SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED MAY 31, 1998, OR
TRANSITION REPORT PURSUANT 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 of (I.R.S. Employer
incorporation or organization) Identification No.)
1983 Marcus Avenue, Lake Success, New York 11042
(Address of principal executive offices) (Zip Code)
(516) 358-1000
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
The number of shares of Class A Common Stock and Class B Common
Stock outstanding on July 13, 1998 was 21,421,824 and 1,050,909
shares, respectively.
STAFF BUILDERS, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
May 31, 1998 and February 28, 1998 2
Condensed Statements of Consolidated
Operations - Three months ended
May 31, 1998 and 1997 3
Condensed Statements of Consolidated Cash
Flows - Three months ended May 31, 1998
and 1997 4
Notes to Condensed Consolidated Financial
Statements 5-6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7-8
Factors Affecting the Company's Future
Performance 8-9
PART II. OTHER INFORMATION
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K 9
-1-<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) MAY 31,
1998 FEBRUARY 28,
(UNAUDITED) 1998
ASSETS:
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 3,025 $ 1,931
Accounts receivable, net of allowance
for doubtful accounts of $3,700 and
$3,600, respectively 56,333 76,668
Deferred income tax benefits 3,086 3,081
Prepaid expenses and other current assets 5,332 4,371
Total current assets 67,776 86,051
Fixed Assets, net of accumulated
depreciation of $9,178 and
$8,187, respectively 11,474 11,548
Intangible Assets, net of accumulated
amortization of $10,578 and
$10,413, respectively 27,657 26,995
Investment in unconsolidated affiliate 15,584 15,125
Other Assets 11,090 10,682
Total $133,581 $150,401
LIABILITIES:
Current Liabilities:
Accounts payable and accrued expenses $ 29,156 $ 35,910
Accrued payroll and payroll related expenses 26,147 27,233
Current portion of long-term liabilities 8,648 8,596
Total current liabilities 63,951 71,739
Long-Term Debt 29,509 36,293
Other Liabilities 4,052 4,000
STOCKHOLDERS' EQUITY:
Class A Common Stock - $.01 par value;
50,000,000 shares authorized; 21,881,556
and 23,009,247 outstanding at May 31, 1998
and February 28, 1998, respectively 219 230
Class B Common Stock - $.01 par value;
1,554,936 shares authorized; 1,053,609 and
1,056,356 outstanding at May 31, 1998 and
February 28, 1998, respectively 10 10
Convertible Preferred Stock, Class A;
666 2/3 shares outstanding 1 1
Additional paid-in capital 71,502 73,692
Accumulated deficit (35,663) (35,564)
Total stockholders' equity 36,069 38,369
Total $133,581 $150,401
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In thousands, except per share data)
<CAPTION>
Three Months Ended
May 31,
1998 1997
<S> <C> <C>
Revenues:
Service revenues:
Home health care $ 83,607 $115,478
ATC supplemental staffing 20,615 14,884
Total service revenues 104,222 130,362
Sales of franchises and fees, net 415 139
Total revenues 104,637 130,501
Costs and Expenses:
Operating costs 71,241 83,976
General and administrative expenses 33,286 44,002
Amortization of intangible assets 312 712
Interest expense 953 869
Interest (income) (345) (310)
Other (income) expense, net (635) (291)
Total costs and expenses 104,812 128,958
Income (Loss) Before Income Taxes (175) 1,543
Provision (Benefit) for Income Taxes (76) 694
Net Income (Loss) $ (99) $ 849
Weighted average number of common and
common equivalent shares:
Basic 23,647 23,842
Diluted 23,647 24,080
Income per common and
common equivalent share:
Basic $.00 $.04
Diluted $.00 $.04
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In thousands)
<CAPTION>
Three Months Ended
May 31,
1998 1997
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ (99) $ 849
Adjustments to reconcile net income (loss)
to net cash provided by operations:
Depreciation and amortization of fixed assets 990 908
Amortization of intangibles and other assets 312 712
Allowance for doubtful accounts 100 100
Deferred income taxes (3) (38)
Write-off of goodwill - 157
(Earnings) from unconsolidated affiliate (542) -
Increase in other long-term liabilities 79 40
Change in operating assets and liabilities:
Accounts receivable 20,234 (3,931)
Prepaid expenses and other current assets (953) 2,020
Accounts payable and accrued expenses (7,870) 2,050
Income taxes payable - 57
Other assets (410) (2,101)
Net cash provided by operating activities 11,838 823
Cash Flows from Investing Activities:
Acquisition of businesses (627) (338)
Disposition of business - (70)
Additions to fixed assets (95) (210)
Net cash used in investing activities (722) (618)
Cash Flows from Financing Activities:
Proceeds from Employee Stock Purchase Plan 108 151
Exercise of options 35 -
Purchase and retirement of common stock (2,345) -
Increase (decrease) in borrowings under
revolving line of credit (5,653) 1,922
Reduction in other long-term liabilities (2,167) (1,175)
Net cash provided by (used in)
financing activities (10,022) 898
