documents reasonably requested by Staff Builders.
(e) Incentive Compensation. The Executive will be
eligible to participate in Staff Builders' Tip Top Program with the
same bonus percentage as the CEO of Staff Builders, Inc.
(Delaware).
(f) Options. The Executive shall receive 100,000
stock options of Staff Builders, Inc. (Delaware) ("SBD") at market
price for close of trading on February 29, 1996, which shall be
vested over a three (3) year period, such that 33,334 will become
vested immediately; 33,333 will become vested as of March 1, 1997,
and 33,333 will become vested as of March 1, 1998, in accordance
with the terms of an option agreement to be entered into between
SBD and the Executive.
(g) Vacation. The Executive shall receive fifteen (15)
days vacation each year during the term of the Agreement.
(h) Car Lease. Staff Builders shall lease a Lexus ES-
300 automobile for the Executive's exclusive use.
5. TERMINATION: RIGHTS AND OBLIGATIONS UPON TERMINATION.
(a) If the Executive dies during the Term, then the
Executive's employment under this Agreement shall terminate. In
such event, the Executive's estate shall be entitled only to
compensation and expenses accrued and unpaid as at the date of the
Executive's death.
(b) If, as a result of the Executive's total incapacity
due to physical or mental illness, whether or not job related, the
Executive is absent from his duties hereunder for 180 consecutive
days, the Executive's employment hereunder shall terminate. The
Executive's salary shall continue during such period of incapacity
until the period of 180 consecutive days has elapsed. In such
event, the Executive shall be entitled to severance, payable as the
then weekly base salary for a period of six (6) months, and
expenses accrued and unpaid as at the date of termination of the
Executive's employment.
(c) The Corporation shall have the right to terminate
the Executive's employment under this Agreement for Cause. For
purposes of the Agreement, the Corporation shall have "Cause" to
terminate the Executive's employment if (i) the Executive assigns,
pledges, or otherwise disposes of his rights and obligations under
this Agreement, or attempts to do the same without the prior
written consent of the Corporation; or (ii) the Executive
deliberately or intentionally fails or habitually neglects to
fulfill his obligations under this Agreement (except by reason of
incapacity due to physical or mental illness or disability), has
engaged in willful misconduct or has acted in bad faith; (iii) the
Executive has breached Section 7 of this Agreement; (iv) the
Executive has committed a felony or other crime involving moral
turpitude or perpetrated a fraud or other dishonest acts against
the Corporation; or (v) the Executive has engaged in deliberate or
reckless acts which place the Employer's officers, employees,
customers or invitees in immediate physical danger or deliberate
or reckless acts which result in damage to or destruction of
Employer's property. If the Corporation terminates this Agreement
for Cause, the Corporation's obligations hereunder shall cease,
except for the Corporation's obligation to pay the Executive the
compensation and expenses accrued and unpaid as of the date of
termination in accordance with the provisions hereof.
(d) In the event that (i) the Executive is discharged by the
President-CEO for any reason other than for Cause, (as defined
above), or (ii) the Executive is no longer responsible for the
management of all aspects of the home health care business of Staff
Builders, except as established by mutual consent of the parties,
prior to the end of the term hereof, the Executive shall receive
within thirty (30) days after such discharge or change in
responsibility a one time, lump sum severance payment equal to
twelve (12) months' salary at the same rate of pay in effect at the
date of the termination, including any accrued incentive or bonuses
of the date of termination. Staff Builders shall, in addition, pay
to the Executive all reasonable moving expenses from New York to
Houston or from New York to Missouri. In such event, the
Restrictive Covenant period as defined in Section 7(b) hereof,
shall be reduced to six (6) months.
(e) Notwithstanding anything to the contrary contained
herein, all payments owed to the Executive upon termination of this
Agreement shall be subject to offset by the Corporation for amounts
owed to the Corporation by the Executive hereunder or otherwise.
(f) The obligations of the Corporation and the Executive
pursuant to this Section 5 shall survive the termination of this
Agreement.
6. NOTICES. Any written notice permitted or required under
this Agreement shall be deemed sufficient when hand delivered or
posted by certified or registered mail, postage prepaid, and
addressed to:
if to Staff Builders:
Staff Builders, Inc.
1983 Marcus Avenue,
Lake Success, New York 11042
Attention: Chairman of the Board
or
if to the Executive:
Larry Campbell
13626 Ashley Run
Houston, Texas 77077-1509
Either party may, in accordance with the provisions of this
Section, give written notice of a change of address, in which event
all such notices and requests shall thereafter be given as above
provided at such changed address.
7. CONFIDENTIALITY OBLIGATIONS; NON-COMPETITION BY
EXECUTIVE.
(a) The Executive acknowledges that in the course of
performing his duties hereunder, he will be made privy to
confidential and proprietary information. The Executive covenants
and agrees that during the term of this Agreement and at any time
after the termination of this Agreement, he will not directly or
indirectly, for his own account or as an employee, officer,
director, partner, joint venturer, shareholder, investor, or
otherwise, disclose to others or use for his own benefit or cause
or induce others to do the same, any proprietary or confidential
information or trade secrets of Staff Builders, including but not
limited to, any matters concerning the business or operations of
Staff Builders, including its plans, procedures or methods of
operations, any Staff Builders' lists of clients or business
contacts, any information concerning specialty programs or business
development, other work product or records of Staff Builders, other
than in the performance of his duties hereunder.
(b) The Executive agrees that, during the term hereof and
for one (1) year following the termination hereof (the "Restrictive
Covenant Period"), he will not, within the United States (A)
compete, directly or indirectly, for his own account or as an
employee, officer, director, partner, joint venturer, shareholder,
investor, or otherwise, with the home health care or supplemental
staffing business conducted by Staff Builders or (B) be employed
by, work for, advise, consult with, serve or assist in any way,
directly or indirectly, any person or entity whose business is home
health care of supplement staffing; or (C) directly or indirectly
solicit, recruit or hire any employee of Staff Builders to leave
the employ of Staff Builders; or (D) solicit any client or customer
of Staff Builders to terminate or modify its business relationship
with Staff Builders. During the Restrictive Covenant Period, Staff
Builders shall pay to the Executive the sum of $180,000 in fifty-
two (52) equal weekly installments.
(c) The foregoing restrictions on the Executive set
forth in this Section 7 shall be operative for the benefit of Staff
Builders and of any business owned or controlled by Staff Builders,
or any successor or assign of any of the foregoing.
(d) Executive acknowledges that the restricted period
of time and geographical area specified in this Section 7 is
reasonable, in view of the nature of the business in which Staff
Builders is engaged and the Executive's knowledge of Staff
Builders' business. Notwithstanding anything herein to the
contrary, if the period of time or the geographical area specified
in this Section 7 should be determined to be unreasonable in a
judicial proceeding, then the period of time and territory of the
restriction shall be reduced so that this Agreement may be enforced
in such area and during such period of time as shall be determined
to be reasonable.
(e) The parties acknowledge that any breach of this
Section 7 will cause Staff Builders irreparable harm for which
there is no adequate remedy at law, and as a result of this, Staff
Builders shall be entitled to the issuance of an injunction,
restraining order or other equitable relief in favor of Staff
Builders restraining Executive from committing or continuing any
such violation. Any right to obtain an injunction, restraining
order or other equitable relief hereunder shall not be deemed a
waiver of any right to assert any other remedy Staff Builders may
have at law or in equity.
(f) For purposes of this Section 7, the term "Staff
Builders" shall refer to the Corporation and all of its parents,
subsidiaries and affiliated corporations.
8. JURISDICTION. The Executive consents to the jurisdiction
of the Supreme Court of the State of New York or of any Federal
Court in the City of New York for a determination of any dispute as
to any matters whatsoever arising out of or in any way connected
with this Agreement and authorizes the service of process on him by
registered mail sent to him at his address shown on the records of
Staff Builders.
9. HANDBOOK;GROUP INSURANCE PROGRAM BOOKLET. The Executive
acknowledges receipt of Staff Builders Employee Handbook and Group
Insurance Program booklet (together, the "Handbook"). The terms of
the Handbook are incorporated herein by reference.
10. BINDING EFFECT. This agreement shall bind and inure to
the benefit of Staff Builders, its successors and assigns and shall
inure to the benefit of, and be binding upon, the Executive, his
heirs, executors and legal representatives.
11. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall in no way affect the validity or
enforceability of any other provision, or any part thereof.
12. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement between the parties hereto pertaining to the subject
matter hereof and supersedes all prior and contemporaneous
agreements, understandings, negotiations, and discussions, whether
oral or written, of the parties.
14. MODIFICATION, TERMINATION OR WAIVER. This Agreement may
only be amended or modified by a written instrument executed by the
parties hereto. The failure of any party at any time to require
performance of any provision of this Agreement shall in no manner
affect the right of such party at a later time to enforce the same.
IN WITNESS WHEREOF, Staff Builders and the Executive have
executed this Employment Agreement as of the date first above
written.
STAFF BUILDERS, INC.
By: /s/ Stephen Savitsky
STEPHEN SAVITSKY, President-CEO
/s/ Larry Campbell
LARRY CAMPBELL
campbell/kl
EXHIBIT 10.53<PAGE>
AGREEMENT AND RELEASE
THIS AGREEMENT AND RELEASE is entered into by and between
Larry Campbell ('Campbell') who resides at 33 Hamilton Place,
Garden City, New York 11530 (the 'Residence') and Staff Builders,
Inc., a New York corporation, 1983 Marcus Avenue, New York, 11042
('Staff Builders') (collectively the 'Parties') on the date set
forth below.
RECITALS:
A. Campbell is presently employed by Staff Builders pursuant
to that certain employment agreement by and between Campbell and
Staff Builders effective as of March 1, 1996 (the 'Employment
Agreement').
B. The parties have mutually agreed to terminate the
Employment Agreement upon the terms and conditions hereinafter set
forth.
NOW THEREFORE, in consideration of the mutual promises set
forth herein and the mutual benefits which the parties will gain by
performance thereof, the parties hereto agree as follows:
1. Campbell agrees, by affixing his signature hereto, that
effective at the close of business February 28, 1997, he shall
resign his employment with Staff Builders. As of March 1, 1997,
Campbell shall have no duties, responsibilities or authority on
behalf of Staff Builders, nor shall be otherwise act as an employee
of Staff Builders. Campbell shall provide Staff Builders with a
letter of resignation dated February 28, 1997. Notwithstanding
Campbell's termination of employment, Campbell agrees to use his
best efforts as an independent consultant to facilitate a smooth
transition and that for a period of 48 months following the
effective date of this Agreement and Release will be available upon
reasonable notice, and at no charge to Staff Builders, to consult
with and assist Staff Builders in areas of Campbell's expertise.
2. In full satisfaction and termination of all of Staff
Builders obligations under the Employment Agreement, including but
not limited to all obligations for severance pay, vacation pay,
deferred compensation and all other benefits, Staff Builders agrees
to provide Campbell the following:
(a) A consulting contract, whereby Campbell agrees, as
independent consultant, to use his best efforts to render
consultant services in his areas of expertise to Staff Builders on
a 'when and as-needed' basis for a period of 48 months from the
effective date of this Agreement. During the period commencing
March 1, 1997 through February 28, 2001, or Campbell's death,
whichever occurs first, Staff Builders will pay Campbell on the
first of each month, in advance, a consulting fee of $8,125.00 and
reimburse Campbell for all approved out-of-pocket expenses incurred
by Campbell in the course of rendering such consulting services.
Campbell will use his best efforts to make himself available
consistent with Staff Builders' needs, but will be under no
obligation for a specific number of days, weeks, or months of
consulting services. Accordingly, Campbell shall be entitled to
the consulting fees in all events, other than in the event of his
death, regardless of the quantity or quality of the services
rendered.
(b) Under the terms of the Employment Agreement,
Campbell, under certain circumstances was required to repay Staff
Builders the sum of $50,000 in the event his employment terminated
prior to February 28, 1998. Staff Builders hereby waives
Campbell's obligation to repay the aforesaid sign-on bonus.
(c) Upon relocation of Campbell from New York to either
Houston or Missouri, Staff Builders shall reimburse Campbell up to
a maximum of $7,000 for all moving expenses. These expenses shall
include but shall not be limited to travel for Campbell and his
family, expenses for transporting Campbell's personal possessions
and reasonable lodging and accommodations incurred in connection
with such relocation.
(d) Effective with the effective date of this Agreement,
and continuing until the Residence is sold, Staff Builders will
reimburse Campbell on a monthly basis on the first of each month
for all expenses related to the Residence, including mortgage
payments, property taxes, insurance and utilities. Campbell and
his spouse hereby grant Staff Builders the exclusive right to
select a purchaser ('Purchaser') for the Residence. Campbell and
his spouse hereby agree to sell the Residence, to the Purchaser at
the time, place and pursuant to the terms negotiated by Staff
Builders with the Purchaser. Campbell and his spouse agree to
execute all documents and to do all other acts requested by Staff
Builders to complete the sale of the Residence to the Purchaser.
In the event the proceeds of the sale are insufficient 1) to
satisfy the First Mortgage on the premises (in the present amount
of $310,362), and 2) to reimburse Campbell his equity in the
Residence of $84,000, and 3) to pay all real estate commissions,
transfer fees and attorney's fees incurred in connection with the
sale of the Residence, Staff Builders will immediately reimburse
Campbell any such deficiency. In the event the proceeds exceed the
sum of the first mortgage, Campbell's equity of $84,000 and the
real estate commissions, transfer fees and attorney's fees incurred
in connection with the sale, Campbell shall immediately pay any
such surplus to Staff Builders. Campbell and his family shall have
the right to live in the Residence until the earlier of the date on
which settlement on the sale of the Residence takes place or
June 1, 1997. Notwithstanding the foregoing, during such
occupancy, Campbell shall be responsible for all utilities and
routine repair and maintenance but shall have no obligation for any
other expenses associated with the Residence.
3. Campbell understands that there are various state and
federal laws that prohibit employment discrimination on the basis
of age, race, sex, religion, national origin, martial status and
disability and that these laws are enforced by the courts and
various government agencies. By signing this Agreement And
Release, Campbell intends to give up any rights he may have under
these laws or any other laws with respect to his employment or the
termination of his employment with or by Staff Builders and
acknowledges that Staff Builders has not (a) discriminated against
him; (b) breached any express or implied contract with him; or (c)
otherwise acted unlawfully towards him. The parties hereto agree
and acknowledge that the payment specified in paragraph 2 are in
excess of that which Staff Builders is obligated to provide to
Campbell or which normally would be provided to an individual who
was leaving or had left Staff Builders and that it is provided
solely in consideration of Campbell's execution of this Agreement
And Release.
4. As a material inducement to the Parties to enter into
this Agreement And Release, except with respect to the obligations
and undertakings set forth in this Agreement, Campbell covenants
not to sue and hereby irrevocably and unconditionally release,
acquits and forever discharges Staff Builders, and all other
affiliated, subsidiary or related organizations, parents, companies
or divisions, and their respective present, former or future
officers, directors, shareholders, agents, employees,
representatives, consultants, attorneys, successors, and assigns,
and all Staff Builders' employee benefit plans and the current and
former Trustees of all of them (collectively the 'Releasees'), of
and from any claim, right, demand, charge, complaint, action, cause
of action, obligation, or liability of any and every kind based on
any federal, state, or local law, statute or regulation, whether
known or unknown, suspected or unsuspected, fixed or contingent,
whether in tort or in contract or by statue, which arises or
results from any event, action or inaction occurring prior to the
execution of this Agreement And Release, as well as any and all
claims arising out of or relating to any alleged tortuous,
wrongful, discriminatory, defamatory, improper or unlawful act or
omission of Staff Builders, including without limitation, claims
alleging a violation of the Age Discrimination In Employment Action
of 1967, as amended 29 U.S.C. 621 et seq.; The Americans with
Disabilities Act of 1990, 42 U.S.C. 12101 et seq., which arose
prior to the execution of this Agreement And Release or which might
exist under the qui tam provisions of the False Claims Act, 31
U.S.C. 3730. Subject to the provisions of paragraph 18, the
foregoing releases shall be null and void ab initio if Staff
Builders fails to fulfill in all material respects its obligations
under paragraph 2 of this Agreement, unless Staff Builders' actions
are barred by Court or Administrative Orders.
5. As a material inducement to the Parties to enter into
this Agreement And Release, Staff Builders covenants not to sue and
hereby irrevocably and unconditionally releases, acquits and
forever discharges Campbell, his successors, and assigns
(collectively the 'Releasees'), of and from any claim, right,
demand, charge, complaint, action, cause of action, obligation, or
liability of any and every kind based on any federal, state, or
local law, statute or regulation, whether known or unknown,
suspected or unsuspected, fixed or contingent, whether in tort or
in contract or by statute, which arises or results from any event,
action or inaction occurring prior to the execution of this
Agreement And Release, as well as any and all claims arising out of
or relating to any alleged tortuous, wrongful, discriminatory,
defamatory, improper or unlawful act or omission of Campbell. The
foregoing releases shall not apply to any obligations of Campbell
created under this Agreement and Release.
6. Campbell affirms that he is not aware of any outstanding
administrative or judicial claims, charges, lawsuits or proceedings
of any kind against any of the Releases to which he is a party or
which were filed on his behalf, and promises not to commence any
proceeding or action against Staff Builders except to enforce this
Agreement And Release.
7. Campbell hereby agrees to surrender any and all Stock
Options of Staff Builders, Inc. (Delaware) ('SBD') granted to him
pursuant to the Stock Option Agreement dated March 1, 1996 between
the Parties, or otherwise, including any options which are vested
as of the date hereof.
8. Campbell agrees to surrender the Lexus ES-300 automobile
leased by Staff Builders on his behalf.
9. Campbell acknowledges that as a result of his employment
by Staff Builders, he has had access to confidential, proprietary
business information belonging to Staff Builders, as those terms
are defined in paragraph 6 of the Employment Agreement, and hereby
agrees not to use or disclose any such information personally or
for the benefit of others. Campbell also agrees (1) not to
disclose to anyone any such confidential and proprietary
information; and (2) to comply with any and all provisions of the
Employment Agreement, that, by their terms, survive the termination
of his employment, except paragraph 7b thereof. Campbell agrees
specifically that he will not use personally or for the benefit of
others or disclose in any manner any information relating to
SCORES' or any similar outcomes determination program or concept
owned by Staff Builders. On the date he signs this Agreement And
Release, Campbell further promises and agrees to return to Staff
Builders any and all documents, diskettes or copies now in his
possession which he received, sent, generated or had access to in
the course of his employment by Staff Builders, together with any
and all property of Staff Builders he has in his possession. The
parties acknowledge that the restrictions on the use of
confidential information shall in no way apply to the extent such
information relates to the business and operations of American
HomeCare Management Corporation. The parties further acknowledge
that Campbell may hold himself out as a co-developer of SCORES'.
10. During any period Campbell retains an ownership interest
and is actually involved in the business of American HomeCare
Management Corporation, neither Campbell nor Staff Builders will
make any public statements, including but not limited to,
statements to the press or staff of Staff Builders' employees
regarding the existence of or the terms and conditions set forth in
this Agreement and Release. Notwithstanding the foregoing, the
parties shall issue a joint press release in the form and annexed
hereto as Exhibit A (a press release). Each party further agrees
that it will not disclose the terms and conditions of this
Agreement and Release to parties other than their respective
officers, attorneys and accountants, except that either party, with
the consent of the other party, which consent shall not be
unreasonably withheld, may make such disclosures (i) that it, in
good faith, deems reasonably necessary or appropriate, under
reasonable conditions of confidentiality, for legitimate business
or financial reasons or (ii) that it, in good faith, deems
reasonably necessary to comply with any legal requirement or
process.
11. With respect to Campbell's acts while an employee of
Staff Builders, Staff Builders will continue to extend to Campbell
the same rights and obligations (subject to the same restrictions)
that it extends to its current employees, officers and directors
with respect to indemnification for liability arising out of their
authorized acts as employees, officers or directors of Staff
Builders. It is further agreed that if Campbell retains counsel in
connection with any action or proceeding relating to such actions,
such counsel shall be selected or approved by Staff Builders or its
insurance carrier. In the event Campbell elects to retain counsel
of his choice, he shall be liable for all such attorney's fees.
12. If in violation of paragraphs 3 or 4 above, Campbell
files or causes to be filed a claim, charge or lawsuit against any
of the Releasees with any governmental agency, court or other forum
concerning, in whole or in part, any event occurring as of or prior
to the date of this Agreement And Release or any claim that has
been released herein, Campbell agrees to immediately repay to Staff
Builders all monies that he received pursuant to paragraph 2
hereof, and to waive and forego any claim to any additional monies
he might otherwise have a claim to receive pursuant to this
Agreement And Release or otherwise. Campbell further agrees that
the release set forth in paragraphs 4 and 5 remains in full force
and effect, and that the balance of this Agreement and Release
provides adequate consideration for such Release.
13. Campbell agrees that he will not any time hereafter,
directly or indirectly, solicit for employment, hire or engage as
a consultant any personnel of Staff Builders on his own behalf or
on behalf of any other person, without prior express written
consent by an officer of Staff Builders. Campbell further agrees
that for a period of four (4) years following the effective date of
this Agreement, he will not consult with or solicit business from
any current or future franchisees of Staff Builders.
14. The waiver by any Party of breach of any provision hereof
shall not operate or be construed as a waiver of any subsequent
breach by any Party.
15. Except as provided in paragraph 9, this Agreement And
Release and the exhibits attached hereto contain the full agreement
between Campbell and Staff Builders, and may not be modified,
altered or changed except upon the express prior written consent of
both Campbell and Staff Builders.
16. Campbell affirms that he has been given at least 21 days
to consider this Agreement And Release and that he has voluntarily
chosen not to wait 21 days to execute this Agreement And Release.
His choice to execute this Agreement And Release was knowing and
voluntary and made after consultation with his counsel. Campbell
understands that he may revoke his agreement hereto by so notifying
Staff Builders' General Counsel in writing within seven days after
he signs this Agreement And Release.
17. Campbell acknowledges and agrees that: (a) no promise or
inducement for this Agreement And Release has been made by Staff
Builders, except as set forth in this Agreement And Release; (b)
this Agreement And Release is executed by him without reliance upon
any statement or representation by Staff Builders other than as set
forth herein; (c) he fully understands this Agreement And Release
and the meaning of its provisions; (d) he fully understands that he
is giving up important rights set forth herein; (e) he is legally
competent to enter into this Agreement And Release and to accept
full responsibility therefor; (f) he consulted with his counsel
before entering into this Agreement And Release; and (g) he
voluntarily enters into this Agreement And Release.
18. In the event Staff Builders is awarded damages against
Campbell by any court or tribunal of competent jurisdiction, as a
result of a breach by Campbell of his obligations under paragraph
9, 10 or 13 of this Agreement, Staff Builders may offset any amount
awarded Staff Builders by such court or tribunal against amounts
otherwise payable to Campbell under paragraph 2 and such offset
shall not be treated as a failure to fulfill Staff Builders'
obligations under paragraph 2. Additionally, it is agreed that if
Staff Builders, in good faith, brings a bona fide claim against
Campbell for breach of his obligations under paragraph 9, 10 or 13
and diligently prosecutes such claim or cause of action, then,
pending resolution by an appropriate court or tribunal of its
claim, Staff Builders may pay into escrow, with a third party
unrelated escrow agent, amounts otherwise due Campbell under
paragraph 2, in which event such failure to pay amounts due
directly to Campbell, shall not constitute a failure by Staff
Builders to fulfill its obligations under paragraph 2. All amounts
paid into such escrow shall be paid to Staff Builders or Campbell
as determined by the appropriate court or tribunal.
19. This Agreement And Release may be executed in
counterparts, and, when each party has signed and delivered at
lease one such counterpart, each counterpart shall be deemed an
original and taken together, shall constitute one and the same
agreement, which shall be binding and effective to all parties.
20. This Agreement And Release shall be construed in
accordance with the laws of the State of New York. Any action or
proceeding relating to or arising from this Agreement And Release
or any other dispute between the parties hereto shall be brought
solely in the Supreme Court of the State of New York, Nassau
County. Campbell hereby consents to personal jurisdiction and
venue in New York State Supreme Court, County of Nassau any such
action or proceeding. The parties expressly waive their right to
trial by jury in any action or proceeding against the other and
consent to trial before a judge.
21. This Agreement And Release is the product of negotiation
and mutual discussion. The rule of construction that an agreement
may be construed against its drafter shall not apply in any action
or proceeding arising from or based, in whole or in part, on this
Agreement And Release.
22. Campbell promises and agrees not to apply for or seek
employment or other association with or by Staff Builders in the
future.
23. Staff Builders has no obligation to pay any premiums for
health insurance coverage for Campbell or any of his dependents
subsequent to February 28, 1997.
24. In the event any party hereto brings an action or incurs
any cost or expense to enforce the terms or conditions of this
Agreement, the prevailing party shall be entitled to reimbursement
from the other party for all costs and expenses (including
attorneys' fees) incurred in defending or prosecuting such action
as the case may be.
25. CAMPBELL ACKNOWLEDGES AND AGREES THAT HE HAS READ AND
FULLY UNDERSTANDS THE MEANING OF EACH PROVISION OF THIS AGREEMENT
AND RELEASE, THAT HE HAS HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL CONCERNING IT, AND THAT HE FREELY AND VOLUNTARILY ENTERS
INTO IT.
IN WITNESS WHEREOF, the PARTIES have hereunto set their hand
on the dates indicated below.
STAFF BUILDERS, INC.
By: /s/ Stephen Savitsky
Date: March 18, 1997
/s/ Larry Campbell
LARRY CAMPBELL
Date: March 18, 1997
STATE OF NEW YORK )
)ss.:
COUNTY OF NASSAU )
I, Carolyn R. Naranjo do hereby certify that LARRY
CAMPBELL, personally known to me to be the same person whose name
is subscribed to the foregoing instrument, appeared before me this
day in person and acknowledged that he signed and delivered the
said instrument as his free and voluntary act, for the users and
purposes therein set forth.
Given under my hand and official seal this 18th day of
March, 1997.
/s/ Carolyn R. Naranjo
Notary Public
My Commission Expires:
June 30, 1998
G:\...\WP\HOME\CAMPBELL\AGREE-3.7
EXHIBIT 10.55<PAGE>
STAFF BUILDERS, INC., et al
WITH
MELLON BANK, N.A.
___________________________
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
___________________________<PAGE>
SECTION 1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . 3
1.1 Terms Defined. . . . . . . . . . . . . . . . . . . . 3
1.2 Accounting Principles. . . . . . . . . . . . . . . 11
SECTION 2. THE LOANS. . . . . . . . . . . . . . . . . . . . 11
2.1 Revolving Line of Credit - Description . . . . . . 11
2.2 Revolving Credit - Borrowing Base. . . . . . . . . 12
2.3 Revolving Credit - Termination by Borrowers. . . . 12
2.4 Collections, Disbursements and Borrowing
Availability . . . . . . . . . . . . . . . . . . . 13
2.5 Acquisition Line . . . . . . . . . . . . . . . . . 14
2.6 Interest . . . . . . . . . . . . . . . . . . . . . 15
2.7 Fees . . . . . . . . . . . . . . . . . . . . . . . 20
2.8 Capital Adequacy . . . . . . . . . . . . . . . . . 20
2.9 Payments . . . . . . . . . . . . . . . . . . . . . 21
2.10 Use of Proceeds. . . . . . . . . . . . . . . . . . 21
2.11 Nature of Liability. . . . . . . . . . . . . . . . 21
SECTION 3 - COLLATERAL . . . . . . . . . . . . . . . . . . . 21
3.1 Description. . . . . . . . . . . . . . . . . . . . 21
3.2 Lien Documents . . . . . . . . . . . . . . . . . . 22
3.3 Other Actions. . . . . . . . . . . . . . . . . . . 23
3.4 Searches . . . . . . . . . . . . . . . . . . . . . 23
3.5 Landlord's Waivers . . . . . . . . . . . . . . . . 23
3.6 Filing Security Agreement. . . . . . . . . . . . . 24
3.7 Power of Attorney. . . . . . . . . . . . . . . . . 24
3.8 Management Support Agreements and Fraud
Guarantees . . . . . . . . . . . . . . . . . . . . 24
3.9 Application of Collateral Proceeds . . . . . . . . 24
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES . . 24
4.1 Resolutions, Opinions, and Other Documents . . . . 24
4.2 Absence of Certain Events. . . . . . . . . . . . . 26
4.3 Warranties and Representations at Closing. . . . . 26
4.4 Compliance with this Agreement . . . . . . . . . . 26
4.5 Officer's Certificate. . . . . . . . . . . . . . . 26
4.6 Closing. . . . . . . . . . . . . . . . . . . . . . 26
4.7 Waiver of Rights . . . . . . . . . . . . . . . . . 26
SECTION 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . 27
5.1 Corporate Organization and Validity. . . . . . . . 27
5.2 Place of Business. . . . . . . . . . . . . . . . . 27
5.3 Pending Litigation . . . . . . . . . . . . . . . . 28
5.4 Title to Properties. . . . . . . . . . . . . . . . 28
5.5 Patents and Trademarks . . . . . . . . . . . . . . 28
5.6 Governmental Consent . . . . . . . . . . . . . . . 28
5.7 Taxes. . . . . . . . . . . . . . . . . . . . . . . 28
5.8 Financial Statements . . . . . . . . . . . . . . . 29
5.9 Full Disclosure. . . . . . . . . . . . . . . . . . 29
5.10 Subsidiaries and Affiliates. . . . . . . . . . . . 29
5.11 Guarantees, Contracts, etc.. . . . . . . . . . . . 29
5.12 Government Regulations, etc. . . . . . . . . . . . 30
5.13 Business Interruptions . . . . . . . . . . . . . . 31
5.14 Names. . . . . . . . . . . . . . . . . . . . . . . 31
5.15 Other Associations . . . . . . . . . . . . . . . . 31
5.16 Environmental Matters. . . . . . . . . . . . . . . 32
5.17 Regulation O . . . . . . . . . . . . . . . . . . . 32
5.18 Capital Stock. . . . . . . . . . . . . . . . . . . 32
5.19 Interrelationship of Borrowers . . . . . . . . . . 33
5.20 Solvency . . . . . . . . . . . . . . . . . . . . . 33
SECTION 6. BORROWERS' AFFIRMATIVE COVENANTS . . . . . . . . 33
6.1 Payment of Taxes and Claims. . . . . . . . . . . . 33
6.2 Maintenance of Properties, Collateral and
Corporate Existence. . . . . . . . . . . . . . . . 34
6.3 Places of Business . . . . . . . . . . . . . . . . 35
6.4 Business Conducted . . . . . . . . . . . . . . . . 36
6.5 Litigation . . . . . . . . . . . . . . . . . . . . 36
6.6 Issue Taxes. . . . . . . . . . . . . . . . . . . . 36
6.7 Bank Accounts. . . . . . . . . . . . . . . . . . . 36
6.8 Employee Benefit Plans . . . . . . . . . . . . . . 36
6.9 Submission of Collateral Documents . . . . . . . . 37
6.10 Other Governmental Contracts . . . . . . . . . . . 37
6.11 Warranties for Future Advances . . . . . . . . . . 37
6.12 Financial Covenants. . . . . . . . . . . . . . . . 38
6.13 Financial and Business Information . . . . . . . . 39
6.14 Officers' Certificates . . . . . . . . . . . . . . 41
6.15 Inspection . . . . . . . . . . . . . . . . . . . . 41
6.16 Tax Returns and Reports. . . . . . . . . . . . . . 42
6.17 Information to Participant . . . . . . . . . . . . 42
6.18 Material Adverse Developments. . . . . . . . . . . 42
SECTION 7. BORROWERS' NEGATIVE COVENANTS. . . . . . . . . . 42
7.1 Merger, Consolidation, Dissolution or Liquidation. 42
7.2 Acquisitions . . . . . . . . . . . . . . . . . . . 43
7.3 Liens and Encumbrances . . . . . . . . . . . . . . 43
7.4 Transactions With Affiliates or Subsidiaries . . . 44
7.5 Guarantees . . . . . . . . . . . . . . . . . . . . 44
7.6 Distributions, Redemptions and Other Indebtedness. 44
7.7 Loans and Investments. . . . . . . . . . . . . . . 45
7.8 Use of Lender's Name . . . . . . . . . . . . . . . 45
7.9 Change in Capital Stock. . . . . . . . . . . . . . 45
7.10 Miscellaneous Covenants. . . . . . . . . . . . . . 45
SECTION 8. DEFAULT. . . . . . . . . . . . . . . . . . . . . 46
8.1 Events of Default. . . . . . . . . . . . . . . . . 46
8.2 Rights and Remedies on Default . . . . . . . . . . 49
8.3 Nature of Remedies . . . . . . . . . . . . . . . . 50
8.4 Set-Off. . . . . . . . . . . . . . . . . . . . . . 51
8.5 CONFESSION OF JUDGMENT . . . . . . . . . . . . . . 51
SECTION 9. MISCELLANEOUS. . . . . . . . . . . . . . . . . . 51
9.1 Governing Law. . . . . . . . . . . . . . . . . . . 51
9.2 Integrated Agreement . . . . . . . . . . . . . . . 51
9.3 Waiver . . . . . . . . . . . . . . . . . . . . . . 52
9.4 Time . . . . . . . . . . . . . . . . . . . . . . . 52
9.5 Expenses of Lender . . . . . . . . . . . . . . . . 52
9.6 Brokerage. . . . . . . . . . . . . . . . . . . . . 53
9.7 Notices. . . . . . . . . . . . . . . . . . . . . . 53
9.8 Headings . . . . . . . . . . . . . . . . . . . . . 54
9.9 Survival . . . . . . . . . . . . . . . . . . . . . 54
9.10 Successors and Assigns . . . . . . . . . . . . . . 54
9.11 Duplicate Originals. . . . . . . . . . . . . . . . 55
9.12 Modification . . . . . . . . . . . . . . . . . . . 55
9.13 Signatories. . . . . . . . . . . . . . . . . . . . 55
9.14 Third Parties. . . . . . . . . . . . . . . . . . . 55
9.15 Discharge of Taxes, Borrowers's Obligations, Etc.. 55
9.16 Withholding and Other Tax Liabilities. . . . . . . 56
9.17 Consent to Jurisdiction. . . . . . . . . . . . . . 56
9.18 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . 56
9.19 Future Commitments . . . . . . . . . . . . . . . . 57
<PAGE>
EXHIBIT LIST
Exhibit 5.1 -- Qualification to do Business
Exhibit 5.2 -- Places of Business
Exhibit 5.3 -- Litigation
Exhibit 5.4 -- Existing Liens and Claims
Exhibit 5.5 -- Patents, Copyrights, Trademarks,
Licenses,
Franchises, etc.
Exhibit 5.8 -- Tax Identification Numbers
Exhibit 5.10 -- Subsidiaries and Affiliates
Exhibit 5.11 -- Existing Guaranties, Investments and
Borrowings
Exhibit 5.12(b) -- Employee Benefit Plans
Exhibit 5.12(c) -- Borrowers' Certificates of Need, Third
Party Payor Contracts and Provider
Numbers
Exhibit 5.13 -- Business Interruptions
Exhibit 5.14 -- Names
Exhibit 5.15 -- Other Associations
Exhibit 5.16 -- Environmental Matters
Exhibit 5.18 -- Capital Stock; Warrants; Options
Exhibit 7.6 -- Distributions, Redemptions and other
Indebtedness
<PAGE>
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Amended and Restated Loan and Security Agreement
("Agreement") dated as of this 8th day of January, 1997 among STAFF
BUILDERS, INC. ("Staff Builders, Inc."), a Delaware corporation
with a place of business at 1983 Marcus Avenue, Lake Success, N.Y.
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").
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, the 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. On January 3, 1996, Borrowers and Lender entered into
that certain Seventh Amendment to Loan and Security Agreement
pursuant to which certain financial covenants were amended (the
"Seventh Amendment").
J. On July 30, 1996, Borrowers and Lender entered into that
certain Eighth Amendment to Loan and Security Agreement pursuant to
which certain Borrowers were added (the "Eighth Amendment").
K. On December 13, 1996, Borrowers and Lender entered into
that certain Ninth Amendment to Loan and Security Agreement
pursuant to which certain Borrowers were added (the "Ninth
Amendment").
L. 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, the Seventh
Amendment, the Eighth Amendment, the Ninth Amendment and all
agreements and documents executed pursuant thereto are sometimes
hereinafter collectively called the "Existing Financing
Agreements."
M. The Revolving Credit is outstanding and in effect on the
date hereof.
N. Borrowers and Lender desire to amend, restate and replace
the Existing Financing Agreements, to increase the Maximum
Revolving Credit Amount and the Acquisition Line and to further
modify certain terms and conditions of the Existing Financing
Agreements.
NOW, THEREFORE, with the foregoing background hereinafter
deemed incorporated by reference herein and made a part hereof, the
parties hereto, intending to be legally bound hereby, promise and
agree as follows:
SECTION 1. DEFINITIONS AND INTERPRETATION
1.1 Terms Defined: As used in this Agreement, the following
terms shall have the following respective meanings:
Account - Any right to payment for goods sold or leased
or for services rendered which is not evidenced by an instrument or
chattel paper, whether or not it has been earned by performance.
Acquisition Line - Section 2.5.
Advance(s) - Any monies advanced or credit extended to
Borrower by Lender under the Revolving Credit, including without
limitation, cash advances and the issuance of letters of credit,
and under the Acquisition Line.
Affiliate - Any entity (other than a Subsidiary), which
directly or indirectly through one or more intermediates controls
or is controlled by or is under common control with any Borrower.
Control may be by ownership, contract, or otherwise.
Book Net Worth - At any time, the amount by which all
assets of Borrowers, exceed all of Borrowers' Liabilities, as would
be shown on a consolidated balance sheet of Borrowers prepared as
of such date in accordance with GAAP.
Business Day - Any day other than a Saturday, Sunday or
legal holiday on which Lender is not open for business in
Philadelphia, PA.
Cash Flow Coverage Ratio - For the fiscal period, the
ratio of (a) the sum of (i) Net Income plus (ii) depreciation plus
(iii) amortization to (b) the sum of (i) the Unfunded Capital
Expenditures plus (ii) the long term indebtedness repaid plus (iii)
permitted stock repurchases actually purchased pursuant to Section
7.6(a) and the cash consideration for permitted acquisitions
actually paid pursuant to Section 7.2.
Closing - Section 4.6.
Closing Date - Section 4.6.
Collateral - Section 3.1.
Current Assets - At any time means all assets of
Borrowers that should be classified as current assets on a
consolidated balance sheet of Borrowers prepared in accordance with
GAAP.
Current Liabilities - At any time means all liabilities
of Borrowers that should be classified as current liabilities on a
consolidated balance sheet of Borrowers prepared in accordance with
GAAP except that it shall include the Loans.
Current Term - The Initial Term during the period of the
Initial Term, and any renewal or extended term during the term
thereof.
Default - An election by Lender to declare Borrowers in
default upon the occurrence of an Event of Default under Section 8
herein.
Distribution -
(1) Dividends or other distributions on capital stock of
any of the Borrowers; and
(2) The redemption, repurchase or acquisition of such
stock or of warrants, rights or other options to purchase such
stock other than for securities of any Borrower.
EBITDA - For any period, (a) the sum of the amounts for
such period of (i) Net Income, (ii) tax expense, (iii) interest
expense, (iv) amortization expense and (v) depreciation expense
less (b) the sum of (i) the amount of other income as shown on
Borrowers' financial statements under the line item "other expenses
[income]" and (ii) the amounts for such period of after-tax gains
on sales of fixed assets and other after-tax extraordinary gains
which are required to be shown, in accordance with GAAP, on
Borrowers' financial statements, to the extent included in Net
Income.
Effective Net Worth - The sum of (i) Book Net Worth
excluding intangible assets as that term would be defined under
GAAP and (ii) subordinated indebtedness.
ERISA - The Employee Retirement Income Security Act of
1974, as the same may be amended, from time to time.
Event of Default - Section 8.1.
Expenses - Section 9.5.
GAAP - Generally accepted accounting principles applied
in a manner consistent with the most recent audited consolidated
financial statements of Borrowers furnished to Lender under Section
5 herein.
Good Business Days - Any Business Day when banks in
Philadelphia, Pennsylvania, New York, New York and London, England
are open for business.
Hazardous Substance - Section 5.16.
Initial Term - Section 2.1(c).
Liabilities - All liabilities of every kind of Borrowers
as would be shown on a consolidated balance sheet of Borrowers
prepared in accordance with GAAP.
LIBOR Based Rate - (i) with respect to Advances
outstanding under the Revolving Credit, the LIBOR Rate plus two
percent (2.00%) per annum, and (ii) with respect to Advances under
the Acquisition Line, the LIBOR Rate plus two and three-quarters
percent (2.75%) percent per annum.
Provided however, upon receipt of Borrowers' annual audited
financial statements required pursuant to Section 6.13(a), if (a)
No Event of Default has occurred or would occur after the giving of
notice, the passage of time, or both, (b) Borrowers have maintained
a minimum average excess availability of Five Million Dollars
($5,000,000) under the Borrowing Base for the thirty (30) days
prior to and on the date of receipt of such financial statements
and (c) Borrowers have complied with the following financial
requirements during the prior fiscal year as shown on such
financial statements, then the LIBOR Based Rate with respect to the
Revolving Credit shall be reduced to the following levels,
effective within ten (10) days of Lender's receipt of such
financial statements:
Borrower maintains during
the prior fiscal year: LIBOR Based Rate
Ratio of Total Funded LIBOR Rate plus two and a
Indebtedness to EBITDA quarter percent (2.25%)
of greater than or per annum
equal to 3.50 to 1.0
Ratio of Total Funded LIBOR Rate plus two percent
Indebtedness to EBITDA (2.00%) per annum
of less than 3.50 to 1.0
but greater than or equal
to 2.25 to 1.0
Ratio of Total Funded LIBOR Rate plus one and
Indebtedness to EBITDA three-quarters percent
of less than 2.25 to 1.0 (1.75%) per annum
but greater than or equal
to 1.50 to 1.0
Ratio of Total Funded LIBOR Rate plus one and a
Indebtedness to EBITDA half percent (1.50%) per
of less than 1.50 to 1.0 annum
LIBOR Based Loan - Any Advance under the Revolving Credit
on which interest accrues at the LIBOR Based Rate and any Advance
under the Acquisition Line on which interest accrues at the LIBOR
Based Rate.
LIBOR Interest Period - Section 2.6.
LIBOR Rate - An annual rate of interest determined by
Lender as being the rate available to Lender at approximately
11:00 a.m. London time in the London Interbank Market, as
referenced by Reuters Screen "LIBO", in accordance with the usual
practice in such market, for the LIBOR Interest Period elected by
Borrower, in effect two Good Business Days prior to the funding
date for a requested LIBOR Based Loan (including those requested in
connection with the conversion of a portion of the Revolving Credit
subject to the Prime Rate Option to a LIBOR Based Loan in
accordance with Section 2.6 hereof), or for a LIBOR Based Loan
which Borrower has elected to continue as a LIBOR Based Loan beyond
the expiration of the then current LIBOR Interest Period with
respect thereto, for deposits of dollars in amounts equal (as
nearly as may be estimated) to the amount of the LIBOR Based Loan
which shall then be loaned by the Lender to Borrower as of the time
of such determination, as such rate may be adjusted by the reserve
percentage applicable during the LIBOR Interest Period in effect
(or if more than one such percentage shall be applicable, the daily
average of such percentages for those days in such LIBOR Interest
Period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including without
limitation, any emergency, supplemental or other marginal reserve
requirement) for the Lender with respect to liabilities or assets
consisting of or including "Eurocurrency Liabilities" as such term
is defined in Regulation D of the Board of Governors of the Federal
Reserve System, as in effect from time to time, having a term equal
to such LIBOR Interest Period ("Eurocurrency Reserve Requirement").
Such adjustment shall be effectuated by calculating, and the LIBOR
Rate shall be equal to, the quotient of (i) the offered rate
divided by (ii) one minus the Eurocurrency Reserve Requirement.
Libor Rate Option - Section 2.6.
Lien - Any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law, statute
or contract, and including, but not limited to, the security
interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale or trust receipt or a lease, consignment or
bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property other than those
which would not materially interfere with Borrowers' use of the
Property or would not materially detract from the value of the
Property. For the purposes of this Agreement, Borrowers shall be
deemed to be the owners of any Property which they have acquired or
hold subject to a conditional sale agreement or other arrangement
pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
Loan Documents - This Agreement, the Revolving Credit
Note, Collateral Pledge Agreements the Lockbox Agreement and each
other document, instrument or agreement required to be delivered
hereby, as amended from time to time.
Loans - All advances and extensions of credit under the
Revolving Credit.
Material Adverse Effect - A material adverse effect on
the business, Property, financial condition or results of
operations of Staff Builders alone, or all the Borrowers as a
whole, or the ability of Staff Builders alone, or all of Borrowers
as a whole, to perform under this Agreement, or of any other
Borrower alone where the effect on such Borrower is due to events
that Lender reasonably believes are likely to have or cause a
similar material adverse effect on the business, Property,
financial condition or results of operations of Staff Builders or
the other Borrowers as a whole, or the ability of Staff Builders or
the other Borrowers as a whole to perform under this Agreement.
Maximum Revolving Credit Amount - Section 2.1(a).
Net Income - The net income after taxes of Borrowers, as
such would appear on a consolidated profit and loss statement of
Borrowers, prepared in accordance with GAAP.
