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 NOVEMBER 30, 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 January 13, 1999 was 23,201,682 and 312,411
shares, respectively.
<PAGE>
STAFF BUILDERS, INC. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets -
November 30, 1998 and February 28, 1998 2
Condensed Statements of Consolidated
Operations - Three and Nine months ended
November 30, 1998 and 1997 3
Condensed Statements of Consolidated Cash
Flows - Nine months ended November 30, 1998
and 1997 4
Notes to Condensed Consolidated Financial
Statements 5-7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8-12
Factors Affecting the Company's Future
Performance 13-14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 15
ITEM 3. DEFAULT UPON SENIOR SECURITIES 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 16
ITEM 5. OTHER INFORMATION 16
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 17
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<TABLE>
<CAPTION>
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) NOVEMBER 30,
1998 FEBRUARY 28,
(UNAUDITED) 1998
ASSETS:
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,573 $ 1,931
Accounts receivable, net of allowance
for doubtful accounts of $7,100 and
$3,600, respectively 52,116 76,668
Tax refund receivable 1,733 -
Prepaid expenses and other current assets 4,185 4,371
Deferred income tax - 3,081
Total current assets 59,607 86,051
Fixed Assets, net of accumulated depreciation
of $10,137 and $8,187, respectively 10,581 11,548
Intangible Assets, net of accumulated
amortization of $10,696 and $10,413
respectively 28,306 26,995
Investment in unconsolidated affiliate 17,381 15,125
Other Assets 8,378 5,318
Deferred income tax - 5,364
Total $124,253 $150,401
LIABILITIES:
Current Liabilities:
Accounts payable and accrued expenses $ 23,841 $ 28,580
Medicare and Medicaid audit liabilities 26,330 7,330
Accrued payroll and related expenses 24,336 27,233
Amounts due under secured credit facility 32,672 3,156
Current portion of long-term debt 5,474 5,441
Total current liabilities 112,653 71,740
Long-Term Liabilities 8,154 36,292
Other Liabilities 14,906 4,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A Common stock - $.01 par value;
50,000,000 shares authorized; 23,200,989 and
23,009,247 outstanding at November 30,
1998 and February 28, 1998, respectively 232 230
Class B Common stock - $.01 par value;
1,554,936 shares authorized; 313,104
and 1,056,356 outstanding at November 30,
1998 and February 28, 1998, respectively 3 10
Convertible preferred stock, 10,000 shares
authorized; 666 2/3 shares
outstanding at February 28, 1998 - 1
Additional paid-in capital 69,203 73,692
Accumulated deficit (80,898) (35,564)
Total stockholders' equity (11,460) 38,369
Total $124,253 $150,401
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
November 30, November 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Service revenues
Home health care $ 73,976 $113,258 $237,122 $344,108
ATC supplemental staffing 24,160 17,514 68,230 48,295
Total service revenues 98,136 130,772 305,352 392,403
Sales of franchises and fees, net 1,273 490 2,056 977
Total revenues 99,409 131,262 307,408 393,380
Costs and Expenses:
Operating costs 65,901 84,268 205,152 252,313
General and administrative expenses 37,420 44,127 105,887 132,707
Medicare and Medicaid audit
adjustments 29,000 - 29,000 -
Amortization of intangible assets 331 789 961 2,214
Interest expense 779 873 2,481 2,579
Interest (income) (182) (327) (739) (1,008)
Other (income) expense, net (179) (244) (1,741) (543)
Restructuring costs 4,500 - 4,500 -
Total costs and expenses 137,570 129,486 345,501 388,262
Income (Loss) Before Income Taxes (38,161) 1,776 (38,093) 5,118
Provision for Income Taxes 7,209 801 7,241 2,305
Net Income (Loss) $(45,370) $ 975 $(45,334) $ 2,813
Weighted average number of common
and common equivalent shares:
Basic 22,846 23,970 23,026 23,907
Diluted 22,846 24,388 23,026 24,180
Income (loss) per common and
common equivalent share:
Basic $(1.99) $ .04 $(1.97) $ .12
Diluted $(1.99) $ .04 $(1.97) $ .12
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
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<TABLE>
<CAPTION>
STAFF BUILDERS, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
(In thousands)
Nine Months Ended
November 30,
1998 1997
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $(45,334) $ 2,813
Adjustments to reconcile net income to net
cash provided by (used in) operations:
Depreciation and amortization of fixed assets 2,977 2,823
Amortization of intangibles and other assets 961 2,214
Allowance for doubtful accounts 3,500 300
Deferred income taxes 8,445 (130)
Write-off of goodwill and intangibles 1,161 492
Write-off of fixed assets 911 -
Decrease in other long-term liabilities (68) (638)
(Earnings) of unconsolidated affiliate (2,315) (181)
Change in operating assets and liabilities:
Accounts receivable 21,052 (9,012)
Prepaid expenses and other current assets (1,541) 1,866
Accounts payable and accrued expenses (8,925) 5,837
Increase in Medicare and Medicaid audit
liabilities 29,000 -
Other assets (3,840) 153
Net cash provided by operating activities 5,984 6,537
Cash Flows from Investing Activities:
Acquisition of businesses (1,819) (16,020)
Disposition of business - (70)
Additions to fixed assets, net (724) (344)
Net cash used in investing activities (2,543) (16,434)
Cash Flows from Financing Activities:
Proceeds from Employee Stock Purchase Plan 239 411
Exercise of stock options 35 -
Purchase and retirement of common stock (4,770) -
Increase in borrowings under revolving
line of credit 4,849 1,190
Increase (decrease) in borrowings under
acquisition line of credit (1,599) 12,625
Decrease in other long-term liabilities (2,553) (3,726)
Net cash provided by (used in)
financing activities (3,799) 10,500
Increase (decrease) in Cash and Cash Equivalents (358) 603
Cash and Cash Equivalents, Beginning of Period 1,931 2,006
Cash and Cash Equivalents, End of Period $ 1,573 $ 2,609
Supplemental Data:
Cash paid for:
Interest $ 2,355 $ 2,402
Income taxes, net $(1,257) $ 1,580
Fixed assets acquired through
capital lease agreements $ 2,197 $ 2,127
Acquisition of businesses through
issuance of notes payable $ 325 $ -
<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 other than the items referred to in
Notes 2 and 3 below) necessary to present fairly the financial
position of the Company and its subsidiaries as of November
30, 1998 and February 28, 1998 and the results of operations
for the three and nine months ended November 30, 1998 and
1997. Certain prior period amounts have been reclassified to
conform with the November 1998 presentation.
The results for the three and nine months ended November 30,
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. MEDICARE AND MEDICAID AUDIT ADJUSTMENTS - 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 have become more restrictive in their
interpretation of those costs for which reimbursement will be
allowed to such providers. These regulatory agencies have
increased the number of audits performed and have applied a
more intensive degree of scrutiny in the conduct of these
audits.
During the quarter ended November 30, 1998, the Medicare
fiscal intermediary completed and issued the results of 88
audits for the fiscal year ended February 28, 1997, including
25 audits conducted on site at branch operating locations.
These results together with the results of the home office
audit for the year ended February 28, 1997, indicated an
aggregate liability of approximately $9.5 million.