Net Increase in Cash and Cash Equivalents 1,094 1,103
Cash and Cash Equivalents, Beginning
of Period 1,931 2,006
Cash and Cash Equivalents, End of Period $ 3,025 $3,109
Supplemental Data:
Cash paid for:
Interest $ 881 $ 750
Income taxes, net $(1,428) $ 465
Acquisition of business through issuance of
notes payable $ 275 $ -
Fixed assets purchased through capital lease
agreements $ 821 $ 867
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
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STAFF BUILDERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. FINANCIAL STATEMENTS - In the opinion of the Company, the
accompanying unaudited condensed consolidated financial
statements contain all adjustments (consisting of only normal
and recurring accruals) necessary to present fairly the
financial position of the Company and its subsidiaries as of
May 31, 1998 and February 28, 1998 and the results of
operations and the cash flows for the three months ended May
31, 1998 and 1997. Certain prior period amounts have been
reclassified to conform with the May 1998 presentation.
The results for the three months ended May 31, 1998 and 1997
are not necessarily indicative of the results for an entire
year. It is suggested that these condensed consolidated
financial statements be read in conjunction with the Company's
audited financial statements as of February 28, 1998 and for
the year then ended.
2. HEALTH CARE REFORM LEGISLATION - The Balanced Budget Act of
1997 ("BBA") which was enacted by Congress resulted in
significant changes to cost based reimbursement for Medicare
home health care providers. The BBA provided for an interim
payment system ("IPS") which became effective for the Company
as of March 1, 1998. The effect of changes under the IPS was
to reduce the limits for the amount of costs that are
reimbursable by Medicare. Accordingly, the Company together
with many of the Company's franchisees have modified their
operations as needed to meet the restrictive demands of the
IPS, including taking steps to reduce costs and maximize
operational efficiencies within the constraints of the IPS.
Based upon the Company's evaluation of each franchisee's
operations and the operating plans submitted by its
franchisees, the Company has funded the operational expenses
of many of its franchisees which have incurred losses
resulting from the provision of Medicare services. During the
three months ended May 31, 1998 ("the 1998 period"), the
Company recognized $1.2 million of net royalty income and
advanced an additional $800 thousand in working capital to
these franchises, which amounts are included in Prepaid
Expenses and Other Current Assets in the accompanying
condensed consolidated balance sheet of May 31, 1998. The
Company expects to begin recovering these amounts as these
franchisees return to appropriate levels of operations later
in the year ending February 28, 1999. The results of the
Company's and franchisees' continuing cost reductions, changes
in revenue mix and care management strategies, in response to
the IPS, have not yet fully offset the decrease in Medicare
revenues in the 1998 period. Further, the Company has
converted approximately 15 franchise locations to company
owned operations during the 1998 period.
3. EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE - The
Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share" ("SFAS No. 128"). SFAS No. 128 replaced
-5-
the calculation of primary and fully diluted earnings per
share with basic and diluted earnings per share, effective
with fiscal years ending after December 15, 1997. Earnings
per share amounts for all periods have been restated to
conform to the SFAS No. 128 requirements.
The shares used in computing basic earnings per share were
23,647,395 and 23,842,086 shares for the three months ended
May 31, 1998 and 1997, respectively. The shares used in
computing diluted earnings per share were 23,647,395 and
24,080,095 for the three months ended May 31, 1998 and 1997,
respectively.
Since March 1998 to date, the Company purchased and retired
a total of 1,667,800 shares of its common stock at a cost of
$3.1 million.
4. PROVISION (BENEFIT) FOR INCOME TAXES - The provision (benefit)
for income taxes for the three months ended May 31, 1998 and
1997 is based upon the Company's estimated tax provision
required for the full year.
5. CONTINGENCIES - On September 20, 1995, the United States
Attorney for the Eastern District of Pennsylvania alleged that
(i) between 1987 and 1989, a corporation, substantially all
assets and liabilities of which were acquired by a
subsidiary of the Company in 1993, submitted false claims to
Medicare totaling approximately $1.5 million and (ii) officers
and employees of that corporation submitted false statements
in support of such claims, 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. There have been
significant discussions with the office of the United States
Attorney which the Company believes are likely to lead to an
arbitration within specified parameters.