Obligations - All existing and future liabilities of
Borrowers to Lender, including, without limitation, indebtedness
evidenced under the Revolving Credit Note issued pursuant hereto,
the Loans, repayment of cash advances, reimbursement obligations
with respect to letters of credit, all fees and charges owing by
Borrowers, and all other liabilities and obligations of every kind
or nature whatsoever of Borrowers to Lender, whether hereunder or
otherwise, whether now existing or hereafter incurred, joint or
several, matured or unmatured, direct or indirect, primary or
secondary, related or unrelated, due or to become due, including,
but not limited to, any extensions, modifications, substitutions,
increases and renewals thereof, and substitutions therefor; the
payment of all amounts advanced by Lender to preserve, protect,
defend, and enforce its rights hereunder and in the Collateral in
accordance with the terms of this Agreement; and the payment of all
Expenses incurred by Lender in connection therewith.
Person - An individual, partnership, corporation, trust,
unincorporated association or organization, joint venture or any
other entity.
Prime Based Loan - Any Advance under the Revolving Credit
or Acquisition Line on which interest accrues at the Prime Based
Rate.
Prime Based Rate - (i) with respect to Advances
outstanding under the Revolving Credit, the Lender's Prime Rate per
annum, and (ii) with respect to Advances under the Acquisition
Line, the Lender's Prime Rate plus three-quarters of one percent
(.75%) per annum.
Prime Based Rate Option - Section 2.6.
Prime Rate - Section 2.6.
Property - Any interest of any Borrower in any kind of
property or asset, whether real, personal or mixed, or tangible or
intangible.
Qualified Accounts - All Accounts of a Borrower meeting
all the following specifications: (i) it is lawfully and solely
owned by such Borrower and subject to no Lien, or other assignment,
and such Borrower has the right of assignment thereof and the power
to grant a security interest therein; (ii) it is a valid and
enforceable Account, arising from the rendition of health care or
temporary personnel services actually rendered by a Borrower in the
ordinary course of its business; (iii) it is due and owing from a
Qualified Payor that has been approved by Lender under a Qualified
Payor Contract acceptable to Lender (or in the case of home health
care or private duty services provided to an individual where the
contract is with the individual and not the Qualified Payor, it is
due and owing from such individual but is subject to reimbursement
by a Qualified Payor) and is not outstanding more than one-hundred
twenty (120) days from the Friday of the week in which the services
are performed; (iv) it is not subject to any defense, set-off,
counterclaim, deduction, discount, credit, chargeback, allowance or
adjustment of any kind (provided that only the portion of the
Account which is subject to any such defense, set-off,
counterclaim, deduction, discount, credit, chargeback, allowance or
adjustment shall not be deemed a Qualified Account); (v) it is not
subject to any limitations which would make payment by a Qualified
Payor conditional; (vi) the Qualified Payor is not a Subsidiary or
Affiliate of any Borrower; (vii) no notice of the bankruptcy,
receivership, reorganization or insolvency of the Qualified Payor
has been received by any Borrower; (viii) it is not an Account from
a Qualified Payor having its principal place of business or
executive office outside the United States; (ix) no Borrower has
received any note, trade acceptance, draft or other instrument with
respect to or in payment of the Account; (x) there has been no
material adverse change in the Qualified Payor's financial
condition since the date of Lender's approval of such Qualified
Payor; (xi) not more than fifty (50%) percent of the aggregate
Accounts from the Qualified Payor obligated on the Account are
outstanding more than one hundred and twenty (120) days past their
invoice date; (xii) the aggregate of Accounts from the Qualified
Payor does not exceed such percentage of Borrowers' total Accounts
as may be established by Lender from time to time; (xiii) it meets
such other specifications and requirements as may be established by
Lender from time to time. Under no circumstances will Lender
advance against any Account or portion of any Account to the extent
such Account or portion thereof is payable by an individual
recipient of services unless such obligation is subject to
reimbursement by a Qualified Payor. No Account arising from
services provided by any Borrower as part of a joint venture
between such Borrower and any Person shall be a Qualified Account.
In the event of any dispute concerning the foregoing criteria as to
whether an Account is, or has ceased to be, a Qualified Account,
the decision of Lender in the exercise of its sole discretion,
shall control.
Qualified Payor - Any of the following Persons obligated
on any Account: (i) the Health Care Finance Administration of the
Department of Health and Human Services administering the Federal
Medicare program; (ii) any federal, state or county government
entity administering any Medicaid program; (iii) any commercial
payor acceptable to Lender in Lender's sole discretion; and (iv)
any hospital, other managed care payor or Person (excluding
individuals) acceptable to Lender in Lender's sole discretion.
Qualified Payor Contract - Any written agreement, between
any Borrower and any Qualified Payor, who agrees to pay for health
care or temporary personnel services rendered on behalf of such
Borrower.
Revolving Credit - Section 2.1(a).
Revolving Credit Borrowing Base - Section 2.2.
Revolving Credit Note - Section 2.1(b).
Senior Debt - All Liabilities less subordinated
indebtedness.
Staff Builders - Staff Builders, Inc., a Delaware
corporation.
Subsidiary - Any corporation more than fifty (50%)
percent of whose voting stock is legally and beneficially owned by
any of the Borrowers or owned by a corporation more than fifty
(50%) percent of whose voting stock is legally and beneficially
owned by any of the Borrowers.
Support Agreements - Section 3.8.
Total Funded Indebtedness - All indebtedness including,
but not limited to (i) all amounts outstanding under the Revolving
Credit, (ii) long term indebtedness, (iii) capital leases, (iv)
subordinated indebtedness, (v) mortgages and (vi) all other
indebtedness, except for trade debt, accrued expenses and deferred
expenses.
UCC - Uniform Commercial Code.
Unfunded Capital Expenditures - Any expenditure that
would be classified as a capital expenditure on a consolidated
statement of cash flows of Borrowers prepared in accordance with
GAAP.
Working Capital - At any time, the amount by which the
Current Assets of Borrowers exceed the Current Liabilities of
Borrowers, as would be shown on a consolidated balance sheet
prepared as of such date in accordance with GAAP.
1.2 Accounting Principles: Where the character or amount of
any asset or liability or item of income or expense is required to
be determined or any consolidation or other accounting computation
is required to be made for the purposes of this Agreement, this
shall be done in accordance with GAAP, to the extent applicable,
except where such principles are inconsistent with the requirements
of this Agreement.
SECTION 2. THE LOANS
2.1 Revolving Line of Credit - Description:
(a) (i) Lender hereby establishes for the benefit of
Borrowers a Revolving Line of Credit ("Revolving Credit") which
shall include cash sums advanced and other credit extended by
Lender to or for the benefit of Borrowers from time to time
hereunder up to the maximum principal sum of Fifty Million Dollars
($50,000,000) ("Maximum Revolving Credit Amount") at any one time
outstanding, depending upon the requests of Borrowers, and the
availability of Borrowers' Qualified Accounts, and, based upon the
Revolving Credit Borrowing Base, or on such other basis as Lender
may determine in its sole discretion. The outstanding balance
under the Revolving Credit may fluctuate from time to time, to be
reduced by repayments made by Borrowers, and to be increased by
future advances and extensions of credit which may be made by
Lender to or for the benefit of Borrowers. For the purposes of
this Agreement, any determination as to whether there is
availability within the Revolving Credit Borrowing Base for
advances or extensions of credit shall be determined by Lender in
accordance with the provisions of Section 2.2 hereof and shall be
final and binding upon Borrowers. Subject to availability under
the Revolving Credit Borrowing Base, the fulfillment of any other
conditions to borrowing contained in this Agreement and the absence
of a continuing Event of Default or any event which with the giving
of notice or passage of time or both would become an Event of
Default, Borrowers may borrow, repay and reborrow from time to time
during the Current Term. Lender shall have the right to establish
reserves against the Revolving Credit Borrowing Base in such
amounts and with respect to such matters as Lender in its sole
discretion, deems appropriate, including, but not limited to, a
cumulative reserve in the amount of $100,000.00 for each day the
monthly accounts receivable aging required by Section 6.13(a)(iii)
is late.
(ii) As part of the Revolving Credit and subject to
all of its terms and conditions, Lender shall extend Borrowers
credit in the form of standby letters of credit up to a maximum
aggregate amount of One Million ($1,000,000.00) Dollars outstanding
at any one time. No letter of credit will be issued with an expiry
date later than the earlier of: (A) one year after the issuance
date, or (B) the end of the Current Term. Borrowers shall execute
from time to time all letter of credit agreements and other
documents required by Lender for such purposes.
(b) At Closing, Borrowers shall execute and deliver a
promissory note to Lender in form and substance acceptable to
Lender (the "Revolving Credit Note") to evidence its unconditional
obligation to repay Lender for loans, advances, and extensions of
credit made under the Revolving Credit, with interest as herein and
therein provided. Each borrowing and extension of credit under the
Revolving Credit shall be deemed evidenced by the Revolving Credit
Note, which is deemed incorporated herein by reference and made
part hereof.
(c) The term ("Initial Term") of the Revolving Credit
shall expire on July 31, 2000. On such date, all Obligations of
Borrowers to Lender of every kind whatsoever in connection with the
Revolving Credit, unless sooner accelerated by Lender in accordance
with Section 8 below, shall be due and payable in full and after
which date no further advances or extensions of credit shall be
available from Lender.
2.2 Revolving Credit - Borrowing Base: Subject to the terms
and conditions of this Agreement, Advances under the Revolving
Credit shall be considered against and shall at no time exceed up
to the lesser of (i) seventy-five percent (75%) of Borrowers'
Qualified Accounts due from a Qualified Payor or (ii) The Maximum
Revolving Credit Amount less the outstanding principal balance
under the Acquisition Line ("Borrowing Base").
2.3 Revolving Credit - Termination by Borrowers: Borrowers
may, at any time prior to the end of the Initial Term of the
Revolving Credit and on not less than ninety (90) days prior
written notice to Lender, terminate the Revolving Credit: provided,
however, that on the termination date:
(a) Borrowers satisfy all outstanding Obligations and
cause all outstanding letters of credit to be released and returned
to Lender or deposit with Lender cash collateral in sufficient
amounts to cover all such outstanding letters of credit, and
(b) Borrowers also pay to Lender a prepayment fee
("Termination Fee") equal to the appropriate amount designated on
the following schedule:
Year of Initial Term
In Which Prepayment Occurs Termination Fee
From date hereof until 12/31/97 $500,000
1/1/98 to 12/31/98 $300,000
1/1/99 to 12/31/99 $250,000
1/1/00 to 7/31/00 $0
Provided, however, that in the event Borrowers give notice of
termination within 90 days of (i) Borrowers' receipt of a statement
from Lender under Section 2.8 (Capital Adequacy) that an amount is
due to Lender, other than with respect to Letters of Credit issued
by Lender, or (ii) Lender's reduction of the advance rate used by
Lender to determine the Revolving Credit Borrowing Base to sixty
(60%) percent or less without a corresponding deterioration in the
Accounts and provided that no Event of Default has occurred and is
continuing, then Borrowers may terminate this Agreement as provided
in this Section 2.3 without payment of the Termination Fee.
2.4 Collections, Disbursements and Borrowing Availability:
(a) Borrowers shall maintain a lockbox account(s)
("Lender's Lockbox") with Lender and a depository account(s)
("Lender's Cash Collateral Account") with Lender subject to the
provisions of this subparagraph, and shall execute a lockbox
agreement ("Lockbox Agreement") in form and substance acceptable to
Lender, and such other agreements related thereto as Lender may
require. Unless otherwise prohibited by applicable law, all
collections of Accounts shall be paid directly from Qualified
Payors into Lender's Lockbox from which funds shall be transferred
to Lender's Cash Collateral Account, and from which funds shall be
applied by Lender, daily, to reduce the outstanding indebtedness
under the Revolving Credit with future advances and extensions of
credit to be made by Lender under the conditions set forth in this
Section 2. Those collections which, by applicable law, must be
paid directly to Borrowers, shall be sent to a lockbox exclusively
under Borrowers' control ("Borrowers' Lockbox"). Such remittances
shall be deposited by Borrowers, if not prohibited by applicable
law, directly into Lender's Cash Collateral Account or, if so
prohibited then into a depository account ("Borrowers' Cash
Collateral Account") established with Lender. Such remittances
made by wire transfer shall be wired directly into Borrowers' Cash
Collateral Account. All proceeds in Borrowers' Cash Collateral
Account shall be automatically transferred, at the direction of
Borrowers, on a daily basis, to Lenders' Cash Collateral Account.
In the event that proceeds of other Collateral are received by
Borrowers, such collections shall be held in trust for the benefit
of Lender and remitted, in the form received, to Lender for deposit
in Lender's Cash Collateral Account immediately upon receipt by
Borrowers. All funds transferred from Lender's Cash Collateral
Account shall, upon application to Borrowers' indebtedness to
Lender, reduce the Revolving Credit loan balance, but for the
purpose of calculating interest, shall be subject to a one (1) day
clearance period. Interest shall be calculated to reflect such
clearance period on the last day of the month based on the average
daily cleared collections in Lender's Cash Collateral Account for
such month. Borrower shall have no right of access to or
withdrawal from the Lender's Lockbox or Lender's Cash Collateral
Account.
(b) Cash advances made by Lender under the Revolving
Credit shall be made available to Staff Builders, Inc. by crediting
such proceeds to the operating account of Staff Builders, Inc. with
Lender. Advances will be made available to Borrowers on any
Business Day after a telephonic request on behalf of any Borrower
to Lender (made before 11:00 A.M. Philadelphia time) on such
Business Day. If requested by Lender, at its option, Borrowers
will confirm such request, in writing, within one (1) Business Day
of any such telephonic request. Lender reserves its right to
require Staff Builders on behalf of Borrowers to provide a
borrowing base certificate contemporaneously with each loan
request. Lender may rely upon any and all telephonic and written
requests purported to be made by any of the Borrowers through any
of its authorized officers which have been authorized in writing by
such Borrower for such purpose to Lender.
(c) Lender may, in its sole discretion, charge the
operating account of any or all of the Borrowers with Lender for
all of Borrowers' Obligations to Lender as they become due from
time to time under this Agreement including without limitation,
interest, principal, fees and reimbursement of Expenses. Lender
may further charge the Revolving Credit, at Lender's option, for
any and all of Borrowers' Obligations to Lender as they become due
from time to time.
2.5 Acquisition Line:
(a) Lender hereby establishes for the benefit of
Borrowers an Acquisition Line (the "Acquisition Line") to be used
by Borrowers from time to time to finance the intangible portion of
acquisitions by Borrowers up to the maximum principal sum of
Fifteen Million Dollars ($15,000,000) at any one time outstanding.
Each requested Advance under the Acquisition Line is subject to
Bank's approval, must be made at least 30 days prior to the date of
the requested approval and must be accompanied by the following
(all in form and substance acceptable to the Bank):
(i) Historical and projected financial information
regarding the company to be acquired;
(ii) A proforma opening balance sheet of company to
be acquired;
(iii) A statement of the sources and use of cash;
(iv) The draft acquisition agreement or term sheet
for the acquisition; and
(v) All other documents and information Lender may
request.
(b) Each company to be acquired in connection with an
Acquisition Loan must be in the same general business as the
Borrowers.
(c) Each Acquisition Loan shall be fully amortized over
12-48 months depending on the acquisition as determined by Lender
in its sole discretion.
(d) At no time shall the sum of the principal balance of
Advances outstanding under the Acquisition Line and the Revolving
Credit exceed the Maximum Revolving Credit Amount.
2.6 Interest:
(a) Revolving Credit: Interest on outstanding Advances
under the Revolving Credit (including without limitation,
Borrower's obligation to reimburse Lender for payments on letters
of credit) shall be calculated at the Prime Rate Option or the
LIBOR Rate Option.
(b) Acquisition Line: Interest on outstanding Advances
under the Acquisition Line shall be calculated at the Prime Rate
Option or the LIBOR Rate Option.
(c) Prime Rate Option:
(i) All or a portion of the unpaid principal balance
of cash Advances under the Revolving Credit, unless subject to the
LIBOR Rate Option, shall bear interest, subject to the terms
hereof, and
(ii) all or a portion of the unpaid principal
balance of the Acquisition Line, unless subject to the LIBOR Rate
Option, shall bear interest, subject to the terms hereof, at the
Prime Based Rate ("Prime Based Rate Option"). Changes in the Prime
Rate shall become effective on the same day as Lender announces a
change in its Prime Rate. Interest on Prime Based Loans shall be
due and payable in arrears on the first day of each calendar month.
(d) LIBOR Rate Option:
(i) All or a portion of the unpaid principal balance
of Advances under the Revolving Credit and/or all or a portion of
the unpaid principal balance of Advances under the Acquisition
Line, may, at Borrower's option, provided no Event of Default then
exists, bear interest at the LIBOR Based Rate ("LIBOR Rate
Option"). Each Advance to bear interest at the LIBOR Based Rate
must be for a minimum loan amount of one million dollars
($1,000,000) and/or a multiple of one million dollars
($1,000,000).
(ii) LIBOR Based Loans shall be selected for a
period of either a one (1), two (2) or three (3) months' duration,
as the Borrower may elect, during which the LIBOR Based Rate is
applicable ("LIBOR Interest Period"); provided, however, that (A)
if the LIBOR Interest Period would otherwise end on a day which
shall not be a Good Business Day, such LIBOR Interest Period shall
be extended to the next succeeding Good Business Day, unless such
Good Business Day falls in another calendar month, in which case
such LIBOR Interest Period shall end on the next preceding Good
Business Day subject to clause (C) below; (B) interest shall accrue
from and including the first day of each LIBOR Interest Period to,
but excluding the day on which any LIBOR Interest Period expires;
and (C) with respect to any LIBOR Interest Period which begins on
the last Good Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month at the end of such LIBOR Interest Period), the LIBOR Interest
Period shall end on the last Good Business Day of a calendar month.
Interest on a LIBOR Based Loan shall be due and payable in arrears
on the first day of each calendar month commencing the first full
month following the date hereof. No LIBOR Interest Period with
respect to any of the Loans may end after the Initial Term.
Subject to all of the terms and conditions applicable to a request
that all or a portion of new Advance under the Revolving Credit or
that all or a portion of new Advance under the Acquisition Line be
a LIBOR Based Loan, Borrower may extend a LIBOR Based Loan as of
the last day of the LIBOR Interest Period to a new LIBOR Based Loan
or may convert all or a portion of the Revolving Credit Loans
subject to the Prime Rate Option to a LIBOR Based Loan. If the
Borrower fails to notify the Lender of the LIBOR Interest Period
for a subsequent LIBOR Based Loan at least three Good Business Days
prior to the last day of the then current LIBOR Interest Period of
an outstanding LIBOR Based Loan, then such outstanding LIBOR Based
Loan shall become a loan subject to the Prime Rate Option at the
end of the current LIBOR Interest Period for such outstanding LIBOR
Based Loan and shall accrue interest in accordance with
Section 2.6(c) above.
(iii) Notwithstanding the foregoing, at no time may
Borrowers have outstanding more than three (3) LIBOR Based Loans.
(iv) The LIBOR Rate may be automatically adjusted
by Lender on a prospective basis to take into account the
additional or increased cost of maintaining any necessary reserves
for Eurodollar deposits or increased costs due to changes in
applicable law or regulation or the interpretation thereof
occurring subsequent to the commencement of the then applicable
LIBOR Interest Period, including but not limited to changes in tax
laws (except changes of general applicability in corporate income
tax laws as they affect financial institutions) and changes in the
reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor) that increase the cost to
Lender of funding the LIBOR Based Loan. Lender shall promptly give
the Borrower notice of such a determination and adjustment, which
determination shall be conclusive as to the correctness of the fact
and the amount of such adjustment.
(v) In the event that the Borrower shall have
requested the LIBOR Rate Option in accordance with Section 2.6(d)
and Lender shall have reasonably determined that Eurodollar
deposits equal to the amount of the principal of the requested
LIBOR Based Loan and for the LIBOR Interest Period specified are
unavailable, impractical or unlawful, or that the rate based on the
LIBOR Rate will not adequately and fairly reflect the cost of the
LIBOR Based Rate applicable to the specified LIBOR Interest Period,
of making or maintaining the principal amount of the requested
LIBOR Based Loan specified by the Borrower during the LIBOR
Interest Period specified, or that by reason of circumstances
affecting Eurodollar markets, adequate and reasonable means do not
exist for ascertaining the rate based on the LIBOR Rate applicable
to the specified LIBOR Interest Period, Lender shall promptly give
notice of such determination to the Borrower that the rate based on
the LIBOR Rate is not available. A determination by Lender
hereunder shall be prima facie evidence of the correctness of the
fact and amount of such additional costs or unavailability. Upon
such a determination, (A) the right of Borrower to select, convert
to, or maintain a LIBOR Based Loan at the rate based on the LIBOR
Rate shall be suspended until Lender shall have notified the
Borrower that such conditions shall have ceased to exist, (B)
Lender shall use its best efforts to offer to Borrower a
replacement index at a rate with a margin that gives Lender a
comparable yield to the LIBOR Rate Option, and (C) the Loans
subject to the requested LIBOR Rate Option shall accrue interest in
accordance with Section 2.6(c) above.
(vi) In the event that, as a result of any changes
in applicable law or regulation or the interpretation thereof, it
becomes unlawful for Lender to maintain Eurodollar liabilities
sufficient to fund any LIBOR Based Loan subject to the LIBOR Based
Rate, then Lender shall immediately notify Borrowers thereof and
Lender's obligations to make, convert to, or maintain a LIBOR Based
Loan at the LIBOR Based Rate shall be suspended until such time as
Lender may again cause the LIBOR Based Rate to be applicable to any
LIBOR Based Loans of the Revolving Credit Loans subject to the
LIBOR Based Rate shall accrue interest in accordance with Section
2.6(c) above. Promptly after becoming aware that it is no longer
unlawful for Lender to maintain such Eurodollar liabilities, Lender
shall notify Borrower thereof and such suspension shall cease to
exist.
(vii) Indemnity/Loss of Margin: Borrower shall
indemnify, defend and hold harmless Lender against any and all
loss, liability, cost or expense Lender may sustain or incur as a
consequence of (i) any failure of Borrower to obtain, convert or
extend any LIBOR Based Loan after notice thereof has been given to
Lender or (ii) any payment, prepayment, termination or conversion
of a LIBOR Based Loan made for any reason on a date other than the
last day of the applicable LIBOR Interest Period. Borrower shall
pay the full amount thereof to Lender, on demand by Lender.
(viii) In the event that any present or future
law, rule, regulation, treaty or official directive or the
interpretation or application thereof by any central bank, monetary
authority or governmental authority, or the compliance with any
guideline or request of any central bank, monetary authority or
governmental authority (whether or not having the force of law)
imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit, or other similar requirement with respect
to deposits in or for the account of, or loans or advances or
commitment to make loans or advances by, Lender and the result of
any of the foregoing is to increase the costs of Lender, reduce the
income receivable by or return on equity of Lender or impose any
expense upon Lender with respect to any advances or extensions of
credit or commitments to make advances or extensions of credit
under this Agreement, Lender shall so notify Borrowers in writing.
Upon notice from Lender, Borrowers agree to pay Lender the amount
of such increase in cost, reduction in income, reduced return on
equity or capital, or additional expense after presentation by
Lender of a statement concerning such increase in cost, reduction
in income, reduced return on equity or capital, or additional
expense. Such statement shall set forth a brief explanation of the
amount and Lender's calculation of the amount (in determining such
amount Lender may use any reasonable averaging and attribution
methods), which statement shall be conclusively deemed correct
absent manifest error.
(e) Calculation of Interest: Interest shall be computed
daily for the actual number of days elapsed, but calculated on the
basis of a year of 360 days. The interest rate shall change on the
same day as Lender's Prime Rate may change from time to time.
Interest shall be payable monthly, in arrears, on the first day of
each calendar month.
(f) Default Rate: After the occurrence and during the
continuance of an Event of Default hereunder, interest shall accrue
on the outstanding principal balance of the Loans at a per annum
rate equal to two (2%) percent in excess of the contract rate.
(g) Post Judgment Interest: Despite the entry of a
judgment or judgments against any Borrower with respect to any of
the Obligations, such Obligations will continue to earn interest at
the applicable rate as set forth in Section 2.6.
(h) Applicable Interest Limitations: In no contingency
or event whatsoever shall the aggregate of all amounts deemed
interest hereunder and charged and collected pursuant to the terms
of the Agreement exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. In the event that such
court determines Lender has charged or received interest hereunder
in excess of the highest applicable rate, Lender shall promptly
refund such excess interest to the Borrowers and such rate shall
automatically be reduced to the maximum rate permitted by law.
2.7 Fees:
(a) Upon execution of this Agreement, Borrowers shall
unconditionally pay to Lender a non-refundable facility fee
("Facility Fee") of Three Hundred Thousand Dollars ($300,000).
(b) So long as the Revolving Credit is outstanding and
has not been terminated, and the Obligations are not satisfied in
full, Borrowers shall unconditionally pay to Lender a fee ("Usage
Fee") equal to .375% percent per annum of the daily unused portion
of the Revolving Credit, which fee shall be computed on a monthly
basis in arrears and shall be due and payable on the first day of
each month commencing on the first day of the first full month
after Closing.
(c) So long as the Revolving Credit has not been
terminated pursuant to the terms hereof, and the Obligations are
not satisfied in full, Borrowers shall unconditionally pay to
Lender a non-refundable monthly collateral management fee
("Collateral Management Fee") of $7,083.33, payable monthly, in
advance, beginning on the Closing Date and thereafter, on the first
day of each successive month.
(d) Borrowers shall pay to Lender on demand, letter of
credit fees equal to 2.00% per annum ("Letter of Credit Fee") of
the face amount of each letter of credit issued pursuant to Section
2.1(a)(ii) hereof. Borrowers shall also pay all of Lender's
standard charges for the issuance, amendment, extension and
cancellation of such letters of credit.
2.8 Capital Adequacy: If any present or future law,
governmental rule, regulation, policy, guideline, directive or
similar requirement (whether or not having the force of law)
imposes, modifies, or deems applicable any additional capital
adequacy, capital maintenance or similar requirement which affects
the manner in which Lender allocates capital resources to its
commitments (including any commitments hereunder), and as a result
thereof, in the opinion of Lender, the rate of return on Lender's
capital with regard to the Revolving Credit is reduced to a level
below that which Lender could have achieved but for such
circumstances, then in such case and upon notice from Lender to
Borrowers, from time to time, Borrowers shall pay Lender on demand
such additional amount or amounts as shall compensate Lender for
such reduction in Lender's rate of return. Such notice shall
contain the statement of Lender with regard to any such amount or
amounts which shall, in the absence of manifest error, be binding
upon Borrowers. In determining such amount, Lender may use any
method of averaging and attribution that it deems applicable, in
its sole discretion.
2.9 Payments: Except to the extent otherwise set forth in
this Agreement, or as may be otherwise designated by Lender in
writing, all payments of principal and of interest on the Revolving
Credit, the Collateral Management Fee, the Facility Fee, the Usage
Fee, Letter of Credit Fees, the Termination Fee, all other charges
and any other obligations of Borrowers hereunder, shall be made to
Lender at Mellon Bank Center, 1735 Market Street, Philadelphia,
Pennsylvania, in lawful currency of the United States and in
immediately available funds. Any and all payments received by
Lender may be applied to the Obligations in such order as Lender
may determine.
2.10 Use of Proceeds: The proceeds of Lender's advances
under the Revolving Credit shall be used for working capital.
2.11 Nature of Liability: All Obligations of Borrowers are
expressly agreed by each of them to be joint and several.
SECTION 3 - COLLATERAL
3.1 Description: As security for the payment of the
Obligations, and satisfaction by Borrowers of all covenants and
undertakings contained in this Agreement and the other Loan
Documents, each Borrower hereby assigns and grants to Lender a
continuing first (other than as described in Section 5.4 hereof)
lien on and security interest in, upon and to the following
Property (the "Collateral"):
(a) Accounts, Contract Rights, Etc. - All of such
Borrower's now owned and hereafter acquired or arising accounts,
accounts receivable, notes receivable, contract rights, chattel
paper, documents (including documents of title), instruments,
invoices;
(b) Inventory - All of such Borrower's now owned or
hereafter acquired inventory of every nature and kind, wherever
located;
(c) General Intangibles - All of such Borrower's now
owned and hereafter acquired or arising general intangibles of
every kind and description, including, but not limited, to all
existing and future customer lists, choses in action, claims,
books, records, patents and patent applications, copyrights, trade-
marks, tradenames, tradestyles, trademark applications, blueprints,
drawings, designs and plans, trade secrets, contracts, licenses,
license agreements, franchises, franchise agreements, formulae, tax
and any other types of refunds, returned and unearned insurance
premiums, rights and claims under insurance policies including
without limitation, credit insurance policies, and computer
information, software, records, data;
(d) Equipment - All of such Borrower's now owned and
hereafter acquired equipment, including without limitation,
machinery, vehicles, furniture and fixtures, wherever located, and
all replacements, parts, accessories, substitutions and additions
thereto;
(e) Deposit Accounts - All of such Borrower's now
existing and hereafter acquired or arising deposit accounts of
every nature, wherever located, and all documents and records
associated therewith;
(f) Property in Lender's Possession - All Property of
such Borrower, now or hereafter in Lender's possession;
(g) Stock - All stock of each Borrower other than Staff
Builders, of every kind and nature.
(h) Proceeds - The proceeds (including, without
limitation, insurance proceeds) of all of the foregoing.
3.2 Lien Documents: At Closing and thereafter as Lender
reasonably deems necessary, Borrowers shall execute and deliver to
Lender, or have executed and delivered (all in form and substance
satisfactory to Lender):
(a) Financing Statements - Financing statements pursuant
to the UCC, which Lender may file in any jurisdiction where any
Collateral is or may be located and in any other jurisdiction that
Lender deems appropriate; and
(b) Stock Pledge Agreements with Stock Certificates and
Blank Stock Powers - Stock pledge agreements covering the stock
described in Section 3.1(g) above accompanied by delivery of
original stock certificates representing all stock of every kind
and nature of each Borrower other than Staff Builders, together
with stock powers, duly executed in blank by each Borrower for the
stock of any other Borrower which it owns.
(c) Other Agreements - Any other agreements, documents,
instruments and writings required to evidence, perfect or protect
Lender's lien and security interest in the Collateral required
hereunder or as Lender may request from time to time.
3.3 Other Actions: In addition to the foregoing, Borrowers
shall do anything further that may be lawfully and reasonably
required by Lender to secure Lender and effectuate the intentions
and objects of this Agreement, including, but not limited to, the
execution and delivery of lockbox agreements, continuation
statements, amendments to financing statements, security
agreements, contracts and any other documents required hereunder.
At Lender's request, Borrowers shall also immediately deliver to
Lender all items for which Lender must receive possession to obtain
a perfected security interest, including without limitation, all
notes, stock certificates, other certificates and documents of
title, chattel paper, warehouse receipts, instruments, and any
other similar instruments constituting Collateral.
3.4 Searches: Lender shall, prior to or at Closing, and
thereafter as Lender may determine from time to time at Borrowers'
expense, obtain the following searches (the results of which are to
be consistent with the warranties made by Borrowers in this
Agreement):
(a) UCC searches with the Secretary of State and local
filing office of each state where any Borrower maintains its
executive offices, a place of business, or assets;
(b) Judgment, federal tax lien and corporate tax lien
searches, in each county of each state searched under subparagraph
(a) above.
Borrowers shall, prior to or at Closing and at their
expense, obtain and deliver to Lender good standing certificates
showing each Borrower to be in good standing in its state of
incorporation and in each other state in which it is doing and
presently intends to do business for which qualification is
required, except where the failure to be so qualified or in good
standing does not have a Material Adverse Effect.
3.5 Landlord's Waivers: Within 270 days of Closing,
Borrowers will cause the owner of the premises occupied by or to
be occupied by Staff Builders to execute and deliver to Lender an
instrument, in form and substance satisfactory to Lender, under
which such owner(s) agrees to allow Lender to remain on such
premises to dispose of or deal with any Collateral located thereon.
Nothing herein shall require Borrower to reach any settlement with
such owner(s) in the current dispute between Staff Builders and
such owner(s).
3.6 Filing Security Agreement: A carbon, photographic or
other reproduction or other copy of this Agreement or of a
financing statement is sufficient as and may be filed in lieu of a
financing statement.
3.7 Power of Attorney: Each of the officers of Lender is
hereby irrevocably made, constituted and appointed the true and
lawful attorney for each of the Borrowers (without requiring any of
them to act as such) with full power of substitution to do the
following: (1) endorse the name of any Borrower upon any and all
checks, drafts, money orders and other instruments for the payment
of monies that are payable to any Borrower and constitute
collections on such Borrowers' Accounts; (2) execute in the name of
any Borrower any financing statements, schedules, assignments,
instruments, documents and statements that any Borrower is
obligated to give Lender hereunder; and (3) do such other and
further acts and deeds in the name of Borrowers that Lender may
reasonably deem necessary or desirable to enforce any Account or
other Collateral or perfect Lender's security interest or lien in
the Collateral.
3.8 Management Support Agreements and Fraud Guarantees: A
management support agreement and fraud guarantee ("Support
Agreement"), each in favor of and in form and substance acceptable
to Lender shall be executed and delivered to Lender by Stephen
Savitsky, David Savitsky and Gary Tighe.
3.9 Application of Collateral Proceeds. Except to the extent
otherwise agreed by Lender in writing, all collections and proceeds
of Collateral at any time and from time to time generated from the
Collateral which may at any time be received by any Borrower are to
be held in trust for Lender and immediately paid to Lender for
application to the Obligations.
SECTION 4. CLOSING AND CONDITIONS PRECEDENT TO ADVANCES
Closing is subject to the following conditions precedent (all
documents to be in form and substance satisfactory to Lender and
Lender's counsel):
4.1 Resolutions, Opinions, and Other Documents: Borrowers
shall have delivered to Lender the following:
(a) this Agreement and the Revolving Credit Note all
properly executed by each Borrower;
(b) each Loan Document required to be executed by
Borrowers or by any other Person under any provision of this
Agreement or any related agreement;
(c) certified copies of (i) resolutions of each
Borrower's board of directors authorizing the execution and
performance of this Agreement, the Revolving Credit Note to be
issued hereunder and each document required to be delivered by any
Section hereof and (ii) each Borrower's Certificate of
Incorporation and by-laws;
(d) an incumbency certificate for each Borrower;
(e) a good standing certificate for each Borrower;
(f) a written opinion of Borrowers' independent counsel
addressed to Lender;
(g) such financial statements, reports, certifications
and other operational information required to be delivered
hereunder, including without limitation an initial borrowing base
certificate calculating the Revolving Credit Borrowing Base;
(h) updated projections, on a monthly and consolidated
basis, for the first twelve (12) months after Closing, including
profit and loss statements, cash flow statements and balance
sheets.
(i) certification by the chief financial officer of
Staff Builders on behalf of Borrowers that there has not occurred
any material adverse change, since November 30, 1991, in the
operations, condition (financial or otherwise) and business
prospects of Staff Builders or of Borrowers as a whole;
(j) payment of the Facility Fee and Collateral
Management Fee;
(k) all documents and agreements required with respect
to the Collateral, including without limitation, financing state-
ments;
(l) evidence that all of Borrowers' obligations on its
existing line of credit with Citicorp have been satisfied and all
liens related thereto have been terminated;
(m) executed Support Agreements;
(n) evidence that after all Closing payments, costs, and
expenditures, and other then current expenditures (including
without limitation, unfunded but accrued gross payroll), all
initial advances under the Revolving Credit, Borrowers have a
minimum borrowing availability of Four Million ($4,000,000.00)
Dollars under the Revolving Credit Borrowing Base which shall be
confirmed by Lender's Pre-Closing field examination;
4.2 Absence of Certain Events: At the Closing Date, no Event
of Default hereunder shall have occurred and be continuing, and no
event shall have occurred and be continuing which, with the passage
of time, or the giving of notice, or both, would constitute an
Event of Default hereunder.
4.3 Warranties and Representations at Closing: The
warranties and representations contained in Section 5 as well as
any other Section of this Agreement shall be true and correct on
the Closing Date with the same effect as though made on and as of
that date.
4.4 Compliance with this Agreement: Borrowers shall have
performed and complied with all agreements, covenants and
conditions contained herein which are required to be performed or
complied with by Borrowers before or at the Closing Date,
including, without limitation, the provisions of Section 6 hereof.
4.5 Officer's Certificate: Staff Builders shall provide
Lender with an officer's certificate signed by its chief executive
officer certifying that all conditions to Closing contained in this
Agreement have been fulfilled.
4.6 Closing: Subject to the conditions of this Section, the
Loans shall be made available on such date (the "Closing Date") and
at such time as may be mutually agreeable to the parties
contemporaneously with the execution hereof (the "Closing") at such
place as may be requested by Lender.
4.7 Waiver of Rights: By completing the Closing hereunder,
or by making advances hereunder, Lender does not thereby waive a
breach of any warranty or representation made by Borrowers
hereunder or any agreement, document, or instrument delivered to
Lender or otherwise referred to herein, and all of Lender's claims
and rights resulting from any breach or misrepresentation by
Borrowers are specifically reserved by Lender.
SECTION 5. REPRESENTATIONS AND WARRANTIES
Borrowers warrant and represent to Lender that:
5.1 Corporate Organization and Validity:
(a) Except as set forth on Exhibit "5.1", each of the
Borrowers is a corporation duly organized and to the best of Staff
Builders' knowledge is validly existing under the laws of its state
of incorporation, is duly qualified, is in good standing and has
lawful power and authority to engage in business in each state
where the nature and extent of its business requires qualification,
except where the failure to be so qualified or in good standing
does not have a Material Adverse Effect. A list of all states and
other jurisdictions where Borrowers are qualified to do business is
attached hereto as Exhibit "5.1" and made a part hereof.
(b) The making and performance of this Agreement and
each Loan Document required by any Section hereof will not violate
any law, government rule or regulation, or the charter, minutes or
bylaw provisions of any of the Borrowers or violate or result in a
default (immediately or with the passage of time) under any con-
tract, agreement or instrument to which any of the Borrowers is a
party, or by which they are bound, except for violations or
defaults which would not have a Material Adverse Effect. None of
the Borrowers is in violation of any term of any agreement or
instrument to which it is a party or by which it may be bound or of
its charter, minutes or its bylaws, except for violations which
would not have a Material Adverse Effect.
(c) Each of the Borrowers has all requisite corporate
power and authority to enter into and perform this Agreement and to
incur the obligations herein provided for, and has taken all proper
and necessary corporate action to authorize the execution, delivery
and performance of this Agreement, and the other Loan Documents.
(d) This Agreement, the Revolving Credit Note to be
issued hereunder, and all other Loan Documents, when delivered,
will be valid and binding upon Borrowers and enforceable in accord-
ance with their respective terms.
5.2 Place of Business: The only places of business of each
of the Borrowers, and the place where they keep and intend to keep
their Property and records concerning their Property, are at the
addresses listed in Exhibit "5.2" attached hereto and made part
hereof.
5.3 Pending Litigation: Except as set forth on Exhibit "5.3"
attached hereto and made part hereof, there are no judgments or
judicial or administrative orders or proceedings pending, or to the
knowledge of any of the Borrowers, threatened against or affecting
any of the Borrowers in any court or before any governmental
authority or arbitration board or tribunal. None of the Borrowers
is in default with respect to any order of any court, governmental
authority, regulatory agency or arbitration board or tribunal.
5.4 Title to Properties: Each Borrower has exclusive title
to all Property it purports to own in fee simple (or its equivalent
under applicable law) free from Liens and free from the claims of
any other Person, except for (i) those Liens set forth on Exhibit
"5.4" attached hereto and made part hereof, (ii) Liens of the type
permitted in section 7.3, and (iii) Liens to be released or
discharged contemporaneously with the Closing.
5.5 Patents and Trademarks: Each Borrower owns or has the
unconditional right to use all the patents, patent applications,
trademarks, trademark applications, service marks, trade names,and
copyrights, that are material for the present and planned future
conduct of its business, without any known conflict with the rights
of others. A list of all such patents, patent applications, trade-
marks, trademark applications and copyrights owned or otherwise
possessed by Borrowers (indicating the nature of each Borrower's
interest) is attached hereto as Exhibit "5.5", and made a part
hereof. No Borrower is in default of any obligation or undertaking
with respect to such Property or rights.
5.6 Governmental Consent: Neither the nature of any Borrower
or of its business or Property, nor any relationship between any or
all Borrowers and any other Person, nor any circumstance affecting
each Borrower in connection with the issuance or delivery of the
Revolving Credit Note, is such as to require a consent, approval or
authorization of, or filing (other than filing of UCC-1 financing
statements), registration or qualification with, any governmental
authority on the part of Borrowers in conjunction with the exe-
cution and delivery of this Agreement or the issuance or delivery
of the Revolving Credit Note, or other Loan Documents.
5.7 Taxes: All tax returns required to be filed by any
Borrower in any jurisdiction have in fact been filed, and all
taxes, assessments, fees and other governmental charges upon
Borrowers, or upon any of its Property, income or franchises, which
are due and payable have been paid, except for those taxes being
contested in good faith with due diligence by appropriate
proceedings for which appropriate reserves have been maintained
under GAAP. None of the Borrowers are aware of any proposed
additional tax assessment or tax to be assessed against or
applicable to any of the Borrowers.
5.8 Financial Statements: The fiscal year of each of the
Borrowers ends on the last day of February. Each Borrower's
federal tax identification number is listed on Exhibit "5.8"
attached hereto and made a part hereof.
5.9 Full Disclosure: Neither the financial statements
referred to in Section 5.8, nor this Agreement or related
agreements and documents or any written statement furnished by
Borrowers to Lender in connection with the negotiation of the Loans
and contained in any financial statements or documents relating to
the Collateral contain any untrue statement of a material fact or
omit a material fact necessary to make the statements contained
therein or herein not misleading. There is
no fact known to any officer of any of the Borrowers which any of
the Borrowers have not disclosed to Lender in writing, which
materially affects adversely or may materially affect adversely all
or any of the Borrowers' Property, business or financial condition
or the ability of Borrowers to perform this Agreement.
5.10 Subsidiaries and Affiliates: All Subsidiaries and
Affiliates of Borrowers are listed on Exhibit 5.10.
5.11 Guarantees, Contracts, etc.:
(a) None of the Borrowers owns or holds any equity or
long term debt investments in, have any outstanding advances to,
have any outstanding guarantees for the obligations of, or have any
outstanding borrowings from, any Person other than a Borrower or a
Subsidiary of a Borrower, except as described in Exhibit "5.11",
attached hereto and made part hereof.
(b) No Borrower is a party to any contract or agreement,
or subject to any charter or other corporate restriction, which has
a Material Adverse Effect.
(c) Except as otherwise specifically provided in this
Agreement, none of the Borrowers has agreed or consented to cause
or permit any of its Property whether now owned or hereafter
acquired to be subject in the future (upon the happening of a
contingency or otherwise) to a Lien not permitted by this
Agreement, other than Liens that are being released or discharged
contemporaneously with the Closing.
5.12 Government Regulations, etc.:
(a) The use of the proceeds of the Loans and Borrowers'
issuance of the Revolving Credit Note, will not directly or
indirectly violate or result in a violation of the Securities Act
of 1933 or the Securities Exchange Act of 1934, as amended, or any
regulations issued pursuant thereto, including, without limitation,
Regulations U, T, G and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R., Chapter II. No Borrower owns or intends
to carry or purchase any "margin security" within the meaning of
said Regulations.
(b) To the best of Borrowers' knowledge, except as
disclosed on Exhibit 5.12(b), (i) each Employee Benefit Plan, as
defined in Section 3(3) of ERISA, (other than a multi-employer plan
described in Section 3(37) of ERISA) maintained by a Borrower or in
which any Borrower is a participating employer has been maintained
in all material respects in accordance with its terms and with
applicable law, and (ii) each such Employee Benefit Plan which is
intended to be tax-qualified currently satisfies to the extent
required by applicable law, and for all years subsequent to the
establishment of such Plan and with respect to which Borrowers'
income tax returns are open to audit, has satisfied, the
requirements of Section 401(a) of the Code, except that if any
such requirement has not been satisfied, the failure to satisfy
such requirements has not had, and in the future will not have, a
Material Adverse Effect (assuming the continued conduct of the
Borrowers' business is substantially consistent with past
practice), (iii) no such Employee Benefit Plan has engaged in or
been involved in a non-exempt Prohibited Transaction (as defined in
ERISA) under ERISA or the Internal Revenue Code, and (iv) no such
Employee Benefit Plan has been terminated, which termination would
have a Material Adverse Effect. Borrowers or any member of a
Controlled Group (as defined in ERISA) including Borrowers, have
not received notice of a claim asserted against Borrowers or other
members of the Controlled Group for withdrawal liability (as
defined in the Multiemployer Pension Plan Amendments Act of 1980,
as amended) with respect to any multiemployer pension plan.
Borrowers have timely made all contributions when due with respect
to any multiemployer pension plan in which any of them participate
and, no event has occurred triggering a claim against Borrowers or
any member of a Controlled Group including Borrowers for withdrawal
liability with respect to any multi-employer pension plan. All
Employee Benefit Plans maintained by and multi-employer plans
contributed to by any Borrower are listed on Exhibit 5.12(b)
attached hereto and made a part hereof.