Additionally, the Company has recorded an accrual for third
party liability ("TPL") to state Medicaid agencies which have
claimed that the Company did not follow proper billing
procedures in several locations. These state Medicaid
agencies have challenged the eligibility of individuals for
whom services were provided. The related claims are being
reviewed by the state agencies encompassing several prior
years for which the Company has been paid. While the Company
prevails in many of these cases, it has accrued for the loss
which is likely to have been incurred for the cases in which
it does not prevail in supporting its position. The Company
has reached a settlement for a portion of its TPL liability
-5-
and is continuing to negotiate to resolve amounts payable to
these state agencies. Based upon the Company's assessment of
these findings, its estimate of liabilities for subsequent
audit periods and the balance of liabilities previously
provided, the Company recorded aggregate expense of $29.0
million in the quarter ended November 30, 1998. The resultant
liability together with the balance of liabilities previously
established, results in an aggregate audit liability of $36.3
million for Federal and state audit adjustments. The Company
continues to appeal many audit issues and has engaged outside
professional advisors to support the Company's positions on
these issues. The Company anticipates that any resolution of
these appeals may require several years.
3. HEALTH CARE REFORM AND RELATED RESTRUCTURING COSTS - The
Balanced Budget Act of 1997 ("BBA"), enacted by Congress on
August 5, 1997, 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.
As discussed in the Company's audited financial statements as
of February 28, 1998 and for the year then ended, the Company
recorded restructuring costs of $33.4 million, which included
a write-off of goodwill and intangible assets as well as other
restructuring costs. As a result of the Company's further
operating modifications, including the additional closure and
conversion of many locations from franchise to company owned
operations, the Company has written off or reserved
approximately $4.5 million during the quarter ended November
30, 1998. Included in this amount is the write-off of goodwill
and fixed assets related to closed locations, the write-off or
reserve for receivables generated from converted franchise
locations, the accrual for employee severance payments and
other related costs.
4. EARNINGS (LOSS) 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
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 prior periods have been restated to
conform to the SFAS No. 128 requirements.
The shares used in computing basic earnings (loss) per share
were 23,025,589 and 23,907,261 shares for the nine months
-6-
ended November 30, 1998 and 1997, respectively. The shares
used in computing diluted earnings (loss) per share were
23,025,589 and 24,180,000 shares for the nine months ended
November 30, 1998 and 1997, respectively. The shares used in
computing basic earnings (loss) per share were 22,845,508 and
23,970,478 for the three months ended November 30, 1998 and
1997, respectively. The shares used in computing diluted
earnings (loss) per share were 22,845,508 and 24,388,032
shares for the three months ended November 30, 1998 and 1997,
respectively.
Since March 1998 to date, the Company purchased and retired
a total of 5,088,060 shares of its common stock at a cost of
approximately $4.8 million.
5. PROVISION FOR INCOME TAXES - The provision for income taxes
for the three and nine months ended November 30, 1998 and 1997
is based upon the Company's estimated tax provision required
for the full year. The provision for income taxes was
approximately $7.2 million for the three and nine months ended
November 30, 1998. The provision for income taxes in the nine
months ended November 30, 1998 ("the 1998 period") consists of
a valuation allowance of $20.7 million offset by tax benefits
of $13.5 million resulting from losses incurred in the 1998
period. Such valuation allowance was recorded as the Company
has no assurance of using the tax benefits resulting from
operating losses and other temporary differences. The
provision for income taxes was approximately $800 thousand and
$2.3 million for the three and nine months ended November 30,
1997, respectively. The Company's effective income tax rate
was (19%) for the 1998 period as compared to 45% in the nine
months ended November 30, 1997.
6. CONTINGENCIES - On September 20, 1995, the United States
Attorney for the Eastern District of Pennsylvania alleged that
(i) between 1987 and 1989, a corporation, substantially all
assets and liabilities of which were acquired by a subsidiary
of the Company in 1993, submitted false claims to Medicare
totaling approximately $1.5 million and (ii) officers and
employees of that corporation submitted false statements in
support of such claims; the U.S. Attorney has made a pre-
complaint civil settlement demand of approximately $4.5
million. The alleged false claims and false statements were
made before the Company acquired that corporation in 1993.
There have been significant discussions with the office of the
U. S. Attorney which the Company believes are likely to lead
to an arbitration within specified parameters.
See Part II, Item 1. for a discussion of additional legal
proceedings.
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
conclude such matters. In management's opinion, continued
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litigation or conclusion of these matters will not have a
material adverse effect on the Company's consolidated
financial position, liquidity or results of operations.
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 $31.9 million or 24.3% for the three
months ended November 30, 1998 to $99.4 million from $131.3 million
for the three months ended November 30, 1997. For the nine months
ended November 30, 1998 ("the 1998 period"), total revenues
decreased by $86.0 million or 21.9% to $307.4 million from $393.4
million for the nine months ended November 30, 1997 ("the 1997
period"). The decrease for the 1998 period was primarily due to a
decrease in home health care service revenues of $107.0 million,
including a decrease in Medicare revenues of approximately $96.0
million. The decrease in Medicare revenues resulted from the
negative impact of the Medicare Interim Payment System, enacted
under the Balanced Budget Act of 1997, which reduced the limits for
the amount of costs which are reimbursable under the Medicare
program. Offsetting this decrease was an increase of approximately
$19.9 million in revenues generated by the Company's ATC
supplemental staffing division ("ATC"). ATC opened new offices
during the 1998 period in response to increased market demand for
these services, to a total of 57 supplemental staffing service
locations as of November 30, 1998. Additionally, there was an
increase in sales of franchises and fees primarily as a result of
the sale of several locations to former franchisees in the 1998
period aggregating $1.1 million.
The Company's home health care service revenues were $74.0 million
and $113.3 million for the three months ended November 30, 1998 and
1997, and $237.1 million and $344.1 million for the nine months
ended November 30, 1998 and 1997, respectively. The following are
the Company's home health care service revenues by payment source:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 30, November 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Medicare 46.6% 60.9% 47.6% 60.7%
Medicaid and other local
government programs 33.4 22.7 31.7 22.5
Insurance and individuals 19.1 14.9 19.4 14.9
Other 0.9 1.5 1.3 1.9
Total 100.0% 100.0% 100.0% 100.0%
</TABLE>
-8-
Operating costs (the direct costs of providing services) were 67.2%
and 64.4% of service revenues for the three months ended November
30, 1998 and 1997, and 67.2% and 64.3% for the nine months ended
November 30, 1998 and 1997, respectively. The increases in
operating costs as a percentage of service revenues in the three
and nine months ended November 30, 1998 over the comparable periods
in the prior year were primarily due to increased ATC supplemental
staffing revenues, which generate lower gross margins, while home
health care revenues have decreased which generate higher gross
margins.
General and administrative expenses decreased by $6.7 million, or
15.2%, to $37.4 million for the three months ended November 30,
1998 from $44.1 million for the three months ended November 30,
1997. For the nine months ended November 30, 1998, general and
administrative expenses decreased by $26.8 million, or 20.2%, to
$105.9 million from $132.7 million for the nine months ended
November 30, 1997. The decrease for the 1998 period was due to a
reduction in those expenses related to the decline in home health
care services of approximately $33.0 million, consisting primarily
of a decrease in general and administrative expenses related to
Medicare services. This decrease was partially offset by an
increase of approximately $3.4 million in general and
administrative expenses incurred by ATC. An additional offset was
an increase of $2.8 million in the Company's provision for bad
debts for uncollectible accounts receivable generated by
franchisees. Many of these franchise locations have been converted
to company owned locations.