Although the Company cannot estimate the ultimate cost of its
open legal matters with precision, it maintains a loss
contingency accrual for the aggregate, estimated amount to
settle such matters. In management's opinion, settlement of
these matters will not have a material adverse effect on the
Company's consolidated financial position, liquidity or
results of operations.
-6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding
of the Company's results of operations and financial condition.
This discussion should be read in conjunction with the Condensed
Consolidated Financial Statements appearing in Item 1.
Results of Operations
Total revenues decreased by $25.9 million or 19.8% for the three
months ended May 31, 1998 ("the 1998 period") to $104.6 million
from $130.5 million for the three months ended May 31, 1997 ("the
1997 period"). The decrease was primarily due to a decrease in
Medicare revenues of approximately $30.7 million, resulting from
the negative impact of the Medicare Interim Payment System, enacted
under the Balanced Budget Act of 1997, which limits the amount of
costs which are reimbursable under the Medicare program. This
decrease was partially offset by an increase of approximately $5.7
million in revenues generated by the Company's ATC supplemental
staffing division. The Company opened eight new offices during the
1998 period in response to increased market demand for these
services, to a total of 54 supplemental staffing service locations
as of May 31, 1998.
The Company's home health care revenues were $83.6 million and
$115.5 million in the 1998 and 1997 period, respectively. The
following are the Company's home health care service revenues by
payment source:
Three Months Ended
May 31,
1998 1997
Medicare 47.9% 61.3%
Medicaid and other local government
programs 30.7 21.8
Insurance and individuals 19.6 14.8
Other 1.8 2.1
Total 100.0% 100.0%
Operating costs were 68.4% and 64.4% of service revenues for the
1998 and 1997 periods, respectively. The increase in operating
costs as a percentage of service revenues was primarily due to a
change in revenue mix toward non-Medicare services which have lower
gross margins.
General and administrative expenses decreased by $10.7 million, or
24.4%, to $33.3 million for the 1998 period from $44.0 million for
the 1997 period. These costs, expressed as a percentage of service
revenues, were 31.9% and 33.8% for the 1998 and 1997 periods,
respectively. The decrease in general and administrative expenses
-7-
is primarily due to a reduction in those expenses related to the
decline in Medicare services.
Interest expense was approximately $900 thousand in each of the
1998 and 1997 periods. Interest expense consists primarily of
interest on its secured line of credit facility and on capital
leases.
The benefit for income taxes was approximately $80 thousand in the
1998 period. The provision for income taxes was approximately $700
thousand in the 1997 period. The Company's effective income tax
rate was 43% in the 1998 period and 45% in the 1997 period.
Liquidity and Capital Resources
The Company has a secured credit facility 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 up to
an aggregate amount of $50 million. As of May 31, 1998 and
February 28, 1998, the amounts available for borrowing under the
credit facility were approximately $19.0 million and $18.6 million,
respectively.
In April 1998, an amendment was made to the credit facility which
increased the maximum available amount of the acquisition line of
credit from $15 million to $25 million and expanded the purpose to
include stock repurchases in amounts up to $10 million. The
acquisition line of credit continues to provide for borrowings up
to $15 million without collateral to finance acquisitions made by
the Company. Since March 1998 to date, the Company purchased and
retired a total of 1,667,800 shares of its common stock at a cost
of $3.1 million.
At May 31, 1998 and February 28, 1998, the Company borrowed $23.0
million and $29.4 million, respectively, under this facility. Trade
accounts receivable at May 31, 1998 and February 28, 1998 were
outstanding approximately 63 days and 58 days, respectively.
At May 31, 1998, the Company's debt obligations due within the next
twelve months were $8.6 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.
FORWARD LOOKING STATEMENTS
Certain statements in this report on Form 10-Q constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
typically identified by their inclusion of phrases such as "the
Company anticipates", "the Company believes" and other phrases of
similar meaning. These forward looking statements are based on the
Company's current expectations. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors
that may cause the actual results, performance or achievements of
-8-
the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-
looking statements including those risks detailed in the Company's
Form 10-K as of February 28, 1998 and for the year then ended. The
potential risks and uncertainties which could cause actual results
to differ materially from the Company's expectations include the
impact of further changes in the Medicare reimbursement system,
including any changes to the current Interim Payment System ("IPS")
and/or the implementation of a prospective payment system;
government regulation; health care reform; pricing pressures from
third-party payors, including managed care organizations;
retroactive Medicare audit adjustments; and changes in laws and
interpretations of laws or regulations relating to the health care
industry.