(c) No Borrower is in violation of any applicable
material statute, regulation or ordinance of the United States of
America, or of any state, city, town, municipality, county or of
any other jurisdiction, or of any agency thereof, (including
without limitation, environmental laws and regulations) and all
Borrowers possess all material licenses, permits and governmental
approvals needed to operate their business, except where such
violation or failure to possess would not have a Material Adverse
Effect. Each Borrower has obtained and currently has all
certificates of need and Medicare and Medicaid provider numbers as
are necessary to operate its business. A list of each Borrower's
certificates of need, Qualified Payor Contracts, and provider
numbers are listed on Exhibit 5.12(c). All cost reports required
to be filed with Qualified Payors have been filed.
(d) Borrowers are current with all reports and documents
required to be filed with any state or federal securities
commission or similar agency and is in full compliance in all
material respects with all applicable rules and regulations of such
commissions.
5.13 Business Interruptions: To the best of Staff Builders'
knowledge, within five (5) years prior to the date hereof, neither
the business, Property or operations of any of the Borrowers have
been materially and adversely affected in any way by any casualty,
strike, lockout, combination of workers, order of the United States
of America, or any state or local government, or any political
subdivision or agency thereof, directed against any of the
Borrowers. There are no pending or, to the Borrowers' knowledge,
threatened labor disputes, strikes, lockouts or similar occurrences
or grievances against the business being operated by any of the
Borrowers, other than disputes with individual employees, except as
set forth on Exhibit "5.13".
5.14 Names: Since July 6, 1988, except as provided in Exhibit
"5.14" none of the Borrowers have conducted business under or used
any other names (whether corporate or assumed) except for their
present corporate names. Each Borrower is the sole owner of its
name, other than Staff Builders, Inc., a Delaware corporation, and
Staff Builders, Inc., a New York corporation which share the same
name, and other than licenses of the name Staff Builders and other
names to franchisees, and any and all business done and all
invoices represent sales and business of each respective Borrower
conducted in such Borrowers' name.
5.15 Other Associations: None of the Borrowers is engaged in
any joint venture or partnership with any other Person or is a
party to any franchise agreement or other arrangement except as
listed on Exhibit 5.15 attached hereto and made part hereof.
5.16 Environmental Matters: None of the Borrowers has
knowledge, except as disclosed on Exhibit "5.16" attached hereto
and made part hereof:
(a) of the presence of any Hazardous Substances on any
of the real property on which the Collateral is located, or
(b) of any on-site spills, releases, discharges,
disposal or storage of Hazardous Substances that have occurred or
are presently occurring on any of such real property, or
(c) of any spills, releases, discharges or disposal of
Hazardous Substances that have occurred, are presently occurring
off such real properties or as a result of the activities of any of
the Borrowers, or
(d) of any notice, summons, citation or other
communication sent to any Borrower from any state or federal agency
concerning any intentional or unintentional action or conduct,
inaction or omission, past or present which is or may be in
violation of any state or federal environmental law, rule or
regulation.
As used herein, the term "Hazardous Substances" means any
substances defined or designated as hazardous or toxic waste,
hazardous or toxic material, hazardous or toxic substance or
similar term, by any environmental statute, rule or regulation of
any governmental entity presently in effect and applicable to such
real property.
5.17 Regulation O: No director, executive officer or
principal shareholder of any of the Borrowers is a director,
executive officer or principal shareholder of Lender. For the
purposes hereof the terms "director" (when used with reference to
Lender), "executive officer" and "principal shareholder" have the
respective meanings assigned thereto in Regulation O issued by the
Board of Governors of the Federal Reserve System.
5.18 Capital Stock: The authorized and outstanding capital
stock of each of the Borrowers is as set forth on Exhibit "5.18"
attached hereto and made part hereof. To the best of Borrowers'
knowledge, all of the capital stock of each of the Borrowers has
been duly and validly authorized and issued and is fully paid and
nonassessable and has been sold and delivered to the holders
thereof in compliance with, or under valid exemption from, all
Federal and state laws and the rules and regulations of all
regulatory bodies thereof governing the sale and delivery of
securities. Except as provided in Exhibit 5.18, there are no
subscriptions warrants, options, calls, commitments, rights or
agreements by which any of the Borrowers or any of the shareholders
of any of the Borrowers are bound relating to the issuance,
transfer, voting or redemption of shares of its capital stock or
any pre-emptive rights held by any Person with respect to the
pre-emptive rights held by any party with respect to the shares of
capital stock of any Borrower. Except as provided in Schedule
5.18, no Borrower has issued and currently has outstanding any
securities convertible into or exchangeable for shares of its
capital stock or any options, warrants or other rights to acquire
such shares or securities convertible into or exchangeable for such
shares.
5.19 Interrelationship of Borrowers: Borrowers have common
corporate purposes and interrelated business operations which
compliment each other. The creation and implementation of the
Revolving Credit will provide direct and indirect benefit, economic
and otherwise, to all Borrowers regardless of which particular
Borrower may receive from time to time advances from Lender under
the Revolving Credit.
5.20 Solvency: Each Borrower is able to pay its debts as they
become due, has sufficient capital to carry on its business
operations, and presently owns property having a fair salable value
which is greater than the amount required to pay all of such
Borrower's debts as they become due.
SECTION 6. BORROWERS' AFFIRMATIVE COVENANTS
Borrowers covenant that until all of Borrowers' Obligations to
Lender are paid and satisfied in full and the Revolving Credit has
been terminated:
6.1 Payment of Taxes and Claims: Borrowers shall pay, before
they become delinquent,
(a) all taxes, assessments and governmental charges or
levies imposed upon any of them or upon the Collateral, and
(b) all claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, which, if
unpaid, might result in the imposition of a Lien upon its Property;
Provided, however, that Borrowers shall not be required
to pay any such tax, assessment, charge, levy , claim or demand if
the amount, applicability or validity thereof shall at the time be
contested in good faith and by appropriate proceedings by
Borrowers, and if Borrowers shall have set aside on its books
adequate reserves in respect thereof, if so required in accordance
with GAAP; which deferment of payment is permissible so long as
Borrowers' title to, and its right to use, the Collateral are not
materially adversely affected thereby and Lender's lien and
priority on the Collateral are not materially and adversely
affected, altered or impaired thereby.
6.2 Maintenance of Properties, Collateral and Corporate
Existence:
(a) Property: Each of the Borrowers shall maintain its
Property in good condition in all material respects and make all
renewals, replacements, additions, betterments and improvements
thereto in the ordinary course of such Borrowers' business, as
Borrowers deem reasonably necessary in good faith in the exercise
of its business judgment, and will pay and discharge when due the
cost of repairs and maintenance to its Property.
(b) Insurance: Borrowers shall maintain insurance on all
insurable tangible Collateral against fire, flood, casualty and
such other hazards as may be reasonably acceptable to Lender in
such amounts, with such deductibles and with such insurers as may
be acceptable to Lender in its reasonable judgment. The policies
of all such casualty insurance shall contain standard Lender's Loss
Payable Clauses issued in favor of Lender under which all losses
thereunder shall be paid to Lender as Lender's interest may appear.
Such policies shall expressly provide that the requisite insurance
cannot be altered or canceled without thirty (30) days prior
written notice to Lender and shall insure Lender notwithstanding
the act or neglect of Borrowers. At or prior to Closing, Borrowers
shall furnish Lender with duplicate original policies of insurance
or such other evidence of insurance as Lender may reasonably
require. In the event Borrowers fail to procure or cause to be
procured any such insurance or to timely pay or cause to be paid
the premium(s) on any such insurance, Lender may do so for
Borrowers, but Borrowers shall continue to be liable for the same.
Each of the Borrowers hereby appoints Lender as such Borrowers'
attorney-in-fact, exercisable at Lender's option, upon the
occurrence and continuation of an Event of Default to endorse any
check which may be payable to Borrowers in order to collect the
proceeds of such insurance and any amount or amounts collected by
Lender pursuant to the provisions of this paragraph may be applied
by Lender to any liabilities owing by Borrowers to Lender or to
repair, reconstruct or replace the loss of or damage to Collateral
as Lender in its sole judgment may from time to time determine.
(c) Public and Products Liability Insurance: Borrowers
shall maintain, and shall deliver to Lender upon Lender's request
evidence of, general liability and professional liability
insurance in such amounts as is customary for companies in the same
or similar businesses located in the same or similar area.
(d) Financial Records: Borrowers shall keep current and
accurate books of records and accounts in which full and correct
entries will be made of all of its business transactions, and will
reflect in their consolidated financial statements adequate
accruals and appropriations to reserves, all in accordance with
GAAP. Borrowers shall backup its records of accounts daily, and
its entire computer system weekly, and shall store such weekly
information at a secure off-site facility acceptable to Lender.
(e) Corporate Existence and Rights: Borrowers shall do
(or cause to be done) all things necessary to preserve and keep in
full force and effect their existence, good standing, rights and
franchises, provided however, that any Borrower (other than Staff
Builders) or Subsidiary of any Borrower may merge into another
Borrower or dissolve and distribute its assets to another Borrower.
(f) Compliance with Law: No Borrower shall be in
violation of any laws, ordinances, governmental rules and
regulations to which it is subject, and will not fail to obtain any
licenses, permits, franchises or other governmental authorizations,
necessary to the ownership of its Property or to the conduct of its
businesses, which violation or failure to obtain would Materially
Adversely Affect the business, prospects, Property or financial
condition of Staff Builders or Borrowers collectively or the
ability of Staff Builders or Borrowers as a whole to perform under
this Agreement.
(g) Updated Qualified Payor Information: The
certificates of need, provider numbers and Qualified Payor
Contracts listed on Exhibit 5.12(c) shall not be amended, altered,
suspended, terminated, or made provisional, in any material way,
without prior written notice to Lender. Borrowers shall
immediately notify Lender in writing of any Borrower's application
for any new certificates of need, and any new provider numbers and
Qualified Payor Contracts.
(h) Collection of Accounts: Each of the Borrowers shall
continue to collect their Accounts in the ordinary course of their
business subject to the provisions hereof.
6.3 Places of Business: Each of the Borrowers shall give
thirty (30) days prior written notice to Lender of any change in
the location of any of their respective places of business (other
than a move of any office other than the corporate office to a
location within the same county), of the places where their records
concerning their Accounts are kept, of the places where the Col-
lateral is kept, or of the establishment of any new, or the
discontinuance of any, existing places of businesses.
6.4 Business Conducted: Each of the Borrowers shall continue
in the business presently operated by them using their best efforts
to maintain their customers and goodwill, provided however, that
any Borrower (other than Staff Builders) or a Subsidiary of any
Borrower may merge into another Borrower or dissolve and distribute
its assets to another Borrower. None of the Borrowers shall
engage, directly or indirectly, in any line of business substan-
tially different from the business conducted by it immediately
prior to the Closing Date, or engage in business or lines of
business which are not reasonably related thereto. No Subsidiary
which is not a Borrower shall conduct any business.
6.5 Litigation: Borrowers shall give prompt written notice
to Lender of any litigation pending, or to their knowledge
threatened or affecting Borrowers or any of them if the amount
claimed is more than $50,000.00 unless fully covered by insurance
less a deductible not to exceed $25,000.00.
6.6 Issue Taxes: Borrowers shall pay all taxes (other than
taxes based upon or measured by Lender's income or revenues or any
personal property tax), if any, in connection with the issuance of
the Revolving Credit Note, and the recording of any Lien documents.
The obligations of Borrowers under this Section 6.6 shall survive
the payment of Borrowers' indebtedness hereunder and the termi-
nation of this Agreement.
6.7 Bank Accounts: Each of the Borrowers shall maintain
their major depository and disbursement account(s) with Lender and
shall notify Lender, in writing, prior to opening any account(s)
subsequent to the Closing Date at any bank or financial institution
other than Lender.
6.8 Employee Benefit Plans: Each Borrower will (a) fund all
its Employee Benefit Plans in a manner that will satisfy the
minimum funding standards of Section 302 of ERISA, or will promptly
satisfy any accumulated funding deficiency that arises under
Section 302 of ERISA, (b) furnish Lender, promptly after the filing
of the same, with copies of all annual reports (Form 5500) or other
material statements filed with the United States Department of
Labor, the Pension Benefit Guaranty Corporation ("PBGC") or the
Internal Revenue Service ("IRS") with respect to all Employee
Benefit Plans that are defined benefit plans, or which any of the
Borrowers, or any material notices, any member of a Controlled
Group, may receive from the United States Department of Labor, the
IRS or the PBGC, with respect to all such Employee Benefit Plans,
and (c) promptly advise Lender of the occurrence of any Reportable
Event (as defined in Section 4043 of ERISA other than the type of
event with respect to which the PBGC has waived the 30-day notice
requirement of Section 4043 of ERISA) or non-exempt Prohibited
Transaction with respect to any such Employee Benefit Plan(s) and
the action which Borrowers proposes to take with respect thereto.
Borrowers will make all contributions when due with respect to any
multi-employer pension plan in which any of them participates and
will promptly advise Lender (i) upon its receipt of notice of the
assertion against any of the Borrowers of a claim for withdrawal
liability, (ii) upon the occurrence of any event which, to the best
of Borrowers' knowledge, would trigger the assertion of a claim for
withdrawal liability against Borrowers, and (iii) upon the
occurrence of any event which, to the best of Borrowers' knowledge,
would place Borrowers in a Controlled Group (other than those
Controlled Groups in which any of the Borrowers is a member as of
the Closing Date) as a result of which any member (including any of
the Borrowers) thereof may be subject to a claim for withdrawal
liability, whether liquidated or contingent which would result in
a Material Adverse Effect.
6.9 Submission of Collateral Documents: Borrowers will, on
demand of Lender, make available to Lender copies of proof of the
satisfactory performance of services that gave rise to an Account,
a copy of the invoice for each Account and copies of any written
contract or order from which an Account arose. Borrowers shall
promptly notify Lender if an Account becomes evidenced or secured
by an instrument or chattel paper and upon request of Lender, will
promptly deliver any such instrument or chattel paper to Lender.
6.10 Other Governmental Contracts: Borrowers will
immediately notify Lender if any Account arises out of contracts
with the United States or any department, agency or instrumentality
thereof other than the Health Care Finance Administration, and to
the extent permitted under applicable law will execute any
instruments and take any steps required by Lender so that all
monies due and to become due under such contract shall be assigned
to Lender and notice thereof given to and acknowledged by the
appropriate government agency or authority under the Federal
Assignment of Claims Act.
6.11 Warranties for Future Advances: Each request by any of
the Borrowers for an advance under the Revolving Credit in any form
following the Closing Date shall constitute an automatic
representation and warranty by Borrowers to the effect that:
(a) No Event of Default, or event or condition which
with the giving of notice or passage of time, or both, would
constitute an Event of Default, then exists;
(b) Each advance is within and complies with the terms
and conditions of this Agreement; and
(c) Each representation and warranty set forth in
Section 5 of this Agreement is then true and correct in all
material respects, as though made on the funding date for such
advance, except for changes otherwise permitted by this Agreement
or which are consented to by Lender in writing.
6.12 Financial Covenants: Borrowers shall maintain and comply
with the following financial covenants:
(a) Unfunded Capital Expenditures: Borrowers shall not
expend for Unfunded Capital Expenditures more than $1,227,132 for
the seven months ending September 30, 1996.
(b) Effective Net Worth: Borrowers shall have and
maintain Effective Net Worth of not less than $8,436,062 at
September 30, 1996.
(c) Ratio of Senior Debt to Effective Net Worth:
Borrowers shall have and maintain a ratio of Senior Debt to
Effective Net Worth of not more than 8.83 to 1.00 at September 30,
1996.
(d) Net Income: Borrowers shall have and maintain a
minimum Net Income of $2,143,479 for the seven months ending
September 30, 1996.
(e) Book Net Worth: Borrowers shall have and maintain a
Book Net Worth of not less than the following amounts with respect
to the corresponding period:
Amount Period
$58,000,000 At the date hereof through
February 27, 1998;
The greater of (i) the February 28, 1998 and as of the
actual Book Net Worth as last day of each fiscal year
of such date or (ii) the thereafter (each respective year
covenant amount of Book end covenant amount to be
Net Worth as of the last maintained through the next to
day of the immediately last day of the following fiscal
preceding fiscal year plus year.
$2,000,000.
The covenant amount of Book Net Worth shall be increased by the
amount of net proceeds of any sale of capital stock, options or
warrants at the time of such sale and shall be decreased by any
permitted repurchases of common stock at the time of such
repurchase.
(f) Senior Debt to Book Net Worth Ratio: Borrowers shall
have and maintain a ratio of Senior Debt to Book Net Worth of not
more than 2.00 to 1.00 at the date hereof and at all times
thereafter.
(g) Cash Flow Coverage Ratio: Borrowers shall have and
maintain a Cash Flow Coverage Ratio of not less than 1.05 to 1.00
for fiscal year ending February 28, 1997; 1.05 to 1.00 for fiscal
year ending February 28, 1998; 1.25 to 1.00 for fiscal year ending
February 28, 1999; 1.35 to 1.00 for fiscal year ending February 29,
2000.
6.13 Financial and Business Information: So long as
Borrowers are indebted to Lender and the Revolving Credit has not
been terminated, Borrowers shall deliver to Lender the following:
(a) Financial Statements and Collateral Reports - in
addition to such other data, reports, statements and information,
financial or otherwise, as are already prepared in the ordinary
course of Borrowers' business, as Lender may request, Borrowers
shall provide the following: (i) a borrowing base certificate in
a form acceptable to Lender on the first Business Day of each week,
or more frequently as Lender may request, which shall include, but
not be limited to, a report of sales, credits issued and
collections received; (ii) reports of sales, collections,
adjustments and all other information pertaining to Accounts, on
the first Business Day of each week (iii) monthly accounts
receivable and payable aging schedules within twenty (20) days of
the end of each calendar month, including reports of sales, credits
issued, collections received and the amount of credit insurance for
such accounts; (iv) internally prepared monthly financial state-
ments for Borrowers on a consolidated basis, certified by Staff
Builders' chief financial officer within forty-five (45) days of
the end of each calendar month; (v) annual projections, profit and
loss statements, balance sheets and cash flow reports on a
consolidated basis (presented on a monthly basis) for the
succeeding fiscal year within thirty (30) days before the end of
each of Borrowers' fiscal years; (vi) annual certified financial
statements for Borrowers from their independent certified public
accountants on a consolidated basis, acceptable to Lender within
ninety (90) days after the end of each of Borrowers' fiscal years;
and (vii) an annual management letter prepared by Borrowers'
independent certified public accountants and acceptable to Lender,
within ninety (90) days after the end of each of Borrowers' fiscal
years. Annual statements shall set forth in comparative form
figures for the corresponding periods in the prior fiscal year.
All financial statements shall include a consolidated balance sheet
and statement of consolidated operations and consolidated cash
flows and shall be prepared in accordance with GAAP;
(b) Medicare and Medicaid Audit - promptly upon receipt,
Borrowers' medicare and medicaid audit which shall be in substance
satisfactory to Lender in Lender's sole discretion;
(c) Notice of Event of Default - promptly upon becoming
aware of the existence of any condition or event which constitutes
an Event of Default under this Agreement, or which with the passage
of time or the giving of notice, or both, would become an Event of
Default hereunder, a written notice specifying the nature and
period of existence thereof and what action Borrowers is taking
(and proposes to take) with respect thereto;
(d) Notice of Claimed Default - promptly upon receipt by
Borrowers, a copy of any notice of default given to Borrowers by
any creditor for borrowed money of Borrowers other than Lender;
(e) Securities and Other Reports - promptly upon its
becoming available, one copy of each financial statement, report,
notice or proxy statement sent by Borrowers to stockholders, and,
a copy of each regular or periodic report, (including without
limitation all 10-K and 10-Q reports), registration statement, or
prospectus in respect thereof filed by Borrowers with any
securities exchange or with any federal or state securities and ex-
change commissions or any successor agency.
6.14 Officers' Certificates: Within forty-five (45) days of
the end of each month and along with the set of financial
statements delivered to Lender at the end of each fiscal year
pursuant to Section 6.13(a) hereof, Borrowers shall deliver to
Lender a certificate from Borrowers, executed on their behalf by
Staff Builders Chief Financial Officer in form and substance
reasonably satisfactory to Lender setting forth:
(a) Covenant Compliance - the information (including
detailed calculations) required in order to establish whether
Borrowers are in compliance with the requirements of Sections 6 and
7 as of the end of the period covered by the financial statements
then being furnished and any exhibits appended to such financial
statements under Section 6.13; and
(b) Event of Default - that the signer has reviewed the
relevant terms of this Agreement, and has made (or caused to be
made under his supervision) a review of the transactions and
conditions of Borrowers from the beginning of the accounting period
covered by the income statements being delivered therewith to the
date of the certificate, and that such review has not disclosed the
existence during such period of any condition or event which
constitutes an Event of Default or which is then, or with the
passage of time or giving of notice, or both, would become an Event
of Default hereunder, and if any such condition or event existed
during such period or now exists, specifying the nature and period
of existence thereof and what action Borrowers have taken or
proposes to take with respect thereto.
6.15 Inspection: So long as Borrowers are indebted to
Lender, each of the Borrowers will permit any of Lender's officers
or other representatives to visit and inspect any of the Collateral
of Borrowers, to examine and audit all of Borrowers' books of
account, records, reports and other papers, to make copies and
extracts therefrom and to discuss its affairs, finances and
accounts with its officers, employees and independent public
accountants. All costs incurred by Lender as a result of its
normal quarterly field examinations and inspections shall be
covered by the Collateral Management Fee. All costs exceeding the
usual costs incurred in connection with a normal quarterly field
examination of Borrowers as well as all costs relating to other
visits and inspections which are deemed necessary by Lender, in its
sole discretion, shall be paid for by Borrowers.
6.16 Tax Returns and Reports: At Lender's request from time
to time, Borrowers shall promptly furnish Lender with copies of the
annual federal and state income tax returns of Borrowers. Borrowers
further agree that if requested by Lender, it shall promptly
furnish Lender with copies of all reports filed with any federal,
state or local governmental authority or agency, board or
commission.
6.17 Information to Participant: Lender may divulge to any
participant or unless prohibited by applicable law, prospective
participant it may obtain in the Loans, or any portion thereof, all
information in its possession concerning Borrowers, their Property
and financial condition, and furnish to such participant copies of
reports, financial statements, projections, certificates, and
documents obtained under any provision of this Agreement, or
related agreements and documents.
6.18 Material Adverse Developments: Each of the Borrowers
agree that promptly upon becoming aware of any development or other
information outside the ordinary course of business (excluding
matters of a general economic, financial or political nature) which
would have a Material Adverse Effect, or of Lender's failure to
perform any of its obligations to Borrowers under this Agreement it
shall give to Lender telephonic or telegraphic notice specifying
the nature of such development or information and such anticipated
effect. In addition, such verbal communication shall be confirmed
by written notice thereof to Lender on the same day such verbal
communication is made.
SECTION 7. BORROWERS' NEGATIVE COVENANTS:
Borrowers covenant that until all of Borrowers' liabilities
and obligations to Lender are paid and satisfied in full and the
Revolving Credit has been terminated, that without Lender's prior
consent:
7.1 Merger, Consolidation, Dissolution or Liquidation:
(a) None of the Borrowers shall sell, lease, license,
transfer or otherwise dispose of its Property, other than (i)
inventory sold in the ordinary course of such Borrower's business,
(ii) obsolete equipment office furniture or vehicles, (iii) to
another Borrower, (iv) equipment or office furniture or vehicles
with a value of less than $5,000.00, and (v) the sublease of office
space, and the sale of a franchise consistent with Borrowers'
current business practices.
(b) None of the Borrowers shall merge or consolidate
with any other Person, or commence a dissolution or liquidation,
provided, however, that any Borrower (other than Staff Builders) or
Subsidiary of any Borrower may merge into another Borrower or
dissolve and distribute its assets to another Borrower.
(c) None of the Borrowers shall permit their names to be
changed without at least thirty (30) days prior written notice to
Lender.
7.2 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
without prior written approval of Lender. Provided, however, if,
after giving effect to the potential acquisition, (i) No Event of
Default has occurred or would occur with the giving of notice, the
passage of time, or both, and (ii) Borrowers have a minimum excess
availability of $10,000,000 for a period of thirty (30) days prior
to and on the date of such acquisition, and (iii) there are no
outstanding Advances under the Acquisition Line, 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 to exceed Three Million Dollars ($3,000,000) in the
aggregate for all transactions during any fiscal year minus the
amount paid by Borrowers in connection with permitted redemptions
of common stock made during such fiscal year as provided in Section
7.6.
7.3 Liens and Encumbrances: None of the Borrowers or
Subsidiaries shall (i) cause or permit or (ii) agree or consent to
cause or permit in the future (upon the happening of a contingency
or otherwise), its Property (including, without limitation, the
Collateral), whether now owned or hereafter acquired, to be subject
to a Lien except:
(a) Liens securing taxes, assessments or governmental
charges or levies or the claims or demands of materialmen,
repairmen, mechanics, carriers, warehousemen, landlords, and other
like persons, provided the payment thereof is not at the time re-
quired by Section 6.1;
(b) Liens incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance, social security and other like laws and in
connection with leases or trade contracts;
(c) Existing liens described in Section 5.4 and on
Exhibit "5.4" hereto; and
(d) Other Liens expressly permitted by this Agreement.
(e) Liens being released or discharged contemporaneously
with the Closing.
(f) Purchase money security interests or capital leases
of equipment, office furniture, or vehicles.
(g) Any attachment or judgment lien for a period of
thirty (30) days.
7.4 Transactions With Affiliates or Subsidiaries:
(a) None of the Borrowers shall enter into any
transaction, including, without limitation, the purchase, sale, or
exchange of Property, or the loaning or giving of funds to or with
any Subsidiary or Affiliate (including without limitation another
Borrower) except in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's business and to the
extent expressly approved pursuant to this Agreement except for
compensation to and the granting of stock options or issuance of
stock to employees not expressly prohibited by any other section of
this Agreement.
(b) None of the Borrowers shall create or acquire any
Subsidiary without Lender's prior written consent (except by merger
with an existing Subsidiary).
7.5 Guarantees: Excepting the endorsement in the ordinary
course of business of negotiable instruments for deposit or
collection, none of the Borrowers or Subsidiaries shall become or
be liable, directly or indirectly, primary or secondary, matured or
contingent, in any manner, whether as guarantor, surety,
accommodation maker, or otherwise, for the existing or future
indebtedness of any kind of any Person except existing guarantees.
7.6 Distributions, Redemptions and Other Indebtedness: None
of the Borrowers shall other than in connection with the Closing:
(a) Declare or pay or make any forms of Distribution to its
shareholders, their successors and assigns. Provided, however, if,
after giving effect to the potential Distribution, (i) No Event of
Default has occurred or would occur with the giving of notice, the
passage of time, or both, and (ii) Borrowers have a minimum excess
availability of $10,000,000 for a period of thirty (30) days prior
to and on the date of such Distribution and (iii) there are no
outstanding Advances under the Acquisition Line, Borrowers may make
annual redemptions of common stock not to exceed Three Million
Dollars ($3,000,000) in the aggregate for each fiscal year minus
the amount paid by Borrowers in connection with permitted
acquisitions made during such fiscal year as provided in Section
7.2;
(b) make any payments on any existing or future indebtedness
for borrowed money to any Person other than a Borrower (including
subordinated indebtedness) except for payments to the holders of
the indebtedness listed on Exhibit 7.6 in accordance with the
existing terms of such indebtedness; or
(c) hereafter borrow money from any Person other than Lender
or, if in the ordinary course, another Borrower.
7.7 Loans and Investments: None of the Borrowers shall make
or have outstanding loans, advances, or extensions of credit to, or
capital contributions or investments in, any Person other than
another Borrower in the ordinary course of such Borrower's
business, or ownership of an inactive Subsidiary, including without
limitation, any officers and directors of any Borrower.
7.8 Use of Lender's Name: Borrowers shall not use Lender's
name (or the name of any of Lender's affiliates) in connection with
any of their business operations, provided that Borrowers may
disclose to third parties that Borrowers have a deposit and
borrowing relationship with Lender. Nothing herein contained is
intended to permit or authorize Borrowers to make any contract on
behalf of Lender.
7.9 Change in Capital Stock: There shall occur no change in
the ownership of any of the capital stock of any of the Borrowers,
except with respect to the stock of Staff Builders or with respect
to any merger by any Borrower (other than Staff Builders) or a
Subsidiary of any Borrower into another Borrower or the dissolution
and distribution of the assets of any Borrower or Subsidiary of any
Borrower to a Borrower.
7.10 Miscellaneous Covenants:
(a) None of the Borrowers shall become or be a party to
any contract or agreement which would breach this Agreement, or
breach, any other instrument, agreement or document to which any of
the Borrowers are a party or by which they are or may be bound
which breach would have a Material Adverse Effect.
(b) None of the Borrowers shall carry or purchase any
"margin security" within the meaning of Regulations U, G, T or X of
the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II.
SECTION 8. DEFAULT
8.1 Events of Default: Each of the following events shall
constitute an event of default ("Event of Default") and Lender
shall thereupon have the option to declare Borrowers in default
under this Agreement, and all other existing and future agreements
of any kind (related or unrelated) with Lender, and declare all
Obligations, of Borrowers to Lender, whether joint or several,
matured or contingent, related or unrelated, due or to become due,
(including, without limitation, liabilities on the Revolving
Credit) immediately due and payable including, but not limited to,
accrued and unpaid interest, outstanding principal, Expenses,
advances to protect Lender's position and all of Lender's rights
hereunder and thereunder, all without demand, notice, presentment
or protest or further action of any kind (it also being understood
that the occurrence of any of the Events of Default set forth in
subparagraphs (j), (k) or (l) shall automatically place Borrowers
in default and cause an acceleration of Borrowers' indebtedness to
Lender):
(a) Payments - if any of the Borrowers fails to make any
payment of principal or interest under the Loans when such payment
is due and payable, or if at any time the outstanding principal
balance of the Revolving Credit exceeds the Revolving Credit
Borrowing Base or the Maximum Revolving Credit Amount; or
(b) Other Charges - if any of the Borrowers fails to pay
any other charges, fees or other monetary obligations owing to
Lender arising out of or incurred in connection with this Agreement
when such payment is due and payable; or
(c) Particular Covenant Defaults - if any of the
Borrowers fails to perform or observe any covenant, condition or
undertaking contained in this Agreement and such failure with
respect to sections 6.2(a), (e) and (g) and 6.6 only, continues for
more than 30 days after an executive officer of Borrowers obtains
knowledge thereof; or
(d) Financial Information - if any statement, report,
financial statement, or certificate made or delivered by any of the
Borrowers or any of its officers, employees or agents, to Lender is
not true and correct, in all material respects when made; or
(e) Uninsured Loss - if there shall occur any uninsured
damage to or loss, theft, or destruction of a material portion of
the Collateral; or
(f) Warranties or Representations - if any warranty,
representation or other statement by or on behalf of any of the
Borrowers contained in this Agreement, or in any other Loan Docu-
ment, or in any other existing or future agreement between any of
the Borrowers and Lender, is false, erroneous, or misleading in any
material respect when made; or
(g) Agreements with Others - if any of the Borrowers
shall default beyond any grace period under any agreement with any
other creditor for borrowed money (including the subordinated
indebtedness) of any of the Borrowers, if as a result of such
default the holder of such Borrowers' obligations declares or is
permitted to declare any such obligation of such Borrower to become
due prior to its maturity date or prior to its regularly scheduled
date of payment; or
(h) Other Agreements with Lender - if any of the
Borrowers breaches or violates any material term of, or if a
default or an Event of Default, occurs under, any other existing or
future agreement (related or unrelated) between any of the
Borrowers and Lender (subject to any applicable grace or cure
period which may be contained in any such other agreement); or
(i) Judgments - if any final judgment or judgments (in
the aggregate) for the payment of money in excess of $50,000.00
shall be rendered by any court of record against any of the
Borrowers unless satisfied or discharged within 30 days thereof; or
(j) Assignment for Benefit of Creditors, etc. - if any of
the Borrowers makes an assignment for the benefit of creditors
generally, offers a composition or extension to creditors, or makes
or sends notice of an intended bulk sale of any business or assets
now or hereafter conducted by any of the Borrowers; or
(k) Bankruptcy, Dissolution, etc. - upon the
commencement of any action for the dissolution or liquidation of
any of the Borrowers, except as expressly permitted by this
Agreement, or the commencement of any proceeding to avoid any
transaction entered into by any of the Borrowers, or the
commencement of any case or proceeding for reorganization or
liquidation of any of the Borrowers' debts under the Bankruptcy
Code or any other state or federal law, now or hereafter enacted
for the relief of debtors, whether instituted by or against any of
the Borrowers except with respect to an involuntary petition which
is dismissed within 60 days; or
(l) Receiver - upon the application for the appointment
of a receiver, liquidator, custodian, trustee or similar official
or fiduciary for any of the Borrowers or for any of the Borrowers'
Property; or
(m) Execution Process, etc. - the issuance of any
execution or distraint process against any of the Borrowers, or any
of their Property; or
(n) Tax Liens - if a notice of a Lien, levy or
assessment is filed of record with respect to any or all of any
Borrower's assets by the United States government, or any
department, agency or instrumentality thereof, or by any state,
county, municipal or other government agency, or if any taxes or
debts owing at any time hereafter to any one or more of such
entities becomes a Lien, whether choate or otherwise, upon any or
all of any Borrower's assets except with respect to liens for
state, county and municipal taxes only, which do not exceed
$5,000.00 in the aggregate with all other such liens; or
(o) Termination of Business - if any Borrower is
enjoined, restrained or in any way prevented by court order or
administrative proceeding from continuing to conduct, or any
Borrower otherwise ceases to conduct, all or a material part of its
business affairs except as permitted hereunder the results of which
would have a Material Adverse Effect; or
(p) Pension Benefits, etc. - if any of the Borrowers
fails to comply with ERISA, with the result that grounds exist for
the PBGC to commence proceedings to appoint a trustee under ERISA
to administer Borrowers' employee benefit plans or to allow the
Pension Benefit Guaranty Corporation to institute proceedings to
appoint a trustee to administer such plan(s), or to permit the
entry of a Lien to secure any deficiency or claim; or
(q) Support Agreements - if any Support Agreement shall
for any reason cease to be in full force and effect and if the
reason is due to the death, disability or termination of employment
of one of the parties to such Support Agreement after 90 days has
elapsed and Lender has sent Borrower notice of such event, or a
default shall otherwise occur under such Support Agreement; or
(r) Sale of Stock - if the stock of any of the Borrowers
other than Staff Builders is sold or otherwise transferred other
than in connection with a permitted merger; or
(s) Investigations - any indication or evidence received
by Lender that any of the Borrowers may have directly or indirectly
been engaged in any type of activity which, in Lender's discretion
might result in the forfeiture of any material Property to any
governmental entity, federal, state or local; or
(t) Change in Management - if Stephen Savitsky, David
Savitsky or Gary Tighe shall cease to have an active role in the
management of Borrowers or such individuals collectively shall
cease to exercise management control over Borrowers after 90 days
has elapsed and Lender has sent Borrower notice of such event.
8.2 Rights and Remedies on Default:
(a) In addition to all other rights, options and
remedies granted to Lender under this Agreement, Lender may, upon
or at any time after the occurrence of an Event of Default,
terminate the Revolving Credit, cease making advances or extensions
of credit thereunder, and exercise all other rights granted to it
hereunder and all rights under the UCC and any other applicable law
or in equity, and under all Loan Documents permitted to be
exercised after the occurrence of an Event of Default, including
the following rights and remedies (which list is given by way of
example and is not intended to be an exhaustive list of all such
rights and remedies):
(i) The right to take possession of, send notices
regarding and collect directly, the Collateral, with or without
judicial process (including without limitation the right to notify
the United States postal authorities to redirect mail addressed to
any Borrower to an address designated by Lender);
(ii) By its own means or with judicial assistance,
enter any of the Borrowers' premises and take possession of the
Collateral, or render it unusable, or dispose of the Collateral on
such premises in compliance with subsection (b), below, without any
liability for rent, storage, utilities or other sums, and Borrowers
shall not resist or interfere with such action;
(iii) Require any of the Borrowers at Borrowers'
expense to assemble all or any part of the Collateral (other than
real estate or fixtures) and make it available to Lender at any
place designated by Lender;
(iv) The right to reduce the Maximum Revolving
Credit Amount, Revolving Credit Borrowing Base or any portion
thereof or the advance rates or to modify the terms and conditions
upon which Lender is willing to consider making advances under the
Revolving Credit or to take additional reserves in the Revolving
Credit Borrowing Base for any reason; and
(v) Require Borrowers to deliver cash collateral to
Lender in an amount equal to the undrawn amount of all outstanding
Letters of Credit issued by Lender hereunder.
(b) Each of the Borrowers acknowledge that any
Borrower's failure to cause all collections of Accounts to be paid
directly to a lockbox and/or deposited into a cash collateral
account as specified herein in Section 2.4, will result in the
dissipation of Lender's Collateral and other irreparable harm to
Lender for which money damages could not adequately compensate
Lender. In the event of such a breach, Lender shall be entitled,
in addition to all other rights and remedies which Lender may have
at law or equity, to have an injunction issued by any court of
Lender's choosing, enjoining and restraining Borrowers and any
agents and employees thereof, from continuing such breach.
(c) Each of the Borrowers hereby agrees that a notice
received by it at least seven (7) days before the time of any
intended public sale or of the time after which any private sale or
other disposition of the Collateral is to be made after the
occurrence of an Event of Default hereunder, shall be deemed to be
reasonable notice of such sale or other disposition. If permitted
by applicable law, any perishable inventory or Collateral which
threatens to speedily decline in value or which is sold on a
recognized market may be sold immediately by Lender without prior
notice to Borrowers after the occurrence of an Event of Default
hereunder. Borrowers covenant and agree not to interfere with or
impose any obstacle to Lender's exercise of its rights and remedies
with respect to the Collateral, after the occurrence of an Event of
Default hereunder.
8.3 Nature of Remedies: After the occurrence of an Event of
Default Lender shall have the right to proceed against all or any
portion of the Collateral in any order and may apply such
Collateral to the liabilities and obligations of Borrowers to
Lender in any order. All rights and remedies granted Lender
hereunder and under any agreement referred to herein, or otherwise
available at law or in equity, shall be deemed concurrent and
cumulative, and not alternative remedies, and Lender may proceed
with any number of remedies at the same time until the Loans, and
all other existing and future liabilities and obligations of
Borrowers to Lender, are satisfied in full. The exercise of any
one right or remedy shall not be deemed a waiver or release of any
other right or remedy, and Lender, upon the occurrence of an Event
of Default, may proceed against Borrowers, and/or the Collateral,
at any time, under any agreement, with any available remedy and in
any order. Notwithstanding the foregoing, Lender may, at any time
in its sole discretion, relinquish or abandon any Collateral,
interest therein, or portion thereof, for any reason whatsoever.
8.4 Set-Off: If any bank account of any of the Borrowers
with Lender or with any participant is attached or otherwise liened
or levied upon by any third party, Lender (and any participant)
need not await the running of any applicable grace period
hereunder, but Lender (and such participant as agent for Lender)
shall have and be deemed to have the immediate right of set-off and
may apply the funds or amount thus set-off against any of the
Borrowers' liabilities hereunder.
8.5 CONFESSION OF JUDGMENT: EACH OF THE BORROWERS, TO THE
EXTENT PERMITTED BY LAW, EMPOWERS ANY ATTORNEY OF ANY COURT OF
RECORD IN THE UNITED STATES OR ELSEWHERE TO, AFTER THE OCCURRENCE
AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT HEREUNDER, APPEAR
IN ANY AND ALL ACTIONS WHICH MAY BE BROUGHT TO ENFORCE ANY AND ALL
OBLIGATIONS HEREUNDER AND CONFESS JUDGMENT AGAINST ALL OR ANY ONE
OR MORE OF THEM FOR ALL OR ANY PART OF ITS OR THEIR OBLIGATIONS,
INCLUDING, WITHOUT LIMITATION, ALL PRINCIPAL, INTEREST, COSTS,
EXPENSES AND REASONABLE COUNSEL FEES OF TEN (10%) PERCENT OF ALL
AMOUNTS THEN OWED. SUCH AUTHORITY SHALL NOT BE EXHAUSTED BY ONE
EXERCISE HEREOF BUT JUDGMENT MAY BE CONFESSED AS AFORESAID FROM
TIME TO TIME AS ANY SUM AND/OR COSTS, EXPENSES AND REASONABLE
COUNSEL FEES SHALL BE DUE. EACH OF THE BORROWERS WAIVES ALL RELIEF
FROM ALL APPRAISEMENT OR EXEMPTION LAWS NOW IN FORCE OR HEREAFTER
ENACTED.
SECTION 9. MISCELLANEOUS
9.1 Governing Law: This Agreement, and all related
agreements and documents shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania,
without regard to its otherwise applicable principles of conflicts
of laws. The provisions of this Agreement and other agreements and
documents referred to herein are to be deemed severable, and the
invalidity or unenforceability of any provision shall not affect or
impair the remaining provisions which shall continue in full force
and effect.
9.2 Integrated Agreement: The Revolving Credit Note, this
Agreement, and all other Loan Documents shall be construed as
integrated and complementary of each other, and as augmenting and
not restricting Lender's rights, remedies and security. If, after
applying the foregoing, an inconsistency still exists, the
provisions of this Agreement shall constitute an amendment thereto
and shall control.
9.3 Waiver:
(a) No omission or delay by Lender in exercising any
right or power under this Agreement or any other Loan Document will
impair such right or power or be construed to be a waiver of any
default, or Event of Default or an acquiescence therein, and any
single or partial exercise of any such right or power will not
preclude other or further exercise thereof or the exercise of any
other right, and no waiver of Lender's rights hereunder will be
valid unless in writing and signed by Lender, and then only to the
extent specified.
(b) Borrowers release Lender, its officers, employees
and agents, of and from any claims for loss or damage resulting
from acts or conduct of any or all of them arising through the date
hereof, unless caused by wilful misconduct or gross negligence.
9.4 Time:
(a) Whenever Borrowers shall be required to make any
payment, or perform any act on a Saturday, Sunday or a legal
holiday under the Laws of the Commonwealth of Pennsylvania or such
other jurisdiction where Borrowers may be required to make any
payment or perform any act, such payment may be made, or such act
may be performed, on the next succeeding Business Day.
(b) Time is of the essence in Borrowers' performance
under all provisions of this Agreement and all other Loan
Documents.
9.5 Expenses of Lender:
(a) At Closing and from time to time thereafter,
Borrowers will pay, on demand, all accrued and unpaid expenses
(including the fees and expenses of legal counsel for Lender)
relating to this Agreement, and all related agreements and
documents, including, without limitation, expenses incurred in the
analysis, negotiation, preparation, closing, administration, audit
and enforcement of this Agreement, and all related agreements and
documents, the enforcement, protection and defense of the rights of
Lender in connection with the Revolving Credit, the Collateral or
otherwise hereunder, including the right to take possession of any
Collateral and the proceeds thereof and to hold, collect, prepare
for sale, sell and dispose of any Collateral, and any reasonable
expenses relating to extensions, amendments, waivers or consents
pursuant to the provisions hereof, or any related agreements and
documents or relating to agreements with other creditors, or
termination of this Agreement (collectively, the "Expenses").
(b) Expenses shall also include but not be limited to
(i) cost of reproducing this Agreement and related agreements and
documents; (ii) filing and recording fees; and (iii) searches.
9.6 Brokerage: Except as otherwise provided herein, this
transaction was brought about and entered into by Lender and
Borrowers acting as principals and without any brokers, agents or
finders being the effective procuring cause hereof, except Ha-Lo
Investment Associates, Inc. has asserted that it is acting as a
broker on behalf of Staff Builders and is entitled to receive a fee
from Staff Builders, which fee, if any, will be paid by Borrowers.
Borrowers represent that they have not committed Lender to the
payment of any brokerage fee, commission or charge in connection
with this transaction. If any such claim is made on Lender by any
broker, finder or agent or other person, Borrowers will indemnify,
defend and save Lender harmless against such claim and further will
defend any action or actions to recover on such claim, at
Borrowers' own cost and expense, including Lender's counsel fees.
Borrowers further agree that until any such claim or demand is
adjudicated in Lender's favor, the amount demanded shall be deemed
a liability of Borrowers under this Agreement, secured by the
Collateral.
9.7 Notices:
(a) Any notices or consents required or permitted by
this Agreement shall be in writing and shall be deemed given if
delivered in person, sent by telegram (with messenger service
specified) or sent by nationally recognized overnight courier
service, or sent by certified or registered mail postage prepaid,
return receipt requested, as follows, unless such address is
changed by written notice hereunder:
If to Lender to: Mellon Bank, N.A.
Mellon Bank Center
Asset Based Lending Dept.
1735 Market Street
Philadelphia, PA 19101
Attn: Jeffrey G. Saperstein,
Assistant Vice President
With copies to: Blank, Rome, Comisky & McCauley
1200 Four Penn Center Plaza
Philadelphia, PA 19103
Attn: Lawrence F. Flick, II, Esquire
If to Borrowers: Stephen Savitsky
Chairman and Chief Executive Officer
Staff Builders, Inc.
1983 Marcus Avenue
Lake Success, NY 11042
With copies to: Floyd I. Wittlin, Esquire
Richards & O'Neil
885 Third Avenue
New York, NY 10022-4873
(b) All notices sent by Lender or Borrowers shall be
deemed to be given when so received.