Medicare and Medicaid audit adjustments recorded in the three
months ended November 30, 1998 include Federal and state audit
liabilities arising from some completed audit examinations as well
as estimated liabilities for open audit periods through November
30, 1998. 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 have become more restrictive in their interpretation
of those costs for which reimbursement will be allowed to such
providers. These regulatory agencies have increased the number of
audits performed and have applied a more intensive degree of
scrutiny in the conduct of these audits.
During the three months ended November 30, 1998, the Medicare
fiscal intermediary completed and issued the results of 88 audits
for the fiscal year ended February 28, 1997, including 25 audits
conducted on site at branch operating locations. These results
together with the results of the home office audit for the year
ended February 28, 1997, indicated an aggregate liability of
approximately $9.5 million. Additionally, the Company has recorded
an accrual for third party liability ("TPL") to state Medicaid
agencies which have claimed that the Company did not follow proper
billing procedures in several locations. These state Medicaid
agencies have challenged the eligibility of individuals for whom
-9-
services were provided. The related claims are being reviewed by
the state agencies encompassing several prior years for which the
Company has been paid. While the Company prevails in many of these
cases, it has accrued for the loss which is likely to have been
incurred for those cases in which it does not prevail in supporting
its position. The Company has reached a settlement for a portion
of its TPL liability and is continuing to negotiate to resolve
amounts payable to these state agencies. Based upon the Company's
assessment of these findings, its estimate of liabilities for
subsequent audit periods and the balance of liabilities previously
provided, the Company recorded aggregate expense for Medicare and
Medicaid audit liabilities of $29.0 million in the quarter ended
November 30, 1998. The resultant liability together with the
balance of liabilities previously established, results in an
aggregate liability of $36.3 million for Federal and state audit
adjustments. The Company continues to appeal many audit issues and
has engaged outside professional advisors to support the Company's
positions on these issues. The Company anticipates that any
resolution of these appeals may require several years.
The Balanced Budget Act of 1997 ("BBA"), enacted by Congress on
August 5, 1997, 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.
As discussed in the Company's audited financial statements as of
February 28, 1998 and for the year then ended, the Company recorded
restructuring costs of $33.4 million, which included a write-off of
goodwill and intangible assets as well as other restructuring
costs. As a result of the Company's further operating
modifications, including the additional closure and conversion of
many home health care locations from franchise to company owned
operations, the Company has written off or reserved approximately
$4.5 million during the quarter ended November 30, 1998. Included
in this amount is the write-off of goodwill and fixed assets
related to closed locations, the write-off or reserve for
receivables generated from converted franchise locations, the
accrual for employee severance payments and other related costs.
Interest expense was approximately $779 thousand and $873 thousand
for the three months ended November 30, 1998 and 1997, and $2.5
million and $2.6 million for the nine months ended November 30,
1998 and 1997, respectively. Interest expense consists primarily of
interest on the Company's line of credit facility and on capital
leases.
The provision for income taxes was approximately $7.2 million for
the three and nine months ended November 30, 1998. The provision
for income taxes in the 1998 period consists of a valuation
-10-
allowance of $20.7 million offset by tax benefits of $13.5 million
resulting from losses incurred in the 1998 period. Such valuation
allowance was recorded as the Company has no assurance of using the
tax benefits resulting from operating losses and other temporary
differences. The provision for income taxes was approximately $800
thousand and $2.3 million for the three and nine months ended
November 30, 1997. The Company's effective income tax rate was
(19%) for the 1998 period as compared to 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. On January 14, 1999, the bank
provided the Company with written notification that, in its
opinion, the Company's non-compliance with certain financial
covenants constitutes an event of default under the terms of the
credit facility agreement. Those covenants require the Company to
maintain a minimum level of net worth and a maximum ratio of senior
debt to net worth, failures of which resulted from losses incurred
for the three and nine months ended November 30, 1998. On January
14, 1999, the Company had borrowed $39.4 million under the credit
facility, including $29.7 million and $9.7 million under the
revolving line of credit and the acquisition line of credit,
respectively. The bank has advised the Company that while it has
no obligation to provide additional advances as a result of the
non-compliance with certain financial covenants, it is willing to
consider making additional advances to the Company under such
conditions as it may determine.
In connection with the bank's notice of default, the maximum
aggregate amount which can be borrowed under the credit facility
was reduced from $50 million to $40 million. Additionally, the
bank increased the rate of interest on all borrowings to 2.0% over
the prevailing prime lending rate on its revolving line of credit
and 2.75% over the prevailing prime lending rate on its acquisition
line of credit (such prime lending rate being 7.75% as of January
14, 1999). The Company has classified its outstanding borrowings
as a current liability as of November 30, 1998 because the bank has
the option to declare all borrowings under the credit facility to
become immediately due and payable. At November 30, 1998 and
February 28, 1998, the Company borrowed $32.7 million and $29.4
million, respectively, under the credit facility.
The Company's working capital deficiency was $(53.0) million at
November 30, 1998. Current liabilities at November 30, 1998
include $26.3 million for Medicare and Medicaid audit liabilities,
$32.7 of outstanding borrowings under the secured credit facility
and $5.5 million for the current portion of other debt obligations.
While the Company cannot accurately determine the required payment
dates for audit liabilities, it has included $10 million thereof in
other long term liabilities based upon its estimate of when
payments would likely become due. In order to pay its current
liabilities in the normal course of business as well as to pay its
liabilities to the Medicare and Medicaid agencies as they become
due, the Company is investigating alternative sources of funding.
-11-
In addition to cash provided from operations, the Company is
pursuing various strategies, including but not limited to, the sale
of certain assets including certain lines of its business,
additional equity financing, negotiating with alternative lending
sources, deferred payment terms for Medicare and Medicaid audit
liabilities as well as for any repayments of Medicare periodic
interim payment(s) ("PIP") and deferred payment terms for other
creditors. Further, the Company is implementing an intensified
collection effort and has established deferred payment plans for
the repayment of a portion of excess PIP made to the Company by the
Federal government. As of January 14, 1999, approximately $17
million of excess PIP amounts have been received based upon the
Company's historical volume of business over current levels of
business. Included in this amount is $9.1 million which is
scheduled to be paid through June 1999. The Company is seeking to
secure a deferred payment schedule for the remaining balance. The
Company has made timely payments for all PIP repayments through
January 14, 1999 and is negotiating with the Federal government for
further extended payment schedules. However, there can be no
assurance that these actions will be successful to provide adequate
funds for its current level of operations and to pay its past-due
obligations.
Since March 1998 to date, the Company purchased and retired a total
of 5,088,060 shares of its common stock at a cost of approximately
$4.8 million.
Impact of Year 2000 Computer Issue
The year 2000 issue is the result of computer programs which were
written using two digits rather than four to define the applicable
year. The Company is currently adapting its computer systems to
accommodate the year 2000. The Company is utilizing both internal
and external resources to reprogram or replace its computer
software for year 2000 modifications. The Company anticipates that
modifications to existing software and investments being made in
new software will provide compliance with the requirements to
handle the year 2000 issue with no significant operational
concerns. However, there is no guarantee that the Company's
expected results will be achieved and actual results could differ
materially from those expected results. Specific factors that
might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area.
System maintenance and modification costs to existing software will
be expensed as incurred. The costs associated with externally
developed computer software that is year 2000 compliant will be
capitalized and amortized over the software's estimated useful
life. The estimated cost to replace existing software applications
consisting of Lawson Software and HBO Corporation systems,
including modifications to accommodate the year 2000, is
approximately $25 million, including the cost of implementation,
which will be capitalized and amortized
over the life of the software.