As a result of the implementation of the IPS as provided for in the
Balanced Budget Act of 1997, the Company's fiscal year ending
February 28, 1999 net revenues are estimated to be less than the
prior fiscal year due principally to reductions in the limits for
the amount of costs that are reimbursable in connection with the
provision of Medicare services. Further 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. Additionally,
uncertainties relating to the nature and outcomes of health care
reforms have also generated numerous realignments, combinations and
consolidations in the health care industry which may also have an
adverse impact on the Company's business strategy and results of
operations. The Company expects that in addition to industry
consolidation generally, there may be consolidations within Staff
Builders' company-owned and franchised locations, with the likely
result that there will be fewer offices by the end of its current
fiscal year.
PART II. OTHER INFORMATION
ITEM 6. EXHIBIT AND REPORTS ON FORM 8-K
(A) Exhibit
Exhibit No.
10.1 Employment Agreement dated as of October 1,
1997 between the Company and Cynthia Nye.
(B) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant for the quarter
ended May 31, 1998.
-9-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Staff Builders, Inc.
Dated: July 14, 1998 By: /s/ Stephen Savitsky
Stephen Savitsky
Chairman of the Board, President
and Chief Executive Officer
Dated: July 14, 1998 By: /s/ Dale R. Clift
Dale R. Clift
Executive Vice President, Finance
and Chief Financial Officer
(Principal Financial Officer)
Dated: July 14, 1998 By: /s/ Willard T. Derr
Willard T. Derr
Senior Vice President, Controller
(Principal Accounting Officer)
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> MAY-31-1998
<CASH> 3,025
<SECURITIES> 0
<RECEIVABLES> 60,033
<ALLOWANCES> 3,700
<INVENTORY> 0
<CURRENT-ASSETS> 67,776
<PP&E> 20,652
<DEPRECIATION> 9,178
<TOTAL-ASSETS> 133,581
<CURRENT-LIABILITIES> 63,951
<BONDS> 0
1
0
<COMMON> 229
<OTHER-SE> 35,839
<TOTAL-LIABILITY-AND-EQUITY> 133,581
<SALES> 0
<TOTAL-REVENUES> 104,637
<CGS> 0
<TOTAL-COSTS> 71,241
<OTHER-EXPENSES> (668)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 953
<INCOME-PRETAX> (175)
<INCOME-TAX> (76)
<INCOME-CONTINUING> (99)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (99)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
Exhibit
10.1<PAGE>
EMPLOYMENT AGREEMENT
Employment agreement, dated as of October 1, 1997 by and
between STAFF BUILDERS INC., a New York Corporation ("Staff
Builders" or the "Corporation"), and Cynthia Nye who resides at 1
Prospect Rd., Centerport, New York 11721 ("Executive").
WHEREAS, Staff Builders wishes to secure the services of the
Executive on the terms and conditions set forth below;
AND WHEREAS, the Executive is willing to accept employment
with Staff Builders on such terms and Conditions
NOW, THEREFORE, in consideration of their mutual promises
and other adequate consideration, Staff Builders an the Executive
do hereby agree as follows:
1. EMPLOYMENT. Staff Builders will employ the Executive as
Sr. Vice President - Corporate Support Services, in accordance with
the terms and provisions of this Agreement.
2. DUTIES. The Executive shall be responsible for the
management of the Corporation's billing, collection and corporate
support services. The Executive shall report directly to the
Executive Vice President of the Corporation or such other officer
of the Corporation as the Board of Directors may from time to time
designate. The Executive shall devote her full business time,
attention and skill to the performance of her duties hereunder and
to the advancement of the business and interests of Staff Builders.
3. TERM This Agreement shall be effective upon execution by
Staff Builders and the Executive, and shall remain in effect until
November 30, 2000, unless terminated earlier pursuant to the terms
hereof.
4. COMPENSATION.
(a) Salary. The Executive shall be paid a salary
of $145,000 per annum during the term hereof, payable in weekly
installments. The Executive's salary will be increased to $155,000
on January 1, 1998 and will be increased by Staff Builders on each
of January 1, 1999. January 1, 2000 by no less than 5%.
(b) 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.
(c) Expenses. 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.
(d) Vacation. The Executive shall be entitled to
three weeks of paid vacation during each twelve month period of
employment during the term.
(e) Deferred Compensation. The Executive is
entitled to participate in the Deferred Compensation Program as
described in the plan documents.