(c) All notices and deliveries received by Lender from
Staff Builders shall be deemed to have been received from all
Borrowers and all notices received by Staff Builders shall be
deemed to have been received by all Borrowers.
9.8 Headings: The headings of any paragraph or Section of
this Agreement are for convenience only and shall not be used to
interpret any provision of this Agreement.
9.9 Survival: All warranties, representations, and covenants
made by Borrowers herein, or in any other Loan Document or on any
certificate, document or other instrument delivered by it or on its
behalf under this Agreement, shall be considered to have been
relied upon by Lender, and shall survive the delivery to Lender of
the Revolving Credit Note, regardless of any investigation made by
Lender or on its behalf. All statements made by Borrower in any
Loan Document such certificate or other instrument prepared and/or
delivered for the benefit of Lender shall constitute warranties and
representations by Borrowers hereunder. Except as otherwise
expressly provided herein, all covenants made by Borrowers
hereunder or under any other agreement or instrument shall be
deemed continuing until all liabilities and obligations of
Borrowers to Lender are satisfied in full.
9.10 Successors and Assigns: This Agreement shall inure to
the benefit of and be binding upon the successors and permitted
assigns of each of the parties. Lender may participate any or all
of its rights or obligations hereunder with notice to, but without
consent of Borrowers to any commercial lender, financial
institution, or other entity not engaged in the same business as
Borrowers. Except as expressly provided herein, Borrowers may not
transfer, assign or delegate any of its duties or obligations
hereunder. Lender may assign the Revolving Note, this Agreement
and other Loan Documents to another financial institution as Lender
in its discretion may determine.
9.11 Duplicate Originals: Two or more duplicate originals of
this Agreement may be signed by the parties, each of which shall be
an original but all of which together shall constitute one and the
same instrument.
9.12 Modification: 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.
9.13 Signatories: Each individual signatory hereto represents
and warrants that he is duly authorized to execute this Agreement
on behalf of his principal and that he executes the Agreement in
such capacity and not as a party.
9.14 Third Parties: No rights are intended to be created
hereunder, or under any related agreements or documents for the
benefit of any third party donee, creditor or incidental bene-
ficiary of Borrowers. Nothing contained in this Agreement shall be
construed as a delegation to Lender of Borrowers' duty of
performance, including, without limitation Borrowers' duties under
any account or contract in which Lender has a security interest.
9.15 Discharge of Taxes, Borrowers's Obligations, Etc.:
Lender, in its discretion, shall have the right at any time, and
from time to time, if Borrowers fail to do so, after reasonable
notice, to (a) obtain insurance covering any of the Collateral as
required hereunder (b) pay for the performance of any of Borrowers'
obligations hereunder, (c) discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on any
of the Collateral in violation of this Agreement unless Borrowers
are in good faith with due diligence by appropriate proceedings
contesting such taxes, liens, etc., and (d) pay for the maintenance
and preservation of any of the Collateral. Expenses and advances
by Lender under this paragraph shall be deemed advances under the
Revolving Credit, bear interest at the same rate applied to the
Revolving Credit, until reimbursed to Lender and shall be secured
by the Collateral. Such payments and advances made by Lender shall
not be construed as a waiver by Lender of an Event of Default under
this Agreement.
9.16 Withholding and Other Tax Liabilities: Lender shall have
the right to refuse to make any advances from time to time unless
Borrowers shall, at Lender's request, have given to Lender
evidence, reasonably satisfactory to Lender, that Borrowers have
properly deposited or paid, as required by applicable law, all
withholding taxes and all federal, state, city, county or other
taxes due up to and including the date of the loan. Until all of
Borrowers' liabilities and obligations to Lender have been paid in
full, Lender shall be entitled to continue to hold any and all of
the Collateral until Borrowers have given to Lender evidence,
reasonably satisfactory to Lender, that Borrowers have properly de-
posited or paid, as required by law, all federal withholding taxes
due up to and including the date of such expiration or termination.
Copies of deposit slips showing payment shall likewise constitute
satisfactory evidence for such purpose. In the event that any
lien, assessment or tax liability against Borrowers shall arise in
favor of any taxing authority, whether or not notice thereof shall
be filed or recorded as may be required by law, Lender shall have
the right (but shall not be obligated, nor shall Lender hereby
assume the duty) upon reasonable prior notice to Borrowers to pay
any such lien, assessment or tax liability by virtue of which such
charge shall have arisen; provided, however, that Lender shall not
pay any such tax, assessment or lien if the amount, applicability
or validity thereof is being contested in good faith and by
appropriate proceedings by Borrowers and further provided that by
Borrowers' title to and its right to use, the Collateral are not
materially adversely affected and Lender's lien and priority in the
Collateral are not adversely affected, altered or impaired thereby.
In order to pay any such lien, assessment or tax liability, Lender
shall not be obliged to wait until said lien, assessment or tax
liability is filed before taking such action as hereinabove set
forth. Any sum or sums which Lender shall have paid for the
discharge of any such lien shall be added to the Revolving Credit
and shall be paid by Borrowers to Lender with interest thereon,
upon demand, and Lender shall be subrogated to all rights of such
taxing authority against Borrowers.
9.17 Consent to Jurisdiction: Each of the Borrowers
irrevocably consents to the jurisdiction of the Courts of Common
Pleas of Philadelphia, Commonwealth of Pennsylvania or the United
States District Court for the Eastern District of Pennsylvania in
any and all actions and proceedings whether arising hereunder or
under any other agreement or undertaking and irrevocably agrees to
service of process as set forth in Section 9.7 hereof, to the
address of Borrowers set forth herein.
9.18 WAIVER OF JURY TRIAL: EACH OF THE BORROWERS HEREBY
WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO A JURY TRIAL IN CONNECTION
WITH ANY LITIGATION COMMENCED BY OR AGAINST LENDER WITH RESPECT TO
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO.
9.19 Future Commitments: Except as expressly set forth in
this Agreement, Lender has made no agreement or commitment to lend
money or extend credit to Borrowers, or any of them, and has made
no agreement or commitment to Borrowers, or any of them, to modify
or consider any modification of any nature whatsoever of the terms
of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Amended
and Restated Loan and Security Agreement the day and year first
written above.
LENDER:
MELLON BANK, N.A.
By: /s/ Jeffrey Saperstein, Assistant Vice President_
BORROWERS:
STAFF BUILDERS, INC. (DE) THE BERGALL CORPORATION (MA)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
CARECO, INC. (MA) T.L.C. MEDICARE SERVICES, INC.
(DE)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
T.L.C. MIDWEST INC. (DE) TENDER LOVING CARE HEALTH CARE
SERVICES, INC. (CT)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
LOVING HOME CARE, INC. (NY) HOME HEALTH CARE, INC. (MD)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
PERSONNEL INDUSTRIES, INC. (MD) T.L.C. HOME HEALTH CARE, INC.
(FL)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
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/ Renee Silver Attest: /s/ Renee Silver
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/ Renee Silver Attest: /s/ Renee Silver
U.S. ETHICARE ALBANY CORPORATION U.S. ETHICARE CHAUTAUQUA
(NY) CORPORATION (NY)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
U.S. ETHICARE ERIE CORPORATION U.S. ETHICARE NIAGARA
(NY) CORPORATION (NY)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
U.S. ETHICARE ONONDAGA ETHICARE CERTIFIED SERVICES,
CORPORATION (NY) INC. (NY)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
STAFF BUILDERS BUFFALO, INC. (NY) STAFF BUILDERS, INC. (NY)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
S.B.H.F. INC. (NY) STAFF BUILDERS SERVICES, INC.
(NY)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
STAFF BUILDERS HOME HEALTH U.S. ETHICARE CORPORATION (DE)
CARE, INC. (DE)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
STAFF BUILDERS INTERNATIONAL, STAFF BUILDERS PERSONNEL
INC. (NY) SERVICES, INC.(NY)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
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/ Renee Silver Attest: /s/ Renee Silver
ST. LUCIE HOME HEALTH AMERICAN HOMECARE MANAGEMENT
AGENCY, INC. (FL) CORP. (DE)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
ALBERT GALLATIN SERVICES CORP. ATC HEALTHCARE SERVICES INC.
(PA) (GA)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
ALBERT GALLATIN HOME CARE, INC. ATC STAFFING SERVICES, INC.
(DE) (GA)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
ADULTCARE, INC. (FL.) ATC NURSING SERVICES OF TEXAS,
INC. (TX)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
S.B. ASSURED HOME CARE, INC. STAFF BUILDERS PRESCRIPTION
(DE) SERVICES, INC. (FL)
By: /s/ Gary Tighe By: /s/ Gary Tighe
Attest: /s/ Renee Silver Attest: /s/ Renee Silver
MEDVISIT, INC. (NC)
By: /s/ Gary Tighe
Attest: /s/ Renee Silver
EXHIBIT 10.56<PAGE>
CHASE EQUIPMENT LEASING, INC.
One Chase Square
Rochester, New York 14643
MASTER LEASE AGREEMENT
This Master Lease Agreement ("Agreement") is made as of
December 4, 1996, between CHASE EQUIPMENT LEASING, INC.,
having its principal place of business at One Chase Square,
Rochester, New York 14643 ("Lessor") and STAFF BUILDERS,
INC. , a Corporation Partnership Proprietorship having its
principal place of business at 1983 Marcus Avenue, Lake
Success, NY 11042 ("Lessee").
1. LEASE: Subject to the terms and conditions contained
herein, Lessor hereby leases to Lessee and Lessee shall
lease from Lessor, various items of personal property
(collectively the "Equipment" or individually an "Item")
described in one or more Equipment Schedules to be
executed substantially in the form attached hereto. The
terms "Equipment" and "Item" include, as applicable, any
associated software systems and programming. Each
Equipment Schedule incorporates the terms and conditions
of this Agreement, and shall constitute a separate,
distinct and independent lease and contractual
relationship between Lessor and Lessee. The term "Lease"
shall mean the applicable Equipment Schedule which
incorporates the terms and conditions of this Agreement.
The term "Subsidiary" means any corporation, the majority
of the shares of voting stock of which at any time
outstanding is, owned directly or indirectly by Lessee or
by one or more of its other subsidiaries or by Lessee in
conjunction with one or more of its other subsidiaries.
By execution of this Agreement, the parties hereto agree
to the terms and conditions pursuant to which Equipment
may be leased from time to time by Lessor to Lessee.
2. TERMS AND RENTAL PAYMENTS: The term of this Agreement
shall commence on the date set forth above and shall
continue in effect thereafter so long as any Lease
remains in effect. The term of each Equipment Schedule
as to all or any Item of Equipment designated on any
Equipment Schedule shall commence on the date on which
the Lessee executes a Certificate of Acceptance for such
Equipment (the "Acceptance Date") and shall continue for
a period ending that number of months from the date the
first periodic rental payment is due as specified on the
applicable Equipment Schedule.
Rent shall be specified and payable in accordance with
the terms as set forth in the Equipment Schedule. All
payments shall be made at the office of Lessor at One
Chase Square, Rochester, New York 14643 or as otherwise
directed by Lessor in writing.
If Lessee fails to pay any periodic rent payment or other
sum to be paid to Lessor after ten days of the due date,
then Lessee shall pay a late charge of five cents per
dollar on, and in addition to, the amount of such payment
but not exceeding the maximum amount, if any, permitted
by law ("Late Charge").
3. NET LEASE: This Lease is a net lease. Lessee's
obligation to pay all rent and any other amounts due
hereunder shall be absolute and unconditional and, except
as expressly provided, shall not be subject to any
abatement, deferment, reduction, defense, counterclaim,
set-off, or recoupment, including, but not limited to,
for example, (i) any existing or future claims of
whatever kind or nature against Lessor or the
manufacturer(s) or supplier(s) of the Equipment or (ii)
termination of Lessee's right of possession and/or the
taking of possession of the Equipment thereof by or
through Lessor in accordance with this Lease. Except as
expressly provided herein, this Lease shall not terminate
for any reason, including, but not limited to, any defect
in the Equipment or Lessor's title thereto or any
destruction or loss of use of any Item of Equipment.
4. LOCATION AND USE OF EQUIPMENT: Lessee shall be solely
responsible to install the Equipment or have it
installed, to inspect the Equipment during installation,
upon completion of installation to test the Equipment and
to accept it pursuant to the terms of this Lease. The
full risk of loss arising out of or in connection with
delays, partial performance or nonperformance by
supplier(s) shall be on Lessee, and Lessor shall not be
liable for specific performance of this Lease or for
damages if, for any reason, any supplier delays or fails
to fill or improperly fills an order.
During the term of this Lease, the Equipment shall be
located at the address specified in the Equipment
Schedule and shall not be removed from that address
without the prior written consent of Lessor. Lessee
covenants and warrants that during the period that any
Equipment is leased to Lessee, or its successors or
assigns, the Equipment will at all times be used and
operated in compliance with the laws of the jurisdictions
in which it is located, and in compliance with all acts,
rules, regulations, and orders of any commission, board
or other legislative, administrative, or judicial body or
officer having power to regulate or supervise the use or
operation of the Equipment. Lessee shall not install or
use the Equipment in such manner or in such circumstances
that any part of the Equipment is deemed to be an
accession to other personal property or deemed to be real
property or a fixture thereon.
5. ERRORS IN ESTIMATED COST: As used herein, "Total Cost"
means the cost to Lessor of purchasing and delivering the
Equipment to Lessee, including taxes and transportation
and other charges. The amount of each rental payment set
forth on the Equipment Schedule is based on the Total
Cost initially set forth which is an estimate, and each
shall be adjusted proportionally if the actual cost of
the Equipment differs from said estimate. Lessee hereby
authorizes Lessor to correct the figures set forth on the
Equipment Schedule(s) when the actual cost is known, and
to add to the amount of each rental payment any sales,
use or other tax that may be imposed on or measured by
rental payments. If the actual cost of the Equipment
differs from the estimated cost by more than ten percent
(10%) however, either party at its option may terminate
the Lease with respect to the Equipment as to subsequent
obligations by giving written notice to the other party
within fifteen (15) days after receiving notice of the
actual cost or the corrected rentals and Lessee shall
reimburse and indemnify Lessor for any existing
obligation and/or expenses incurred by Lessor such as but
not limited to, open purchase orders and progress
payments made to supplier(s).
6. INSPECTION: Lessee shall, whenever requested, advise
Lessor of the exact location and condition of the
Equipment and shall give Lessor immediate notice of any
attachment or other judicial processes, liens or
encumbrances affecting the Equipment and indemnify and
save Lessor harmless from any loss or damage caused
thereby. Lessor may for the purpose of inspection, at
all reasonable business hours, enter any building or
place where the Equipment is located. Lessor shall be
entitled to review Lessee's maintenance records relating
to the Equipment.
7. PRESERVATION OF LESSEE'S EXISTENCE AND BUSINESS:
(a) Lessee will preserve and keep in full force and
effect Lessee's existence, rights, licenses and
franchises and those of any Subsidiaries, necessary and
material to Lessee's and Subsidiaries' operations taken
as a whole.
(b) Lessee will not make or permit to be made any
material change in the character of Lessee's business or
operations.
8. FINANCIAL INFORMATION AND REPORTING:
(a) Lessee shall annually, within ninety (90) days after
the close of Lessee's fiscal year, furnish to Lessor,
financial statements of Lessee (including a balance sheet
as of the close of such year and statements of income,
changes in financial condition and shareholder's equity
for such year) prepared in accordance with generally
accepted accounting principles and certified by Lessee's
independent public accountants. Lessee shall also
provide quarterly financial statements of Lessee
similarly prepared for each of the first three quarters
of each fiscal year, which shall be certified (subject to
normal year-end adjustments) by Lessee's chief financial
officer and furnished to Lessor within sixty (60) days
following the end of the quarter.
(b) Lessee will furnish Lessor with any and all
information regarding Lessee's business, condition or
operations, financial or otherwise which Lessee furnishes
to any other creditor. This information shall be
furnished to Lessor at the same time it is furnished to
that creditor, provided Lessor will execute a
Confidentiality Agreement if requested by Lessee.
(c) Within three business days after a request, Lessee
will furnish Lessor with such further public information
regarding Lessee's business, condition, property, assets
or operations, financial or otherwise, as Lessor may from
time to time reasonably request, all prepared in form and
detail.
(d) Lessee will at all times maintain true and
complete records and books of account including, without
limiting the generality of the foregoing, appropriate
reserves for possible losses and liabilities, all in
accordance with generally accepted accounting principles
consistently applied.
(e) Lessee shall permit, and cause any Subsidiary to
permit, representatives of Lessor (i) to visit and
inspect any of the properties of Lessee or any Subsidiary
(ii) to examine its or their corporate or partnership
books and records, (iii) to make extracts or copies of
such books and records, and (iv) to discuss its or their
affairs, finances and accounts with its or their officers
or partners, as applicable. The foregoing may be done at
any time within regular business hours, upon reasonable
notice to Lessee.
(f) Lessee will promptly notify Lessor in writing of
the commencement of any litigation to which Lessee or any
of its affiliates may be a party (except for litigation
in which Lessee's (or the affiliate's) contingent
liability is fully covered by insurance) which, if
decided adversely to Lessee would adversely affect or
impair the title of Lessor to the Equipment or which, if
decided adversely to Lessee would materially adversely
affect the business operations or financial condition of
Lessee, taken as a whole. In addition, Lessee will
immediately notify Lessor, in writing, of any judgment
against Lessee if such judgment would have the effect
described in the preceding sentence.
9. PAYMENT OF TAXES, DEBTS AND OBLIGATIONS:
(a) Lessee shall pay all taxes, assessments, fees,
charges, penalties and fines imposed upon the Equipment
and/or arising out of the lease, use, possession or
operation thereof and whether levied or assessed against
Lessee or against Lessor. All taxes, fees and similar
charges imposed on the ownership, possession or use of
the Equipment during the term of this Lease shall be paid
by Lessee. In case of failure of Lessee to pay said
taxes, fees and similar charges, Lessor may pay the same,
and the amount thereof shall be payable by Lessee as
additional rent with the next rental payment.
(b) Except with respect to amounts not material (in
the good faith determination of Lessor) to Lessee taken
as a whole, Lessee will cause to be paid and discharged
all its obligations when due and all lawful taxes,
assessments and governmental charges or levies imposed
upon Lessee or any Subsidiary, or upon any property,
real, personal or mixed, belonging to Lessee or any
Subsidiaries, or upon any part thereof, before the same
shall become in default, as well as all lawful claims for
labor, materials and supplies which, if unpaid, might
become a lien or charge upon the property or any part of
it. Notwithstanding the previous sentence, neither
Lessee nor any Subsidiary shall be required to cause to
be paid and discharged any obligation, tax, assessment,
charge, levy or claim so long as its validity is
contested in the normal course of business and in good
faith by appropriate and timely proceedings and Lessee or
any Subsidiary, as the case may be, sets aside on its
books adequate reserves with respect to each tax,
assessment, charge, levy or claim so contested, nor shall
Lessee nor any Subsidiary be required to pay or discharge
any trade Indebtedness which is not past its stated due
date by more than thirty (30) days.
10. MAINTENANCE: Lessee will cause the Equipment to be kept
in good working order, repair and maintenance and will
make all necessary adjustments and repairs to the
Equipment. Any parts installed or replacements made by
Lessee to any Item pursuant to Lessee's obligation to
maintain the Equipment shall be considered accessions and
title thereto shall immediately vest in Lessor. Each
manufacturer or service organization is hereby authorized
to accept the directions of Lessee with respect thereto.
Lessee shall allow the manufacturer(s) or service
organization full and free access to the Equipment. All
maintenance and service charges, whether under a
maintenance agreement or otherwise, shall be borne by
Lessee, including the expenses, if any, of a
manufacturer's or service organization's customer
engineer charged in connection with maintenance and
repair services. Lessee covenants that the Equipment will
at all times be used and operated in accordance with each
manufacturer's instructions and in compliance with any
restriction contained in each manufacturer's warranties
regarding the Equipment.
11. ALTERATIONS AND ATTACHMENTS: Except with respect to
any addition less than $1,000, upon prior written notice
to Lessor, Lessee may, at its own expense, make
alterations in or add attachments to the Equipment
provided any alteration or attachment shall not interfere
with the normal operation of the Equipment. The
manufacturer may incorporate engineering changes or make
temporary alterations to the Equipment upon request by
Lessee. All such alterations and attachments, unless
Lessor shall otherwise agree in writing, shall be removed
by Lessee and the Equipment restored to its original
condition, reasonable wear and tear excepted, upon
termination of this Lease. If the alteration or
attachment interferes with the normal and satisfactory
operation or maintenance of the Equipment in a manner as
to increase the cost of maintenance of the Equipment, or
create a safety hazard, Lessee shall promptly remove the
alteration or attachment and restore the Equipment to its
normal condition.
12. INSURANCE; NOTICE OF ACCIDENT:
(a) At its sole expense, Lessee shall secure and
maintain in full force and effect throughout the term of
all Equipment Schedules and any extensions or renewals
thereof, insurance against all risks including, but not
limited to, theft, damage, or destruction of the
Equipment in an amount equal to the aggregate Total Cost
of all Equipment Schedules written in the broadest form
available on usual commercial terms and with carriers
acceptable to Lessor. Lessee shall also maintain public
liability insurance satisfactory to Lessor and with at
least the minimum limits as set forth in the Equipment
Schedule.
(b) Upon execution of the Certificate of Acceptance,
Lessee shall deliver the policy or policies or duplicates
or certificates thereof, to Lessor. Lessee shall maintain
a loss payable endorsement on all such policies in favor
of Lessor and its successors and assigns and shall afford
to Lessor and its successors and assigns such additional
protection as Lessor and its successors and assigns shall
reasonably require. All such insurance policies shall
name Lessor, its successors and assigns, as additional
insureds and expressly provide that any obligations
imposed upon the insureds (including, without limitation,
the obligation to pay premiums) shall be the obligation
solely of Lessee and not the obligations of Lessor, its
successors and assigns. Each policy shall expressly
provide that (1) the insurance as to Lessor and its
successors and assigns shall not be invalidated by any
act, omission or neglect of Lessee, (2) the same may not
be cancelled, modified or allowed to lapse (for failure
to renew or otherwise) without at least thirty (30) days
prior written notice to Lessor or its successors and
assigns, and (3) the insurance shall be primary, without
right or contribution of any other insurance carried by
or on behalf of Lessor with respect to its interests.
In the event that any policies insuring against liability
risks described above shall now or hereafter provide
coverage on a "claims made" basis, Lessee shall continue
to maintain such policies in effect for a period of not
less than three years after the expiration of the Lease
term of any Equipment Schedule.
(c) Lessor and its successors and assigns may apply
the proceeds of insurance to replace or repair the
Equipment and/or to satisfy Lessee's obligations
hereunder, as determined in Lessor's sole discretion. If
Lessee fails to pay when due any insurance premium for
any policy written hereunder, then Lessor may make such
premium payment and add the amount thereof to the next
rent payment, and such premium amounts shall become rent.
Lessee appoints Lessor as Lessee's attorney-in-fact to
make any claim for, to receive payment for and to execute
and endorse any documents, checks or other instruments in
payment for loss, theft or damage under any such
insurance policy. Lessor shall be under no duty to
ascertain the existence of any insurance coverage or to
examine any certificate of insurance or other evidence of
insurance coverage or to advise Lessee in the event the
insurance coverage does not comply with the requirements
of this Agreement. Lessee will promptly notify the
appropriate insurer, Lessor and any assignee, of an
accident or occurrence which may become the basis of a
claim against the insured. In connection with any claim
against Lessor and/or Lessee arising out of the
ownership, operation, maintenance and use of the
Equipment, Lessee agrees to cooperate with Lessor in
defending against such claims, including making Lessee's
employees available to Lessor without charge.
(d) Lessee will maintain, and cause any Subsidiaries
to maintain, insurance from duly licensed and responsible
insurers on all property of Lessee and any Subsidiaries
to its full insurable value, except to the extent limited
by applicable insurance law. This insurance shall be
against risks of fire and all other risks as fall within
"extended coverage" as that term is generally understood
in the insurance industry. Lessee shall also maintain,
and cause any Subsidiaries to maintain, additional
insurance in such amounts and against such risks,
including, without limitation, product liability,
personal injury, property damage, and workers'
compensation, as is usually carried by owners of similar
businesses of similar size and profits or as Lessor may
reasonably require.
13. INDEMNIFICATION: To the fullest extent permitted by
law, Lessor, its officers, employees, agents, successors
and assigns, shall not be liable to Lessee for, and
Lessee shall indemnify and hold Lessor, its officers,
employees, agents, successors and assigns, harmless with
respect to any third-party from any liability (including
liability for Lessee negligence), claim, loss, damage or
expense (including litigation expense) of any kind or
nature arising out of this Lease, or the transactions
contemplated in this Lease, including, but not limited
to: (a) the inadequacy of any Item of Equipment for any
purpose; (b) any deficiency or defect in any Item of
Equipment; the use or performance or maintenance of any
Item of Equipment; (d) any interruption or loss of
service, use or performance of any Item of Equipment; or
(e) any loss of business or other consequential damage
whether or not resulting from any of the foregoing. IN
PARTICULAR, LESSOR AND ITS SUCCESSORS AND ASSIGNS SHALL
NOT BE LIABLE FOR INJURIES TO PERSONS OR DAMAGE TO ANY
ITEM OF EQUIPMENT OR OTHER PROPERTY UNDER ANY THEORY OF
STRICT LIABILITY, AND LESSEE SHALL INDEMNIFY AND SAVE
LESSOR AND ITS SUCCESSORS AND ASSIGNS HARMLESS FROM ANY
SUCH LIABILITY AND ALL COSTS AND EXPENSES IN DEFENDING
THE SAME. This obligation to indemnify shall apply from
the date of the execution of the Equipment Schedule out
of which the claim arises, notwithstanding that the lease
term may not have commenced. All of Lessor's and its
successors' and assigns' rights under this section shall
survive the termination of this Lease. However, Lessee
shall not be required to indemnify Lessor or its
successors or assigns for claims arising from events
which occur after the Equipment has been redelivered to
Lessor, its successors or assigns.
14. RISK OF LOSS:
(a) Lessee hereby assumes and shall bear the entire
risk of loss, theft, damage and destruction of the
Equipment, whether partial or complete, from any cause
whatsoever. No loss, theft, damage or destruction of
Equipment shall relieve Lessee of the obligation to pay
rent or any other obligation of this Lease, and, except
as provided below, this Lease shall remain in full force
and effect. Lessee shall promptly notify Lessor in
writing of any such loss, theft, damage or destruction of
the Equipment. Lessor shall not be liable to Lessee for
any loss, damage or expense of any kind or nature, caused
directly or indirectly by any Item of Equipment or by the
use, maintenance, repair, failure, destruction or damage
of any Equipment.
(b) In the event of damage of any kind whatsoever to
the Equipment (unless the same is damaged beyond repair),
Lessee, shall at Lessee's expense (i) place the same in
good repair, condition and working order, or (ii) replace
the same with like Equipment of the same or a later
model, and in good repair, condition and working order
and provide Lessor good and valid title thereto.
(c) In the event that the Equipment is lost, stolen,
destroyed or damaged beyond repair (any such event is
referred to as an "Event of Loss"), Lessee, shall (i) at
Lessee's expense replace the same with like Equipment of
the same or a later model, in good repair, condition and
working order and provide Lessor good and valid title
thereto or (ii) pay to Lessor an amount equal to the
unpaid balance of the rent and any other sums then due or
past due, plus the Stipulated Loss Value attributable to
the Equipment (as set forth on Attachment 1 to the
Equipment Schedule) calculated on the rental payment date
immediately preceding the date of the loss (this option
(ii) shall only be applicable if a Stipulated Loss Value
table is referenced in the Equipment Schedule), or (iii)
pay to Lessor an amount equal to the unpaid balance of
the rent and any other sums then due, plus the balance of
any remaining rents (discounted at the rate of six (6)
percent per annum) attributable to the Equipment during
the term and extension thereof, if any, of this Lease.
Upon such payment Lessee's obligation to pay further rent
for such Equipment shall cease, and Lessee thereupon
shall become entitled to the Equipment paid for "as-is-
where-is", without recourse or warranty, express or
implied, with respect to any matter whatsoever.
(d) To the extent of Lessee's expense actually
incurred to repair or replace the Equipment or of
Lessee's payment to Lessor for the loss, theft, damage or
destruction of any Item of Equipment, Lessee shall then
be entitled to receive from Lessor any insurance or
recovery received by Lessor in connection with such loss,
theft, damage or destruction, and any amount of insurance
or recovery received by Lessor in excess of Lessee's
expenses actually incurred or paid to Lessor shall belong
to Lessee. Lessor shall not be obligated to deliver to
Lessee any insurance or recovery received by Lessor in
connection with any loss, theft, damage or destruction
until Lessee has provided Lessor with such documents as
Lessor shall deem necessary or desirable for purposes of
evidencing that the Equipment has been repaired or
replaced in accordance with this Section 14.
15. OWNERSHIP OF EQUIPMENT: The Equipment shall at all
times remain personal property, and title thereto shall
remain solely in Lessor. The Equipment may be removed by
Lessor at any time after termination of this Lease.
Lessee shall affix tags, decals or plates to the
Equipment indicating Lessor's ownership, which type of
tag, decal or plate and location may be specified by
Lessor, and Lessee shall not permit their removal or
concealment. Lessee shall cause each Item of Equipment
to be kept numbered with the serial number specified in
the Certificate of Acceptance. Lessee shall, at its own
expense, protect and defend Lessor's title in the
Equipment against all claims and liens of Lessee's
creditors and keep the Equipment free and clear of all
claims, liens and encumbrances except those resulting
from the agreements or acts of Lessor. At Lessor's
request Lessee shall obtain and record such instruments
and take such steps as may be necessary to prevent any
entity from acquiring any rights in the Equipment by
reason of the Equipment being claimed as or deemed as
real property.
In the event this Agreement or any Equipment Schedule
thereto shall be adjudged or determined not to be a
Lease, then Lessor's retention of title to the Equipment
shall be construed to be, and Lessee does hereby grant to
Lessor, a security interest in the Equipment, insurance
covering the Equipment and all of the proceeds of the
foregoing.
16. ASSIGNMENT: Neither this Lease nor Lessee's rights
hereunder shall be assignable in whole or in part by
Lessee except with Lessor's prior written consent, and
the provisions hereof shall bind any permitted successors
and assigns of Lessee. Lessor shall have the right to
assign this Lease or any part thereof. If Lessor assigns
the rentals reserved herein or all or any of Lessor's
other rights hereunder, or amounts equal thereto, the
right of the Assignee to receive the rentals as well as
any other right of the Assignee shall not be subject to
any defense, setoff, counterclaim, or recoupment which
may arise out of any breach or obligation of Lessor in
connection herewith or by reason of any other
indebtedness or liability at any time owing by Lessor to
Lessee. All rentals due hereunder shall be payable to
the Assignee by Lessee whether or not this Lease is
terminated by operation of law or otherwise, including
without limitation, termination arising out of
bankruptcy, reorganization or similar proceedings
involving Lessor. On receipt of notification of such
assignment, Lessee, subject to its rights hereunder,
shall become the pledgeholder of the Equipment for and on
behalf of the Assignee and will relinquish possession
thereof only to the Assignee or pursuant to its written
order. Lessee, on receiving notice of any such
assignment, shall abide thereby and make payment as may
therein be directed. Following any such assignment the
term "Lessor" shall be deemed to include or refer to
Lessor's Assignee, provided that no such Assignee shall
be deemed to assume any obligation or duty imposed upon
Lessor hereunder, and Lessee shall look only to Lessor
for performance thereof.
Lessee is further directed that after assignment of a
Lease only Assignee shall have the right or power to
compromise, settle, extend or otherwise negotiate the
terms of payment under that Lease.
17. SECURITY INTEREST: Where appropriate, Lessor shall
file all necessary documents, including UCC financing
statements, in connection with this Lease so as to
perfect Lessor's security interest under the Lease.
Lessee shall execute and deliver to Lessor such documents
(including UCC financing statements) as Lessor shall deem
necessary or desirable for purposes of evidencing,
protecting or recording the rights and interest of Lessor
in the Equipment or this Lease and in furtherance of the
performance of the terms and conditions of this Lease.
All reasonable expenses (including UCC search and filing
fees) related thereto shall be paid by Lessee. Lessee
hereby irrevocably appoints Lessor as its lawful attorney
and agent to execute UCC financing statements on Lessee's
behalf and hereby authorizes Lessor to file, at Lessee's
expense, such UCC financing statements in any appropriate
public office.
18. DISPOSITION: In the event Lessee does not exercise the
purchase option, contained in the Addendum, at the
expiration or termination of this Lease by lapse of time,
or otherwise, Lessee shall return the Equipment to Lessor
or its designee at a location designated by Lessor within
New York State, with transportation charges (including
in-transit insurance), prepaid by Lessee, in the same
condition as when received by Lessee, ordinary wear and
tear alone excepted, and free of any lien created or
suffered by Lessee. To the extent the Lease does not
terminate at the end of the Lease term thereof, or the
Equipment is not returned to Lessor or its designee, and
other rental amounts are not specified therein or
mutually agreed to in writing, then the same amount of
rent shall continue to be due and payable by Lessee until
the Equipment is returned to Lessor or its designee.
Lessee shall remain responsible to maintain in full force
and effect insurance in accordance with paragraph 12 of
this Agreement.
19. EVENTS OF DEFAULT AND LESSOR'S REMEDIES:
(a) Each of the following events shall constitute an
event of default ("Event of Default") hereunder: (i)
Lessee fails to pay any rent or other amount due
hereunder within ten (10) days after the same is due and
payable; or (ii) Lessee fails to perform any other
obligation or observe any material condition of this
Lease required to be performed or observed by Lessee; or
(iii) any representation, warranty or statement made in
writing to Lessor by Lessee (or any guarantor of Lessee's
obligations under this Agreement) in connection with the
transactions contemplated under this Lease shall have
been false in any material respect on a consolidated
basis when made; or (iv) Lessee attempts to sell,
transfer, encumber, part with possession of, assign or
sublet (except as expressly permitted by the provisions
hereof) any Item of Equipment; or (v) Lessee fails to
insure (pursuant to Section 12 hereof) any Item of
Equipment; or (vi) Lessee fails to deliver and such
failure continues for a period of (10) days to Lessor any
documents reasonably required by Lessor under the Lease;
or (vii) Lessee (or any guarantor of Lessee's obligations
under this Agreement) is in default under any other
agreement with Lessor or any of its affiliates; or (viii)
Lessee ceases doing business as a going concern; or (ix)
Lessee shall consolidate with or merge into any other
entity, or convey, transfer or lease substantially all of
its assets to any other entity; or (x) the corporate
existence of Lessee shall terminate; or (xi) any of
Lessee's issued and outstanding shares of capital stock
are sold, assigned, pledged, transferred, exchanged in a
corporate reorganization or otherwise disposed of or new
shares of such stock are issued and such sale,
assignment, pledge, transfer, exchange, issuance or other
disposition results in vesting the "control" of such
corporation in a person (or persons) not presently having
control and not approved by Lessor in writing prior to
such vesting (except for involuntary transfers of such
stock by operation of law). "Control" shall be deemed
vested in the person or persons owning more than fifty
percent (50%) of the number of issued and outstanding
shares of such stock, however designated, or holding more
than fifty percent (50%) of the voting power for the
election of members of the Board of Directors of the
Lessee; or (xii) Lessee (a) incurs any accumulated
funding deficiency within the meaning of the Employee
Retirement Income Security Act of 1974, as amended from
time to time and the regulations thereunder, equal to 5%
of Consolidated Tangible Net Worth of Lessee or (b)
incurs any liability of comparable size to the Pension
Benefit Guaranty Corporation; or (xiv) Lessee is, or
permits any subsidiary to be, in violation of any law or
regulation, order, writ, injunction or decree of any
court or governmental instrumentality or in breach of any
agreement or instrument to which Lessee or any Subsidiary
is subject or in default thereunder which is material to
Lessee's operations when taken as a whole; or (xv) Lessee
(or any guarantor of Lessee's obligations under this
Agreement) applies for or consents to the appointment of
a receiver, trustee, assignee, custodian or liquidator of
its business or any substantial part of its property; or
(xvi) Lessee (or any guarantor of Lessee's obligations
under this Agreement) fails to pay its debts generally as
they become due; or (xvii) Lessee (or any guarantor of
Lessee's obligations under this Agreement) makes a
general assignment for the benefit of creditors; or
(xviii) Lessee (or any guarantor of Lessee's obligations
under this Agreement) fails within sixty (60) days to
lift any execution, garnishment or attachment of such
consequences as will impair its ability to carry on its
operations under this Lease; or (xix) Lessee (or any
guarantor of Lessee's obligations under this Agreement)
commences (as the debtor) a case in bankruptcy (including
a petition for reorganization or arrangement) under the
United States Bankruptcy Code or a proceeding under any
state or federal insolvency law; or (xx) a case in
bankruptcy or any other proceeding (including a petition
for reorganization or arrangement) under the United
States Bankruptcy Code or any case or proceeding under
any other insolvency law shall be commenced against
Lessee (or any guarantor of Lessee's obligations under
this Agreement) (as the debtor) involuntarily or a decree
or order for relief against Lessee (or any guarantor of
Lessee's obligations under this Agreement) (as the
debtor) shall be entered in any court of competent
jurisdiction, and such case, proceeding or decree or
order is not dismissed within forty (40) days after such
commencement or entry, or Lessee (or any guarantor of
Lessee's obligations under this agreement) shall consent
to or admit the material allegations against it in any
such case or proceeding; or (xxi) a trustee, assignee,
receiver, custodian or agent (however named) is appointed
or authorized to take charge of any substantial part of
Lessee's (or any guarantor of Lessee's obligations under
this Agreement) property.
(b) Upon the occurrence of any Event of Default,
Lessor may declare the Lessee in default. At its option,
Lessor may declare a default in all Leases and any other
agreement between Lessor, or any affiliate of Lessor, and
Lessee except as specifically exempted therefrom by
Lessor in such declaration. In the case of an Event of
Default, Lessor or its agents shall have the right, at
their option, to exercise any or all of the rights and
remedies available to a secured party under the Uniform
Commercial Code and, in addition, to do any or all of the
following: (i) to declare immediately due and payable
without notice or demand to Lessee an amount equal to the
balance of unpaid rent and any other sums then due plus
the balance of the rent and any other sums to become due
(discounted at the rate of four (4) percent per annum)
during the term and extension thereof, if any, of this
Lease; and/or (ii) to sue for and recover from Lessee an
amount equal to the unpaid balance of rent and any other
sums then due plus the balance of rents and any other
sums to become due (discounted at the rate of four (4)
percent per annum) during the term and extension thereof,
if any, of this Lease (hereinafter "Unpaid Rent"); and/or
(iii) to take possession of any or all Item(s) of
Equipment without demand or notice wherever the same may
be located without any court order or other process of
law, provided that Lessor will allow Lessee to safeguard
its data. Upon taking possession of any or all Item(s)
of Equipment, Lessor at its option may (i) lease the
repossessed Equipment to any third party on such terms
and conditions as Lessor may determine, or (ii) sell the
Equipment or any part thereof at public auction or at
private sale. In the event Lessor re-lets the
repossessed Equipment, then Lessor shall credit against
the Unpaid Rent the present value of the aggregate of the
rent to be received from the re-lease during the
remaining term of the applicable Equipment Schedules
(discounted at a rate equal to the sum of the prime
interest rate in effect at The Chase Manhattan Bank, on
the date such re-lease is entered into plus 2%). In the
event Lessor sells the repossessed Equipment, then Lessor
shall credit all amounts received from the sale, less
expenses incurred in connection therewith, to the Unpaid
Rent due. Lessee hereby agrees to peaceably deliver the
Equipment to Lessor upon demand after an Event of Default
is declared by Lessor; Lessee waives any and all damages
occasioned by such taking possession. Any such taking of
possession shall not constitute a termination of this
Lease and shall not relieve Lessee of its original
obligation hereunder unless Lessor expressly so notifies
Lessee in writing.
(c) Should any proceeding be instituted by Lessor to
recover any monies due and/or to become due hereunder
and/or for the possession of the Equipment, Lessee shall
pay a reasonable sum as attorney's fees and collection
agency fees, court costs and repossession expenses.
The exercise, or the beginning of exercise by the Lessor
of any one or more of such remedies described above shall
not constitute the exclusive election of such remedies
and shall not preclude the simultaneous or later exercise
by Lessor of any or all of such other remedies.
20. LESSEE'S AND LESSOR'S WARRANTIES: (a) Lessee hereby
warrants and represents to Lessor, its successors and
assigns that: (i) Lessee's execution and performance of
this Lease has been duly authorized by all necessary
corporate action and is not now and will not be in
conflict with Lessee's charter or by-laws, or with any
indenture, contract or agreement by which it is bound, or
with any statute, judgment, decree, rule or regulation
binding upon it; (ii) no consent or approval of any
trustee or holder of any indebtedness or obligation of
Lessee, and no consent or approval of any governmental
authority, is necessary for Lessee's execution or
performance of this Lease; (iii) there is no litigation
or other proceeding pending, or to the best of the
Lessee's knowledge, threatened against or affecting
Lessee which, if decided adversely to Lessee would
adversely affect or impair the title of Lessor to the
Equipment or which, if decided adversely to Lessee would
materially adversely affect the business operations or
financial condition of Lessee; (iv) all balance sheets,
statements of profit and loss and other financial data
that have been delivered to Lessor with respect to Lessee
are complete and correct in all material respects, fairly
present the financial condition of the Lessee on the
dates for which, and the results of its operations for
the periods for which, the same have been furnished and
have been prepared in accordance with generally accepted
accounting principles consistently applied; (v) there has
been no material adverse change in the condition of
Lessee, financial or otherwise, since the date of the
most recent financial statements delivered to Lessor;
(vi) this Lease is valid and binding and enforceable
against Lessee in accordance with its terms, subject to
enforcement limitations imposed by rules of equity or by
bankruptcy or similar laws. Upon Lessor's request,
Lessee shall submit to Lessor an opinion of Lessee's
counsel that the above warranties and representations are
true.
(b) Lessor hereby warrants and represents to Lessee,
its successors and assigns that: (i) Lessor's execution
and performance of this Lease has been duly authorized by
all necessary corporate action and is not now and will
not be in conflict with Lessor's charter and by-laws, or
with any indenture, contract or agreement by which it is
bound, or with any statute, judgment, decree, rule or
regulation binding upon it; (ii) no consent or approval
of any trustee or holder of any indebtedness or
obligation of Lessor, and no consent or approval of any
governmental authority, is necessary for Lessor's
execution or performance of this Lease; and (iii) this
Lease is valid and binding and enforceable against Lessor
in accordance with its terms, subject to enforcement
limitations imposed by rules of equity or by bankruptcy
or similar laws.
21. JOINT AND SEVERAL LIABILITY; AUTHORITY TO SIGN;
SUBSIDIARIES; PURCHASE OF EQUIPMENT: If more than one
party executes this Lease as Lessee, each such party
shall be jointly and severally bound by the terms and
provisions of this Lease. Any person who signs as an
officer or agent for a corporation, partnership or other
entity warrants that he has authority from such
corporation, partnership or other entity to enter into
this Lease on its behalf. Each Item of Equipment
delivered pursuant to this Lease by Lessor to a
Subsidiary of Lessee or to any entity or person
designated by Lessee, whether at the request of Lessee or
such Subsidiary, entity or person shall be Equipment for
all purposes of this Lease, and Lessee shall be and
remain primarily liable for its obligations under this
Lease with respect to such Equipment. Lessor shall not
be obligated to purchase and deliver any Item of
Equipment unless Lessor has executed an Equipment
Schedule covering the Equipment.
22. MODIFICATION: No change, modification, or alteration
of, and no additions to, the terms of this Lease shall be
effective or binding on Lessor unless the same is in
writing and signed by Lessor (except if the Lease term is
automatically extended per Section 18 hereof). In the
event of conflict between the terms of this Lease and the
Equipment Schedule, the Equipment Schedule shall govern.
23. NOTICES:
(a) Lessee will immediately notify Lessor in writing
with full details if (i) any event occurs or any
condition exists which constitutes, or which but for a
requirement of lapse of time or notice or both would
constitute, an Event of Default under Part 19, or which
might materially and adversely affect the financial
condition or operations of Lessee or of any Subsidiary or
(ii) any representation or warranty made in the Master
Lease Agreement or in any writing related to it may for
any reason cease in any material respect to be true and
complete.
(b) All notices relating to this Lease, shall be in
writing and shall be deemed given when delivered or when
deposited in the U.S. mail, certified, postage prepaid
and addressed with the full name and address of the
appropriate party set forth above, or to such other
address as may have been furnished by written notice from
the party to whom notice is sent.
24. TIME OF ESSENCE; ENTIRE AGREEMENT; WAIVER; SURVIVAL OF
TERMS: Time is of the essence of this Lease. This Lease
constitutes the entire agreement between the parties and
shall be binding upon the parties and their respective
successors or assigns, and shall only be amended by a
written instrument signed by Lessor and Lessee. Any
waiver of the performance of any of the terms, conditions
or covenants hereof by either party shall not be
construed as thereafter waiving any such terms,
conditions or covenants, but the same shall remain in
full force and effect, as if no such waiver has occurred.
Lessee's obligations and liabilities under this Lease
shall not be affected by the expiration or earlier
termination of this Lease.