-12-
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
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; Medicare
audit adjustments; the failure to reach an agreement with Medicare
and Medicaid agencies for deferred payment terms; and changes in
the laws and interpretations of laws or regulations relating to the
health care industry.
As part of its participation in Federal and state funded health
care programs, the Company is routinely audited in connection with
its services rendered under these programs. In connection with
recent increased pressure from the Federal government to reduce
health care expenditures, the scope of audits has significantly
increased. For example, in fiscal year 1998 the Medicare fiscal
intermediary conducted 25 field audits, whereas in fiscal 1997 it
conducted nine field audits. Additionally, the interpretation and
application of regulatory guidelines has become more restrictive.
Based upon information received during the quarter ended November
30, 1998, the Company increased its accrual established for
Medicare and Medicaid audit adjustments by $29.0 million, which is
deemed adequate for periods through November 30, 1998. 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 will 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
-13-
franchised locations, with the likely result that there will be
fewer locations by the end of its current fiscal year.
On January 14, 1999, the bank provided the Company with written
notification that, in its opinion, the Company's non-compliance
with certain financial covenants constitutes an event of default
under the terms of the credit facility agreement. The Company has
not complied with those covenants which require a minimum level of
net worth and a maximum ratio of senior debt to net worth. The
Bank has advised the Company that while it has no obligation to
provide additional advances as a result of the non-compliance with
certain financial covenants, it is willing to consider making
additional advances to the Company under such conditions as it may
determine. However, there is no assurance that the bank will
provide additional advances, as needed.
-14-
<PAGE>
Part II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - The Company has had several lawsuits
filed against it by former franchisees; however, it believes that
the claims alleged in these lawsuits are wholly without merit and
it intends to vigorously defend the suits.
On June 18, 1998, 6100 Cleveland, Inc., Orsinger Enterprises, Inc.,
and First Choice Medical Staffing, Inc., three former corporate
home care and staffing franchisees of the Company in Ohio,
commenced an action in the United States District Court for the
Northern District of Ohio, Eastern Division against the Company's
subsidiary, Staff Builders International, Inc. The action sought
to recover damages and other relief alleging unpaid royalties,
wrongful termination by the Company of the Franchise Agreement
between the Company and the Plaintiffs, breach of contract and
other damages. The Company answered the complaint and moved for a
change of venue. On December 1, 1998, Plaintiffs, without the
required permission of the Court, filed a Second Amended Complaint
alleging, in addition to the allegations contained in the prior
Complaint, claims under the Racketeer Influenced and Corrupt
Organizations Act ("RICO"), claiming a series of deliberate and
illegal actions designed to put certain Staff Builders franchisees
out of business, as well as claims arising under New York and Ohio
loss of business opportunity statutes. The Second Amended
Complaint seeks money damages in excess of $25 million and a claim
for treble damages on the RICO claim. The Second Amended Complaint
added as defendants Staff Builders Services, Inc., and four
executive officers of the Company. The Company has moved to strike
the Second Amended Complaint on the basis that it was filed in
violation of the Rules of Civil Procedure and has made a motion to
dismiss that pleading which challenges the legal sufficiency of the
RICO claims and other claims which allege a loss of business
opportunities under New York and Ohio laws.
On December 21, 1998, H.L.N. Corporation, Frontlines Homecare,
Inc., E.T.H.L., Inc., Phoenix Homelife Nursing, Inc., and Pacific
Rim Healthcare Services, Inc., former home care franchisees of the
Company for the territory comprising certain counties in and around
Los Angeles, California and their holding company, instituted an
action against the Company's subsidiaries, Staff Builders, Inc.,
Staff Builders International, Inc., Staff Builders Services, Inc.,
and certain executive officers of the Company in the Superior Court
for the State of California, County of Los Angeles. The action was
removed to United States District Court for the Central District of
California on December 22, 1998. Plaintiffs filed a First Amended
Complaint in the Central District on January 8, 1999 to challenge
the termination of the four franchise agreements between the
Company and certain of the named plaintiffs, seeking damages for
violations of California franchise law, breach of contract, fraud
and deceit, unfair trade practices, claims under the RICO,
negligence, intentional interference with contractual rights,
declaratory and injunctive relief and a request for an accounting.
Plaintiffs seek an unspecified amount of damages.
-15-
ITEM 3. DEFAULT UPON SENIOR SECURITIES
The Company has not attained the specified level of net worth and
senior debt to net worth ratios required by the financial covenants
under its credit facility agreement. As a result of the non-
compliance with these covenants, the bank has notified the Company
that, in its opinion, such non-compliance constitutes an event of
default under the terms of the credit facility agreement. This
non-compliance is primarily due to the Medicare and Medicaid audit
adjustments and restructuring costs recorded in the quarter ended
November 30, 1998. While the Company is currently negotiating with
the bank, it has classified its outstanding borrowings as a current
liability as of November 30, 1998 because the bank has the option
to declare all borrowings under the credit facility to become
immediately due and payable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on October
14, 1998. At the Annual Meeting, the Stockholders of the Company
voted (i) to elect Dr. Bernard J. Firestone and Mr. Donald Meyers
as Class B Directors of the Company each with a three-year term
ending with the 2001 Annual Meeting; (ii) to approve the issuance
of 4,269,820 shares of Class A Common Stock to Stephen Savitsky and
David Savitsky in exchange for all of their shares of Class A
Preferred Stock (the "Issuance"); (iii) to approve the 1998 Stock
Option Plan; and (iv) to approve the 1998 Employee Stock Purchase
Plan. 26,142,736 votes were cast in favor of Dr. Firestone's
election as a Class B Director and authority was withheld with
respect to 1,596,192 votes on such matter. 26,142,736 votes were
cast in favor of Mr. Meyers election as a Class B Director and
authority was withheld with respect to 1,596,192 votes on such
matter. 14,847,996 votes were cast for the Issuance, 3,679,465
were cast against the Issuance and 116,006 votes abstained. There
were 9,095,461 broker non-votes with respect to the Issuance.
12,389,859 votes were cast for the approval of the 1998 Stock
Option Plan, 6,432,303 votes were cast against the approval of the
1998 Stock Option Plan and 102,546 votes abstained. There were
8,814,220 broker non-votes with respect to the 1998 Stock Option
Plan. 17,014,431 votes were cast for the approval of the 1998
Employee Stock Purchase Plan, 2,232,990 votes were cast against the
approval of the 1998 Employee Stock Purchase Plan and 106,910 votes
abstained. There were 8,384,597 broker non-votes with respect to
the 1998 Employee Stock Purchase Plan.
ITEM 5. OTHER INFORMATION - The Company received notification
from the staff of the NASDAQ Stock Market advising the Company that
unless the minimum bid price of the Company's common stock reached
$1 per share, the Company's common stock would no longer be
eligible for quotation on NASDAQ. The Company has requested an
oral hearing to review the NASDAQ staff findings which has been
scheduled for January 29, 1999.
-16-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Reports on Form 8-K
The following Form 8-K was filed by the Company during the quarter
for which this report is filed:
I. Form 8-K dated October 29, 1998 containing Item 5 (Other
Events).
(B) Exhibits
Exhibit No. Description
10.1 Stock Option Agreement, dated December 1,
1998, under the Company's 1993 Stock Option
Plan, between the Company and Stephen
Savitsky.
10.2 Stock Option Agreement, dated December 1,
1998, under the Company's 1994 Performance-
Based Stock Option Plan,between the Company
and Stephen Savitsky.