5. TERMINATION: RIGHTS AND OBLIGATIONS UPON
TERMINATION.
(a) If the Executive dies during the Term, then the
Executive's employment under this Agreement shall terminate. In
such event, the Executive's estate shall be entitled only to
compensation and expenses accrued and unpaid as at the date of the
Executive's death.
(b) If, as a result of the Executive's incapacity
due to physical or mental illness, whether or. not job related, the
Executive is absent from her duties hereunder for 90 consecutive
days, or an aggregate of 120 days during the Term, the Executive's
employment hereunder and this Agreement shall terminate. In such
event, the Executive shall be entitled only to compensation and
expenses accrued and unpaid as at the date of termination of the
Executive's employment.
(c) The Corporation shall have the right to
terminate the Executive's employment under this Agreement for
Cause. For purposes of the Agreement, the Corporation shall have
"Cause" to terminate the Executive's employment if (i) the
Executive assigns, pledges, or otherwise disposes of her rights and
obligations under this Agreement, or attempts to do the same
without the prior written consent of the Corporation; or (ii) the
Executive fails to fulfill her obligations under this Agreement,
has breached any of the terms or conditions hereof, has engaged in
willful misconduct or has acted in bad faith; or (iii) the
Executive has breached Section 7 of this Agreement; or (iv) the
Executive has committed a felony or perpetrated a fraud against the
Corporation. If the Corporation terminates this Agreement for
Cause, the Corporation's obligations hereunder shall cease, except
for the Corporation's obligation to pay the Executive the
compensation and expenses accrued and unpaid as of the date of
termination in accordance with the provisions hereof.
(d) In the event that at any time after a Change of
Control (as defined below) but prior to the end of twelve (12)
months after such Change of Control, the Executive is discharged
for any reason other than for Cause (as defined below) or resigns
for any reason (other than due to termination for Cause), the
Executive shall begin to receive within thirty (30) days after such
discharge or resignation a severance payment of one year's salary
at the same rate of pay in effect at the date of the Change of
Control to be paid in weekly installments for the one year period
following such discharge or resignation. A "Change of Control"
shall be deemed to occur when a person, corporation, partnership,
association or entity (x) acquires a majority of the outstanding
voting securities of Staff Builders, Inc., a Delaware corporation
("SBD") or (y) acquires securities of the bearing a majority of
voting power with respect to election of directors of SBD or (z)
acquires all or substantially all of SBD's assets.
(e) Notwithstanding anything to the contrary
contained herein, all payments owed to the Executive upon
termination of this Agreement shall be subject to offset by the
Corporation for amounts owed to the Corporation by the Executive
hereunder 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, Suite C115
Lake Success, New York 11042
Attention: Executive Vice President
or
if to the Executive:
Cynthia Nye
1 Prospect Road
Centerport, New York II 721
Either party may, in accordance with the provisions of this
Section, give written notice of a change of address, in which event
all such notices and requests shall thereafter be given as above
provided at such changed address.
7. CONFIDENTIALITY OBLIGATIONS: NON-COMPETITION BY
EXECUTIVE
(a) The Executive acknowledges that in the course
of performing her duties hereunder, she will be made privy to
confidential and proprietary information. The Executive covenants
and agrees that during the term of this Agreement and at any time
after the termination of this Agreement, she will not directly or
indirectly, for her own account or as an employee, officer,
director, partner, joint venturer, shareholder, investor, or
otherwise, disclose to others or use for her own benefit or cause
or induce others to do the same, any proprietary or confidential
information or trade secrets of Staff Builders, including but not
limited to, any matters concerning the business of Staff Builders,
including its billing, collections or administrative operations,
plans, procedures or methods of operations, any Staff Builders'
lists of clients or business contacts, other work product or
records of Staff Builders, other than in the performance of her
duties hereunder.
(b) The Executive agrees that, during the term hereof
and for one (1) year following the termination hereof, she will
not, within the United States (A) compete, directly or indirectly,
for her own account or as an employee, officer, director, partner,
joint venturer, shareholder, investor, or otherwise, with the 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 or supplemental 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.
(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 night 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 her
registered mail sent to him at his address shown on the records of
Staff Builders.
9. HANDBOOKGROUP 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. STOCK OPTIONS. The Executive will be granted stock
options to purchase 10,000 shares of SBLI which will be issued and
will vest in accordance with the terms of an Option Agreement
between the Executive and the Corporation.
11. 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.
12. 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.
13. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
14. 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.
15. 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/ David Savitsky
/s/ Cynthia Nye
Cynthia Nye