25. APPLICABLE LAW: This Lease shall be governed by and in
accordance with the laws of the State of New York. At
Lessor's option, any action or proceeding relating
directly or indirectly to this Lease shall be tried in a
court of competent jurisdiction located in the State of
New York. Lessee hereby consents to jurisdiction of any
court of competent jurisdiction chosen by Lessor. This
Lease shall be deemed to have been made in the State of
New York, regardless of the order in which it was
executed.
26. HEADINGS: The headings of each numbered paragraph are
for reference only and constitute no part of this Lease.
27. ACKNOWLEDGEMENTS AND WARRANTIES: Lessee acknowledges
that it has selected both (a) the Equipment and (b) the
manufacturer and/or supplier from whom Lessor is to
purchase it. LESSOR MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING THE
CONDITION OF THE EQUIPMENT, ITS MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE, AND, AS TO LESSEE,
LESSOR LEASES THE EQUIPMENT AS IS. NO DEFECT OR
UNFITNESS OF THE EQUIPMENT SHALL RELIEVE LESSEE OF THE
OBLIGATION TO PAY RENT OR OF ANY OTHER OBLIGATION UNDER
THIS LEASE. LESSOR WARRANTS TO LESSEE THAT, SO LONG AS
NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING,
LESSOR WILL NOT INTERFERE WITH THE LESSEE'S USE AND
POSSESSION OF THE EQUIPMENT.
If the Equipment is unsatisfactory for any reason, Lessee
shall make any claim on account thereof solely against
the manufacturer or supplier. Lessor hereby agrees to
assign to Lessee, solely for the purpose of making and
prosecuting any such claim, all of the rights which
Lessor has against such manufacturer or supplier for
breach of warranty or other representation respecting the
Equipment to the extent the same are assignable.
28. LESSOR'S RIGHT TO CURE: Upon Lessee's failure to
perform any of its duties under a Lease, Lessor may, but
shall not be obligated to, perform any or all such
duties, and Lessee shall pay an amount equal to the
expenses thereof to Lessor forthwith upon demand by
Lessor. No such performance of any or all such duties by
Lessor shall be deemed to cure any Event of Default of
Lessee.
29. ADDITIONAL ASSURANCES: If Lessor shall request, Lessee
shall execute and deliver to Lessor such documents as
Lessor shall reasonably deem necessary or desirable.
Lessee hereby authorizes Lessor to make corrections, if
necessary, to the description of Equipment, quantities,
model numbers, and/or serial numbers, on the Equipment
Schedule, Certificate of Acceptance, UCC-1 financing
statements covering the Equipment and all other related
documents. Lessor will provide Lessee with a copy of the
corrected Equipment Schedule.
30. MODIFICATIONS/ADDITIONAL PROVISIONS: See attached
Addendum, if there are any modifications or additions
hereto.
_____________________________________________
IN WITNESS WHEREOF, THE PARTIES HAVE CAUSED THIS AGREEMENT
TO BE DULY EXECUTED AS OF THE DATE FIRST ABOVE WRITTEN.
CHASE EQUIPMENT LEASING, INC. LESSEE: STAFF
BUILDERS, INC.
BY: /s/ Daniel J. Quinlides BY: /s/ Gary
Tighe
TITLE: 2nd Vice President TITLE: Sr. Vice
President,
Chief Financial
Officer
(REV.2/93)
EXHIBIT 10.57<PAGE>
PREMIUM FINANCE AGREEMENT
DISCLOSURE STATEMENT AND SECURITY AGREEMENT
A.I. Credit Corp.
160 Water Street
New York, NY 10038
(212) 428-5400 or 1-800-221-3450
INSURED/BORROWER
Staff Builders, Inc.
1983 Marcus Avenue
Lake Success, NY 11042
_________________________________________________________________
A) Total Premiums $5,726,956.00
B) Cash Down Payment $ 0.00
C) Amount Financed (The
amount of Credit provided
to insured or on its behalf) $5,726,956.00
D) Finance Charge (Dollar amount
credit will cost) $ 609,806.84
E) Florida Documentary Stamp Tax $ 0.00
F) Total of Payments (Amounts which
have been paid after making
all scheduled payments) $6,336,762.84
_________________________________________________________________
Annual Percentage Rate 6.69%
(Cost of credit figured as a yearly rate)
_________________________________________________________________
PAYMENT SCHEDULE
Amount of Each Payment $ 176,021.19
Number of Payments (Monthly) 36
1st Payment Due 1/15/97
Final Payment Due 12/15/99
SCHEDULE OF POLICIES
Policy Number and Prefix DRP 204/93
DRP 204/94
Full Name of Insurance Company and
Name and Address of Policy Issuing East River Insurance
Agent East River Insurance
Type of Policy Premium WMC
WMC
Term in Months 36
36
Effective Date M,D,Y 12/15/96
12/15/96
Policy Premiums $ 5,726,956
(Included)
TOTAL PREMIUMS (Recorded in "A")` $ 5,726,956
_________________________________________________________________
IMPORTANT NOTICE TO INSURED
Notice: 1) Do not sign this Agreement before you read it or if it
contains any blank spaces. 2) You are entitled to completely
filled-in copy of this Agreement at the time you sign. 3) Under
the law, you have the right to pay off in advance the full amount
due and under certain conditions to obtain a partial refund of the
finance charge. 4) Keep your copy of this Agreement to protect
your legal rights.
AGENT or BROKER Treiber Group LLC
BUSINESS ADDRESS 377 Oak Street, Garden City, NY 11530
_________________________________________________________________
AGREEMENTS OF AGENT OR BROKER
The Agent or Broker Undersigned:
1) Represents and warrants as follows: (a) to the best of the
undersigned's knowledge and belief, the insured's signature is
genuine or, to the extent permitted by applicable Law, the
undersigned Agent or Broker has been authorized (in writing) by the
insured to sign this Agreement on their behalf, (b) the insured has
received a copy of the Agreement, (c) the scheduled Policies are in
full force and effect and the premiums indicated therefore are
correct, (d) the insured may cancel all scheduled policies
immediately upon request, (e) none of the Policies scheduled in the
Agreement are non-cancelable, and (f) if indicated, the down
payment due at Policy inception in the amount of $0 and
installments due on - have been collected and are being
retained by us.
2) Upon cancellation of any of the scheduled Policies, the
undersigned Agent or Broker agrees upon demand to pay to you or
your assigns their commission on any unearned premiums applicable
to the cancelled Policies.
3) For California business, the undersigned agent will receive
from the lender $0 for aiding in administration of the premium
finance agreement relating to above premiums.
4) Warrants that it is the authorized Policy issuing agent of the
insurance companies or the broker placing the coverage directly
with the insurance company on all the Policies scheduled except:
n/a
_________________________________________________________________
Where the word "Policy" or "Policies" is used in this
Agreement, it means the policies listed above in the Schedule of
Policies.
Where the word "you, your or AICCO" is used in this Agreement,
it means A.I.Credit Corp. or AICCO Inc. (as checked above).
Wherever the words "I" or "me" are used in this Agreement, it
means the undersigned Insured, which is a commercial entity.
AGREEMENT OF INSURED
THE NAMED INSURED HEREBY AGREES:
1) In consideration of the premium payments being financed by you
to the above insurance company(ies) on my behalf, I promise to pay
to your order the TOTAL OF PAYMENTS to be made in accordance with
the PAYMENT SCHEDULE, subject to the provisions set forth in this
Agreement.
2) a) If there is an amount listed as "Brokers Fee" in the Schedule
of Policies listed above, this fee is charged under Section 2119 of
the New York Insurance Law or the Law, if any, of the state in
which I live. This fee is charged for obtaining and servicing the
Policy or where the risk to be insured under the Policy resides.
b) A fee $none, which is not being financed, has been charged under
the provisions of these Laws. If none has been charged, the word
"none" is shown.
POWER OF ATTORNEY
The insured appoints AICCO its Attorney-in-Fact with full authority
to cancel the insurance policies, financed herein for nonpayment of
installments as set forth in this Agreement.
12/26/96 /S/Gary Tighe, Sr. Vice President
Date Signature of Insured(s) or Agent or Broker
EXHIBIT 10.63<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT made this 4th day of November, 1996,
by and between AIRPORT LANDING CENTER, L.L..C., 5505 Main Street,
Suite A, Williamsville, New York 14221-6701 (the "Landlord"), and
STAFF BUILDERS HOME HEALTH CARE, INC., a Delaware corporation,
having an office at 1983 Marcus Avenue, Lake Success, New York
11042 (the "Tenant").
W I T N E S S E T H :
In consideration of the premises, representations,
warranties, and mutual covenants set forth herein, the Landlord
and the Tenant agree as follows:
1. Leased Premises. Landlord hereby agrees to lease to
the Tenant and the Tenant hereby agrees to lease from the
Landlord 1,500 square feet of storage space and 16,500 square
feet of office space, as shown on Exhibit A attached hereto
("Premises"), in a building with an adjacent approximately 188
vehicle parking lot ("Parking Lot"), known as 1127 Wehrle Drive,
Amherst, New York (the "Building"). Parking for 120 vehicles for
Tenant's employees and invitees shall be reserved for Tenant's
exclusive use, and up to an additional 30 parking spaces will at
all times be left unrestricted.
2. Term of Lease. The term of this Lease Agreement shall
commence on the "Commencement Date" as hereafter defined, and
shall end ninety-six (96) months thereafter, provided, however,
that in the event the Commencement Date is a date other than the
first day of a calendar month, said term shall be extended by the
number of days between the Commencement Date and the first day of
the next succeeding month.
The Commencement Date shall be the date when the
Landlord has substantially completed Landlord's Work, as
described in Exhibit B attached hereto, or on the date that
Tenant takes possession of the Premises, whichever event first
occurs. Landlord shall give Tenant not less than ninety (90)
days advance written notice of the date upon which Landlord's
Work will be substantially completed. Landlord shall be
responsible for obtaining a Certificate of Occupancy for the
Premises, although this shall not be a precondition for
determining the Commencement Date; it being understood, however,
that the Commencement Date cannot occur prior to the issuance of
a temporary Certificate of Occupancy.
The parties shall execute an amendment to this Lease
Agreement stating the Commencement Date and Termination Date of
the term of this Lease Agreement when it is ascertained.
3. Construction of Leased Premises.
(a) Landlord shall, subject to the terms and
conditions of this Lease Agreement, at its own cost and expense
cause the Building to be completed and the Premises to be built
and completed substantially in accordance with Landlord's Work as
shown on Exhibit B. The Premises shall be constructed in a good
and workmanlike manner. Landlord warrants that the improvements
to the Premises will be constructed with new materials of good
quality and in accordance with all currently existing laws,
ordinances and statutes of the municipal or State governments.
(b) Possession of the Premises completed in accordance
with Landlord's Work, shall be delivered not later than July 1,
1997, unless construction is delayed for causes beyond Landlord's
control, including delays in decision sign-offs by Tenant. In
that event the time fixed to complete and deliver the Premises
shall be extended for a grace period equivalent to the time lost
by reason of such delay, after which Tenant shall have the option
of terminating this Lease.
(c) Landlord, at no charge to Tenant, shall allow
Tenant early entrance on the Premises only to prepare the
Premises for installation of Tenant's fixtures and equipment and
for no other purpose. Prior to entering the Premises, for the
purpose of installing its fixtures and equipment, Tenant shall
obtain written consent of Landlord, which consent shall not be
unreasonably withheld. William Snyder, an employee of Landlord,
is hereby designated by Landlord as building liaison to Tenant
during its initial move-in and occupancy. Tenant shall obey all
reasonable restrictions of Landlord and shall prepare the
Premises in a manner so as not to interfere with Landlord's
construction of the Premises.
4. Base Rent. Commencing (6) six months following the
Commencement Date, Tenant shall pay to Landlord for the following
twelve (12) months base annual rent of $177,718.75 in equal
monthly installments of $14,809.90; the next twelve (12) months
base annual rent of $193,875 in equal monthly installments of
$16,156.25; and thereafter, base annual rent of $198,375 in equal
monthly installments of $16,531.25 ("Base Rent"). Base Rent
shall not be paid during the first six (6) months following the
Commencement Date, but shall be payable pro rata for any period
of occupancy other than for fixturing as provided in Section
3(c), prior to July 1, 1997 should Landlord substantially
complete construction prior to that date. During the initial
six-month period in which Base Rent is not payable, Tenant shall
pay to Landlord in lieu thereof a monthly sum of $1,125 on the
first day of each month as a contribution towards Landlord's tax
and maintenance costs. Base Rent and Additional Rent (as
hereinafter defined) together are hereafter referred to as "Rent"
and shall be paid on the 1st day of each month in advance at the
office of Landlord without demand, abatement, deduction or
offset. In the event that any installment of Base Rent or
Additional Rent is not paid on the due date thereof, interest
shall accrue and be payable by Tenant on each dollar so unpaid
from the due date thereof at the rate of eighteen percent (18%)
per annum, or, if lower, at the highest rate of interest legally
chargeable to or payable by Tenant.
5. Janitorial and Cleaning Services. Tenant will
provide, at Tenant's expense, Janitorial and cleaning services.
6. Taxes. Attached hereto as Exhibit C is a form from
the Amherst Industrial Development Agency setting forth the
Assessor's estimate of the taxes for the building, which Landlord
believes is reasonable assuming taxes are abated (partially) as
herein below referred to. In any event, Landlord warrants to
Tenant that if no abatement is granted, the taxes on the-building
during the first twelve (12) months of the term of this Lease
Agreement will not exceed $45,398.23.
As Additional Rent, Tenant shall also pay to Landlord each
calendar year or part thereof its share of all real property
taxes and assessments or governmental impositions in lieu
thereof, be they special or otherwise, of every kind and nature
(including without limitation, assessments for public
improvements or benefits whether or not commenced during the term
of this Lease Agreement), water, sewer and other rents, rates and
charges, excises, levies, license fees, permit fees, and other
authorization fees, public dues, and all other charges (in each
case whether general or special, ordinary or extraordinary, or
foreseen or unforeseen), of every character (including all
penalties or interest thereon, if incurred due to Tenant's late
payment), which at any time during or in respect of the term of
this Lease Agreement may be assessed, levied, confirmed, or
imposed on or in respect of or be a lien upon, or measured by the
value or amount of, (a) the Building or any part thereof,
including any personal property, any rent therefrom or any
estate, right or interest therein or (b) any occupancy, use or
possession of the Premises or any part thereof other than any
franchise, capital stock or similar tax of Landlord, or any
income or excess profit tax of Landlord determined on the basis
of its general income or revenues. Tenant's share shall be
determined by multiplying the foregoing by a fraction, the
numerator of which is the square foot area of the Premises, less
1,500 square feet, and the denominator of which is the leasable
building area (22,415 square feet) in the Building. Tenant shall
pay such Additional Rent in monthly installments at the same time
and place Base Rent is due and payable in amounts from time to
time reasonably estimated by Landlord. This Additional Rent
shall initially be paid at the rate of $.10 per square foot per
month. At the end of each calendar year Landlord shall send a
copy of all tax bills to Tenant and shall calculate Tenant's
actual share of the foregoing, and if the amount theretofore paid
by Tenant for such calendar year is less than the amount of
Tenant's actual share, Tenant shall pay such deficiency to
Landlord upon demand. If the amount paid by Tenant exceeds
Tenant's actual share, Tenant shall receive a credit equivalent
to such excess which shall be applied against Tenant's subsequent
payments of such Additional Rent or if the term of this Lease
Agreement has expired and Tenant has vacated the Premises in
accordance with the terms of this Lease Agreement, without being
further indebted to Landlord, Landlord shall promptly refund such
excess to Tenant.
Immediately following the execution of this Lease
Agreement, Landlord, at Landlord's cost, shall make application
to the Amherst Industrial Development Agency ("AIDA") for a ten
(10) year tax abatement on the Building, and shall thereafter
diligently pursue obtaining such abatement. Although Landlord
makes no warranty or representation regarding the availability of
such abatement, Landlord in good faith believes such abatement
will likely be granted because of Tenant's occupancy. Tenant
agrees to timely supply to Landlord all information concerning
Tenant as AIDA may reasonably request.
Upon the date of any expiration or termination of this
Lease Agreement, whether the same be the date herein set forth
for the expiration of the term or any prior or subsequent date,
the entire amount of Additional Rent herein provided for shall
immediately become due and payable by Tenant to Landlord.
Tenant's obligation to pay any and all Additional Rent under this
Lease Agreement shall survive any expiration or termination of
this Lease Agreement.
7. Landlord's Duties. Landlord shall, throughout the term
of this Lease Agreement, pay and be responsible for snow plowing
the parking areas; landscaping; window cleaning; HVAC
maintenance; labor for bulb replacements (but not bulbs); trash
removal; and, subject to the terms of paragraph 15, shall repair
and maintain the Building and the Premises (but not the security
system, which shall be maintained or replaced by Tenant) and keep
the Building adequately insured against fire and other perils.
All services described above shall be provided by Landlord in a
manner consistent with that of a first-class building. Also,
Landlord shall repaint the Premises after the first sixty-six
(66) months of the term, and if Tenant exercises the first five
year renewal option as set forth in Section 39, Landlord shall
recarpet the Premises at the end of the ninety-six (96) month
initial eight-year term of this Lease Agreement.
8. Use of Premises
(a) During the term hereof and during any extension
hereof, Tenant agrees to use and occupy the Premises solely for
offices in connection with the provision of temporary home health
care services, and storage of records and no other use without
the express prior written consent of Landlord.
(b) Landlord represents to Tenant that the Premises
will not contain Hazardous Materials (as defined hereafter) on
the Commencement Date.
Tenant represents, warrants and covenants that it will
not use, store, treat, produce, handle, manufacture, dispose of
or permit Hazardous Materials in the Premises. Tenant agrees to
defend, indemnify, and hold harmless Landlord, its employees,
agents, officers, and directors from and against any claims,
demands, penalties, fines, liabilities, settlements, damages,
costs or expenses of whatever kind or nature, known or unknown,
contingent or otherwise, arising out of, or in any way related
to, (i) the presence, disposal, release, or threatened release of
any Hazardous Materials which are on, from, or affecting the
soil, water, vegetation, buildings, personal property, persons,
animals, or otherwise; (ii) any personal injury (including
wrongful death) or property damage (real or personal) arising out
of or related to such Hazardous Materials; (iii) any lawsuit
brought or threatened, settlement reached, or government order
relating to such Hazardous Materials; and/or (iv) any violation
of laws, orders, regulations, requirements or demands of
government authorities which are based upon or in any way related
to such Hazardous Materials, including, without limitation,
attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses. At the expiration of the
term of this Lease Agreement the Tenant shall deliver the
Premises to Landlord free of any and all Hazardous Materials so
that the condition of the Premises shall conform with all
applicable federal, state and local laws, ordinances, rules or
regulations affecting the Building. For purposes of this
paragraph, "Hazardous Materials" includes, without limit, any
flammable explosives, radioactive materials, hazardous materials,
hazardous wastes, hazardous or toxic substances, or related
materials defined in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C.
Sections 9601, et seq.), the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801 et seq.), and in the
regulations adopted and publications promulgated pursuant
thereto, or any other federal, state or local environmental law,
ordinance, rule, or regulation. The provisions of this Section
shall be in addition to any and all other obligations and
liabilities Tenant may have to Landlord at common law, and shall
survive the expiration of this Lease Agreement. If Tenant fails
to cause any release of a hazardous substance on, at or from the
Premises to be contained, removed, cleaned up and otherwise
remediated within thirty (30) days after receiving notice
thereof, Landlord shall have the right (but not the obligation),
upon ten (10) days written notice to Tenant (or without notice in
the case of emergency), to take or complete such action on behalf
of Tenant. The contractors and/or subcontractors selected by
Landlord shall have the right to enter the Premises with such
persons, machinery and equipment, and to undertake such
investigative, containment, removal, clean up or other remedial
actions. Tenant shall be liable to Landlord for all costs and
expenses, including, without limitation, reasonable attorneys'
and experts' fees, expenses and disbursements, paid or incurred
on account of such actions undertaken on Tenant's behalf and
shall promptly reimburse Landlord therefor on demand as
Additional Rent.
(c) At the commencement of the term of this Lease
Agreement, at Landlord's cost, the Building and the Premises
shall be in compliance with all laws, ordinances, rules and
regulations of federal, state, county and municipal authorities
(including the Certificate of Occupancy for the Building and
Premises, as applicable). Thereafter, Tenant shall at its
expense comply with all laws, ordinances and regulations of
federal, state, county and municipal authorities, and with any
lawful direction of any public officer thereof which shall assert
or impose any violation by, or order or duty upon Landlord or
Tenant resulting from the use or occupancy of the Premises.
Notwithstanding the above, any structural changes that may be
required by any changes in laws, ordinances, and regulations of
federal, state, county and municipal authorities shall be made by
Landlord at its cost.
(d) Tenant shall not do or permit to be done any act
or thing which will invalidate or be in conflict with New York
standard fire insurance policies covering the Building, the
Premises and their contents. Landlord warrants that at the
commencement of the term of this Lease Agreement, the Premises
will be in compliance with all rules, orders, regulations or
requirements then in effect of the appropriate fire insurance
rating organization with respect to the intended use of the
Premises by Tenant as hereinbefore set forth. Tenant, at its
expense shall, after notice, comply with all rules, orders,
regulations or requirements of the appropriate fire insurance
rating organization with respect to use of the Premises by
Tenant. Tenant shall not do, or permit anything to be done, in
or upon the Premises which shall increase the rates for fire
and/or liability or workers' compensation insurance maintained by
Landlord with respect to the Building and its employees therein,
over that in effect for permitted uses. If, by reason of the
failure of Tenant to so comply, Landlord's insurance premiums
shall during the term of this Lease Agreement be higher than they
would otherwise be for use of the Premises for the permitted
purposes, Tenant shall reimburse Landlord, as Additional Rent,
for that part of all insurance premiums thereafter paid by
Landlord which shall have been charged because of the failure of
Tenant to so comply.
(e) Tenant shall not obstruct any of the common areas
of the Building. No sign, awnings, aerials, flag poles or the
like, visible from outside the Premises shall be installed by
Tenant without the prior written consent of Landlord.
(f) Tenant shall keep the Premises equipped with all
safety appliances required by law, ordinance or regulations of
any public authority because of any use of the Premises made by
Tenant and procure all licenses and permits required because of
such use and, if requested by Landlord, do any work so required
because of such use, it being understood that the foregoing
provisions shall not be construed to broaden or to limit in any
way Tenant's use of the Premises permitted hereunder.
(g) Notwithstanding anything hereinabove contained,
Tenant shall have no liability responsibility for any hazardous
waste affecting the Premises which migrates from the
adjacent gasoline station at the corner of Cayuga and Wehrle
Drive.
9. Alterations or Additions. Tenant shall not make
structural alterations and additions to the Premises except in
accordance with plans and specifications therefore first approved
in writing by Landlord, such approval not to be unreasonably
withheld. All alterations and additions shall be part of the
Premises unless otherwise provided in this Lease Agreement. All
of Tenant's alterations and additions and installation of
furnishings shall be coordinated with any work being performed by
Landlord and in such manner as to maintain harmonious labor
relations and not to damage the Premises or interfere with the
operation of the Building. All work related to such alterations,
additions, improvements, or changes shall be done in a good,
workmanlike manner and shall be completed. Tenant shall be
responsible to Landlord for any costs incurred by Landlord for
completing any work commenced by Tenant or for improving such
work to a good, workmanlike condition. Tenant shall discharge or
bond off any mechanic's lien filed against the Premises for work
or materials claimed to have been furnished to or at the order of
the Tenant within ten (10) days of the filing of such a lien.
Except for work performed by Landlord or Landlord's
general contractor, Tenant, at its expense shall obtain and
maintain, or cause any contractor retained by Tenant to obtain
and maintain at its expense, for so long as any improvement or
alterations are being constructed in the Premises and for so long
thereafter as may reasonably be requested by Landlord:
(a) Comprehensive General Liability Insurance,
written on an occurrence basis, with coverage for the Premises
and Operations, Products and Completed Operations, Contractual
Liability, Personal Injury Liability, Broad Form Property Damage,
Independent Contractors, Explosion and Collapse Hazard and
Underground Property Damage with limits of not less than one
million dollars ($1,000,000) for bodily injury and property
damage arising from any one occurrence.
(b) Workers' Compensation and Employers' Liability and
Disability Benefits Law insurance with limits as required by
statute necessary to protect the employees or others utilized by
Tenant or any contractor of Tenant from and against any and all
liability for death, disease or injury by reason of the
performance of this work.
Tenant shall furnish to Landlord certificates
evidencing such insurance coverage prior to the commencement of
any alterations or construction work. All insurance shall be
endorsed to provide that thirty (30) days notice of cancellation
or amendment will be given to Landlord. Such insurance shall
name as Additional Insured Landlord and such other person(s)
designated by Landlord as having an insurable interest.
10. Utilities. Tenant shall pay at its expense all
electric, gas and water services to the Premises. Landlord, at
its expense, shall provide for separate meters or submeters for
electricity, gas and water services, which shall be paid by
Tenant directly to the appropriate utilities providing such
services. In order to prevent Tenant from overloading the
electrical distribution facilities of the Building, Tenant shall
make no alterations or additions to the electrical equipment
and/or appliances installed by Landlord as set forth on Exhibit
B, without obtaining the prior written consent of Landlord in
each such instance. Landlord shall not in any way be liable for
or responsible to Tenant for any loss, damage or expense which
Tenant may sustain or incur if either the quantity or character
of the electrical service is changed or is no longer available or
suitable for Tenant's requirements. If Tenant deems it necessary
to install any riser or associated equipment to supply Tenant's
electrical requirements, Landlord shall, upon written request by
Tenant, install such equipment, provided however the cost and
expense of such equipment and installation thereof shall be borne
by Tenant, and provided further that the installation of such
additional equipment, in Landlord's sole judgment, is necessary
and will not cause or create a dangerous or hazardous condition,
entail excessive or unreasonable alterations, repairs or
expenses, or interfere with or disturb other tenants or occupants
of the Building. Tenant shall furnish and install all lighting
tubes, lamps, bulbs and ballasts required in the Premises at
Tenant's expense, or shall pay Landlord's reasonable charges
therefor on demand.
Landlord will furnish such water (except process or cleaning
water) as in Landlord's judgment is reasonably necessary for the
use and occupancy of the Premises. It is agreed that the
interruption or failure of any utility services shall not
constitute an eviction or disturbance of Tenant's use and
possession of the Premises or breach by Landlord of any of its
obligations hereunder; that Landlord shall not by reason thereof
be liable for damages, and Tenant shall not thereby be relieved
of any of its obligations hereunder. Landlord agrees that it
shall in all instances exercise reasonable diligence and use its
best efforts to restore any service which shall be interrupted.
11. Tenant's Insurance. At all times during the term of
this Lease Agreement (or such earlier date if Tenant avails
itself of its rights under Section 3(c)), Tenant shall obtain and
maintain in full force and effect, at Tenant's sole expense:
(a) General liability insurance and automobile
liability insurance, maintained on an occurrence basis, which up
to the maximum liability amounts thereof against liability for
bodily injury, including death, and property damage arising out
of occurrences on or about the Premises and/or the Building.
Coverage shall be included for Premises and Operations, Products
and Completed Operations, Contractual Liability, Personal Injury
Liability, Broad Form Property Damage, Independent Contractors,
Explosion and Collapse Hazard and Underground Property damage
with limits of not less than one million dollars ($1,000,000) for
bodily injury and property damage from any one occurrence.
(b) All-risk casualty insurance, written at
replacement value and with replacement cost endorsement, covering
all of Tenant's personal property in the Premises (including,
without limitation, inventory, trade fixtures, floor coverings,
furniture and other property removable by Tenant under the
provisions of this Lease Agreement) and all leasehold
improvements constructed after the commencement of the term of
this Lease Agreement in the Premises hereunder, insuring Landlord
and Tenant as their interest may appear and to an extent
sufficient to avoid application of any co-insurance penalties.
(c) Workers' Compensation and Employers' Liability and
Disability Benefits Law insurance with limits as required by
statute.
The company or companies issuing any insurance that
Tenant is required to obtain and maintain pursuant to this
Section and Section 9 hereinabove, and the form of such
insurance, shall at all times be subject to the approval of the
Landlord, and any such company or companies shall be an insurance
company (rated grade A-10 or better in Best's Insurance Reports)
licensed to do business in the State of New York. All policies
or certificates evidencing such insurance (except for the
coverage described in Subsections (b) and (c) to be obtained by
Tenant under this Section) shall name as Additional Insured
Landlord and such other person(s) designated by Landlord as
having an insurable interest. All such policies shall contain an
endorsement providing that the insurer will not cancel or change
or refuse to renew such insurance without first giving thirty
(30) day's advance written notice to Landlord and all other Named
Insureds therein. Within at least ten (10) days prior to the
Commencement Date (or the date upon which Tenant enters the
Premises as provided in Section 3(c)), Tenant shall furnish to
Landlord certificates for all such insurance required to be
obtained and maintained by Tenant and, within thirty (30) days
prior to the expiration of any such insurance, Tenant shall
furnish to Landlord certificates evidencing the renewal of such
insurance.
12. Indemnity. Except to the extent caused solely by the
negligence or willful misconduct of Landlord or other tenants
within the Building, and except to the extent otherwise provided
in the waiver of subrogation clause of Section 13 herein, Tenant
hereby agrees to indemnify and save Landlord, its principals,
agents, employees and representatives, safe and harmless from and
against all losses, costs, liabilities, claims, actions, damages
and expenses, including reasonable attorneys' fees and
disbursements, penalties and fines, incurred in connection with
or arising from (a) any default by Tenant in the observance or
performance of any of the terms, covenants or conditions of this
Lease Agreement on Tenant's part to be observed or performed
and/or (b) the use or occupancy or manner of use or occupancy of
the Premises by Tenant or any person claiming through or under
Tenant and/or (c) any occurrence in, on or about the Premises or
within the Building if such occurrence involves any claim against
Landlord by Tenant or by any employee, agent, servant, officer,
invitee or visitor of Tenant and/or (d) any acts, omissions or
negligence by Tenant or Tenant's contractors, agents, servants,
employees, visitors, invitees or licensees in or about the
Premises prior to, during or after the term of this Lease
Agreement, including, without limitation, any acts, omissions or
negligence in the making of any improvements in or about the
Premises. Tenant shall pay to Landlord, within ten (10) days
after receipt by Tenant of bills or statements therefore, all
sums payable by Tenant to Landlord according to the provisions of
this Section. Tenant's obligations under this Section shall
survive the termination of this Lease Agreement.
The Landlord shall be exempt from any and all liability
for any damage or injury to person or property caused by or
resulting from the acts or omissions of Tenant, its employees,
agents or invitees, or any other tenant of the Building and such
tenant's employees, agents or invitees.
13. Destruction and Restoration, Subrogation, Release. If
the Premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give prompt notice thereof to
Landlord and Landlord shall proceed with reasonable diligence to
repair or cause such damage to be repaired. If the Premises or
any part thereof shall be rendered untenantable by reason of such
damage and such damage shall not be caused by the negligence or
other wrongful conduct of Tenant, Tenant's agents, employees or
invitees, the Base Rent or a proportionate part thereof based on
the area of the Premises so rendered untenantable, shall be
abated for the period from the occurrence of such damage to the
date when the damage shall have been repaired, as aforesaid,
otherwise, Tenant's obligation to pay rent shall not be affected
by such fire or casualty. Landlord shall not be liable for, and
Tenant expressly releases Landlord from liability for
inconvenience or annoyance to Tenant and for injury to property
or the business of Tenant resulting in any way from such damage
or any action taken in connection with the repair thereof, except
as due to Landlord's negligence or misconduct. In case the
Premises or the Building (whether or not the Premises shall have
been damaged) shall be so damaged by such fire or other '
casualty that substantial alterations or reconstruction of the
Building shall, in Landlord's sole judgment, be required, then,
Landlord may, at its option, terminate this Lease Agreement by so
notifying Tenant of such termination in writing delivered no
later than ninety (90) days after the date of such damage. In
the event Landlord elects to terminate this Lease Agreement, any
prepaid and unearned rent shall be refunded to Tenant.
It is expressly agreed that neither Landlord nor Tenant
shall be liable to the other, and each party hereto hereby
releases and waives all claims, rights of recovery, and causes of
action that either such party or any party claiming by, through
or under such party by subrogation or otherwise may now or
hereafter have against the other party or any of the other
party's directors, officers, employees or agents for any loss or
damage that may occur to the Building, Premises, Tenant's
improvements, or any of the contents of the Building and the
Premises and for any interruption in Tenant's business if
sustained by reason of fire (even if such fire is the result of
negligence of the parties hereto or their directors, officers,
employees or agents) or if sustained by reason of storm damage or
the elements, or by other casualty to the extent recoverable by
insurance (including any deductible). Both Landlord and Tenant
shall cause the carriers of any insurance covering or affecting
the Premises or the Building to include provisions in all such
policies authorizing the waiver of any rights by way of
subrogation against the other.
14. Condemnation
(a) Except as specified in this Section 14(a) and
Section 14(b) below in the event that the Building or the
Premises, or any part of such Building or the Premises, shall be
condemned, taken or otherwise acquired by right of eminent domain
for any public or quasi-public use ("condemned by right of
eminent domain"), Landlord shall be entitled to receive the
entire award in the condemnation proceeding (including any award
made for the value of the Tenant's leasehold interest) together
with any other consideration paid by the condemning Authority to
the Landlord, or its designee. Tenant hereby assigns to Landlord
any and all right, title and interest of Tenant in and to any
such award and/or consideration or any part thereof. Nothing
herein shall be construed as prohibiting Tenant from prosecuting
any right it may have against the Condemning Authority for
reimbursement with respect to its trade fixtures and/or
relocation expenses, provided that any such claim does not, in
any way, reduce Landlord's claim.
(b) If all or part of the Premises shall be
temporarily condemned by right of eminent domain, then this Lease
Agreement shall continue in full force and effect, and the Rent
due hereunder shall not abate, but Tenant shall be entitled to
that part of the award paid by reason of such temporary'
condemnation which is allocable to use and occupancy of the
Premises during the terms of this Lease Agreement.
(c) If a part of the Building is condemned by right of
eminent domain, and if in Landlord's sole judgment the continued
operation of the remaining part of the Building is not economical
or practicable, then Landlord, by written notice given to Tenant
within sixty (60) days following the vesting of title in the
Condemning Authority, may elect to terminate this Lease Agreement
as of the date specified in such notice.
(d) In the event that the Premises (or a substantive
portion thereof) is condemned by right of eminent domain, then
this Lease Agreement may be terminated at the option of either
party, such option to be exercised by delivery of written intent
to do so to the other party no later than sixty (60) days after
such event.
(e) In the event either the Premises or Building (or
both of them) is condemned by right of eminent domain, rent shall
be payable only up to the date title vests in Condemning
Authority and Landlord will refund to Tenant any prepaid unearned
rent. However, in the event of a partial condemnation of the
Premises and the continuation of this Lease Agreement: (i) the
Base Rent hereunder shall be abated by an amount in proportion to
the area of the Premises so condemned or taken or otherwise
acquired; and (ii) Landlord shall, with reasonable diligence and
at its expense, restore the remaining portion of the Premises as
nearly as practicable to the same condition as it was in prior to
such event. Landlord shall not be liable or responsible for any
injury to property or person, or inconvenience which may arise
through such repair or alteration of any part of the Building, or
failure to make any such repairs, or from any cause whatever,
unless caused solely by Landlord's negligence.
15. Maintenance, Repairs & Access to the Premises. Except
as otherwise expressly provided herein, Landlord shall make all
repairs to the Premises, including the HVAC system, during the
term of this Lease Agreement. Tenant shall take good care of the
Premises and all fixtures therein and appurtenances thereto, and
shall pay and be responsible for all repairs to the Building and
Premises caused by the negligent or wrongful act(s) of Tenant,
its employees and invitees.
During the progress of any repairs or work by Landlord
(whether performed under this provision or otherwise), Landlord
may store and keep on the Premises all necessary materials,
tools, supplies and equipment therefore and Landlord shall not be
liable to Tenant for any inconvenience, disturbance, or other
loss or damage to Tenant by reason of or on account of such
actions by Landlord, provided Tenant's use and occupancy of the
Premises is not unreasonably interfered with.
No entry by Landlord or its authorized representatives
upon the Premises for the purposes of making repairs to the
Premises or the Building or performing any work for the benefit
of the Premises or the Building, shall constitute or be deemed as
trespass or eviction of Tenant, nor a termination of this Lease
Agreement. Landlord and its duly authorized agents and employees
shall have access to and the right to enter upon the Premises,
upon reasonable notice (except in cases of emergency) at any
reasonable time (a) to examine the condition thereof, (b) to make
any repairs required to be made by Landlord hereunder, (c) within
the last nine (9) months of the term or renewal term, as the case
may bet of this Lease Agreement, to show the Premises to
prospective purchasers or tenants of the Building, or (d) for any
other legitimate purpose, including, without limitation, (i) to
perform the services and/or make the repairs and restorations the
Landlord elects to perform or furnish under this Lease Agreement,
(ii) to make repairs to adjoining space, (iii) to cure any
defaults of Tenant hereunder that Landlord elects to cure, and
(iv) to remove from the Premises any improvements thereto or
property placed therein in violation of this Lease Agreement, and
Tenant shall not be entitled to any abatement or reduction of
Rent by reason thereof. In no event shall any of such actions
taken by Landlord be construed as a trespass or eviction of
Tenant. Landlord agrees that in exercising its right hereunder,
it will, under the circumstances, take reasonable action as to
minimize inconvenience to Tenant's use and occupancy of the
Premises.
Upon the expiration or other termination of this Lease
Agreement, Tenant shall surrender possession of the Premises to
Landlord in good order and broom clean condition, ordinary wear
and tear, consistent with normal use thereof notwithstanding the
proper maintenance thereof, only excepted. Prior to the
surrender of the Premises to Landlord, Tenant at its sole cost
and expense, shall remove all liens and other encumbrances which
may have resulted from the acts or omissions of Tenant. If
Tenant fails to do any of the foregoing, Landlord, in addition to
other remedies available to it at law or in equity, may, without
notice, enter upon, reenter, possess and repossess itself
thereof, by force, summary proceedings, ejectment, or otherwise,
and may dispossess and remove Tenant and all persons and property
from the Premises; and Tenant waives any and all damages or
claims for damages as a result thereof. Such dispossession and
removal of Tenant shall not constitute a waiver by Landlord of
any claims by Landlord against Tenant.
16. Assignment and Subletting. Tenant shall not assign
this Lease Agreement in whole or in part, or sublet all or any
part of the Premises, or mortgage or encumber this Lease
Agreement or the Premises or any part thereof, or suffer or
permit the occupation of all or any part thereof by others,
without the prior written consent of Landlord in each instance,
which consent will not be unreasonably withheld.
17. Mechanics' Liens. If any mechanics' liens shall be
filed against the Premises, the Building or any part thereof,
based upon any act of Tenant or anyone claiming through Tenant,
Tenant shall, by bonding, deposit, payment, or otherwise remove
of record or otherwise satisfy such lien within fifteen (15) days
after the filing thereof. If Tenant fails to do so, Landlord may
do so at the expense of Tenant.
18. Subordination and Attornment.
(a) This Lease Agreement and the lien hereof is
subordinate to any present or future ground lease(s) or mortgages
irrespective of the time of recording of any such ground lease(s)
or mortgages as long as the ground lessor or mortgagee, as the
case may be, agrees that so long as Tenant is not in default
hereunder, its possession of the Premises will not be disturbed.
This provision shall be self-operative. However, Tenant agrees
that within five (5) days of Landlord's request, it will execute
such documents in recordable form as Landlord may require to
further evidence this subordination. The Tenant's failure to
execute any such documents shall constitute a default by Tenant
under the terms of this Lease Agreement.
(b) Tenant agrees if any ground lessor or mortgagee,
or any other person claiming through them, shall succeed to the
interest of Landlord in this Lease Agreement, Tenant shall
recognize and attain to said ground lessor or mortgagee or person
as Landlord under the terms of this Lease Agreement.
Tenant agrees that it will, upon the request of such
person succeeding to the Landlord's interest under this Lease
Agreement, execute, acknowledge and deliver any and all
instruments necessary or desirable to give effect to such
attornment, and failure of the Tenant to execute any such
document or instrument within five (5) days of such request shall
constitute a default by Tenant under the terms of this Lease
Agreement.
19. Holdover. In the event that Tenant holds over and
continues to occupy all or any part of the Premises after the
expiration hereof or after any earlier termination, whether with
or without the consent of Landlord, such occupancy shall be
construed as a tenancy from month to month, otherwise subject to
the same terms, covenants and conditions as contained in this
Lease Agreement, except that monthly rental shall be 150% of the
monthly rental then in effect for the last month of the Lease
Agreement. Notwithstanding the foregoing, Tenant shall be liable
for all losses, damages, costs, and expense, including without
limitation, attorneys' fees and disbursements suffered or
incurred directly or indirectly by Landlord by reason of the
failure or refusal by Tenant to vacate and surrender the Premises
as and when required by the terms of this Lease Agreement.
20. Rules and Regulations. Any reasonable rules and
regulations adopted and promulgated by Landlord from time to time
are hereby made a part of this Lease Agreement and Tenant agrees
to comply with and observe the same. Notice of such rules and
regulations shall be given to Tenant and Tenant agrees thereupon
to comply with and observe all such rules and regulations,
provided they shall not contradict any provisions of this Lease
Agreement.
21. Security Deposit. As security for the faithful
performance of all the terms, covenants and conditions of this
Lease Agreement by Tenant, Tenant agrees to pay to Landlord upon
execution of this Lease Agreement and in any case prior to
occupancy the sum of the first and last month Base Rent, one-half
of which will be applied to the first month's rent. At
Landlord's sole discretion, it may be applied against costs
incurred, damages sustained or losses resulting from any defaults
of or by Tenant hereunder. Landlord shall have the right to
transfer and/or deliver such security deposit or any balance
thereof to any purchaser of the Building or successor to
Landlord's rights and obligations hereunder. Thereupon Landlord
shall be discharged from any further liability in reference
thereto. To the extent that Landlord shall from time to time
apply all or any portion of such security deposit of this Lease
Agreement; Tenant agrees upon ten (10) days' written notice to
replenish such security deposit and failure to do so shall be
deemed an Event of Default under Section 22(b) of this Lease
Agreement. Within ninety (90) days following the expiration of
this Lease Agreement, Landlord shall return any portion of
Tenant's security deposit, together with interest thereon at the
rate of five percent (5%) per annum, not required for necessary
repairs to the Premises; except that in the event Tenant
exercises the first renewal option as set forth in paragraph 39,
the security deposit together with interest thereon shall be
applied against the first month's rent due of the first renewal
term.
22. Default by Tenant. Each of the following events shall
constitute, and hereafter be referred to as "an Event of Default"
(a) if Tenant fails or refuses to pay any installment of Rent as
and when due hereunder unless payment in full thereof is made
within five (5) days thereafter; (b) if Tenant fails or refuses
to perform, observe or comply with any covenant, agreement, duty
or obligation of the Tenant strictly according to the terms of
this Lease Agreement unless such failure or refusal is cured
within twenty (20) days after receipt of notice thereof from
Landlord, or, if such failure or refusal cannot be cured within
such twenty (20) day period, unless Tenant promptly commences to
cure the same within such twenty (20) day period and thereafter
continuously and diligently prosecutes such cure and completes
the same; (c) if Tenant or any guarantor of this Lease Agreement
shall make an assignment for the benefit of its creditors; (d) if
Tenant's interest in this Lease Agreement or in the Leased
Premises is encumbered or taken by attachment, lien, execution or
their legal process; (e) if any petition shall be filed by or
against Tenant or any guarantor of this Lease Agreement in any
court, whether or not pursuant to any statute of the United
States or of any State, in any bankruptcy, reorganization,
composition, extension, arrangement, receivership, insolvency or
similar proceedings or if Tenant, or if any guarantor of this
Lease Agreement, shall be adjudicated bankrupt, or if any such
petition shall be approved by the appropriate court or if the
court shall assume jurisdiction of the subject matter thereof;
(f) if in any proceedings any receiver or trustee shall be
appointed for Tenant's property or the property of any guarantor
of this Lease Agreement; or (g) if Tenant shall vacate or abandon
the Premises or any substantial part thereof and fails to timely
pay rent due.
Upon and at any time after the happening of any one or
more of the aforesaid Events of Default, Tenant shall for all
purposes be in default under this Lease Agreement and Landlord
may, at its option, exercise any or all of its rights and/or
remedies as provided in Section 23 of this Lease Agreement or as
otherwise provided by law or in equity. Tenant hereby waives any
right of redemption.