10.3 Stock Option Agreement, dated December 1,
1998, under the Company's 1993 Stock Option
Plan, between the Company and David Savitsky.
10.4 Stock Option Agreement, dated December 1,
1998, under the Company's 1994 Performance-
Based Stock Option Plan, between the Company
and David Savitsky.
10.5 Stock Option Agreement, dated December 1,
1998, under the Company's 1994 Performance-
Based Stock Option Plan, between the Company
and Dale R. Clift.
10.6 Stock Option Agreement, dated December 1,
1998, under the Company's 1994 Performance-
Based Stock Option Plan, between the Company
and Dale R. Clift.
10.7 Stock Option Agreement, dated December 1,
1998, under the Company's 1993 Stock Option
Plan, between the Company and Sandra
Parshall.
10.8 Stock Option Agreement, dated December 1,
1998, under the Company's 1994 Performance-
Based Stock Option Plan, between the Company
and Sandra Parshall.
10.9 Stock Option Agreement, dated December 1,
1998, under the Company's 1993 Stock Option
Plan, between the Company and Edward
Teixeira.
-17-
10.10 Stock Option Agreement, dated December 1,
1998, under the Company's 1994 Performance-
Based Stock Option Plan, between the Company
and Edward Teixeira.
10.11 Stock Option Agreement, dated December 1,
1998, under the Company's 1994 Performance-
Based Stock Option Plan, between the Company
and Edward Teixeira.
10.12 Stock Option Agreement, dated December 1,
1998, under the Company's 1998 Stock Option
Plan, between the Company and Edward
Teixeira.
10.13 First Amendment to Employment Agreement,
dated as of December 1, 1998, to the
Employment Agreement between the Company and
Dale R. Clift.
10.14 Agreement and Release dated December 24, 1998
between the Company and Cynthia Nye.
-18-<PAGE>
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: January 19, 1999 By: /s/ Stephen Savitsky
Stephen Savitsky
Chairman of the Board and
Chief Executive Officer
Dated: January 19, 1999 By: /s/ Dale R. Clift
Dale R. Clift
Executive Vice President,
Finance
Chief Operating Officer and
Chief Financial Officer
Dated: January 19, 1999 By: /s/ Willard T. Derr
Willard T. Derr
Senior Vice President,
Corporate Controller
Principal Accounting Officer
-19-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> NOV-30-1998
<CASH> 1,573
<SECURITIES> 0
<RECEIVABLES> 52,116
<ALLOWANCES> 7,100
<INVENTORY> 0
<CURRENT-ASSETS> 59,607
<PP&E> 20,718
<DEPRECIATION> 10,137
<TOTAL-ASSETS> 124,253
<CURRENT-LIABILITIES> 112,653
<BONDS> 0
0
0
<COMMON> 235
<OTHER-SE> (11,695)
<TOTAL-LIABILITY-AND-EQUITY> 124,253
<SALES> 0
<TOTAL-REVENUES> 307,408
<CGS> 0
<TOTAL-COSTS> 205,152
<OTHER-EXPENSES> 31,981<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,481
<INCOME-PRETAX> (38,093)
<INCOME-TAX> 7,241
<INCOME-CONTINUING> (45,334)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45,334)
<EPS-PRIMARY> (1.97)
<EPS-DILUTED> (1.97)
<FN>
<F1>Includes Medicare, Medicaid audit adjustments ($29,000) and restructuring
costs ($4,500)
</FN>
</TABLE>
EXHIBIT
10.1<PAGE>
STAFF BUILDERS, INC.
1993 STOCK OPTION PLAN
December 1, 1998
Stephen Savitsky
Re: Grant of Nonqualifying Stock Options
to Purchase Shares of the Class A Common
Stock of Staff Builders, Inc.
Dear Steve:
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 fifth 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/ David Savitsky
David Savitsky
Accepted and Agreed to:
/s/ Stephen Savitsky
Stephen Savitsky
Schedule A
Nonqualifying Stock Options
Date of Grant: December 1, 1998
Name of Optionee: Stephen Savitsky
Number of Shares as to
which the Option is Granted: 397,000
Option Price per Share: $.55
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
198,500 December 1, 1999
198,500 December 1, 2000
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
EXHIBIT
10.2
<PAGE>
STAFF BUILDERS, INC.
December 1, 1998
To the Person Named as
Optionee on Schedule A
to this Agreement
Re: Grant of Nonqualifying Stock Options
to Purchase Shares of the Common
Stock of Staff Builders, Inc.
Dear Optionee:
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(1) of the Corporation's 1994 Performance-
Based Stock Option Plan (the "Plan"). The stock option this
Agreement grants is a Nonqualifying Stock Option, as set forth in
Section 5 below. This Agreement incorporates all terms, conditions
and provisions of the Plan.
2. Stock Option.
(a) 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 in Paragraph (b) of this Section. 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 between six months and 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.
(b) The Stock Option shall vest and become
exercisable pursuant to Section 7(c) of the plan.
3. Exercise of Stock Option. The Optionee may
To the Person Named as
Optionee on Schedule A
Date
Page 2
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. 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. The Optionee must exercise the Stock Option
on or before December 1, 2008 after which it will lapse.
4. Purchase Price. The option price per share shall
be the Option Price as defined in Section 7(b) of the Plan.
5. Tax Treatment of the Stock Option. The following
is a summary of the federal income tax consequences of the issuance
and exercise of nonqualifying stock options under the Plan to
optionees and to the Corporation under the Internal Revenue Code of
1986, as amended (the "Code"). The following discussion does not
purport to be complete and does not cover, among other things,
state and local tax treatment of participation in the Plan.
Furthermore, differences in optionees' financial situations may
cause federal, state and local tax consequences of participation in
the Plan to vary. Therefore, each optionee in the Plan is urged to
consult his own accountant, legal counsel or other financial
advisor regarding the particular tax consequences to him of
participation in the Plan, including the applicability and effect
of any state or local tax laws, and of changes in applicable tax
laws.
The grant of a nonqualifying stock option will not result
in the recognition of taxable income to the optionee for federal
income tax purposes or in deduction to the Corporation. Upon the
exercise of a nonqualifying stock option, the optionee will
recognize ordinary income for federal income tax purposes in an
amount equal to the excess of the fair market value of the shares
of Common Stock of the Corporation over the exercise price. Such
amount may be deductible by the Corporation if it complies with
applicable reporting requirements.
If an optionee disposes of any shares of Class A Common
Stock received upon the exercise of a nonqualifying stock option,
such optionee will recognize a capital gain or loss for federal
income tax purposes equal to the difference between the amount
realized on the disposition of such shares and the fair market
value of such shares at the time the option was exercised. The
To the Person Named as
Optionee on Schedule A
Date
Page 3
gain or loss will be either long-term or short-term, depending on
the holding period. The Corporation will not be entitled to any
tax deduction in connection with such disposition of shares.
6. 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.
7. 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; provided, however, that pursuant to Section
7(g) of the Plan, upon settlement of the Stock Option, it shall be
a condition to the obligation of the Corporation that the Optionee
pay to the Corporation such amount as the Corporation may request
for the purpose of satisfying its liability to withhold federal,
state or local income or other taxes.
8. 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 Corporation has been obtained. All shares of Class
A Common Stock purchased pursuant to this Agreement shall be
purchased for investment by the Optionee.
9. 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.
10. 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.