23. Rights and Remedies of Landlord. Without limiting any
other rights and remedies of Landlord, Landlord shall have the
following rights and remedies upon and after any default by
Tenant under this Lease Agreement: (a) Landlord may terminate
this Lease Agreement; (b) with or without terminating this Lease
Agreement, Landlord may re-enter the Premises and attempt to re-
let the Premises or any part thereof and remove all persons and
property from the Premises, and such property may be removed and
stored in a public warehouse or elsewhere at the cost of, and for
the account of, Tenant, all without service of notice or resort
to legal process and without Landlord being deemed guilty of
trespass or becoming liable for any loss or damage that may be
occasioned thereby; (c) Landlord may, at its option, with or
without terminating this Lease Agreement, and without affecting
Tenant's other obligations and liabilities under this Lease
Agreement, declare the entire amount of Rent payable during the
remainder of the term of this Lease Agreement immediately due and
payable and collect such amount by any lawful procedure; (d)
Landlord may, but shall not be required to, re-let the Premises
or any part thereof for such term or terms (which may be for a
term extending beyond the term of this Lease Agreement) at such
rentals or rental and upon such other terms and conditions as
Landlord in its sole discretion may determine; and upon 'such
reletting shall be applied first, to the payment of any
indebtedness other than Rent due hereunder from Tenant to
Landlord; second, to the payment of any costs and expenses of
such re-letting, including brokerage fees and attorneys' fees;
third, to the payment of Rent unpaid hereunder as and if
accelerated, and the residue, if any, shall be held by Landlord
and applied to payment of future rent as the same may become due
and payable hereunder; and no such re-entry or taking possession
of the Premises by Landlord shall constitute an election on its
part to terminate this Lease Agreement unless a notice of
termination shall be given to Tenant or unless the termination
thereof be decreed by a court of competent jurisdiction; (e)
notwithstanding any re-letting of the Premises or any part
thereof described in (b) and (d) above, without terminating this
Lease Agreement, Landlord may at any time thereafter elect to
terminate this Lease Agreement.
All of Landlord's rights hereunder and at law are
cumulative and the exercise of any rights shall not preclude the
exercise of any other rights Landlord has or may have.
24. Bankruptcy. If Tenant become the subject debtor in a
case under the Bankruptcy Code (11 U.S.C. 101 et seq.), and if
Landlord's right to terminate this Lease Agreement shall be
subject to the rights of the Trustee therein to assume or assign
this Lease Agreement, then, to the extent permitted by law, the
parties hereto agree that such trustee shall not have the right
to assume or assign this Lease Agreement until such Trustee (a)
promptly cures all defaults (declared and undeclared) under this
Lease Agreement; (b) promptly compensates Landlord for monetary
damages incurred as a result of such default, and (c) provides
"adequate assurance of future performance," which shall mean, in
addition to any other requirements of 11 U.S.C. Section
365(b)(3), that all of the following have been satisfied: (i) in
addition to all rents payable under the Lease Agreement, such
Trustee shall establish with Landlord a security deposit equal to
three (3) months' rent; (ii) such Trustee shall maintain said
security deposit in said amount whenever the same is reduced
below said amount, (iii) such Trustee has agreed that the
business in the Premises shall be conducted in a first-class
manner, and (iv) the use limitations of the Premises, as
hereinabove set forth, shall not change. If all the foregoing
are not satisfied, Tenant and such Trustee shall be deemed not to
have provided Landlord with adequate assurance of future
performance of this Lease Agreement.
25. Default by Landlord. The term "Landlord," as used in
this Lease Agreement, so far as covenants and agreements on the
part of Landlord are concerned, shall be limited to mean and
include only the owner and owners at the time in question of the
rights granted Landlord in this Lease Agreement and, in the event
of any transfer or transfers of the title to same, Landlord
herein named (and, in case of any subsequent transfers or
conveyances, the then grantor), including each of its partners,
shall be automatically freed and relieved from and after the date
of such transfer and conveyance of all liability as respects the
performance of any covenants and agreements on the part of
Landlord. Landlord or the then grantor shall turn over to the
grantee all monies and security, if any, then held by Landlord or
subgrantor on behalf of Tenant and shall assign to such grantee
all right, title and interest of Landlord of such grantor
thereto.
Notwithstanding any contrary provision of this Lease
Agreement, it is specifically understood and agreed by Landlord
and Tenant that there shall be absolutely no personal liability
on the part of Landlord (including any partner thereof at any
time when Landlord is a partnership) or its successors with
respect to any of the terms, conditions and covenants of this
Lease Agreement, and that Tenant shall look solely to the
interest of Landlord in the Building for the satisfaction of each
and every right and remedy of Tenant in the event of any breach
or default by Landlord with respect to any terms, conditions or
covenants of this Lease Agreement to be observed or performed by
Landlord.
26. Quiet Enjoyment. Provided that and for so long as
Tenant pays all Rent as and when due hereunder, complies and
observes all the terms, conditions and provisions of this Lease
Agreement, and fulfills all of Tenant's obligation of performance
hereunder, Tenant shall have peaceable and quiet enjoyment of the
Premises during the term of this Lease Agreement.
27. Financing Cooperation. Tenant will use its best
efforts to cooperate with Landlord in securing financing for
Landlord's Work and satisfy the reasonable requirements of
Landlord's mortgagee, who will be providing financing for
Landlord's Work, and any successor mortgagee.
If the financial statements and other financial
information provided by Tenant are deemed unsatisfactory to
Landlord's mortgagee and as a result the mortgagee refuses
Landlord's mortgage request necessary to finance Landlord's Work
or seeks to diminish the amount of mortgage funds available to
Landlord for Landlord's Work and/or requires additional
collateral and/or guarantees, Landlord may terminate this Lease
Agreement upon ten (10) days written notice to Tenant.
28. Tax Exemption Filing. Upon written request, Tenant
shall make immediate reporting of any information required by
nature of Landlord's financing structure, including but not
limited to any request of the Erie County Industrial Development
Agency/Town of Amherst Industrial Development Agency/Buffalo
Urban Development Corporation/Buffalo Enterprise Development
Corporation.
29. Attorney Expenses. If either party shall at any time
be in default hereunder and if either party shall institute any
action or summary proceeding against the defending party based
upon such default, then the losing party will reimburse the
prevailing party for the expense of attorney's fees and
disbursements thereby incurred by the prevailing party, so far as
the same are reasonable in amount. Also, as long as Tenant shall
be a tenant hereunder, the amount of such expenses shall be
deemed "Additional Rent" hereunder and shall be due from Tenant
to Landlord on the first day of the month following the billing
by Landlord of such respective expenses.
30. Telephone, Security and Computer Service.
Telephone, security and computer service to and throughout the
Premises shall be the responsibility of Tenant. Landlord grants
to Tenant an easement or right-of-way that may be necessary in
the Building for installation and maintenance of such telephone,
security and computer service, provided same shall not interfere
with Landlord, or Landlord's other tenants' use and enjoyment of
the Building or their particular leased premises.
Notwithstanding the provisions of any other section of this Lease
Agreement, maintenance of telephone, security and computer wiring
and equipment shall be responsibility of Tenant for the term of
this Lease Agreement. Installation of wiring and equipment shall
comply with all federal, state or municipal laws, rules,
ordinances and regulations, and regulations of the New York State
Fire Underwriters. All such wiring installed by Tenant in the
Building shall become the property of the Landlord as of the date
of the termination of this Lease Agreement. Tenant shall be
solely responsible for the maintenance of telephone and other
communication related lines and equipment located within the
Premises and Building.
31. Notices. Any notice, statements, certificate, request
or demand required or permitted to be given or delivered pursuant
to this Lease Agreement shall be in writing either hand delivered
or sent by registered or certified mail, postage prepaid, return
receipt requested, addressed to the appropriate party hereto at
the address indicated at the beginning of this Lease Agreement,
or to such other address as either party may designate for itself
in the manner herein provided.
32. Successors and Assigns. Except to the extent otherwise
provided herein, this Lease Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and assigns.
33. Governing Law and Jury Trial. This Lease Agreement
shall be governed by and interpreted under the laws of the State
of New York.
The parties hereby waive trial by jury in any action,
proceeding or counterclaim brought by either party against the
other, arising out of this Lease Agreement or Tenant's use or
occupancy of the Premises.
34. Invalidity of Particular Provisions. If any term of
provision of this Lease Agreement, or the application thereof,
shall to any extent be invalid or unenforceable, the remainder of
this Lease Agreement shall not be affected thereby, and. each
such term and provision of this Lease Agreement shall be valid
and enforceable to the fullest extent permitted by law.
35. Entire Agreement. This Lease Agreement, and the
exhibits attached hereto, contains all of the covenants, promises
and agreements between Landlord and Tenant concerning the
Premises, and there are no covenants, promises, agreements,
conditions, or understandings either oral or written, other than
as herein set forth. No subsequent alteration, amendment, change
or addition to this Lease Agreement shall be binding unless in
writing and signed by the party to be bound thereby.
36. Waiver. The waiver by Landlord of any breach of any
term, covenant or condition herein contained is not intended, and
shall not be deemed, to be a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term,
covenant or condition herein contained. The subsequent
acceptance of any Rent or other sum by Landlord is not intended,
and shall not be deemed to be a waiver of any prior breach by
Tenant of any term, covenant or condition of this Lease
Agreement, other than the failure of Tenant to pay the particular
Rent or other sum so accepted, regardless of Landlord's knowledge
of such prior breach at the time of such acceptance.
37. Effect of Captions. The captions or legends in this
Lease Agreement are inserted only for convenient reference or
identification of the particular Sections. Such captions are in
no way intended, and shall not be deemed, to describe, interpret,
define, limit or extend the intent or extent of this Lease
Agreement, or any term or provision hereof.
38. Broker. Tenant warrants and represents that Tenant has
not had any dealings with any realtor, broker, or agent in
connection with the negotiation of this Lease Agreement except
Richard Sterben and Waterbourne Group, Inc. Tenant agrees to pay
and to hold harmless the Landlord from any cost, expense
(including reasonable costs of suits and attorneys' fees) or
liability for any compensation, commission or charges claimed by
any realtor, broker or agent other than those named above.
39. Options. Provided Tenant has fully and faithfully
performed its obligations hereunder and is not then in default,
Tenant shall have the right to renew this Lease Agreement for an
additional term of five (5) years ending March 31, 2010 on all
the same terms and conditions except annual Base Rent, which
shall increase to $238,050 per annum payable in equal monthly
installments of $19,837.50.
Provided Tenant has fully and faithfully performed its
obligations hereunder and has exercised its first five-year
option above stated and is not then in default, Tenant shall have
the further option to renew the term of this Lease Agreement for
an additional five (5) year period ending March 31, 2015 on all
the same terms and conditions except annual Base Rent, which
shall increase to $285,660 payable in equal monthly installments
of $23,805.
39. As a condition precedent to the exercise of
the above options, Tenant must provide to Landlord written notice
of its exercise not less than nine (9) months in advance of the
termination of the original term in the case of the first five
year option, and not less than nine (9) months in advance of the
termination of the first five-year option term in the case of the
second five-year option; time being of the essence in the
exercise of the options.
40. Landlord's Books, Documents and Records Available for
Inspection. Until the expiration of four (4) years after the
furnishing of services provided under this Lease Agreement,
Landlord will make available to the Secretary, U.S. Department of
Health and Human Services, and the-U.S. Comptroller General, and
their representatives, this Lease Agreement, and all books,
documents and records pertaining thereto, necessary to certify
the nature and extent of the costs of those services. If
Landlord carries out the duties of the Lease Agreement through a
subcontract worth $10,000 or more over a 12-month period with a
related organization, the subcontract will also contain an access
clause to permit access to the Secretary, Comptroller General,
and their representatives to the related organization's books and
records relative to this Lease Agreement.
41. Force Majeure. This Agreement and the
obligation of Lessee to pay rent hereunder and to perform all of
the other covenants and agreements hereunder on the part of
Lessee to be performed shall not be affected, impaired or excused
because Lessor is unable to supply or is delayed in supplying any
service expressly or impliedly to be supplied or is unable to
make or is delayed in making any repairs, additions, alterations,
or decorations or is unable to supply or is delayed in supplying
any equipment or fixtures, if Lessor is prevented or delayed in
so doing by reason of a strike or labor trouble, or governmental
preemption in connection with a national emergency or in
connection with any rule, order or regulation of any department
or subdivision thereof, or any governmental agency or by reason
of the condition or 'supply and demand which have been or are
affected by war or other emergency or by any other condition
beyond the control of the Lessor.
42. Additional Storage. During the initial term of this
Lease Agreement, should Tenant require additional secured
storage, Landlord will provide Tenant such additional secured
storage-in unheated storage space outside the Building of up to
1,500 square feet in a building designated by Landlord, which
storage space shall not cost Tenant in excess of $2.00 per square
foot.
43. This Lease Agreement shall be contingent upon Landlord
obtaining satisfactory financing of the Landlord's Work. In the
event Landlord has not obtained such satisfactory financing by
December 31, 1996, either Tenant or Landlord may terminate this
Lease Agreement upon ten (10) days written notice to the other.
IN WITNESS WHEREOF, the parties have caused this Lease
Agreement to be duly executed by their duly authorized officers
and/or agents as of the day and year first set forth above.
Attest: Landlord:
Paula Sterben AIRPORT LANDING
CENTER, INC. By: /s/ James A. Zaepfel
Name: James A. Zaepfel
Title: Manager
Attest: Tenant:
Edward McNicholas STAFF BUILDERS HOME HEALTH
CARE, INC.
By: /s/ David Savitsky
Name: David Savitsky
Title: Executive Vice
President
license2/wd/kl
EXHIBIT 10.64
<PAGE>
License Agreement
THIS LICENSE AGREEMENT (this "License") is made as of the 23th
day of April, 1996, between MATTERHORN ONE, LTD., having an address
at c/o BDG Management, Inc., 6800 Jericho Turnpike, Syosset, New
York 11791 ("Owner"), and STAFF BUILDERS, INC., a New York
corporation, having an address at 1983 Marcus Avenue, Lake Success,
New York 11042 ("User").
W I T N E S S E T H:
WHEREAS, Owner is the owner of the office building located at
and known 1983 Marcus Avenue, Lake Success, New York 11042 (the
'Building'); and
WHEREAS, Owner and User have entered into a lease dated April
23, 1996 (the "Lease") for the premises of approximately 675
rentable square feet in the Building, as more particularly shown in
the Lease (the "Premises"); and
WHEREAS, the commencement date for the Lease is May 1, 1996
(the "Lease Commencement Date") and the User has requested the
right to use and occupy approximately 600 square feet of temporary
space prior to the Lease Commencement Date; and
WHEREAS, Owner is willing to grant User the right to use and
occupy temporary space in the Building on the terms and conditions
set forth in this License;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, Owner and User hereby agree as follows:
1. User's Possession of Temporary Premises and Permitted
Uses. Owner hereby grants to User a license to use and occupy
Suite # in the Building (the "Temporary Premises") for the
period from the date hereof (the "License Commencement Date") up
and through the Lease Commencement Date (the "Outside Expiration
Date"). This License shall be limited to the use and occupancy of
the Temporary Premises solely for general office purposes and only
up through and including the Outside Expiration Date.
2. Charges. In consideration of Owner's granting to User
the right to use and occupy the Temporary Premises for the term of
this License, User hereby agrees to pay Owner a license fee equal
to $1,000 payable monthly without setoff or deduction, on the first
day of each calendar month during the term of this License. If the
License Commencement Date is not the first day of a month, User
shall pay to Owner, upon the execution of this License, a licens
fee at the foregoing rate which shall be prorated for the period
from the License Commencement Date to the last day of the month in
which the License Commencement Date takes place.
3. Condition of Premises. User represents and warrants that
it has inspected the Temporary Premises and accepts the Premises
'as is'. User acknowledges that Owner has made no claim or promise
about the condition of the Temporary Premises. User shall not make
any alterations, addition, changes or improvements to the Temporary
Premises without the prior written consent of Owner.
4. Services. As long as User is not in default under this
License, Owner, during the hours of 8:00 a.m. to 6:00 p.m. on
weekdays and on Saturdays from 9:00 a.m. to 1:00 p.m., excluding
legal holidays, shall furnish the Temporary Premises with heat and
air-conditioning in the respective seasons, and provide the
Temporary Premises with electricity for lighting and usual office
equipment. Owner shall also clean the Temporary Premises and
remove regular office refuse therefrom on weekdays.
5. Release From Liability. User agrees that Owner shall
be responsible or liable for any damage or injury to any property
or to any person or persons at any time on or about the Temporary
Premises arising from any cause whatsoever, except Owner's
negligence. User shall not hold Owner in any way responsible or
liable therefor and will indemnify and hold Owner harmless from and
against any and all claims, liabilities, penalties, damages,
judgments and expenses (including, without limitation, reasonable
attorney fees and disbursements) arising from injury to person or
property of any nature arising out of User's use or occupancy of
the Temporary Premises and also for any other matter arising out of
User's use or occupancy of the Temporary Premises, or of the street
or sidewalks adjacent thereto.
6. Insurance. During the term of User's use and occupancy
of the Temporary Premises, User, at its sole cost and expense, and
for the mutual benefit of owner and User, shall carry and maintain
the insurance coverage required pursuant to the terms of the Lease.
User shall deliver to owner a certificate evidencing such insurance
on or before the License Commencement Date. Such certificate shall
provide that the insurer shall not cancel, reduce or otherwise
modify such coverage without giving Owner at least thirty (30) days
prior written notice of such change.
7. Owner Access to the Temporary Premises. Upon prior
notice (except in an emergency when no such notice shall be
required) , User agrees to allow Owner, its employees, agents or
contractors to enter upon the Temporary Premises to inspect same
and to make any repairs thereto which Owner shall deem appropriate,
provided Owner shall not unreasonably interfere with the conduct of
User's business in the Temporary Premises.
8. No Assignment. No assignment of this License or
sublicensing or subleasing of the Temporary Premises or any part
thereof shall be made by User. Neither all nor any part of User's
interest in the Temporary Premises granted hereunder may be
encumbered, assigned, or transferred in whole or in part either by
the act of User or by operation of law. User shall not permit or
suffer the Temporary Premises to be used by anyone other than the
employees of User.
9. Subordination. This License shall be subject and
subordinate to any and all mortgages and ground leases of the
Building and all extensions, consolidations, replacements thereof.
10. Default. In the event User shall be in default of any
monetary provision of this License for more than five (5) days
after the sending by Owner to User of written notice of such
monetary default, or in the event User shall be in default of any
non-monetary provision of this License for more than ten (10) days
after the sending by Owner to User of written notice of such non-
monetary default, Owner shall have the right, to the extent
permitted by law, to (i) re-enter the Temporary Premises and
withdraw the permission hereby granted to User to use the Temporary
Premises; and (ii) remove all persons and property therefrom,
without being deemed to have committed any manner of trespass.
Such remedies shall be in addition to any other rights or remedies
owner may have hereunder or at law or equity.
11. Notices. Any notices required or permitted to be given
under this License shall be given to the respective parties at the
addresses set forth at the head of this License by hand, by
overnight courier or by certified mail, return-receipt requested.
Such notices shall be deemed given upon delivery, in the case of
hand delivery, one day after mailing, in the case of overnight
courier and three business days after mailing, in the case of
mailing. such notices can be given or received by the respective
attorneys for the parties.
12. Revocable License. Either party may cancel this
License on thirty (30) days written notice.
13. Additional Provisions. Except as otherwise
expressly set forth herein, the provisions of the Lease are hereby
incorporated herein and deemed to apply to the Temporary Premises
with the same force and effect the said provisions apply to the
'Premises', subject to the following: (copy of Lease will need to
be reviewed to determine which provisions will not be incorporated
into this license.)
14. Reimbursement of Fees. In the event that Owner is
required to take any legal action to enforce the terms of this
License, including any action against User for possession, owner
shall be entitled, in addition to any other rights and remedies
hereunder or at law or equity, to the reimbursement by User of all
reasonable costs incurred by owner in the exercise of its rights
and remedies, including, but not limited to, reasonable attorneys,
fees and disbursements. In any legal action brought in connection
with this License, both owner and User waive a jury trial.
IN WITNESS WHEREOF, the parties hereto have hereunder set
their hands and seals the day and year first above written.
OWNER: MATTERHORN ONE, LTD.
By: /s/ K. Robert Turner
USER: STAFF BUILDERS,INC.
BY: /s/ Mario Crespo
license/3kl
EXHIBIT 10.65
<PAGE>
License Agreement
THIS LICENSE AGREEMENT (this "License") is made as of the 3rd
day of January, 1997, between MATTERHORN USA, INC., having an
address at c/o BDG Management, Inc., 6800 Jericho Turnpike,
Syosset, New York 11791 ("Owner"), and STAFF BUILDERS, INC., a New
York corporation, having an address at 1983 Marcus Avenue, Lake
Success, New York 11042 ("User").
W I T N E S S E T H:
WHEREAS, Owner is the owner of the office building located at
and known as 1983 Marcus Avenue, Lake Success, New York 11042 (the
'Building'); and
WHEREAS, Owner and User intend to enter into discussions
regarding certain expansion space of approximately 19,650 rentable
square feet in the Building; and
WHEREAS, the User has requested the right to use and occupy
approximately 9,816 square feet of temporary space prior to the
Commencement Date; and
WHEREAS, Owner is willing to grant User the right to use and
occupy temporary space in the Building on the terms and conditions
set forth in this License;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, Owner and User hereby agree as follows:
1. User's Possession of Temporary Premises and Permitted
Uses. Owner hereby grants to User a license to use and occupy the
space substantially as shown on the diagram attached hereto and
made a part hereof as Exhibit A on the Entry Level of the Building
(the "Temporary Premises") for the period from January 1, 1997 (the
"License Commencement Date") through and including the Commencement
Date (the "Outside Expiration Date"). This License shall be
limited to the use and occupancy of the Temporary Premises solely
for general office purposes and only through and including the
Outside Expiration Date or upon the earlier termination as provided
herein.
2. Charges. In consideration of Owner's granting to User
the right to use and occupy the Temporary Premises f or the term of
this License, User hereby agrees to pay Owner a license fee of
$19,084.00 payable monthly without setoff or deduction, on the
first day of each calendar month during the term of this License.
The aforementioned license fee shall be increased at a rate of 4%
compounded and cumulative on an annual basis.
3. Condition of Premises. User represents and warrants that
is has inspected the Temporary Premises and accepts the Premises
'as is'. User acknowledges that Owner has made no claim or promise
about the condition of the Temporary Premises. User shall not make
any alterations, addition, changes or improvements to the Temporary
Premises without the prior written consent of Owner.
4. Services. As long as User is not in default under this
License, Owner, during the hours of 8:00 a.m. to 6:00 p.m. on
weekdays and on Saturdays from 9:00 a.m. to 1:00 p.m., excluding
legal holidays, shall furnish the Temporary Premises with heat and
air-conditioning in the respective seasons, and provide the
Temporary Premises with electricity for lighting and usual office
equipment.
5. Release From Liability. User agrees that Owner shall
be responsible or liable for any damage or injury to any property
or to any person or persons at any time on or about the Temporary
Premises arising from any cause whatsoever, except Owner's
negligence. User shall not hold Owner in any way responsible or
liable therefor and will indemnify and hold Owner harmless from and
against any and all claims, liabilities, penalties, damages,
judgments and expenses (including, without limitation, reasonable
attorney fees and disbursements) arising from injury to person or
property of any nature arising out of User's use or occupancy of
the Temporary Premises and also for any other matter arising out of
User's use or occupancy of the Temporary Premises, or of the street
or sidewalks adjacent thereto.
6. Insurance. During the term of User's use and occupancy
of the Temporary Premises, User, at its sole cost and expense, and
for the mutual benefit of owner and User, shall carry and maintain
comprehensive fire protection and extended coverage and liability
insurance, including property damage and replacement value,
insuring the Owner and the User against liability for injury to
persons or property occurring on or about the Temporary Premises
arising out of the ownership, maintenance, use or occupancy
thereof, in amounts and with insurance companies acceptable to
Landlord, in its reasonable discretion. User shall deliver to
owner a certificate evidencing such insurance on or before the
License Commencement Date. Such certificate shall provide that the
insurer shall not cancel, reduce or otherwise modify such coverage
without giving Owner at least thirty (30) days prior written notice
of such change.
7. Owner Access to the Temporary Premises. Upon prior
notice (except in an emergency when no such notice shall be
required) , User agrees to allow owner, its employees, agents or
contractors to enter upon the Temporary Premises to inspect same
and to make any repairs thereto which owner shall deem appropriate,
provided owner shall not unreasonably interfere with the conduct of
User's business in the Temporary Premises.
8. No Assignment. No assignment of this License or
sublicensing or subleasing of the Temporary Premises or any part
thereof shall be made by User. Neither all nor any part of User's
interest in the Temporary Premises granted hereunder may be
encumbered, assigned, or transferred in whole or in part either by
the act of User or by operation of law. User shall not permit or
suffer the Temporary Premises to be used by anyone other than the
employees of User.
9. Subordination. This License shall be subject and
subordinate to any and all mortgages and ground leases of the
Building and all extensions, consolidations, replacements thereof.
10. Default. In the event User shall be in default of any
monetary provision of this License for more than five (5) days
after the sending by Owner to User of written notice of such
monetary default, or in the event User shall be in default of any
non-monetary provision of this License for more than ten (10) days
after the sending by Owner to User of written notice of such non-
monetary default, Owner shall have the right, to the extent
permitted by law, to (i) re-enter the Temporary Premises and
withdraw the permission hereby granted to User to use the Temporary
Premises; and (ii) remove all persons and property therefrom,
without being deemed to have committed any manner of trespass.
Such remedies shall be in addition to any other rights or remedies
owner may have hereunder or at law or equity.
11. Notices. Any notices required or permitted to be given
under this License shall be given to the respective parties at the
addresses set forth at the head of this License by hand, by
overnight courier or by certified mail, return-receipt requested.
Such notices shall be deemed given upon delivery, in the case of
hand delivery, one day after mailing, in the case of overnight
courier and three business days after mailing, in the case of
mailing. such notices can be given or received by the respective
attorneys for the parties.
12. Revocable License. Either party may cancel this
License on thirty (30) days written notice.
13. Reimbursement of Fees. In the event that Owner is
required to take any legal action to enforce the terms of this
License, including any action against User for possession, owner
shall be entitled, in addition to any other rights and remedies
hereunder or at law or equity, to the reimbursement by User of all
reasonable costs incurred by owner in the exercise of its rights
and remedies, including, but not limited to, reasonable attorneys,
fees and disbursements. In any legal action brought in connection
with this License, both owner and User waive a jury trial.
14. Surrender of Premises. Upon the termination of this
License, User shall deliver the Temporary Premises in a "broom
clean" condition free from all debris, and User agrees to remove
all of its possessions and property from the Temporary Premises.
User agrees that between the date hereof and the termination of
this License, User will maintain the Temporary Premises in the same
condition and repair as it was at the commencement of this License
and will cause the grounds to be maintained and well kept.
15. Owner Access to the Temporary Premises. During the term
of this License, User agrees to allow owner, its employers, agents
or servants to enter upon the Temporary Premises and to inspect
same and make any necessary repairs. Owner is also granted the
right during User's normal business hours to enter the Temporary
Premises and exhibit the same for the purpose of showing the
Temporary Premises to prospective tenants, purchasers or
mortgagees.
IN WITNESS WHEREOF, the parties hereto have hereunder set
their hands and seals the day and year first above written.
OWNER: MATTERHORN USA, INC.
BY: /s/ K. Robert Turner
USER: STAFF BUILDERS, INC.
BY: /s/ David Savitsky
EXHIBIT 10.66
<PAGE>
License Agreement
THIS LICENSE AGREEMENT (this "License") is made as of the 16th
day of January, 1997, between MATTERHORN USA, INC., having an
address at c/o BDG Management, Inc., 6800 Jericho Turnpike,
Syosset, New York 11791 ("Owner"), and STAFF BUILDERS, INC., a New
York corporation, having an address at 1983 Marcus Avenue, Lake
Success, New York 11042 ("User").
W I T N E S S E T H:
WHEREAS, Owner is the owner of the office building located at
and known as The Gateway at Lake Success, 1983 Marcus Avenue, Lake
Success, New York 11042 (the "Building"); and
WHEREAS, User currently occupies certain premises in the
Building of approximately 48,000 rentable square feet pursuant to
a lease dated October 1, 1993; and
WHEREAS, User has requested the right to use and occupy
approximately 3,100 square feet of temporary space for storage
purposes;
WHEREAS, Owner is willing to grant User the right to use and
occupy temporary space in the Building on the terms and conditions
set forth in this License;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, Owner and User hereby agree as follows:
1. User's Possession of Temporary Premises and Permitted
Uses. Owner hereby grants to User a license to use and occupy the
space substantially as shown on the diagram attached hereto and
made a part hereof as Exhibit A on the concourse level of the
Building (the "Temporary Premises") for the period from the date
hereof (the "License Commencement Date") through one year from the
date hereof, unless terminated earlier as provided herein. This
License shall be limited to the use and occupancy of the Temporary
Premises solely for receiving, storage and shipping of computer
equipment and only through the period contemplated herein or upon
the earlier termination of this Agreement.
2. Charges. In consideration of Owner's granting to User
the right to use and occupy the Temporary Premises, User hereby
agrees to pay Owner a license fee of $3,100.00 payable monthly
without setoff or deduction, on the first day of each calendar
month during the term of this License.
3. Condition of Premises. User represents and warrants
that it has inspected the Temporary Premises and accepts the
Premises "as is". User acknowledges that Owner has made no claim
or promise about the condition of the Temporary Premises. User
shall not make any alterations, addition, changes or improvements
to the Temporary Premises without the prior written consent of
Owner.
4. Services. As long
as User is not in default under this License, Owner, during the
hours of 8:00 a.m. to 6:00 p.m. on weekdays and on Saturdays from
9:00 a.m. to 3:00 p.m., excluding legal holidays, shall furnish the
Temporary Premises with heat and air-conditioning in the respective
seasons, and provide the Temporary Premises with electricity for
lighting and usual office equipment.
5. Release From Liability. User agrees that Owner shall
be responsible or liable for any damage or injury to any property
or to any person or persons at any time on or about the Temporary
Premises arising from any cause whatsoever, except Owner's
negligence. User shall not hold Owner in any way responsible or
liable therefor and will indemnify and hold Owner harmless from and
against any and all claims, liabilities, penalties, damages,
judgments and expenses (including, without limitation, reasonable
attorney fees and disbursements) arising from injury to person or
property of any nature arising out of User's use or occupancy of
the Temporary Premises and also for any other matter arising out of
User's use or occupancy of the Temporary Premises, or of the street
or sidewalks adjacent thereto.
6. Insurance. During the term of User's use and occupancy
of the Temporary Premises, User, at its sole cost and expense, and
for the mutual benefit of owner and User, shall carry and maintain
comprehensive fire protection and extended coverage and liability
insurance, including property damage and replacement value,
insuring the Owner and the User against liability for injury to
persons or property occurring on or about the Temporary Premises
arising out of the ownership, maintenance, use or occupancy
thereof, in amounts and with insurance companies acceptable to
Landlord, in its reasonable discretion. User shall deliver to
owner a certificate evidencing such insurance on or before the
License Commencement Date. Such certificate shall provide that the
insurer shall not cancel, reduce or otherwise modify such coverage
without giving Owner at least thirty (30) days prior written notice
of such change.
7. Owner Access to the Temporary Premises. Upon prior
notice (except in an emergency when no such notice shall be
required) , User agrees to allow owner, its employees, agents or
contractors to enter upon the Temporary Premises to inspect same
and to make any repairs thereto which owner shall deem appropriate,
provided owner shall not unreasonably interfere with the conduct of
User's business in the Temporary Premises.
8. No Assignment. No assignment of this License or
sublicensing or subleasing of the Temporary Premises or any part
thereof shall be made by User. Neither all nor any part of User's
interest in the Temporary Premises granted hereunder may be
encumbered, assigned, or transferred in whole or in part either by
the act of User or by operation of law. User shall not permit or
suffer the Temporary Premises to be used by anyone other than the
employees of User.
9. Subordination. This License shall be subject and
subordinate to any and all mortgages and ground leases of the
Building and all extensions, consolidations, replacements thereof.
10. Default. In the event User shall be in default of any
monetary provision of this License for more than five (5) days
after the sending by Owner to User of written notice of such
monetary default, or in the event User shall be in default of any
non-monetary provision of this License for more than ten (10) days
after the sending by Owner to User of written notice of such non-
monetary default, Owner shall have the right, to the extent
permitted by law, to (i) re-enter the Temporary Premises and
withdraw the permission hereby granted to User to use the Temporary
Premises; and (ii) remove all persons and property therefrom,
without being deemed to have committed any manner of trespass.
Such remedies shall be in addition to any other rights or remedies
owner may have hereunder or at law or equity.
11. Notices. Any notices required or permitted to be given
under this License shall be given to the respective parties at the
addresses set forth at the head of this License by hand, by
overnight courier or by certified mail, return-receipt requested.
Such notices shall be deemed given upon delivery, in the case of
hand delivery, one day after mailing, in the case of overnight
courier and three business days after mailing, in the case of
mailing. Such notices can be given or received by the respective
attorneys for the parties.
12. Revocable License. Either party may cancel this
License on thirty (30) days written notice.
13. Reimbursement of Fees. In the event that Owner is
required to take any legal action to enforce the terms of this
License, including any action against User for possession, owner
shall be entitled, in addition to any other rights and remedies
hereunder or at law or equity, to the reimbursement by User of all
reasonable costs incurred by owner in the exercise of its rights
and remedies, including, but not limited to, reasonable attorneys,
fees and disbursements. In any legal action brought in connection
with this License, both owner and User waive a jury trial.
14. Surrender of Premises. Upon the termination of this
License, User shall deliver the Temporary Premises in a "broom
clean" condition free from all debris, and User agrees to remove
all of its possessions and property from the Temporary Premises.
User agrees that between the date hereof and the termination of
this License, User will maintain the Temporary Premises in the same
condition and repair as it was at the commencement of this License
and will cause the grounds to be maintained and well kept.
15. Owner Access to the Temporary Premises. During the term
of this License, User agrees to allow owner, its employers, agents
or servants to enter upon the Temporary Premises and to inspect
same and make any necessary repairs. Owner is also granted the
right during User's normal business hours to enter the Temporary
Premises and exhibit the same for the purpose of showing the
Temporary Premises to prospective tenants, purchasers or
mortgagees.
IN WITNESS WHEREOF, the parties hereto have hereunder set
their hands and seals the day and year first above written.
OWNER: MATTERHORN USA, INC.
By: /s/ K. Robert Turner
USER: STAFF BUILDERS, INC.
BY: /s/David Savitsky
`
EXHIBIT 10.72
<PAGE>
MANAGEMENT AND
STOCK OPTION AGREEMENT
BY AND BETWEEN
TIME INSURANCE COMPANY
AND
STAFF BUILDERS, INC.
DATED AS OF FEBRUARY 29, 1996
<PAGE>
MANAGEMENT AND STOCK OPTION AGREEMENT
THIS MANAGEMENT AND STOCK OPTION AGREEMENT (this
"Agreement") is made and entered into this 29th day of
February, 1996, by and between TIME INSURANCE COMPANY, a
Wisconsin corporation ("Time"), and STAFF BUILDERS, INC., a
Delaware corporation ("Staff Builders").
RECITALS
WHEREAS, Staff Builders owns one hundred percent (100%)
of the issued and outstanding capital stock of AdultCare,
Inc., a Florida corporation ("AdultCare"), which has in the
past provided network management and case management services
for insurance companies, and acted as an intermediary between
insurance companies and providers (the "Business"); and
WHEREAS, Staff Builders desires to grant an option, and
Time desires to purchase such option, to purchase one hundred
percent (100%) of the issued and outstanding capital stock of
AdultCare, in accordance with the terms set forth in this
Agreement; and
WHEREAS, in anticipation of Time's possible exercise of
such option, Time desires that AdultCare change the Business
so that AdultCare will in the future provide national
eldercare referral and resource services; and
WHEREAS, Staff Builders and Time desire that, in order to
effect Time's desired change in the Business, Time shall
manage the operations of AdultCare prior to its exercise of
the option, in accordance with the terms set forth in this
Agreement.
NOW THEREFORE, in consideration of the mutual promises,
covenants, representations and warranties contained herein,
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
MANAGEMENT
1.1 Management. Staff Builders hereby appoints Time as
agent of Staff Builders, and Time hereby agrees, to assume all
management responsibilities for AdultCare, including, but
without limitation, supervising all employees, making all
business decisions in the ordinary course and managing any
other activities which are customary and usual in connection
with operating such a business ("Management Services").
Except as otherwise specifically limited under this Agreement,
Time, as agent of Staff Builders, shall have the sole and
exclusive right to manage and control the operation of
AdultCare. Without limiting the generality of the foregoing,
no officer, director or agent of Staff Builders, or officer or
director of AdultCare, shall have the authority to cause
AdultCare to incur any obligation without the prior written
consent of Time. Furthermore, in the event Time enters into
a contract or obligation that extends beyond the term of the
Management Services and Time subsequently chooses not to
exercise the Option, such contract or obligation shall be the
responsibility of Time, unless Staff Builders expressly
decides to incur such contract or obligation. Staff Builders
and Time agree that during the term of this Agreement the
employees of AdultCare will remain AdultCare employees and not
be deemed Time employees. Additionally, from time to time
throughout the duration of the Management Services, Time may
provide to Staff Builders the names of proposed officers of
AdultCare, and Staff Builders will cause the Board of
Directors of AdultCare to elect such officers, provided that
such request by Time would not result in a violation of
AdultCare's articles of incorporation or bylaws.
1.2 Working Capital. As part of the Management
Services, Time will fund all direct net operating costs of
AdultCare, as determined necessary and appropriate by Time,
beginning January 1, 1996 and continuing for so long as Time
is providing the Management Services hereunder (the "Working
Capital"). Such Working Capital shall be deemed loans from
Time to AdultCare for which AdultCare will execute such
promissory notes as Time may reasonably request containing
appropriate and customary terms and conditions. In the event
Time exercises its Option (as defined herein), the Working
Capital loans will be converted into equity as an additional
capital contribution by Time (thereby increasing Time's basis
in its holdings of AdultCare stock). In the event Time elects
not to exercise its Option, such loans will be forgiven by
Time, and AdultCare shall have no obligation to repay such
debt. As a result of this loan forgiveness, for federal
income tax purposes, AdultCare will be deemed to have received
income, and Time will receive a bad debt write-off (deduction)
for such loan amounts.
1.3 Term. The term of the Management Services shall be
deemed to have commenced on November 1, 1995 and shall
continue in effect through February 28, 1997, unless sooner
terminated in accordance with Section 1.4 below.
1.4 Termination.
(a) Time may terminate this Agreement: (i) for any
reason whatsoever upon 60 days' notice to Staff Builders or
(ii) immediately, without any notice to Staff Builders, in the
event of a material breach of this Agreement by Staff
Builders, which breach is not cured within ten (10) business
days after notice thereof from Time. If Time terminates this
Agreement pursuant to (a)(i) above without exercising its
Option:
(x) Time shall continue to fund all of AdultCare's
direct net operating costs, as determined necessary and
appropriate by Time (but in no event to exceed $100,000), for
a period of thirty (30) days from the date of termination of
the Management Services, and Staff Builders shall reimburse
Time fifty percent (50%) of all such costs within sixty (60)
days from the date of termination;
(y) If AdultCare's stockholder's equity, determined
pursuant to a balance sheet prepared in accordance with
generally accepted accounting principles, as of the effective
date of the termination is less than $396,468, Time shall pay
an amount to Staff Builders equal to the difference; and
(z) If AdultCare's stockholder's equity, determined
pursuant to a balance sheet prepared in accordance with
generally accepted accounting principles, as of the effective
date of the termination is more than $396,468, Staff Builders
shall pay an amount to Time equal to the difference. Time
shall determine the stockholder's equity number and shall
deliver to Staff Builders in writing such determination, with
supporting information in reasonable detail. Staff Builders
shall then have 30 days in which to have its independent
auditors review Time's determination. If Staff Builders does
not object to Time's determination by sending a written notice
to Time within such 30-day period, then Time's determination
shall be deemed binding for purposes of this Agreement. If
Staff Builders makes a timely objection, the parties shall
negotiate in good faith to resolve the objection, and if no
resolution is reached within 15 days after Staff Builders'
delivery of its objection notice, the matter may then be
submitted to arbitration by either party, in accordance with
Article IX hereof.
(b) Staff Builders shall not have any right to
terminate this Agreement prior to the close of business on
February 28, 1997.
1.5 Current Information. For so long as Time is
providing the Management Services, Time and AdultCare shall
(a) confer from time to time as Time deems appropriate, but
not less often than quarterly, with Staff Builders to report
material operational matters and to report the general status
of ongoing operations, (b) notify Staff Builders of any
material adverse effect on AdultCare's business or properties,
and of any governmental or other third-party complaints,
investigations, hearings or adjudicatory proceedings involving
AdultCare, and (c) provide Staff Builders with AdultCare's
internally produced financial information on a month-to-month
basis within 20 days of its production and other information
about AdultCare as Staff Builders may reasonably require. For
so long as Time is providing the Management Services, Staff
Builders shall notify Time promptly of any notice or
communication that Staff Builders receives, or any other
information of which it becomes aware, regarding any
governmental or other third-party complaints, investigations,
hearings or adjudicatory proceedings involving AdultCare, or
any facts that could have an adverse impact on AdultCare.
ARTICLE II
OPTION
2.1 Grant. Staff Builders hereby irrevocably grants,
sells and conveys to Time an option (the "Option") to purchase
from Staff Builders at the Purchase Price (as herein defined):
(a) 600 shares of the Common Stock, no par value, of AdultCare
("Option Shares") which constitutes one hundred percent (100%)
of the issued and outstanding capital stock of AdultCare; and
(b) Staff Builders' agreement not to compete with AdultCare as
set forth in Section 6.1(a), all upon the terms and conditions
contained herein.
2.2 Option Price. In full consideration for the grant
of the aforesaid Option, Time (i) will pay to Staff Builders
the sum of $300,000 on March 1, 1996; and (ii) has paid to
Staff Builders the amounts of the net direct operating costs
of AdultCare for the months of October, November and
December 1995 in the amounts of $53,937, $52,907, and $53,486,
respectively (the "1995 Payments"). The aggregate amount of
the payments described in (i) and (ii) above (collectively,
the "Option Payment") shall be applied to the Purchase Price
as set forth in Section 2.5 below, if Time determines to
exercise its Option. If Time elects not to exercise the
Option, the Option Payment shall be retained by Staff
Builders.
2.3 Exercise Rights. Subject to and upon the terms of
this Agreement, Time shall have the right to exercise this
Option, in its sole discretion, at any time during the Option
Term. Any such exercise of this Option shall be only for all
of the Option Shares.
2.4 Option Term. Time may provide notice to Staff
Builders of its intent to exercise the Option at any time
prior to 5:00 p.m., Eastern Standard time, on the earlier of
January 31, 1997 or 30 days after termination of the
Management Services. Closing of the purchase of the Option
Shares must occur within 60 days after the date of the
exercise notice, but not later than February 28, 1997. The
date upon which such closing occurs is the "Closing Date," and
the period from the date hereof through the earlier of the
Closing Date or February 28, 1997, is the "Option Term."
2.5 Purchase Price.
(a) The purchase price for the exercise of the
Option shall be $1,460,330 ("Purchase Price"). The Purchase
Price shall be paid as follows: (i) application of an amount
equal to the net tax benefit to the Staff Builders
consolidated tax group resulting from its use, for federal
income tax purposes, of the net operating losses generated by
AdultCare that are based on the amount of funding provided by
Time for the period from January 1, 1996 through the date of
exercise of the Option; (ii) application of the Option Payment
and (iii) the remainder of the Purchase Price shall be paid by
Time in cash, by means of a certified check.
(b) On or before the Closing Date, Time and Staff
Builders will mutually determine the amount of the net
operating losses described in Section 2.5(a)(i), and the
parties will mutually agree on the effective federal income
tax rate for the Group (as defined in Section 3.13(a)) that
will be applied to AdultCare's net operating losses to
determine the benefit to Time.
(c) In the event that Time exercises its Option to
purchase AdultCare, and then sells AdultCare to an
unaffiliated third party prior to March 31, 1997, Staff
Builders will share in the proceeds of such sale.
Specifically, Staff Builders will receive one-half the amount
derived by the following formula (if the formula produces a
positive number): Net sales price received by Time less each
of the following items: (i) the amount of the Working Capital
less a 15% return thereon, (ii) the Purchase Price, and
(iii) an aggregate of 20% of such net sales price, which shall
be paid 10% to Howard Passman and 10% to David J. Levy.
2.6 Manner of Exercise. To exercise this Option, Time
shall deliver to Staff Builders prior to January 31, 1997 a
notice of intent to exercise in writing. The subsequent
closing shall take place, on a date specified by Time but in
accordance with Section 2.4, at the offices of Fortis, Inc.,
One Chase Manhattan Plaza, 41st Floor, New York, New York
10005. Time and Staff Builders agree to use their best
efforts to achieve satisfaction of the conditions to closing
set forth in this Agreement and to consummate a closing upon
the exercise of this Option on the terms and subject to the
conditions set forth in this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES BY STAFF BUILDERS
Staff Builders hereby represents and warrants to Time as
follows:
3.1 Title to Shares; Capitalization. Staff Builders is
the owner of all right, title and interests (legal and
beneficial) in and to 600 shares of AdultCare's Common Stock,
no par value, and such stock constitutes one hundred percent
(100%) of the issued and outstanding capital stock of
AdultCare. The Option Shares are validly issued and
outstanding, fully paid and non-assessable. Upon exercise of
the Option, Staff Builders will convey to Time the Option
Shares free and clear of all mortgages, pledges, liens,
charges, security interests, adverse claims, demands and
encumbrances whatsoever. Except as specifically contemplated
by this Agreement, no person or entity has any agreement or
option or any right or privilege (whether preemptive or
contractual) capable of becoming an agreement or option for
the purchase of any of the Option Shares. There are no
outstanding options, warrants, rights, agreements, calls,
commitments or demands of any character relating to the
capital stock of AdultCare and no securities convertible into
or exchangeable for any such capital stock.