/s/ David Savitsky
By: David Savitsky
Accepted and Agreed to:
/s/ Stephen Savitsky
Stephen Savitsky
SCHEDULE A
Nonqualifying Stock Options
Date of Grant: December 1, 1998
Name of Optionee: Stephen Savitsky
Number of Shares as to
which the Option is Granted: 1,383,691
Option Price per Share: $.59
Additional Vesting Provision: All options will automatically
become exercisable on December 1, 2004 regardless of the market
price of the Class A Common Stock.
SCHEDULE B
NOTICE OF ELECTION TO EXERCISE
STAFF BUILDERS, INC.
1981 Marcus Avenue
Lake Success, New York 11042
Attention:
Gentlemen:
I hereby irrevocably elect to exercise the Stock Option
held by me under the 1994 Performance-Based Stock Option Plan of
Staff Builders, Inc. (the "Company") to purchase shares of the
Class A Common Stock, par value $.01 per share, of the Company at
an option price of $ per share.
Enclosed is a check, payable to the order of the Company,
in the amount of $ .
A completed Exercise of Stock Option Payment Remittance
Form is attached.
Please issue certificate(s) for
shares each and, if applicable, a separate certificate for the
remaining shares in my name as shown below.
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
Company.
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.
1994
PERFORMANCE-BASED 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. Class A Common
Stock at an option price of $ per share, for a total
purchase price of $ , I enclose in full payment of the
purchase price a check in the amount of $ made payable
to Staff Builders, Inc.
Dated:
Signature
Type Name
EXHIBIT
10.3<PAGE>
STAFF BUILDERS, INC.
1993 STOCK OPTION PLAN
December 1, 1998
David Savitsky
Re: Grant of Nonqualifying Stock Options
to Purchase Shares of the Class A Common
Stock of Staff Builders, Inc.
Dear David:
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 fifth 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
Stephen Savitsky
Accepted and Agreed to:
/s/ David Savitsky
David Savitsky
Schedule A
Nonqualifying Stock Options
Date of Grant: December 1, 1998
Name of Optionee: David Savitsky
Number of Shares as to
which the Option is Granted: 397,000
Option Price per Share: $.55
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
198,500 December 1, 1999
198,500 December 1, 2000
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
EXHIBIT
10.4<PAGE>
STAFF BUILDERS, INC.
December 1, 1998
To the Person Named as
Optionee on Schedule A
to this Agreement
Re: Grant of Nonqualifying Stock Options
to Purchase Shares of the Common
Stock of Staff Builders, Inc.
Dear Optionee:
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(1) of the Corporation's 1994 Performance-
Based Stock Option Plan (the "Plan"). The stock option this
Agreement grants is a Nonqualifying Stock Option, as set forth in
Section 5 below. This Agreement incorporates all terms, conditions
and provisions of the Plan.
2. Stock Option.
(a) 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 in Paragraph (b) of this Section. 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 between six months and 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.
(b) The Stock Option shall vest and become
exercisable pursuant to Section 7(c) of the plan.
3. Exercise of Stock Option. The Optionee may
To the Person Named as
Optionee on Schedule A
Date
Page 2
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. 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. The Optionee must exercise the Stock Option
on or before December 1, 2008 after which it will lapse.
4. Purchase Price. The option price per share shall
be the Option Price as defined in Section 7(b) of the Plan.
5. Tax Treatment of the Stock Option. The following
is a summary of the federal income tax consequences of the issuance
and exercise of nonqualifying stock options under the Plan to
optionees and to the Corporation under the Internal Revenue Code of
1986, as amended (the "Code"). The following discussion does not
purport to be complete and does not cover, among other things,
state and local tax treatment of participation in the Plan.
Furthermore, differences in optionees' financial situations may
cause federal, state and local tax consequences of participation in
the Plan to vary. Therefore, each optionee in the Plan is urged to
consult his own accountant, legal counsel or other financial
advisor regarding the particular tax consequences to him of
participation in the Plan, including the applicability and effect
of any state or local tax laws, and of changes in applicable tax
laws.
The grant of a nonqualifying stock option will not result
in the recognition of taxable income to the optionee for federal
income tax purposes or in deduction to the Corporation. Upon the
exercise of a nonqualifying stock option, the optionee will
recognize ordinary income for federal income tax purposes in an
amount equal to the excess of the fair market value of the shares
of Common Stock of the Corporation over the exercise price. Such
amount may be deductible by the Corporation if it complies with
applicable reporting requirements.
If an optionee disposes of any shares of Class A Common
Stock received upon the exercise of a nonqualifying stock option,
such optionee will recognize a capital gain or loss for federal
income tax purposes equal to the difference between the amount
realized on the disposition of such shares and the fair market
value of such shares at the time the option was exercised. The
To the Person Named as
Optionee on Schedule A
Date
Page 3
gain or loss will be either long-term or short-term, depending on
the holding period. The Corporation will not be entitled to any
tax deduction in connection with such disposition of shares.
6. 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.
7. 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; provided, however, that pursuant to Section
7(g) of the Plan, upon settlement of the Stock Option, it shall be
a condition to the obligation of the Corporation that the Optionee
pay to the Corporation such amount as the Corporation may request
for the purpose of satisfying its liability to withhold federal,
state or local income or other taxes.
8. 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 Corporation has been obtained. All shares of Class
A Common Stock purchased pursuant to this Agreement shall be
purchased for investment by the Optionee.
9. 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.
10. 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.
/s/ Stephen Savitsky
By: Stephen Savistky
Accepted and Agreed to:
/s/ David Savitsky
David Savitsky
SCHEDULE A
Nonqualifying Stock Options
Date of Grant: December 1, 1998
Name of Optionee: David Savitsky
Number of Shares as to
which the Option is Granted: 1,383,691
Option Price per Share: $.59
Additional Vesting Provision: All options will automatically
become exercisable on December 1, 2004 regardless of the market
price of the Class A Common Stock.
SCHEDULE B
NOTICE OF ELECTION TO EXERCISE
STAFF BUILDERS, INC.
1981 Marcus Avenue
Lake Success, New York 11042
Attention:
Gentlemen:
I hereby irrevocably elect to exercise the Stock Option
held by me under the 1994 Performance-Based Stock Option Plan of
Staff Builders, Inc. (the "Company") to purchase shares of the
Class A Common Stock, par value $.01 per share, of the Company at
an option price of $ per share.
Enclosed is a check, payable to the order of the Company,
in the amount of $ .
A completed Exercise of Stock Option Payment Remittance
Form is attached.
Please issue certificate(s) for
shares each and, if applicable, a separate certificate for the
remaining shares in my name as shown below.
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
Company.
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.
1994
PERFORMANCE-BASED 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. Class A Common
Stock at an option price of $ per share, for a total
purchase price of $ , I enclose in full payment of the
purchase price a check in the amount of $ made payable
to Staff Builders, Inc.
Dated:
Signature
Type Name
EXHIBIT
10.5<PAGE>
STAFF BUILDERS, INC.
December 1, 1998
To the Person Named as
Optionee on Schedule A
to this Agreement
Re: Grant of Nonqualifying Stock Options
to Purchase Shares of the Common
Stock of Staff Builders, Inc.
Dear Optionee:
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(1) of the Corporation's 1994 Performance-
Based Stock Option Plan (the "Plan"). The stock option this
Agreement grants is a Nonqualifying Stock Option, as set forth in
Section 5 below. This Agreement incorporates all terms, conditions
and provisions of the Plan.
2. Stock Option.
(a) 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 in Paragraph (b) of this Section. 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 between six months and 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.
(b) The Stock Option shall vest and become
exercisable pursuant to Section 7(c) of the plan.