3.2 Capacity and Validity. Staff Builders has the full
power and capacity necessary to enter into and perform its
obligations under this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been
duly executed and delivered by Staff Builders, and constitutes
a legal, valid and binding obligation, enforceable in
accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium, or other
laws affecting creditor's rights. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by the Boards of Directors of Staff Builders and
AdultCare, that being the only corporate action necessary to
approve this Agreement or the transactions contemplated
hereby.
3.3 Organization and Good Standing of AdultCare.
AdultCare is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida
and has full corporate power to own or lease its properties
and to carry on its business as it is now being conducted.
AdultCare is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the ownership
of its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would
not have a material adverse effect on AdultCare. Staff
Builders has previously delivered to Time true, complete and
correct copies of the Articles of Incorporation and Bylaws of
AdultCare, records of the proceedings of incorporators,
stockholders and directors of AdultCare ("Minute Books") and
the stock record books of AdultCare ("Stock Record Books").
3.4 No Conflict. Neither the execution and delivery of
this Agreement nor the consummation of the transactions and
agreements contemplated hereby shall (a) conflict with or
result in a violation, contravention or breach of any of the
terms, conditions or provisions of (i) the Articles of
Incorporation or Bylaws of Staff Builders or AdultCare or
(ii) any agreement or instrument to which Staff Builders or
AdultCare is a party, or by which Staff Builders or AdultCare
is bound, or constitute a material default thereunder, or
(b) result in the violation of any statute, regulation,
judgment, decree or law or in the creation or imposition of
any mortgage, lien, charge or encumbrance of any nature
whatsoever upon any of the assets of AdultCare or any of the
Option Shares.
3.5 Subsidiaries and Investments. AdultCare does not
have any subsidiaries and does not own, directly or
indirectly, any capital stock or other equity, ownership or
proprietary interest in any corporation, partnership,
association, trust, joint venture or other entity.
3.6 Financial Statements.
(a) Set forth on Schedule 3.6 hereto are (a) the
unaudited balance sheet of AdultCare as of October 31, 1995
and the related statements of earnings and shareholders equity
for the eight months then ended, and (b) the unaudited balance
sheets of AdultCare as of February 28, 1995 and December 31,
1993 and the related statements of earnings, shareholders
equity and cash flows for the fiscal years then ended
(including the notes related thereto) (the "AdultCare
Financial Statements"). The AdultCare Financial Statements
are (i) in accordance with the books and records of AdultCare,
which have been properly maintained and are complete and
correct in all material respects, (ii) have been prepared in
accordance with GAAP consistently applied, (iii) present
fairly the financial position of AdultCare as of the dates
indicated and present fairly the results of AdultCare's
operations for the periods then ended, and (iv) include all
necessary recurring accruals.
(b) Also set forth on Schedule 3.6 hereto are (a) the
consolidated unaudited balance sheets of Staff Builders as of
October 31 and December 31, 1995 and the related statements of
earnings and shareholders equity for the ten months then
ended, and (b) the consolidated audited balance sheets of
Staff Builders as of February 28, 1995, 1994 and 1993 and the
related statements of earnings, shareholders equity and cash
flows for the fiscal years then ended (including the notes
related thereto and the independent auditors' reports thereon)
(the "Staff Builders Financial Statements"). The Staff
Builders Financial Statements are (i) in accordance with the
books and records of Staff Builders, which have been properly
maintained and are complete and correct in all material
respects, (ii) have been prepared in accordance with GAAP
consistently applied (except that the December 31, 1995
statements do not have footnotes and are subject to normal
year-end audit adjustments that are not material),
(iii) present fairly the financial position of Staff Builders
as of the dates indicated and present fairly the results of
Staff Builders' operations for the periods then ended, and
(iv) reflect reserves in conformity with GAAP which are
adequate for all known liabilities and reasonably anticipated
losses. The independent auditors' reports included with the
Staff Builders Financial Statements have not been revoked or
qualified in any manner since their respective dates.
3.7 Absence of Undisclosed Liabilities. Except as set
forth on Schedule 3.7 hereto, AdultCare does not have any
liability or obligation, whether liquidated or contingent,
that is not fully reflected or reserved against in AdultCare's
October 31, 1995 balance sheet or disclosed herein, including,
without limitation, any tax liabilities due or to become due
or contingent losses for unasserted claims which are probable
of assertion.
3.8 Consents and Approvals. Except as set forth on
Schedule 3.8, the execution, delivery, and performance of this
Agreement by Staff Builders and the consummation of the
transactions contemplated hereby do not require any consent,
approval or authorization of, or registration or filing with,
any person or governmental authority.
3.9 Absence of Changes. Except as set forth on
Schedule 3.9 or expressly contemplated by this Agreement,
since October 31, 1995: (a) AdultCare has conducted its
business only in the ordinary course; (b) there has been no
material adverse change in the business, assets, properties or
financial condition or prospects of AdultCare; (c) AdultCare
has not directly or indirectly declared, paid or authorized
any dividends or other distributions on or payments in respect
of its shares or securities; and (d) there has been no damage
resulting from fire or other hazard to the physical assets of
AdultCare.
3.10 Guarantees. AdultCare is not a party to nor bound
by any agreement or guarantee, indemnification, assumption,
power of attorney or endorsement or any like commitment with
respect to the obligations, liabilities (contingent or
otherwise) or indebtedness of any other person, firm or corporation.
3.11 Pending Litigation or Proceedings. Except as set
forth on Schedule 3.11, there is no litigation, proceeding or
governmental investigation in progress, pending, threatened or
contemplated against or relating to AdultCare, the conduct of
business of AdultCare, the Option or the transactions
contemplated by this Agreement, nor is there presently
outstanding against AdultCare any judgment, decree,
injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator.
3.12 Compliance with Laws, Etc. AdultCare has conducted,
and is conducting, its business in compliance with all
applicable laws, rules and regulations and orders of each
jurisdiction in which its business has been and is being
carried on and is not in breach of any such laws, rules or
regulations or orders in any material respect, including
without limitation, all applicable federal, state and local
laws, rules and regulations relating to the treatment,
handling or disposal of hazardous or toxic substances or waste
and petroleum, petroleum products and oil. AdultCare has not
used any real property owned or leased by AdultCare for the
handling, treatment, storage or disposal of any such hazardous
or toxic substances and no release, discharge, spillage or
disposal thereof has occurred or is occurring thereon.
AdultCare has obtained all, and is not in default under, any
permits, licenses, certificates and other authorizations for
the complete operation of its business. Set forth in
Schedule 3.12 hereof is a true, complete and correct list of
all such permits, licenses, certificates, approvals and other
authorizations. All such permits, licenses, certificates,
approvals and other authorizations are presently valid and in
full force, and no revocation, cancellation, or withdrawal
thereof has been effected or, to the knowledge of Staff
Builders, threatened. The execution of this Agreement and the
performance of the transactions contemplated hereby will not
change or result in the termination of, any such permits,
licenses, certificates and other authorizations.
3.13 Tax Returns.
(a) Staff Builders and AdultCare and certain other
affiliates of Staff Builders constitute an affiliated group of
corporations (the "Group") within the meaning of Section 1504
of the Internal Revenue Code of 1986, as amended (the "Code"),
and AdultCare has joined in the filing of a consolidated
federal income tax return with the Group for taxable years
beginning with the fiscal year ended February 28, 1995.
(b) AdultCare, or Staff Builders on behalf of
AdultCare, has duly and timely filed with the appropriate
federal, state, county and local government agencies any and
all tax returns and reports required to be filed by AdultCare,
and has paid, or accrued in full on AdultCare's financial
statements, all taxes, assessments, reassessments, and all
other taxes, customs and excise duties, governmental charges,
penalties, interest and fines required to be paid by AdultCare
in respect of the periods covered by such returns and reports.
All tax returns of AdultCare, and of the Group with respect to
AdultCare, (i) have been prepared in accordance with all
applicable laws, and (ii) accurately reflect the taxable
income (or other measure of tax) of the corporation or
corporations filing the same. All taxes of AdultCare have
been paid or are adequately reserved against on the books of
AdultCare. AdultCare, or Staff Builders on behalf of
AdultCare, has timely filed all information returns or
reports, including Forms 1099, that are required to be filed
and have accurately reported all information required to be
included on such returns or reports. A true, correct and
complete copy of the federal income tax return of AdultCare
for the fiscal year ended February 28, 1995 has been delivered
to Time, and a true, correct and complete copy of the federal
income tax return of AdultCare included in the consolidated
tax return of the Group for the fiscal year ended February 29,
1996 will be delivered to Time at the time that it is filed.
True copies of the state tax returns of AdultCare filed most
recently in each state, respectively, in which AdultCare has
filed tax returns have been delivered to Time.
(c) There is no action, suit, proceeding,
investigation, audit or claim pending or proposed with respect
to any liability for tax that relates to AdultCare, and there
are no proposed assessments of taxes against AdultCare, no
proposed adjustments to any tax return pending against the
Group with respect to AdultCare's operations or assets, and no
proposed adjustments to the manner in which any tax of the
Group is determined with respect to AdultCare's operations or
assets. No taxing authority in a jurisdiction where AdultCare
does not file tax returns has made a claim or threat that
AdultCare is or may be subject to taxation by that
jurisdiction.
(d) AdultCare has not (i) filed any consent
agreement under Section 341(f) of the Code, (ii) executed or
been the subject of a waiver or consent extending any statute
of limitation for any tax liability that remains outstanding,
(iii) joined in or been required to join in filing a
consolidated or combined federal, state or local tax return
with any corporation other than a current or former member of
the Group, (iv) been the subject of a ruling of the Internal
Revenue Service or any state or local taxing authority that
has continuing application to AdultCare, (v) been the subject
of a closing agreement with any taxing authority that has
continuing effect, (vi) filed an election under Section 338(g)
or Section 338(h)(10) of the Code or caused a deemed election
under Section 338(e) thereof, or (vii) granted a power of
attorney with respect to any tax matters that has continuing
effect. AdultCare has not agreed to make nor is it required
to make any adjustment under Section 481 of the Code or any
comparable provision of state, local or foreign law by reason
of a change in accounting method or otherwise and the Internal
Revenue Service (or other taxing authority) has not proposed
any such change in accounting method in connection with an
ongoing audit of AdultCare. AdultCare has not disposed of
property in a transaction being accounted for under the
installment method pursuant to Section 453 of the Code, or any
comparable state, local or foreign law.
3.14 Owned Property. Set forth on Schedule 3.14 hereto
is a true, complete and correct list of (a) all real property,
(b) all items of tangible personal property, and (c) all
computer software, owned of record or beneficially by
AdultCare (the "Owned Property"). All such properties
constituting personal property are located on real property
which is listed on Schedule 3.14 or 3.15 hereof. AdultCare
has good, valid and marketable (and in the case of real
property, insurable) title to all of the Owned Properties,
free and clear of all mortgages, pledges, liens, charges,
security interests, adverse claims, demands and encumbrances
whatsoever.
3.15 Leased Property. Set forth on Schedule 3.15 hereof
is a true, complete and correct list of all leases, licenses
or similar arrangements in respect of the use of real or
personal property by AdultCare (the "Leased Property"). Each
of such leases, licenses or similar arrangements is in full
force and effect and no event has occurred which, with the
lapse of time or action by a third party could result in a
material default under any of such leases, licenses or similar
arrangements. AdultCare has good and valid leasehold
interests in all of the Leased Properties, free and clear of
all mortgages, pledges, liens, charges, security interests,
adverse claims, demands and encumbrances whatsoever.
3.16 Proprietary Rights. Set forth on Schedule 3.16
hereof is a true, complete and correct list of all patents,
patent applications, trademarks, trademark applications,
service marks, trade names, franchises, permits, copyrights
and copyright registrations owned in whole or in part or
licensed by or to AdultCare (collectively, the "Patents and
Trademarks"). AdultCare has good, valid and marketable title
to each of the Patents and Trademarks, free and clear of
mortgages, pledges, liens, charges, security interests,
adverse claims, demands or encumbrances whatsoever, including,
without limitation, any right of any other person to receive
a royalty with respect thereto. Other than as described in
Schedule 3.16, there are no licenses granted by or to
AdultCare or other agreements to which it is a party, relating
in whole or in part to any of the Patents and Trademarks, or
to inventions, discoveries, improvements, processes, formulae,
trade secrets, ideas or other know-how, or labels, whether
owned by AdultCare or otherwise.
3.17 Accounts Receivable. The accounts receivable of
AdultCare, net of allowance for doubtful accounts and returns
in the ordinary course of business, as recorded on the books
of AdultCare are bona fide accounts receivable arising and
collectible in the ordinary course of business.
3.18 Title to Assets and Properties. The Owned Property,
Leased Property and Patents and Trademarks constitute all of
the material properties used or required in the conduct of the
business of AdultCare as presently conducted. None of the
assets or properties of AdultCare is owned, possessed, used or
held, nor shall any of the same be retained, by Staff Builders
or any of its affiliates. All of the assets and properties of
AdultCare are in good condition and useful for the purpose
intended, reasonable wear and tear excepted. With respect to
each item of computer software owned or leased by AdultCare,
or otherwise used by AdultCare in its business, AdultCare has
delivered to Time true, correct and complete copies of the
most current versions of all user documentation. AdultCare is
in exclusive possession of the source code for all computer
software owned by it and listed on Schedule 3.14. None of
such computer software, nor any of the proprietary rights
described in Section 3.16, infringes on the rights of others,
nor does Staff Builders have any knowledge of any such
infringement claim or any reason to believe that a basis for
any such claim exists.
3.19 Contracts and Agreements. Set forth on
Schedule 3.19 hereof is a true, complete and correct list of
each contract or agreement, whether written or oral, to which
AdultCare is a party involving the payment or receipt of more
than $1,000.
3.20 Compensation; Agreements with Officers, Directors,
Employees and Agents. Set forth on Schedule 3.20 hereof is a
true, complete and correct list of the name, title, date of
hiring or engagement and current annual rate of compensation
or fees of each director, officer, employee, independent
contractor and agent of AdultCare, together with a summary
(containing estimates to the extent necessary) of existing
bonuses, additional compensation (whether current or deferred)
and other like benefits, if any, paid or payable to such
persons. AdultCare is not a party to, nor is any of its
property bound by, any contract, agreement or other
transaction with any director, officer or employee of
AdultCare, and AdultCare has not made or authorized any
payment to its officers, directors, former directors,
shareholders or employees except in the ordinary course of
business and at the regular rates of salary or other
remuneration payable as set forth on Schedule 3.20, except as
expressly contemplated by this Agreement. AdultCare has
treated each person employed or engaged by it as an employee
or independent contractor as appropriate in each case and has
complied with all tax laws regarding such characterizations.
3.21 Insurance Policies. Set forth on Schedule 3.21
hereof is a true, complete and correct list of all policies of
insurance of AdultCare, including, without limitation, those
covering its properties, buildings, machinery, equipment,
furniture, fixtures, operations and the lives of (or
performance of duties by) its officers and key employees.
Each of the insurance policies listed on such Schedule is in
full force and effect, AdultCare is not in material default
thereunder and all claims thereunder have been filed in a
timely fashion. Together, all such policies are adequate to
insure AdultCare against such risks and in such amounts as
customarily maintained by similar businesses or as may be
required by law. Staff Builders has delivered to Time true,
correct and complete copies of all such policies.
3.22 Employee Benefit Plans. Set forth on Schedule 3.22
hereof is a true, complete and correct list of all employee
profit-sharing, incentive, deferred compensation, welfare,
pension, retirement, group insurance, severance, disability,
medical, vacation, sick leave, bonus, executive compensation,
stock option and other employee benefit plans, arrangements
and practices (including all trust agreements), including, but
not limited to, "employee benefit plans" (as defined in
Section 3(3) of ERISA) in which employees of AdultCare or
their dependents were eligible to participate or to which
AdultCare made contributions on behalf of its employees or
their dependents ("Employee Benefit Plans") and the most
recent determination letters of the United States Internal
Revenue Service relating to such Employee Benefit Plans, where
applicable. AdultCare is not in default under any of the
agreements or Employee Benefit Plans, and none of such plans
has been terminated in whole or in part. Except as set forth
on Schedule 3.22, AdultCare has never sponsored, maintained,
contributed to or been obligated to contribute to any
"employee pension benefit plan" (as defined in Section 3(2) of
ERISA), any "employee welfare benefit plan" (as defined in
Section 3(1) of ERISA), or any "multiemployer plan" (as
defined in Section 3(37) of ERISA) (collectively, "ERISA
Plans"), and no AdultCare employee has at any time during the
employee's AdultCare employment been eligible to participate
in, or participated in, any ERISA Plan that was at any time
maintained, sponsored or contributed to by AdultCare or any
ERISA Affiliate of AdultCare. Neither AdultCare nor Time has
any liability or obligation with respect to any current or
prior Employee Benefit Plan or ERISA Plan of AdultCare or its
ERISA Affiliates. "ERISA" means the Employee Retirement
Income Security Act of 1974, as in effect from time to time.
"ERISA Affiliate" means any entity that together with
AdultCare constitutes a single employer within the meaning of
Code Section 414 for periods prior to and including the
Closing Date.
3.23 Banking Relationships. Set forth on Schedule 3.23
hereof is a true, accurate and complete list of each
institution in which AdultCare has a bank account or safe-
deposit box, the names of all persons authorized to draw
thereon or to have access thereto, and the name of each
person, firm or corporation holding a general or special power
of attorney from AdultCare and a summary of the terms thereof.
3.24 Labor Matters. Except as disclosed in
Schedule 3.24, the employment of all employees of AdultCare is
terminable at will by AdultCare without any penalty or
severance obligation incurred by AdultCare or Staff Builders.
Except as and to the extent set forth in Schedule 3.24,
(a) AdultCare is not a party to any union agreement or
collective bargaining agreement or work rules or practices
agreed to with any labor organization or employee association,
and no attempt to organize AdultCare's employees has been
made, proposed or threatened; (b) within the past five years,
AdultCare has not had any Equal Employment Opportunity
Commission charges or other claims of employment
discrimination made against it by any of its employees;
(c) within the past five years, no Wage and Hour Department
investigations have been made of AdultCare with respect to its
employees or independent contractors; (d) no labor strike,
dispute, slowdown, stoppage or lockout is pending or, to the
knowledge of Staff Builders threatened, against or affecting
AdultCare and during the past five years there has not been
any such action; and (e) no unfair labor practice charge or
complaint against AdultCare is pending, or to the knowledge of
Staff Builders threatened, before the National Labor Relations
Board or any similar governmental authority. Since the
enactment of The Worker Adjustment and Retraining Notification
Act, 29 U.S.C. 2101-2109 (the "WARN Act"), AdultCare has
not effectuated (i) a "plant closing" (as defined in the WARN
Act) affecting any site of employment or one or more
facilities or operating units within any site of employment or
facility of AdultCare; or (ii) a "mass layoff" (as defined in
the WARN Act) affecting any site of employment or facility of
AdultCare; nor has AdultCare been affected by any transaction
or engaged in layoffs or employment terminations sufficient in
number to trigger application of any similar state or local
law. Except as set forth in Schedule 3.24, none of the
employees of AdultCare has suffered an "employment loss" (as
defined in the WARN Act) since six (6) months prior to the
date hereof.
3.25 No Brokers. No broker agent, finder, consultant or
other person has been retained by, or has acted on behalf of
Staff Builders or AdultCare (other than legal and accounting
advisors) or is entitled to be paid based upon any agreements
or understandings made by Staff Builders in connection with
the transactions contemplated by this Agreement. Neither Time
nor AdultCare shall have any liability for any broker's fee,
finder's fee, consultant's fee or similar third party
remuneration by reason of any action of Staff Builders or
AdultCare, including, without limitation, any such fee or
other liability to Emerald Capital Services, Inc.
3.26 Full Disclosure. On the date hereof neither this
Agreement nor any other document, certificate, or written
statement furnished to Time in connection with the
transactions contemplated herein contains any untrue statement
of any material fact or omits to state any material fact
necessary in order to make such statements herein not
misleading to a prospective purchaser of the Option Shares
seeking full information as to AdultCare, its properties,
businesses and affairs.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES BY TIME
Time hereby represents and warrants to Staff Builders as
follows:
4.1 Organization and Good Standing of Time. Time is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Wisconsin and has full
corporate power to own or lease its property and to carry on
its business as it is now being conducted.
4.2 Capacity and Validity. Time has full power and
authority necessary to enter into and perform its obligations
under this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed
and delivered by Time and constitutes a legal, valid and
binding obligation, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditor's rights. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Time, that being the
only corporate action necessary to approve this Agreement or
the transactions contemplated hereby.
4.3 No Conflict. Neither the execution and delivery of
this Agreement nor the consummation of the transactions and
agreements contemplated hereby shall (a) conflict with or
result in a violation, contravention or breach of any of the
terms, conditions or provisions of (i) the Articles of
Incorporation or Bylaws of Time or (ii) any agreement or
instrument to which Time is a party, or by which Time is
bound, or constitute a material default thereunder, or
(b) result in the violation of any statute, regulation,
judgment, decree or law or in the creation or imposition of
any mortgage, lien, charge or encumbrance of any nature
whatsoever upon any of the assets of Time.
4.4 Pending Litigation or Proceedings. There is no
litigation, proceeding or governmental investigation in
progress, pending or, to the knowledge of Time threatened,
against or otherwise relating to or affecting Time which, if
adversely determined, could adversely affect the ability of
Time to consummate the transactions contemplated hereby.
4.5 No Brokers. No broker, agent, finder, consultant or
other person has been retained by or on behalf of Time (other
than legal or accounting advisors) or is entitled to be paid
based upon any agreements or understandings made by Time in
connection with the transactions contemplated hereby. Staff
Builders shall not have any liability for any broker's fee,
finder's fee, consultant's fee or other similar third party
remuneration by reason of any action of Time.
ARTICLE V
CERTAIN ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Changes in Articles of Incorporation or Bylaws.
During the Option Term, without the prior written consent of
Time, there shall be no changes made to the Articles of
Incorporation or Bylaws of AdultCare (except as necessary to
effect the requirements of Section 5.5) or in AdultCare's
authorized or issued capital stock, and AdultCare shall
maintain its corporate existence and powers and its
qualifications as a foreign corporation in any jurisdiction
where such qualification is necessary.
5.2 Company Capital. During the Option Term, Staff
Builders shall not cause AdultCare to, and AdultCare shall
not, without the prior written consent of Time, (i) issue any
additional capital stock or other security, (ii) directly or
indirectly redeem, purchase or otherwise acquire any shares of
its capital stock, (iii) issue to any person options,
warrants, or other rights to acquire any of its securities,
(iv) declare, set aside or pay any dividend or make any other
distribution with respect to its capital stock, (v) sell,
transfer or otherwise dispose of any assets of AdultCare, or
(vi) enter into any agreement to do any of the foregoing.
5.3 Computer Software. If Staff Builders has any rights
to or interests in any computer software or other properties
or assets owned or used by AdultCare, Staff Builders will
promptly hereafter transfer such rights and interests to
AdultCare for $1.00 consideration and in a manner to the
reasonable satisfaction of Time. Staff Builders may retain
reasonable rights to use the computer software as such
software existed on October 1, 1995, but only with respect to
business that does not compete with AdultCare.
5.4 Employee Benefits and Insurance. During the Option
Term, Staff Builders shall cause AdultCare to (i) maintain for
its employees all of the employee benefit plans and
arrangements listed on Schedule 3.22, and (ii) maintain in
force all insurance policies listed on Schedule 3.21, unless
requested otherwise by Time. If Time requests a change in the
employee benefit plans or insurance policies, Staff Builders
will cooperate to effect such changes promptly.
5.5 AdultCare Board of Directors. During the Option
Term, the AdultCare Board of Directors shall at all times
consist of five persons, three of whom shall be officers of
AdultCare and not also officers or directors of Staff
Builders. During the Option Term, Staff Builders shall, and
shall cause AdultCare to, provide to Time (i) prior notice of
all meetings of the AdultCare Board of Directors and all
committees thereof, and (ii) copies of all materials and all
other information that is provided to the AdultCare directors.
Time shall have the right to attend all meetings of the
AdultCare Board of Directors and all committees thereof. In
addition, Staff Builders shall provide to Time notice of all
action taken by it as sole shareholder of AdultCare.
5.6 Section 338 Election; Allocation of Purchase Price.
If Time exercises the Option, at Time's election Staff
Builders will join with Time in making an election under
Section 338(h)(10) of the Code (and any corresponding
elections under state, local or foreign tax law)
(collectively, a "Section 338 Election") with respect to the
purchase and sale of the Option Shares. Staff Builders will
pay any and all federal, state, local or foreign tax
attributable to the making of the Section 338 Election, and
will indemnify Time and AdultCare from and against any and all
such tax and any claim arising out of or any failure to pay
such tax. If Time elects to make such a Section 338 Election,
Time will pay to Staff Builders in cash the amount of the net
present value of the tax effect to Staff Builders as a result
of such Section 338 Election, up to a maximum amount of
$100,000. Time and Staff Builders shall report the purchase
and sale of the Option Shares in a manner consistent with the
Section 338 Election and shall take no position contrary
thereto or inconsistent therewith in any tax return or any
proceeding with any taxing authority. The Purchase Price
shall be allocated to the assets of AdultCare (or the stock if
no Section 338 Election is made) and to the non-compete given
by Staff Builders in a manner mutually determined by Time and
Staff Builders, and Time and Staff Builders shall timely file
all required forms and report the allocation consistent with
such determination by Time.
5.7 Preferred Provider. During the term of the
Management Services, Time will cause AdultCare to use Staff
Builders as a preferred provider in those locations where Time
determines, in its discretion, that Staff Builders has
appropriate facilities and professional skills and expertise.
Any such use shall be on terms with AdultCare that are
commercially reasonable and shall be governed by that certain
provider agreement between Staff Builders and AdultCare, dated
November 1, 1994 (as amended by the letter agreement dated
August 30, 1995).
5.8 Tax Returns. For all periods ending on or before
the Closing Date, Staff Builders will prepare, or cause to be
prepared, and filed on a timely basis all tax returns of
AdultCare, and shall pay all taxes owed by AdultCare, and
AdultCare shall continue to be included in the Group's
consolidated federal income tax returns. Staff Builders will
provide copies to Time of all tax returns with respect to
AdultCare at the time they are filed. Effective as of the
Closing Date, all tax sharing agreements and arrangements that
may exist between AdultCare and the Group, and all of
AdultCare's obligations thereunder, shall terminate, and
AdultCare shall have no liability thereunder for any and all
amounts due with respect to periods prior to the Closing Date.
5.9 Certain Consulting Agreements. Any consulting
(excluding the AdultCare Consulting Agreement with Charles
Lotocki), broker's, finder's fee or similar agreements entered
into by Staff Builders or AdultCare in connection with Staff
Builder's purchase of 100% of the AdultCare capital stock in
1994 shall remain the obligation of Staff Builders and shall
not be paid either by Time as part of the Working Capital or
by AdultCare. Without limiting the foregoing, Staff Builders
agrees to assume all obligations of the AdultCare Consulting
Agreement with Steve Cooperstein, dated April 8, 1994.
ARTICLE VI
NON-COMPETITION, NON-SOLICITATION AND CONFIDENTIALITY
6.1 Agreements by Staff Builders.
(a) During the term of the Management Services and,
if Time exercises the Option, for a period of three years
after the closing date of Time's purchase of the Option
Shares, Staff Builders will not on its own behalf or on behalf
of any other person, firm or entity, directly or indirectly,
establish or engage in any care management business relating
to eldercare information, resource or referral, and eldercare
referral or resource business that markets benefits to
employee assistance programs, employee benefit programs,
affinity groups and associations, insurance companies, banks,
credit companies and/or directly to the American public or
other payors within the United States ("Eldercare Services").
The parties acknowledge and agree that Staff Builders is
currently engaged in network management, case management,
disease management and capitation arrangements, and that Staff
Builders may continue engaging in such business without
violating the terms of this Section 6.1.
(b) In addition, in furtherance of, and not in
limitation of, Section 6.1(a), Staff Builders agrees that,
during the term of the Management Services and, if Time
exercises the Option, for a period of three (3) years after
the closing date of the purchase of the Option Shares, Staff
Builders shall not solicit, directly or by assisting others,
any individual who is an employee of AdultCare on the date
hereof for purposes of inducing such individual to become
employed by any person or entity that offers Eldercare
Services.
(c) Staff Builders acknowledges and agrees that, as
a result of Time's performance of its duties hereunder, Staff
Builders may have a unique opportunity to acquire confidential
information and trade secrets of Time, including information
about AdultCare that is developed or becomes known during the
term of the Management Services and that may be the result of
Time's efforts. Staff Builders agrees that the
misappropriation, unauthorized use or disclosure of such
confidential information or trade secrets would cause
irreparable harm to Time. Staff Builders agrees that it will
comply with all applicable laws regarding the protection of
such trade secrets, and that, during the Option Term and for
a period of two (2) years thereafter, it will hold in a
fiduciary capacity for the benefit of Time, and shall not
directly or indirectly use or disclose any confidential
information that Staff Builders may have or acquire during the
Option Term. For purposes of this Section 6.1(c), the
"confidential information" shall mean any and all information
of Time, its affiliates, or AdultCare during the term of the
Management Services, that Time or AdultCare takes care to
treat as confidential; but "confidential information" shall
not include any information (i) that becomes publicly
available other than as a result of a disclosure by Staff
Builders in violation of this Agreement, or (ii) that becomes
available to Staff Builders from a source other than Time, if
the source is not bound by a confidentiality agreement with
Time. For purposes of this Agreement, "trade secret" shall
have the meaning set forth under Florida law.
(d) Staff Builders acknowledges and agrees that it
is the sole shareholder of AdultCare, and that if Time
exercises the Option, all of its shares of common stock of
AdultCare will be exchanged for valuable consideration from
Time. Staff Builders further acknowledges and agrees
(i) that, for such valuable consideration, it is selling its
entire equity interest in AdultCare, (ii) that Staff Builders'
agreeing to these non-competition, non-solicitation and
confidentiality provisions are considered by Time to be an
essential aspect of the Option and Management Services
transactions, and (iii) that the covenants contained in this
Section 6.1 are agreed to in the context of Staff Builders'
sale of its business interest. Staff Builders agrees that
because of such sale of business transaction, the restrictions
on competition, non-solicitation and confidentiality contained
in this Section 6.1 are fair and reasonable and necessary for
the protection of the legitimate business interests of Time.
Staff Builders acknowledges and agrees that the restrictions
contained in this Section 6.1 will not deny it the ability to
generate revenue in its accustomed field or unreasonably
restrict that ability.
6.2 Agreements by Time.
(a) In the event that Time does not exercise the
Option, for a period of two (2) years after termination of the
Management Services, Time will not, as a primary source of
revenue, on its own behalf or on behalf of any other person,
firm or entity, directly or indirectly, engage in the business
of disease management for third parties or network management
and case management for long-term care within the United
States, which is the business currently conducted by AdultCare
and which is referred to in the second Recital of this
Agreement as the "Business."
(b) In addition, in furtherance of, and not in
limitation of, Section 6.2(a), Time agrees that, if it does
not exercise the Option, for a period of two (2) years after
termination of the Management Services, Time shall not
solicit, directly or by assisting others, any individual who
is an employee of AdultCare on the date hereof for purposes of
inducing such individual to become employed by any person or
entity that offers services that directly compete with the
Business.
(c) Time acknowledges and agrees that, as a result
of the performance of its duties hereunder, it may have a
unique opportunity to acquire confidential information and
trade secrets of Staff Builders. Time agrees that the
misappropriation, unauthorized use or disclosure of such
confidential information or trade secrets would cause
irreparable harm to Staff Builders. Time agrees that it will
comply with all applicable laws regarding the protection of
such trade secrets, and that, during the Option Term and for
a period of two (2) years thereafter, it will hold in a
fiduciary capacity for the benefit of Staff Builders, and
shall not directly or indirectly use or disclose any
confidential information that Time may have or acquire during
the Option Term. For purposes of this Section 6.2(c), Staff
Builder's "confidential information" shall mean any and all
information of Staff Builders and its affiliates, other than
AdultCare, that Staff Builders takes care to treat as
confidential; but "confidential information" shall not include
any information (i) that becomes publicly available other than
as a result of a disclosure by Time in violation of this
Agreement, or (ii) that becomes available to Time from a
source other than Staff Builders, if the source is not bound
by a confidentiality agreement with Staff Builders. In the
event that Time does not exercise the Option, Time will also
treat the confidential and trade secret information of
AdultCare in the same fashion as such information of Staff
Builders; provided, however, that any process, idea, know-how
or similar data or information developed by Time during the
term of the Management Services shall be the sole and
exclusive property of Time.
6.3 Procedure. The restrictive covenants contained in
this Article VI are independent of each other and of any other
provision of this Agreement, and the existence of a claim
which one party may allege against the other, whether based on
this Agreement or otherwise, will not prevent the enforcement
of any of these covenants. Each party agrees that the other
party's remedies at law for any breach or threat of breach of
the provisions of this Article VI will be inadequate, and that
the aggrieved party shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this
Article and to enforce specifically the terms and provisions
hereof, in addition to any other remedy to which such
aggrieved party may be entitled at law or equity. Should any
provision of these covenants be held invalid, illegal or
unenforceable, in whole or in part, the validity, legality or
enforceability of the remaining part of such provision, and
the validity, legality and enforceability of the other
provisions hereof, shall not be affected hereby. If any
invalidity shall be caused by the length of any period of
time, the size of any area, or the scope of activities set
forth in any provision hereof, such period of time, such area,
such scope or all of such factors, shall be considered to be
reduced to the maximum period, area or scope which would cure
such invalidity and still be enforceable. Any provision of
this Agreement which is held invalid, illegal or unenforceable
in any jurisdiction shall not be deemed invalid, illegal or
unenforceable in any other jurisdiction.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions Precedent of Time to Close Exercise of
Option. If Time Exercises the Option, it shall not be
obligated to close the purchase of the Option Shares until the
prior fulfillment of each of the following conditions (any or
all of which may be waived by Time):
(a) The representations and warranties of Staff
Builders contained in Exhibit A hereto shall be true and
correct in all material respects on and as of the time of
Closing, with the same force and effect as though such
representations and warranties had been made on, as of and
with reference to such time, and Time shall have received a
certificate to such effect signed by an authorized officer of
Staff Builders.
(b) Staff Builders shall have performed in all
material respects all of the covenants and complied with all
of the provisions required by this Agreement to be performed
or complied with by them on or before the Closing, and Time
shall have received a certificate to such effect signed by an
authorized officer of Staff Builders.
(c) Staff Builders shall have obtained all required
consents listed on Schedule 3.8 hereto and no consent shall be
conditioned or restricted in a manner, which in the reasonable
judgment of Time, would so materially adversely impact the
economic or business benefits and assumptions of the
transactions contemplated by this Agreement so as to render
inadvisable the consummation of this Agreement.
(d) Time, in deciding whether to exercise its
Option, shall be permitted to conduct additional due diligence
with respect to AdultCare and Staff Builders. Upon the
satisfactory completion of such diligence, Time may elect to
exercise its Option.
(e) Staff Builders shall have delivered to Time the
certificate or certificates evidencing the Option Shares, duly
endorsed in blank for transfer or accompanied by duly executed
irrevocable stock powers in blank, free and clear of all
liens, encumbrances, pledges, options, voting agreements,
contractual rights or other claims whatsoever.
(f) Staff Builders shall provide the cash for, and
shall cause AdultCare to pay, all deferred compensation and
salary that is due and owing to all AdultCare employees and
AdultCare consultants for all periods prior to November 1,
1995.
(g) Staff Builders shall have provided or performed
any other actions, proceedings, certificates, instruments or
documents reasonably deemed necessary by Time to effectuate
and consummate the transactions contemplated hereby.
7.2. Conditions Precedent of Staff Builders to Close
Exercise of Option. If Time exercises the Option, Staff
Builders shall not be obligated to close the purchase of the
Option Shares until the prior fulfillment of each of the
following conditions (any or all of which may be waived by
Staff Builders):
(a) The representations and warranties of Time
contained in this Agreement shall be true and correct in all
material respects on and as of the time of Closing, with the
same force and effect as though such representations and
warranties had been made on, as of and with reference to such
time, and Staff Builders shall have received a certificate to
such effect signed by an authorized officer of Time.
(b) Time shall have performed in all material
respects all of the covenants and complied with all of the
provisions required by this Agreement to be performed or
complied with by them on or before the Closing, and Staff
Builders shall have received a certificate to such effect
signed by an authorized officer of Time.
(c) Time shall have either: (i) taken actions to
cause Staff Builders to no longer be responsible under its
corporate guarantee on AdultCare's lease for office space at
858 South Military Trail, Deerfield, Florida or
(ii) indemnified Staff Builders for the continuing obligation
of said lease.
(d) Time shall have paid to Staff Builders the
Purchase Price in accordance with Section 2.5.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification of Time. Staff Builders hereby
agrees to indemnify and hold Time and AdultCare harmless from
and against (i) any and all demands, claims, actions or causes
of action, assessments, losses, damages or liabilities (any
"Damage") by reason of or resulting from any breach of any
representation or warranty of Staff Builders contained in this
Agreement, or any breach of any covenant or agreement or
failure to perform any agreement or covenant of Staff Builders
contained in this Agreement, (ii) any Damage or liability
arising out of or in connection with a claim by Bryan Delia
for consulting fees owed, (iii) any Damage by reason of or
resulting from the operations of AdultCare prior to the
Closing Date, including, but not limited to, any income tax
liability of any member of the Group, and (iv) any actions,
judgments, costs and expenses (including reasonable attorneys'
fees and all other expenses incurred in investigating,
preparing or defending any litigation or proceeding, commenced
or threatened) (any "Costs") incident to any of the foregoing
or the enforcement of this Section 8.1. For purposes of this
Article VIII, the term "Damage" shall include without
limitation, with respect to any undisclosed liability, the
cost of satisfying such undisclosed liability.
8.2 Indemnification of Staff Builders. Time hereby
agrees to indemnify and hold Staff Builders harmless from and
against (i) all Damages by reason of or resulting from any
breach of any representation or warranty of Time contained in
this Agreement, or any breach of any covenant or agreement or
failure to perform any covenant or agreement of Time contained
in this Agreement, (ii) any liability arising solely as the
result of Time's management of AdultCare, but expressly not
including, without limitation, any liabilities that Staff
Builders will remain obligated to pay as a result of its
continued ownership of the capital stock of AdultCare, such as
taxes, costs of performing financial accounting audits and the
like; and (iii) any Costs incident to any of the foregoing or
the enforcement of this Section 8.2.
8.3 Indemnification Procedures.
(a) If a claim is made, or any suit or action is
commenced for which defense or indemnity is claimed to be due
under Section 8.1 or 8.2, or if knowledge is received of any
other state of facts which, if not corrected, may give rise to
a right of defense or indemnification under Sections 8.1 or
8.2, the party seeking defense or indemnity ("Indemnified
Party") shall give written notice to the party claimed to be
liable on the defense or indemnity obligation ("Indemnifying
Party") as soon as practicable after, but in no event (i) more
than ten (10) days following notice to the Indemnified Party
of any claim, suit or action for which defense or indemnity
will be sought, or (ii) more than thirty (30) days following
the Indemnified Party's knowledge of any other state of facts
which may give rise to a right to defense or indemnity under
Sections 8.1 or 8.2. A failure to give prompt notice shall
not relieve an Indemnifying Party of its obligation to defend
or indemnify, except to the extent the Indemnifying Party is
prejudiced by such failure. The Indemnified Party shall make
available to the Indemnifying Party and its counsel and
accountants at reasonable times and for reasonable periods,
during normal business hours, all books and records of the
Indemnified Party relating to the matter for which defense or
indemnity has been claimed, and each party hereunder will
render to the other such assistance as the other may
reasonably require in order to assure prompt and adequate
defense of any suit, claim or proceeding to which this
Section 8.3 applies.
(b) If defense or indemnification is sought with
respect to a claim, suit or other proceeding against the
Indemnified Party, the Indemnifying Party shall have the right
to defend, compromise and settle the matter in the name of the
Indemnified Party to the extent that the Indemnifying Party
may be liable to the Indemnified Party under Section 8.1 or
8.2 hereof; provided, however, that the Indemnifying Party
shall not compromise or settle a suit, claim or proceeding
unless it assumes the obligation to indemnify for all losses
relating thereto. The Indemnifying Party shall notify the
Indemnified Party promptly if the Indemnifying Party elects to
assume the defense of any such claim, suit or action. In
assuming the defense of a matter hereunder, the Indemnifying
Party shall have the right to select counsel, provided that
the Indemnified Party does not object to such counsel in a
reasonable exercise of its discretion. The Indemnified Party
shall have the right to employ its own counsel who may
associate with the counsel designated by the Indemnifying
Party (upon the Indemnifying Party's assumption of the defense
of the matter), but the fees and expenses of such counsel
shall be at the Indemnified Party's expense.
(c) The Indemnified Party may at any time notify
the Indemnifying Party of its intention to settle or
compromise any claim, suit or action against the Indemnified
Party in respect of which indemnification payments may be
sought from the Indemnifying Party hereunder, but shall not
settle nor compromise any matter for which indemnification may
be sought, notwithstanding this Section 8.3(c), in excess of
$1,000 without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld. Any settlement or
compromise of any claim, suit or action in accordance with the
preceding sentence, or any final judgment or decree entered on
or in, any claim, suit or action in which the Indemnifying
Party did not assume the defense in accordance herewith, shall
be deemed to have been consented to by, and shall be binding
upon, the Indemnifying Party as fully as if the Indemnifying
Party had assumed the defense thereof and a final judgment or
decree had been entered in such suit or action, or with regard
to such claim, by a court of competent jurisdiction for the
amount of such settlement, compromise, judgment or decree.
(d) The Indemnifying Party shall be subrogated to any
claims or rights of the Indemnified Party as against any other
persons with respect to any amount paid by the Indemnifying
Party under this Article VIII. The Indemnified Party shall
cooperate with the Indemnifying Party, at the Indemnifying
Party's expense, in the assertion by the Indemnifying Party of
any such claim against other persons.
ARTICLE IX
ARBITRATION
9.1 Agreement to Arbitrate. Any claim, controversy or
dispute arising out of or relating to this Agreement, on which
an amicable understanding cannot be reached, to the maximum
extent allowed by applicable law and irrespective of the type
of relief sought, shall be submitted to and resolved by
arbitration, and such arbitration shall be the sole remedy for
such matter. Such arbitration shall be heard and conducted in
New York, New York and shall be conducted expeditiously and
confidentially in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"), as such
rules shall be in effect on the date of delivery of demand for
arbitration, with the exception that the arbitrators may not
award any punitive or exemplary damages or any damages other
than compensatory, and except as such rules may be otherwise
inconsistent with the express provisions of this Article IX.
9.2 Initiating Arbitration. To initiate arbitration, a
party shall notify the other party in writing of its desire to
arbitrate, stating the nature of its dispute and the remedy
sought. The receiving party shall acknowledge receipt of the
notice in writing within five (5) days, and thereafter the
parties shall attempt in good faith to resolve the dispute
within fifteen (15) days. If the dispute cannot be resolved
within such fifteen (15) day period, any party may file a
written demand for arbitration by filing a written notice with
the AAA and with the other party, complying with the AAA's
prescribed procedures for such notices. Within fifteen (15)
days of delivery of such demand for arbitration, each party
shall appoint one arbitrator, and the arbitrators so selected
shall, within fifteen (15) days of their appointment, appoint
an additional arbitrator. In the event that the arbitrators
selected by the parties are unable to agree upon the selection
of the additional arbitrator after reasonable efforts within
such fifteen (15) day period, a list of seven (7) qualified
and available persons shall be requested from the AAA. The
parties shall take turns striking one person each from the
list, with the last remaining person being the additional
selected arbitrator. Once selected, the arbitration panel
shall meet as expeditiously as possible, select a chairman,
schedule the arbitration hearing, and notify the parties in
writing of the date, time and place of the hearing.
9.3 Effect. All conclusions of law reached by the
arbitrators shall be made in accordance with the internal laws
of the State of Florida without regard for its conflict of
laws doctrine. Any award rendered by the arbitrators shall be
accompanied by a written opinion setting forth the findings of
fact and conclusions of law relied upon in reaching their
decision. The award rendered by the arbitrators shall be
final, binding and non-appealable, and judgment upon such
award may be entered by any court having jurisdiction thereof.
The parties agree that the existence, conduct and content of
any such arbitration shall be kept confidential and no party
shall disclose to any person any information about such
arbitration, except as may be required by law or for financial
reporting purposes in each party's financial statements.
9.4 Costs. Each party shall pay the fees of its own
arbitrator, attorneys, expenses of witnesses and all other
expenses in connection with the presentation of such party's
case. The remaining costs of the arbitration, including,
without limitation, fees of the additional arbitrator, costs
of records or transcripts and administrative fees, shall be
borne by the parties as designated by the arbitrators.
ARTICLE X
MISCELLANEOUS
10.1 Survival of Representations and Warranties. All
representations, warranties, covenants and agreements made in
this Agreement or in any certificate or instrument delivered
pursuant to this Agreement shall survive the execution hereof
and any exercise and closing of the Option.
10.2 Entire Agreement. This Agreement, and Schedules
attached hereto and the documents specifically referred to
herein or executed and delivered concurrently herewith,
constitute the entire agreement, understanding,
representations and warranties of the parties hereto and
supersede any prior agreement, understanding, representation,
warranty or documents relating to the subject matter of this
Agreement.
10.3 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be
deemed to have been duly given, if delivered in person, by
United States mail (certified postage prepaid, return receipt
requested), by overnight delivery service, or by facsimile
transmission with a confirmation copy by any other means
permitted hereunder, to the respective parties as follows:
(a) If to Time:
Bill Robinson
Time Insurance Company
501 West Michigan
Milwaukee, WI 53203
Telephone: (414) 299-8935
Facsimile: (414) 224-0472
with a copy to:
Alston & Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
Attention: Susan J. Wilson
Telephone: (404) 881-7974
Facsimile: (404) 881-7777
(b) If to Staff Builders:
Staff Builders, Inc.
1983 Marcus Avenue
Lake Success, New York 11042-7011
Attention: Stephen Savitsky
Telephone: (516) 327-3389
Facsimile: (516) 358-9128
with a copy to:
Staff Builders, Inc.
1983 Marcus Avenue
Lake Success, New York 11042-7011
Attention: Renee J. Silver
Telephone: (516) 327-3372
Facsimile: (516) 327-8636
or to such other address as the party to be notified shall
have furnished to the other party in writing.
10.5 Amendments. This Agreement may be amended or
modified only by a written instrument executed by each of the
parties hereto, or by their respective successors and assigns.
10.6 Costs and Expenses. All costs and expenses incurred
in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such
expenses, including that Staff Builders, and not AdultCare,
shall be responsible for its expenses, regardless of whether
the transactions contemplated hereby are consummated.
10.7 Further Assurances. From time to time after the
date hereof, upon request of Time and without further
consideration, Staff Builders shall execute, acknowledge and
deliver all such other instruments of sale, assignment,
conveyance and transfer, in form and substance satisfactory to
Time, and shall take all such other action as may reasonably
be required for the consummation of the transactions
contemplated hereby.
10.8 Severability, Enforceability. Should any part of
this Agreement for any reason be declared by any court of
competent jurisdiction to be invalid, such decision shall not
affect the validity of the remaining portion, which shall
continue in full force and effect as if this Agreement had
been executed with the invalid portion eliminated therefrom.
Staff Builders acknowledges and agrees that any breach or
nonperformance of this Agreement will cause irreparable damage
to Time, and Staff Builders therefore agrees that this
Agreement and the Option herein contained shall be
specifically enforceable.
10.9 Assignability. This Agreement and the Option
contained herein shall be binding upon and inure to the
benefit of each party's successors, heirs and assigns;
provided, however, that neither party to this Agreement may
assign this Agreement or the Option contained herein without
the prior written consent of the other party, except Time may
assign this Agreement or the Option to a Time affiliate
without the prior written consent of Staff Builders.
10.10 Interpretations. Neither this Agreement nor
any uncertainty or ambiguity herein shall be construed or
resolved against any party hereto, whether under any rule of
construction or otherwise. No party shall be considered the
draftsman. On the contrary, this Agreement has been reviewed,
negotiated and accepted by all parties and their lawyers and
shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the
purposes and intentions of all parties hereto.
10.11 Miscellaneous. This Agreement (i) shall be
construed and enforced in accordance with the internal laws of
the State of Florida without regard for its conflict of laws
principles, and (ii) may be executed in two or more
counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument. The captions and other headings combined in this
Agreement or in the Schedules hereto are for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement. Nothing in this Agreement,
express or implied, is intended to confer upon any person
other than Time and Staff Builders any rights or remedies
hereunder.
[Signatures on Next Page]<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
STAFF BUILDERS, INC.
By: /s/ Stephen Savitsky
Name: Stephen Savitsky
Title: President
Attest: /s/ David Savitsky
Secretary
TIME INSURANCE COMPANY
By: /s/ William Robinson
Name: William Robinson
Title: President
Attest: /s/ Jack A. Greenhaus
Secretary
EXHIBIT 10.73
<PAGE>
STOCK PURCHASE AGREEMENT AND RECEIPT
THIS STOCK PURCHASE AGREEMENT AND RECEIPT (this "Agreement") is
made and entered into this 28th day of February, 1997 by and
between TIME INSURANCE COMPANY, a Wisconsin corporation ("Time"),
and STAFF BUILDERS, INC., a Delaware corporation ("Staff
Builders").
RECITALS
WHEREAS, Staff Builders and Time entered into that certain
Management and Stock Option Agreement, dated February 29, 1996 (the
"Management and Option Agreement"), whereby Time purchased an
option (the "Option") from Staff Builders to purchase 100% of the
issued and outstanding capital stock of Staff Builders' wholly
owned subsidiary AdultCare, Inc. ("AdultCare") (capitalized terms
used herein but not defined herein shall have the meanings ascribed
to them in the Management and Option Agreement);
WHEREAS, pursuant to and in accordance with the Management
and Option
Agreement, Time has managed the operations of AdultCare since
February 29, 1996;
WHEREAS, pursuant to a letter dated January 22, 1997, Time
elected to exercise its Option and purchase the capital stock of
AdultCare from Staff Builders, and such transaction is being
consummated simultaneously herewith (the "Closing");
NOW THEREFORE, in consideration of the mutual promises,
covenants, representations and warranties contained herein, and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agrees as
follows:
1.1 Purchase Price.
The purchase price for the exercise of the Option and the
purchase of 600 shares of the Common Stock, no par value, of
AdultCare which constitutes one hundred percent (100%) of the
issued and outstanding capital stock of AdultCare shall be
$1,460,330.00 (the "Purchase Price"). Time has paid the Purchase
Price to Staff Builders as set forth below:
(a) $525,000.00 which is an amount equal to the net tax benefit to
the Staff Builders consolidated tax group resulting from its use,
for federal income tax purposes, of the net operating losses
generated by AdultCare that are based on the amount of funding
provided by Time for the period from January 1, 1996 through the
date of the exercise of the Option (the "NOL");
(b) $300,000.00 in cash that was paid by Time to Staff Builders
on March 1, 1996 and the 1995 Payments totaling $160,330.00 that
were made by Time (collectively, the Option Payment); and
(c) $475,000.00 in cash by wire transfer which Time has herewith
paid.
1.2 Deliveries. At the Closing,
(a) Time has paid the Purchase Price in accordance with Section
1. I above;
(b) Staff Builders has delivered to Time the certificate or
certificates representing the 600 shares of AdultCare common stock
("Common Stock"), representing 100% of the capital stock, either
duly endorsed for transfer to Time or accompanied by appropriate
stock powers;
(c) Staff Builders and Time have caused AdultCare to issue and
deliver to Time a new certificate for the Common Stock, in due
and proper form and registered in the name of Time, and
(d) the parties have delivered to each other the documents and
instruments specified in Sections 5, 6 and 7 of the Management
and Option Agreement.
Each party acknowledges receipt of all such deliveries by the
other party.
1.3 Survival of Representations and Warranties, Covenants and
Agreements and Indemnification Obli2ations. All representations
and warranties in this Agreement or in any certificate or
instrument delivered pursuant to this Agreement shall survive the
execution hereof and the Closing of the purchase of the Common
Stock. Additionally, all covenants and agreements made in this
Agreement, in the Management and Option Agreement including, but
without limitation, those covenants in Article 6 of the Management
and Option Agreement, or in any certificate or instrument delivered
pursuant to this Agreement shall survive the execution hereof and
the Closing of the purchase of the Common Stock. The
indemnification obligations of the parties pursuant to Article VIII
of the Management and Option Agreement shall survive in accordance
therewith.
1.4 Additional Representation by Time.
(a) Except for information designated as estimates, Time
hereby certifies that all information submitted by Time to Staff
Builders to enable Staff Builders to file any required tax returns
for AdultCare or to enable the parties to establish the NOL
pursuant to Section I.I(a) of this Agreement is current, complete
and accurate, and has been prepared in accordance with GAAP. Time
further certifies that all expenses submitted to Staff Builders are
reasonable and necessary for the operation of AdultCare's business
and that all revenues have been recorded.
(b) Time will provide to Staff Builders, no later than March
31, 1997, any and all adjustments with respect to the January and
February AdultCare financial statements, to reflect the actual
revenues and expenses in lieu of estimates originally recorded.
Time hereby certifies that it has not taken and will not take on
any tax return, any expense submitted to Staff Builders with
respect to the determination of the NOL in the Purchase Price.
1.6 338(h)(10) Election. Pursuant to Section 5.6 of the
Management and Option Agreement, Time hereby notifies Staff
Builders that Time elects to have Staff Builders join with Time in
making an election under Section 338(h)(10) of the Code (and any
corresponding elections under state, local or foreign tax law) with
respect to the purchase and sale of the Common Stock. Section 5.6
of the Management and Option Agreement shall govern the Section
338(h)(10) Election and the parties agree to cooperate fully in
connection with such Election.
1.7 Miscellaneous. This Agreement (i) shall be construed and
enforced in accordance with the internal laws of the state of
Florida without regard for its conflict of laws principles, and
(ii) may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall
constitute one and the same instrument. The captions and other
headings combined in this Agreement are for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement. Nothing in this Agreement,
express or implied, is intended to confer upon any person other
than Time and Staff Builders any rights or remedies hereunder.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
STAFF BUILDELRS, INC.
Attest: By: /s/ Gary Tighe
Name:Gary Tighe
/s/ Renee Silver Title:Chief Financial Officer
Secretary
TIME INSURANCE COMPANY
By: /s/ William B. Robinson
Name: William B. Robinson
Title: President - Long Term Care
Attest:
/s/ A. Mayberry
Secretary
EXHIBIT 10.75
<PAGE>
STOCK REDEMPTION AGREEMENT
BETWEEN
STAFF BUILDERS, INC.
and
AMERICAN HOMECARE MANAGEMENT CORP.
STOCK REDEMPTION AGREEMENT
THIS STOCK REDEMPTION AGREEMENT (hereinafter referred
to as the "Agreement") is made and entered into as of the 18th day
of March, 1997 by and between STAFF BUILDERS, INC., a Delaware
corporation (the "SELLER") and American HomeCare Management Corp.
("BUYER"), a Delaware corporation.
BACKGROUND
WHEREAS, there are presently 1,000 shares issued and
outstanding of BUYER,
and
WHEREAS, SELLER owns 900 shares of the issued and
outstanding capital stock (the "Stock") of BUYER; and
WHEREAS, SELLER desires to transfer and sell to BUYER, and
BUYER desires to redeem and acquire from SELLER, the Stock, in
accordance with the terms and provisions hereinafter 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, SELLER and
BUYER covenant, represent, warrant, stipulate and agree as follows:
ARTICLE 1. REDEMPTION AND SALE OF STOCK
1.1 Redemption and Sale of Stock. At the Closing (as
hereinafter defined), subject to the terms and conditions of this
Agreement, a certain Loan and Security Agreement of even date
("Loan Agreement"), a certain Promissory Note of even date ("Note")
and a certain Collateral Pledge Agreement of even date ("Pledge
Agreement"), SELLER agrees to sell, transfer, convey, deliver and
assign to BUYER all right, title and interest in and to the Stock,
free and clear of all liens and encumbrances, for the consideration
hereinafter set forth. This Stock Redemption Agreement, Loan
Agreement, Note and Collateral Pledge Agreement are hereby referred
to jointly as ("Transaction Documents").
ARTICLE 2. CLOSING DATE; TRANSFER OF STOCK
2.1 Closing and Closing Date. The closing hereunder (the
"Closing") shall take place at such place and time and on such date
as may be agreed to in writing by Seller and Buyer and shall be
effective March 18, 1997 ('Closing Date').
2.2 Transfer of Stock. SELLER shall, at the Closing on the
Closing Date, deliver to BUYER original certificates for the Stock,
together with a stock powers duly endorsed in favor of BUYER. The
BUYER in turn will deliver the original certificates back to SELLER
along with stock powers endorsed in favor of SELLER, pursuant to the
Collateral Pledge Agreement. The stock shall be recorded on the
books of the BUYER and treated by BUYER as treasury shares.
ARTICLE 3. TOTAL CONSIDERATION RECEIVED FOR THE STOCK
3.1 Total Consideration Received for the Stock. The
Total Consideration received (the 'Total Consideration') for the
Stock by SELLER shall be $2,067,339, subject to the adjustments set
forth in Section 3.3. Buyer is presently indebted to Seller for
advances, loans and capital accounts in the amount of $1,615,996
(the "Current Indebtedness"). It is intended that the Current
Indebtedness and the redemption price ($451,343), as reduced by the
down payment reflected in Section 3.2 be reflected in a single note
in the form of Exhibit A attached hereto.
3.2 Payment of Total Consideration. At Closing Buyer shall
pay Seller $100,000 in cash, certified check, or wire transfer
reflecting the funds contributed to Buyer by the Shareholders of
Buyer (other than Seller). Buyer shall also deliver its Promissory
Note in the form of Exhibit A attached (the "Promissory Note")
hereto in the amount of $1,967,339 representing the sum of (I) the
balance of the Redemption Price and (ii) the Current Indebtedness.
The Promissory Note shall bear interest at prime rate plus 3%.
Following Closing, but in no event later than April 30, 1997, Buyer
shall deliver a Substitute Note revised to reflect the adjustments
set forth in Section 3.3 and any payments on the Promissory Note
received by the Lender prior to the date of delivery of the
Substituted Note.
3.3 Post Closing Adjustment. The Total Consideration and the
Promissory Note shall be adjusted as follows: 1) increased by 90%
of any net profits of Buyer for the period February 1, 1997 through
March 18, 1997, plus; 2) increased by any increase in the income
taxes payable for the period February 1, 1997 through March 18,
1997, plus; 3) increased by all Buyer's intercompany interest and
insurance costs for the period Feb. 1, 1997 through March 18, 1997.
ARTICLE 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; Subsidiaries.
(a) SELLER is a corporation, duly organized, and is in
good standing under the laws of the State of Delaware.
(b) Except as stated herein, the Stock is owned
by SELLER free and clear of any liens, claims, pledges or other
encumbrances. The Stock has not been issued in violation of any
preemptive rights 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 is a
shareholder agreement entered into as of March 13, 1996 with respect
to the Stock ('Shareholders Agreement') which Shareholders Agreement
is to be rescinded simultaneously with the Closing hereunder by a
Rescission Agreement. At Closing, SELLER shall transfer good and
valid title to the Stock to BUYER, free and clear of any liens,
claims, pledges, rights or other encumbrances.
(c) The transfer of the Stock by SELLER to
BUYER is exempt from registration under applicable federal and state
securities laws.
4.2 Authority.
(a) SELLER has full power and has taken all actions
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 constitute the legal, valid and binding obligation of
SELLER enforceable against it 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.
(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 where the failure to obtain such
consent would not materially or adversely affect the assets or the
financial condition of SELLER, conflict with, constitute a breach,
violation or termination of any provision of any contracts and other
agreements to which SELLER is a party or by which SELLER is bound,
(ii) conflict with or violate the Articles of Incorporation or By-
laws, of SELLER (iii) violate any statute, law, regulation,
judgment, rule, order or any other restriction of any kind or
character applicable to SELLER, except for any statute, law,
regulation, judgment, rule, order, license, permit or any other
restriction, where the violation thereof would not materially or
adversely effect the Stock, the assets or the financial condition of
SELLER.
(c) Seller 1) has operated the business in the ordinary
course and neither made nor received any distributions or dividends
since the balance sheet dated January 31, 1997. 2) represents that
upon delivery, of the Amended Promissory Note Buyer will not be
indebted to Seller or any of its affiliates except with respect to
the Transaction Documents. 3) to the best of its knowledge,
believes the balance sheet as of January 31, 1997 is true and
correct in all material aspects.
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 Authority.
(a) BUYER has full corporate power and has taken all
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 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) 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.
(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 he 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 his properties or assets, the violation of which could have
a material adverse effect on the financial condition of BUYER.
5.2 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.
ARTICLE 6. COVENANTS AND AGREEMENTS OF SELLER AND BUYER
6.1 Actions Pending Closing. From the date hereof to the
Closing, except as otherwise contemplated by this Agreement, SELLER
and BUYER covenant and agree as follows:
(a) BUYER 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 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) All assets of BUYER will be used, operated, maintained and
repaired in the usual and ordinary course of BUYER's business
consistent with past practices.
(c) BUYER 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 canceled, terminated or modified or any of the
coverage thereunder to lapse unless simultaneously with such
termination or cancellation.
(d) BUYER will timely file (including all applicable
extensions) all tax returns and reports required to be filed prior
to Closing with any federal, state or local governments or
governmental agencies.
(e) BUYER shall not make or institute any methods of
collection, credit, billing, management, accounting or operation
which are not in the usual and customary course of its business,
consistent with BUYER's past practices.
(f) SELLER shall not transfer, pledge, create or permit to
exist any lien, claim or other encumbrance against any of the Stock
nor issue any options, warrants or other rights with respect
thereto.
(g) From the date hereof, through and including the Closing
Date, BUYER shall not amend in any material respect its Articles of
Incorporation or By-laws.
(h) Buyer will pay all claims by certain of Seller's
franchisees relating to Buyer's business activities in that
franchisee's territory, occurring prior to Closing. Subsequent to
the execution of this Agreement, Buyer will have no obligation to
franchisees with respect to future business.
6.2 Consents. SELLER and BUYER shall use good faith efforts
and cooperate with each other in obtaining all necessary consents
required for the transfer of the Stock to BUYER.
6.3 Post-Closing Access to Information. SELLER 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 the transactions herein
contemplated, audits, compliance with governmental requirements and
regulations, and the prosecution or defense of third party claims.
Accordingly, SELLER 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 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 7. CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
Each and every obligation of BUYER 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 by BUYER.
7.1 Compliance with Agreement. SELLER shall have performed all
of its 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.
7.2 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.
7.3 Approvals and Consents. The material consents, approvals
and waivers as set forth on Schedule 4.2 hereto necessary in order
to consummate the transactions contemplated hereby shall have been
obtained.
7.4 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 redemption of the
Stock.
7.5 No Material Adverse Change. No event or condition
resulting in a materially adverse change in the financial condition
of BUYER or its assets shall have occurred and be continuing.
7.6 Deliveries. BUYER shall have received from SELLER all of
the other documents required to be delivered by them pursuant to
Section l0.l(a) of this Agreement.
ARTICLE 8. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
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 by SELLER, except 8.6:
8.1 Compliance with Agreement. BUYER shall have performed all
of its 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 BUYER on or prior to the Closing Date.
8.2 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 given on the Closing Date.
8.3 Approvals and Consents. Except as provided for in 8.6,
the material consents, approvals and waivers as set forth on
Schedule 4.2 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 redemption of the
Stock.
8.5 Deliveries. SELLER shall receive from BUYER all of the
other documents required to be delivered by BUYER pursuant to
Section l0.l(b) of this Agreement.
8.6 Consent: This Agreement is subject to and conditioned
upon SELLER receiving the consent of Mellon Bank NA to the sale
contemplated hereunder and the related Transactions.
ARTICLE 9. TERMINATION
9.1 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 7 have not been
satisfied or waived by BUYER as of the Closing Date;
(iii) By SELLER, if the conditions specified in Article 8 have not been
satisfied or waived by SELLER as of the Closing Date;
(iv) By BUYER or SELLER, on April 1, 1997, if the Closing has not occurred
by such date;
(v) 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 or consent of Mellon Bank as required
under Article 8.6 has not been received by March 15, 1997.
(vi) At the election of the BUYER prior to the Closing Date, if the SELLER
has breached any representation, warranty, covenant or agreement
contained in this Agreement;
(vii) 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; or
In the event of the termination of this Agreement pursuant to this Section 9.1
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 (v) or (vi) above).
ARTICLE 10. DELIVERIES AT AND AFTER CLOSING
10.1 Deliveries at Closing.
(a) At Closing, SELLER shall deliver to BUYER:
(i) Certificates for the Stock, together with stock powers duly
endorsed in favor of BUYER;
(ii) A Resignation from each of SELLER's designated Directors
and Officers of BUYER; and
(iii) Executed copies of the Transaction Documents.
(iv) Executed copy of a Rescission Agreement with respect to a Shareholder
Agreement dated as of March 13, 1996.
(b) At Closing, BUYER shall deliver to SELLER:
(i) Executed copies of the Transaction Documents.
(ii) Certificates for the Stock, together with stock powers duly endorsed
in favor of SELLER, pursuant to the Collateral Pledge Agreement.
ARTICLE 11. INDEMNIFICATION
1.1 SELLER's Indemnity of BUYER.
(a) 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 any inaccuracies in or any breach
of any representation, covenant, agreement or warranty on
the part of SELLER herein contained or in any other
Transaction Document; 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 hereinafter 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
all 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 claims or actions, and will cooperate with SELLER in such
defense in such manner as SELLER may reasonably request. If SELLER
elect not to, or fail to, defend against such claims or actions,
BUYER shall have the right to defend against such claims or actions
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 SELLER for indemnification
pursuant to this Section 11.1 shall survive the Closing.
(d) It is expressly agreed that BUYER shall not be entitled to any
indemnification from SELLER whether pursuant to this Section 11.1 or
otherwise arising out of the sale of the Stock to BUYER or the
transaction contemplated by this Agreement, in excess of
the Total Consideration paid to SELLER.
e) BUYER shall use its best efforts to utilize any applicable insurance
to reduce any BUYER's Loss.
11.2 BUYER's Indemnity of SELLER.
(a) BUYER shall indemnify SELLER 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 SELLER 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;
(ii) any and all reasonable costs and expenses of SELLER
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 hereinafter as the "SELLER's Loss.")
(b) Whenever it shall come to the attention of SELLER that it has suffered
or incurred, or may suffer or incur, any SELLER's Loss, 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
claims 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 or actions at BUYER's expense.
If SELLER shall defend against such claim or actions at BUYER's
expense SELLER agree 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) SELLER's right to assert a claim against BUYER for indemnification
pursuant to this Section 11.2 shall survive the Closing.
(d) It is expressly agreed SELLER shall not be entitled to any
indemnification from BUYER, whether pursuant to this Section 11.2 or
otherwise arising out of the sale of the Stock to BUYER or the
transaction contemplated by this Agreement, in excess of the Total
Consideration.
ARTICLE 12. MISCELLANEOUS
13.1 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 telecopied, with receipt
confirmed (provided that if telexed or telecopied, with a copy also send
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 BUYER: American HomeCare Management Corp.
808 North By-Pass
Kennett, MO 63857
Attn: President
If to SELLER:
Staff Builders, Inc.
1983 Marcus Avenue
Lake Success, NY 11042
Attn: Stephen Savitsky,
Chief Executive officer
Fax No.: (516) 358-9128
With Copy To:
Staff Builders, Inc.
1983 Marcus Avenue
Lake Success, NY 11042
Attn: Renee J. Silver
Vice President & General Counsel
Fax No.: (516) 327-8636
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 or telecopy is confirmed, or upon the earlier to occur of receipt or
five (5) business days after mailed 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.
12.2 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 (except the right to
receipt of any payment) 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 of BUYER.
(c) It is expressly agreed that this Agreement is not intended to create
any rights in respect of any third party beneficiaries.
12.3 Modification. This Agreement may not be amended or modified
except by writing signed by an the parties or authorized officer of all 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.
12.4 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. There are no agreements,
representations, or warranties between the parties other than those set forth or
provided herein.
12.5 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.
12.6 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.
12.7 Governing Law. This Agreement shall be governed by and
construed, interpreted and enforced in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed entirely within such
state, 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 or federal court for Nassau County, New York.
12.8 Schedules. All of the Schedules attached hereto are
incorporated herein and made a part of this Agreement by this reference thereto.
12.9 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.
12.10 Certain Post Closing Matters. Following the Closing, each
party agrees to cooperate with the other and shall take such actions, deliver
such documents to BUYER and execute such documents as may reasonably be
requested 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 first above written.
STAFF BUILDERS, INC.
BY: /s/ Stephen Savitsky
AMERICAN HOMECARE
MANAGEMENT CORP.
By: /s/ Larry Campbell
STOCKPU5/WD/M
EXHIBIT 10.80
<PAGE>
STAFF BUILDERS, INC. (a Delaware corporation)
INDEMNIFICATION AGREEMENT
with
DONALD MEYERS
THIS AGREEMENT, made and entered into as of May 2, 1995
("Agreement"), by and between STAFF BUILDERS, INC., a Delaware
corporation (the "Company"), and DONALD MEYERS ("Indemnitee"):
WHEREAS, highly competent persons are becoming more
reluctant to serve publicly-held corporations as officers or in
other capacities unless they are provided with adequate
protection through insurance or adequate indemnification against
inordinate risks of claims and actions against them arising out
of their service to and activities on behalf of the corporation;
and
WHEREAS, the current impracticability of obtaining
adequate insurance and the uncertainties relating to
indemnification have increased the difficulty of attracting and
retaining such persons; and
WHEREAS, the Board of Directors of the Company (the
"Board of Directors") has determined that the inability to
attract and retain such persons is detrimental to the best
interests of the Company's stockholders and that the Company
should act to assure such persons that there will be increased
certainty of such protection in the future; and
WHEREAS, it is reasonable, prudent and,necessary for
the Company contractually to obligate itself to indemnify such
persons to the fullest extent permitted by applicable law so that
they will serve or continue to serve the Company free from undue
concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to
serve and to take on additional service for or on behalf of the
Company on the condition that he be so indemnified;
NOW, THEREFORE, in consideration of the premises and
the covenants contained herein, the Company and Indemnitee do
hereby covenant and agree as follows:
Section 1. Services by Indemnitee. Indemnitee agrees
to continue to serve as a director of the Company subject to the
terms and conditions of his employment agreement, dated as of
April 15, 1991, as such agreement may be amended, renewed or
extended from time to time.
Section 2. Indemnification -- General. The Company
shall indemnify, and advance Expenses (as hereinafter defined) to
Indemnitee as provided in this Agreement and to the fullest
extent permitted by applicable law in effect on the date hereof
and to such greater extent as applicable law may thereafter from
time to time permit. The rights of Indemnitee provided under the
preceding sentence shall include, but shall not be limited to,
the rights set forth in the other Sections of this Agreement.
Section 3. Proceedings Other Than Proceedings by or in
the Right of the Company. Indemnitee shall be entitled to the
rights of indemnification provided in this Section 3 if, by
reason of his Corporate Status (as hereinafter defined), he is,
or is threatened to be made, a party to any threatened, pending,
or completed Proceeding (as hereinafter defined), other than a
Proceeding by or in the right of the Company. Pursuant to this
Section 3, Indemnitee shall be indemnified against Expenses,
judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him on his behalf in
connection with such Proceeding or any claim, issue or matter
therein, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 4. Proceedings by or in the Right of the
Company. Indemnitee shall be entitled to the rights of
indemnification provided in this Section 4 if, by reason of his
Corporate Status, he is, or is threatened to be made, a party to
any threatened, pending or completed Proceeding brought by or in
the right of the Company to procure a judgment in its favor.
Pursuant to this Section, Indemnitee shall be indemnified against
Expenses actually and reasonably incurred by him or on his behalf
in connection with such Proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the
best interests of the Company. Notwithstanding the foregoing, no
indemnification against such Expenses shall be made in respect of
any claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company
if applicable law prohibits such indemnification; provided,
however, that if applicable law so permits, indemnification
against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the Court of Chancery
of the State of Delaware, or the Court in which such Proceeding
shall have been brought or is pending, shall determine.
Section 5. Indemnification for Expenses of a Party Who
Is Wholly or Partly Successful. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a party to and is successful, on
the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred
by him or on his behalf in connection therewith. If Indemnitee
is not wholly successful in such Proceeding but is successful, on
the merits or otherwise, as to one or more but less than all
claims, issues or matters in such Proceeding, the Company shall
indemnify Indemnitee against all Expenses actually and reasonably
incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of
this Section, and without limitation, the termination of any
claim, issue or matter in such a Proceeding by dismissal, with or
without prejudice, shall be deemed to be a successful result as
to such claim, issue or matter.
Section 6. Indemnification for Expenses of a Witness.
Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Status, a
witness in any Proceeding, he shall be indemnified against all
expenses actually and reasonably incurred by him or on his behalf
in connection therewith.
Section 7. Advancement Of Expenses. The Company shall
advance all reasonable Expenses incurred by or on behalf of
indemnitee in connection with any Proceeding within twenty days
after the receipt by the Company of a statement or statements
from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include or
be preceded or accompanied by an undertaking by or on behalf of
Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified
against such Expenses.
Section 8. Procedure for Determination of Entitlement
to Indemnification.
(a) To obtain indemnification under this Agreement,
Indemnitee shall submit to the Company a written request,
including therein or therewith such documentation and information
as is reasonably available to Indemnitee and is reasonably
necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall,
promptly upon receipt of such a request for indemnification,
advise the Board of Directors in writing that Indemnitee has
requested indemnification.
(b) Upon written request by Indemnitee for
indemnification pursuant to the first-sentence of Section 8(a)
hereof, a determination, if required by applicable law, with
respect to Indemnitee's entitlement thereto shall be made in the
specific case: (i) if a Change in Control (as hereinafter
defined) shall have occurred, by Independent Counsel (as
hereinafter defined) (unless Indemnitee shall request that such
determination be made by the Board of Directors or the
stockholders, in which case by the person or persons or in the
manner provided for in clause (ii) or (iii) of this Section 8(b))
in a written opinion to the Board of Directors, a copy of which
shall be delivered to Indemnitee; (ii) if a Change of Control
shall not have occurred, (A) by the Board of Directors by a
majority vote of a quorum consisting of Disinterested Directors
(as hereinafter defined), or (B) if a quorum of the Board of
Directors consisting of Disinterested Directors is not obtainable
or, even if obtainable, such quorum of Disinterested Directors so
directs, by Independent Counsel in a written opinion to the Board
of Directors, a copy of which shall be delivered to Indemnitee,
or (C) by the stockholders of the Company; or (iii) as provided
in Section 9(b) of this Agreement; and, if it is so determined
that Indemnitee is entitled to indemnification, payment to
Indemnitee shall be made within ten (10) days after such
determination. Indemnitee shall cooperate with the person,
persons or entity making such determination with respect to
Indemnitee's entitlement to indemnification, including providing
to such person, persons or entity upon reasonable advance request
any documentation or information which is not privileged or
otherwise protected from disclosure and which is reasonably
available to Indemnitee and reasonably necessary to such
determination. Any costs or expenses (including attorneys, fees
and disbursements) incurred by Indemnitee in so cooperating with
the person, persons or entity making such determination shall be
borne by the Company (irrespective of the determination as to
Indemnitee's entitlement to indemnification) and the Company
hereby indemnities and agrees to hold Indemnitee harmless
therefrom.
(c) In the event the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
Section 8(b) hereof, Independent Counsel shall be selected as
provided in this Section 8(c). If a Change of Control shall not
have occurred, Independent Counsel shall be selected by the Board
of Directors, and the Company shall give written notice to
Indemnitee advising him of the identity of Independent Counsel so
selected. If a Change of Control shall have occurred,
Independent Counsel shall be selected by Indemnitee (unless
Indemnitee shall request that such selection be made by the Board
of Directors, in which event the preceding sentence shall apply),
and Indemnitee shall give written notice to the Company advising
it of the identity of Independent Counsel so selected. In either
event, Indemnitee or the Company, as the case may be, may, within
7 days after such written notice of selection shall have been
given, deliver to the Company or to Indemnitee, as the case may
be, a written objection to such selection. Such objection may be
asserted only on the ground that Independent Counsel so selected
does not meet the requirements of "Independent Counsel" as
defined in Section 17 of this Agreement, and the objection shall
set forth with particularity the factual basis of such assertion.
If such written objection is made, Independent Counsel so
selected may not serve as Independent Counsel unless and until a
court has determined that such objection is without merit. if,
within 20 days after submission by Indemnitee of a written
request for indemnification pursuant to Section 8(a) hereof, no
Independent Counsel shall have been selected and not objected to,
either the Company or indemnitee may petition the Court of
Chancery of the State of Delaware or other court of competent
jurisdiction for resolution of any objection which shall have
been made by the Company or Indemnitee to the other's selection
of Independent Counsel and/or for the appointment as Independent
Counsel of a person selected by the Court or by such other person
as the Court shall designate, and the person with respect to whom
an objection is so resolved or the person so appointed shall act
as Independent Counsel under Section 8(b) hereof. The Company
shall pay any and all reasonable fees and expenses of Independent
Counsel incurred by such Independent Counsel in connection with
acting pursuant to Section 8(b) hereof, and the Company shall pay
all reasonable fees and expenses incident to the procedures of
this Section 8(c), regardless of the manner in which such
Independent Counsel was selected or appointed. Upon the due
commencement of any judicial proceeding or arbitration pursuant
to Section 10(a)(iii) of this Agreement, Independent Counsel
shall be discharged and relieved of any further responsibility in
such capacity (subject to the applicable standards of
professional conduct then prevailing).
Section 9. Presumptions and Effect of Certain
Proceedings.
(a) If a Change of Control shall have occurred, in
making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making
such determination shall presume that Indemnitee is entitled to
indemnification under this Agreement if Indemnitee has submitted
a request for indemnification in accordance with Section B(a) of
this Agreement, and the Company shall have the burden of proof to
overcome that presumption in connection with the making by any
person, persons or entity of any determination contrary to that
presumption.
(b) If the person, persons or entity empowered or
selected under Section 8 of this Agreement to determine whether
Indemnitee is entitled to indemnification shall not have made a
determination within 60 days after receipt by the Company of the
request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of
a material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification
under applicable law; provided, however, that such 60-day period
may be extended for a reasonable time, not to exceed an
additional 30 days, if the person, persons or entity making the
determination with respect to entitlement to indemnification in
good faith requires such additional time for the obtaining or
evaluating of documentation and/or information relating thereto;
and provided, further, that the foregoing provisions of this
Section 9(b) shall not apply (i) if the determination of
entitlement to indemnification is to be made by the stockholders
pursuant to Section B(b) of this Agreement and if (A) within 15
days after receipt by the Company of the request for such
determination the Board of Directors has resolved to submit such
determination to the stockholders for their consideration at an
annual meeting thereof to be held within 75 days after such
receipt and such determination is made thereat, or (B) a special
meeting of stockholders is called within 15 days after such
receipt for the,purpose of making such determination, such
meeting is held within 60 days after having been so called and
such determination is made thereat, or (ii) if the determination
of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 8(b) of this Agreement:.
(c) The termination of any Proceeding or of any claim,
issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contenders or its equivalent,
shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to
indemnification or create a presumption that Indemnitee did not
act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the Company or,
with respect to any criminal proceeding, that Indemnitee had
reasonable cause to believe that his conduct was unlawful.
Section 10. Remedies of Indemnitee.
(a) In the event that (i) a determination is made
pursuant to Section 8 of this Agreement that Indemnitee is not
entitled to indemnification under this Agreement, (ii) advance-
ment of Expenses is not timely made pursuant to Section 7 of this
Agreement, (iii) the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
Section 8(b) of this Agreement and such determination shall not
have been made and delivered in a written opinion within 90 days
after receipt by the Company of the request for indemnification,
or (iv) payment of indemnification is not made pursuant to
Section 6 of this Agreement within ten (10) days after receipt by
the Company of a written request therefor, or (v) payment of
indemnification is not made within ten (10) days after a
determination has been made that Indemnitee is entitled to
indemnification or such determination is deemed to have been made
pursuant to Section 8 or 9 of this Agreement, Indemnitee shall be
entitled to an adjudication in an appropriate court of the State
of Delaware, or in any other court of competent jurisdiction, of
his entitlement to such indemnification or advancement of
Expenses. Alternatively, Indemnitee, at his option, may seek an
award in arbitration to be conducted by a single arbitrator
pursuant to the rules of the American Arbitration Association.
Indemnitee shall commence such proceeding seeking an adjudication
or an award in arbitration within 180 days following the date on
which Indemnitee first has the right to commence such proceeding
pursuant to this Section 10(a). The Company shall not oppose
Indemnitee's right to seek adjudication or award in arbitration.
(b) In the event that a determination shall have been
made pursuant to Section 8 of this Agreement that Indemnitee is
not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 10 shall be
conducted in all respects as a de novo trial, or arbitration, on
the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. If a Change of Control shall have
occurred, in any judicial proceeding or arbitration commenced
pursuant to this Section 10 the Company shall have the burden of
proving that Indemnitee is not entitled to indemnification or
advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed
to have been made pursuant to Section 8 or 9 of this Agreement
that Indemnitee is entitled to indemnification, the Company shall
be bound by such determination in any judicial proceeding or
arbitration commenced pursuant to this Section 10, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of
a material fact necessary to make Indemnitee's statement not
materially misleading, in connection with the request for
indemnification, or (ii) a prohibition of such indemnification
under applicable law.
(d) The Company shall be precluded from asserting in
any judicial proceeding or arbitration commenced pursuant to this
Section 10 that the procedures and presumptions of this Agreement
are not valid, binding and enforceable and shall stipulate in any
such court or before any such arbitrator that the Company is
bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this
Section 10, seeks a judicial adjudication of or an award in
arbitration to enforce his rights under, or to recover damages
for breach of, this Agreement, Indemnitee shall be entitled to
recover from the Company, and shall be indemnified by the Company
against, any and all expenses (of the types described in the
definition of Expenses in Section 17 of this Agreement) actually
and reasonably incurred by him in such judicial adjudication or
arbitration, but only if he prevails therein. If it shall be
determined in such judicial adjudication or arbitration that
Indemnitee is entitled to receive part but not all of the
indemnification or advancement of Expenses sought, the expenses
incurred by indemnitee in connection with such judicial
adjudication or arbitration shall be appropriately prorated.
Section 11. Non-Exclusivity; Survival of Rights;
Insurance; Subrogation.
(a) The rights of indemnification and to receive
advancement of Expenses as provided by this Agreement shall not
be deemed exclusive of any other rights to which Indemnitee may
at any time be entitled under applicable law, the Certificate of
Incorporation, the By-Laws, any agreement, a vote of stockholders
or a resolution of directors, or otherwise. No amendment,
alteration or termination of this Agreement or any provision
hereof shall be effective as to any Indemnitee with respect to
any action taken or omitted by such Indemnitee in his Corporate
Status prior to such amendment, alteration or termination.
(b) To the extent that the Company maintains an
insurance policy or policies providing liability insurance for
directors, officers, employees, agents or fiduciaries of the
Company or of any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise which such
person serves at the request of the Company, Indemnitee shall be
covered by such policy or policies in accordance with its or
their terms to the maximum extent of the coverage available for
any such director, officer, employee or agent under such policy
or policies.
(c) In the event of any payment under this Agreement,
the Company shall be subrogated to the extent of such payment to
all of the rights of recovery of Indemnitee, who shall execute
all papers required and take all action necessary to secure such
rights, including execution of such documents as are necessary to
enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this
Agreement to make any payment of amounts otherwise indemnifiable
hereunder if and to the extent that Indemnitee has otherwise
actually received such payment under any insurance policy,
contract, agreement or otherwise.
Section 12. Duration of Agreement. This Agreement
shall continue until and terminate upon the later of: (a) 10
years after the date that Indemnitee shall have ceased to serve
as a director of the Company, or (b) the final termination of all
pending Proceedings in respect of which Indemnitee is granted
rights of indemnification or advancement of Expenses hereunder
and of any proceeding commenced by Indemnitee pursuant to Section
10 of this Agreement relating thereto. This Agreement shall be
binding upon the Company and its successors and assigns and shall
inure to the benefit of Indemnitee and his heirs, executors and
administrators.
Section 13. Severability. If any provision or
provisions of this Agreement shall be held to be invalid, illegal
or unenforceable for any reason whatsoever: (a) the validity,
legality and enforceability of the remaining provisions of this
Agreement (including, without limitation, each portion of any
Section of this Agreement contain any such provision held to be
invalid, illegal or unenforceable, that is not itself invalid,
illegal or unenforceable) shall not in any way be affected or
impaired thereby; and (b) to the fullest extent possible, the
provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is
not itself invalid, illegal or unenforceable) shall be construed
so as to give effect to the intent manifested by the provision
held invalid, illegal or unenforceable.
Section 14. Exception to Right of Indemnification or
Advancement of Expenses. Notwithstanding any other provision of
this Agreement, Indemnitee shall not be entitled to
indemnification or advancement of Expenses under this Agreement
with respect to any proceeding, or any claim therein, brought or
made by him against the Company.
Section 15. Identical Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall
for all purposes be deemed to be an original but all of which
together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against whom enforceability
is sought needs to be produced to evidence the existence of this
Agreement.
Section 16. Headings. The headings of the paragraphs
of this Agreement are inserted for convenience only and shall not
be deemed to constitute part of this Agreement or to affect the
construction thereof.
Section 17. Definitions. For purposes of this
Agreement:
(a) "Change in Control" means a change in control of
the Company occurring after the Effective Date of a nature that
would be required to be reported in response to Item 5(f) of
Schedule 14A of Regulation 14A (or in response to any similar
item on any-similar schedule or form) promulgated under the
Securities Exchange Act of 1934 (the "Act"), whether or not the
Company is then subject to such reporting requirement; provided,
however, that, without limitation, such a Change in Control shall
be deemed to have occurred if after the Effective Date (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Act) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power
of the Company's then outstanding securities without the prior
approval of at least two-thirds of the members of the Board of
Directors in office immediately prior to such person attaining
such percentage interest; (ii) the Company is a party to a
merger, consolidation, sale of assets or other reorganization, or
a proxy contest, as a consequence of which members of the Board
of Directors in office immediately prior to such transaction or
event constitute less than a majority of the Board of Directors
thereafter; or (iii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the
Board of Directors (including for this purpose any new director
whose election or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at
least a majority of the Board of Directors.
(b) "Corporate Status" describes the status of a
person who is or was a director, officer, employee, agent or
fiduciary of the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise which such person is or was serving at the request of
the Company.
(c) "Disinterested Director" means a director of the
Company who is not and was not a party to the Proceeding in
respect of which indemnification is sought by Indemnitee.
(d) "Effective Date" means May 2, 1995.
(e) "Expenses" shall include all reasonable attorneys'
fees, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees,
and all other disbursements or expenses of the types customarily
incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a
witness in a Proceeding.
(f) "Independent Counsel" means a law firm, or a
member of a law firm, that is experienced in matters of
corporation law and neither presently is, nor in the past five
years has been, retained to represent: (i) the Company or
Indemnitee in any matter material to either such party, or (ii)
any other party to the Proceeding giving rise to a claim for
indemnification hereunder. Notwithstanding the foregoing, the
term "Independent Counsel" shall not include any person who,
under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine
Indemnitee's rights under this Agreement.
(g) "Proceeding" includes any action, suit,
arbitration, alternative dispute resolution mechanism,
investigation, administrative hearing or any other proceeding
whether civil, criminal, administrative or investigative, except
one initiated by Indemnitee pursuant to Section 10 of this
Agreement to enforce his rights under this Agreement.
Section 18. Modification and Waiver. No supplement,
modification or amendment of this Agreement shall be binding
unless executed in writing by both of the parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a
continuing waiver.
Section 19. Notice by Indemnitee. Indemnitee agrees
promptly to notify the Company in writing upon being served with
any summons, citation, subpoena, complaint, indictment,
information or other document relating to any Proceeding or
matter which may be subject to indemnification or advancement of
Expenses covered hereunder.
Section 20. Notices. All notices, request, demands
and other communications hereunder shall be in writing and shall
be deemed to have been duly given if (i) delivered by hand and
receipted for by the party to whom said notice or other
communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third
business day after the date on which it is so mailed:
(a) If to Indemnitee, to:
his address indicated on
the signature page hereto
(b) If to the Company, to:
Staff Builders, Inc.
1983 Marcus Avenue
Lake Success, New York 11042
or such other address as may have been furnished to Indemnitee by
the Company or to the Company by Indemnitee, as the case may be.
Section 21. Governing Law. The parties agree that
this Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Delaware.
Section 22. Miscellaneous. Use of the masculine
pronoun shall be deemed to include usage of the feminine pronoun
where appropriate.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first above written.
STAFF BUILDERS, INC.
(a Delaware corporation)
By:/s/ Stephen Savitsky
Stephen Savitsky,
President
INDEMNITEE
/s/ Donald Meyers
Donald Meyers
Address:_________________
_________________
scs:indemn:mey
EXHIBIT 21<PAGE>
Staff Builders, Inc. (DE)
ATC Healthcare Services, Incorporated (GA)
ATC Staffing Services, Inc. (DE)
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, Inc. (NY)
American HomeCare 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)
Staff Builders Prescription Services, Inc. (FL)
Professional Detail Services, Inc. (NY)
A Reliable Homemaker of Martin-St. Lucie County,
Inc.(FL)
St. Lucie Home Health Agency, Inc. (FL)
S.B. Assured Home Care, Inc. (DE)
[ed:corp3]
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 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, 1997, 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 23rd day of April, 1997.
/s/ Donald Meyers
Donald Meyers,
Director of the Corporation
<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 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, 1997, 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 23rd day of April, 1997.
/s/ Bernard Firestone
Bernard Firestone,
Director of the Corporation
<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 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, 1997, 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 23rd day of April, 1997.
/s/ Jonathan Halpert
Jonathan Halpert,
Director of the Corporation