3. Exercise of Stock Option. The Optionee may
To the Person Named as
Optionee on Schedule A
Date
Page 2
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. 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. The Optionee must exercise the Stock Option
on or before December 1, 2008 after which it will lapse.
4. Purchase Price. The option price per share shall
be the Option Price as defined in Section 7(b) of the Plan.
5. Tax Treatment of the Stock Option. The following
is a summary of the federal income tax consequences of the issuance
and exercise of nonqualifying stock options under the Plan to
optionees and to the Corporation under the Internal Revenue Code of
1986, as amended (the "Code"). The following discussion does not
purport to be complete and does not cover, among other things,
state and local tax treatment of participation in the Plan.
Furthermore, differences in optionees' financial situations may
cause federal, state and local tax consequences of participation in
the Plan to vary. Therefore, each optionee in the Plan is urged to
consult his own accountant, legal counsel or other financial
advisor regarding the particular tax consequences to him of
participation in the Plan, including the applicability and effect
of any state or local tax laws, and of changes in applicable tax
laws.
The grant of a nonqualifying stock option will not result
in the recognition of taxable income to the optionee for federal
income tax purposes or in deduction to the Corporation. Upon the
exercise of a nonqualifying stock option, the optionee will
recognize ordinary income for federal income tax purposes in an
amount equal to the excess of the fair market value of the shares
of Common Stock of the Corporation over the exercise price. Such
amount may be deductible by the Corporation if it complies with
applicable reporting requirements.
If an optionee disposes of any shares of Class A Common
Stock received upon the exercise of a nonqualifying stock option,
such optionee will recognize a capital gain or loss for federal
income tax purposes equal to the difference between the amount
realized on the disposition of such shares and the fair market
value of such shares at the time the option was exercised. The
To the Person Named as
Optionee on Schedule A
Date
Page 3
gain or loss will be either long-term or short-term, depending on
the holding period. The Corporation will not be entitled to any
tax deduction in connection with such disposition of shares.
6. 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.
7. 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; provided, however, that pursuant to Section
7(g) of the Plan, upon settlement of the Stock Option, it shall be
a condition to the obligation of the Corporation that the Optionee
pay to the Corporation such amount as the Corporation may request
for the purpose of satisfying its liability to withhold federal,
state or local income or other taxes.
8. 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 Corporation has been obtained. All shares of Class
A Common Stock purchased pursuant to this Agreement shall be
purchased for investment by the Optionee.
9. 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.
10. 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.
/s/ Stephen Savitsky
By: Stephen Savitsky
Accepted and Agreed to:
/s/ Dale R. Clift
Dale R. Clift
SCHEDULE A
Nonqualifying Stock Options
Date of Grant: December 1, 1998
Name of Optionee: Dale R. Clift
Number of Shares as to
which the Option is Granted: 33,335
Option Price per Share: $.53
Additional Vesting Provision: All options will automatically
become exercisable on December 1, 2004 regardless of the market
price of the Class A Common Stock.
SCHEDULE B
NOTICE OF ELECTION TO EXERCISE
STAFF BUILDERS, INC.
1981 Marcus Avenue
Lake Success, New York 11042
Attention:
Gentlemen:
I hereby irrevocably elect to exercise the Stock Option
held by me under the 1994 Performance-Based Stock Option Plan of
Staff Builders, Inc. (the "Company") to purchase shares of the
Class A Common Stock, par value $.01 per share, of the Company at
an option price of $ per share.
Enclosed is a check, payable to the order of the Company,
in the amount of $ .
A completed Exercise of Stock Option Payment Remittance
Form is attached.
Please issue certificate(s) for
shares each and, if applicable, a separate certificate for the
remaining shares in my name as shown below.
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
Company.
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.
1994
PERFORMANCE-BASED 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. Class A Common
Stock at an option price of $ per share, for a total
purchase price of $ , I enclose in full payment of the
purchase price a check in the amount of $ made payable
to Staff Builders, Inc.
Dated:
Signature
Type Name
EXHIBIT
10.6<PAGE>
STAFF BUILDERS, INC.
December 1, 1998
To the Person Named as
Optionee on Schedule A
to this Agreement
Re: Grant of Nonqualifying Stock Options
to Purchase Shares of the Common
Stock of Staff Builders, Inc.
Dear Optionee:
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(1) of the Corporation's 1994 Performance-
Based Stock Option Plan (the "Plan"). The stock option this
Agreement grants is a Nonqualifying Stock Option, as set forth in
Section 5 below. This Agreement incorporates all terms, conditions
and provisions of the Plan.
2. Stock Option.
(a) 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 in Paragraph (b) of this Section. 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 between six months and 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.
(b) The Stock Option shall vest and become
exercisable pursuant to Section 7(c) of the plan.
3. Exercise of Stock Option. The Optionee may
To the Person Named as
Optionee on Schedule A
Date
Page 2
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. 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. The Optionee must exercise the Stock Option
on or before December 1, 2008 after which it will lapse.
4. Purchase Price. The option price per share shall
be the Option Price as defined in Section 7(b) of the Plan.
5. Tax Treatment of the Stock Option. The following
is a summary of the federal income tax consequences of the issuance
and exercise of nonqualifying stock options under the Plan to
optionees and to the Corporation under the Internal Revenue Code of
1986, as amended (the "Code"). The following discussion does not
purport to be complete and does not cover, among other things,
state and local tax treatment of participation in the Plan.
Furthermore, differences in optionees' financial situations may
cause federal, state and local tax consequences of participation in
the Plan to vary. Therefore, each optionee in the Plan is urged to
consult his own accountant, legal counsel or other financial
advisor regarding the particular tax consequences to him of
participation in the Plan, including the applicability and effect
of any state or local tax laws, and of changes in applicable tax
laws.
The grant of a nonqualifying stock option will not result
in the recognition of taxable income to the optionee for federal
income tax purposes or in deduction to the Corporation. Upon the
exercise of a nonqualifying stock option, the optionee will
recognize ordinary income for federal income tax purposes in an
amount equal to the excess of the fair market value of the shares
of Common Stock of the Corporation over the exercise price. Such
amount may be deductible by the Corporation if it complies with
applicable reporting requirements.
If an optionee disposes of any shares of Class A Common
Stock received upon the exercise of a nonqualifying stock option,
such optionee will recognize a capital gain or loss for federal
income tax purposes equal to the difference between the amount
realized on the disposition of such shares and the fair market
value of such shares at the time the option was exercised. The
To the Person Named as
Optionee on Schedule A
Date
Page 3
gain or loss will be either long-term or short-term, depending on
the holding period. The Corporation will not be entitled to any
tax deduction in connection with such disposition of shares.
6. 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.
7. 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; provided, however, that pursuant to Section
7(g) of the Plan, upon settlement of the Stock Option, it shall be
a condition to the obligation of the Corporation that the Optionee
pay to the Corporation such amount as the Corporation may request
for the purpose of satisfying its liability to withhold federal,
state or local income or other taxes.
8. 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 Corporation has been obtained. All shares of Class
A Common Stock purchased pursuant to this Agreement shall be
purchased for investment by the Optionee.
9. 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.
10. 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.
/s/ Stephen Savitsky
By: Stephen Savitsky
Accepted and Agreed to:
/s/ Dale R. Clift
Dale R. Clift
SCHEDULE A
Nonqualifying Stock Options
Date of Grant: December 1, 1998
Name of Optionee: Dale R. Clift
Number of Shares as to
which the Option is Granted: 333,332
Option Price per Share: $.53
Additional Vesting Provision: All options will automatically
become exercisable on December 1, 2004 regardless of the market
price of the Class A Common Stock.
SCHEDULE B
NOTICE OF ELECTION TO EXERCISE
STAFF BUILDERS, INC.
1981 Marcus Avenue
Lake Success, New York 11042
Attention:
Gentlemen:
I hereby irrevocably elect to exercise the Stock Option
held by me under the 1994 Performance-Based Stock Option Plan of
Staff Builders, Inc. (the "Company") to purchase shares of the
Class A Common Stock, par value $.01 per share, of the Company at
an option price of $ per share.
Enclosed is a check, payable to the order of the Company,
in the amount of $ .
A completed Exercise of Stock Option Payment Remittance
Form is attached.
Please issue certificate(s) for
shares each and, if applicable, a separate certificate for the
remaining shares in my name as shown below.
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
Company.
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.
1994
PERFORMANCE-BASED 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. Class A Common
Stock at an option price of $ per share, for a total
purchase price of $ , I enclose in full payment of the
purchase price a check in the amount of $ made payable
to Staff Builders, Inc.
Dated:
Signature
Type Name
EXHIBIT
10.7<PAGE>
STAFF BUILDERS, INC.
1993 STOCK OPTION PLAN
December 1, 1998
Sandra Parshall
Re: Grant of Qualifying Stock Options
to Purchase Shares of the Class A
Common Stock of Staff Builders, Inc.
Dear Sandy:
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 an
Incentive Stock Option, as set forth in Section 5 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 one 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 in part, except by will or by the laws of
descent and distribution. Except as described in the Plan, the
Optionee alone may exercise the Stock Option. 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
Stephen Savitsky
Accepted and Agreed to:
/s/ Sandra Parshall
Sandra Parshall
Schedule A
Qualifying Stock Option
Date of Grant: December 1, 1998
Name of Optionee: Sandra Parshall
Number of Shares as to
which the Option is Granted: 25,000
Option Price per Share: $.50
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)
8,334 December 1, 1998
8,333 June 1, 1999
8,333 December 1, 1999
Schedule B
NOTICE OF ELECTION TO EXERCISE
[
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. Class A 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
EXHIBIT
10.8<PAGE>
STAFF BUILDERS, INC.
December 1, 1998
To the Person Named as
Optionee on Schedule A
to this Agreement
Re: Grant of Nonqualifying Stock Options
to Purchase Shares of the Common
Stock of Staff Builders, Inc.
Dear Optionee:
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(1) of the Corporation's 1994 Performance-
Based Stock Option Plan (the "Plan"). The stock option this
Agreement grants is a Nonqualifying Stock Option, as set forth in
Section 5 below. This Agreement incorporates all terms, conditions
and provisions of the Plan.
2. Stock Option.
(a) 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 in Paragraph (b) of this Section. 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 between six months and 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.
(b) The Stock Option shall vest and become
exercisable pursuant to Section 7(c) of the plan.
3. Exercise of Stock Option. The Optionee may
To the Person Named as
Optionee on Schedule A
Date
Page 2
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. 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. The Optionee must exercise the Stock Option
on or before December 1, 2008 after which it will lapse.
4. Purchase Price. The option price per share shall
be the Option Price as defined in Section 7(b) of the Plan.
5. Tax Treatment of the Stock Option. The following
is a summary of the federal income tax consequences of the issuance
and exercise of nonqualifying stock options under the Plan to
optionees and to the Corporation under the Internal Revenue Code of
1986, as amended (the "Code"). The following discussion does not
purport to be complete and does not cover, among other things,
state and local tax treatment of participation in the Plan.
Furthermore, differences in optionees' financial situations may
cause federal, state and local tax consequences of participation in
the Plan to vary. Therefore, each optionee in the Plan is urged to
consult his own accountant, legal counsel or other financial
advisor regarding the particular tax consequences to him of
participation in the Plan, including the applicability and effect
of any state or local tax laws, and of changes in applicable tax
laws.
The grant of a nonqualifying stock option will not result
in the recognition of taxable income to the optionee for federal
income tax purposes or in deduction to the Corporation. Upon the
exercise of a nonqualifying stock option, the optionee will
recognize ordinary income for federal income tax purposes in an
amount equal to the excess of the fair market value of the shares
of Common Stock of the Corporation over the exercise price. Such
amount may be deductible by the Corporation if it complies with
applicable reporting requirements.
If an optionee disposes of any shares of Class A Common
Stock received upon the exercise of a nonqualifying stock option,
such optionee will recognize a capital gain or loss for federal
income tax purposes equal to the difference between the amount
realized on the disposition of such shares and the fair market
value of such shares at the time the option was exercised. The
To the Person Named as
Optionee on Schedule A
Date
Page 3
gain or loss will be either long-term or short-term, depending on
the holding period. The Corporation will not be entitled to any
tax deduction in connection with such disposition of shares.
6. 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.
7. 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; provided, however, that pursuant to Section
7(g) of the Plan, upon settlement of the Stock Option, it shall be
a condition to the obligation of the Corporation that the Optionee
pay to the Corporation such amount as the Corporation may request
for the purpose of satisfying its liability to withhold federal,
state or local income or other taxes.
8. 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 Corporation has been obtained. All shares of Class
A Common Stock purchased pursuant to this Agreement shall be
purchased for investment by the Optionee.
9. 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.
10. 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.
/s/Stephen Savitsky
By: Stephen Savitsky
Accepted and Agreed to:
/s/ Sandra Parshall
Sandra Parshall
SCHEDULE A
Nonqualifying Stock Options
Date of Grant: December 1, 1998
Name of Optionee: Sandra Parshall
Number of Shares as to
which the Option is Granted: 50,000
Option Price per Share: $.53
Additional Vesting Provision: All options will automatically
become exercisable on December 1, 2004 regardless of the market
price of the Class A Common Stock.
SCHEDULE B
NOTICE OF ELECTION TO EXERCISE
STAFF BUILDERS, INC.
1981 Marcus Avenue
Lake Success, New York 11042
Attention:
Gentlemen:
I hereby irrevocably elect to exercise the Stock Option
held by me under the 1994 Performance-Based Stock Option Plan of
Staff Builders, Inc. (the "Company") to purchase shares of the
Class A Common Stock, par value $.01 per share, of the Company at
an option price of $ per share.
Enclosed is a check, payable to the order of the Company,
in the amount of $ .
A completed Exercise of Stock Option Payment Remittance
Form is attached.
Please issue certificate(s) for
shares each and, if applicable, a separate certificate for the
remaining shares in my name as shown below.
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
Company.
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.
1994
PERFORMANCE-BASED 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. Class A Common
Stock at an option price of $ per share, for a total
purchase price of $ , I enclose in full payment of the
purchase price a check in the amount of $ made payable
to Staff Builders, Inc.
Dated:
Signature
Type Name
EXHIBIT
10.9
<PAGE>
STAFF BUILDERS, INC.
1993 STOCK OPTION PLAN
December 1, 1998
Edward Teixiera
Re: Grant of Qualifying 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 an
Incentive Stock Option, as set forth in Section 5 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 one 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 in part, except by will or by the laws of
descent and distribution. Except as described in the Plan, the
Optionee alone may exercise the Stock Option. 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
Qualifying Stock Option
Date of Grant: December 1, 1998
Name of Optionee: Edward Teixeira
Number of Shares as to
which the Option is Granted: 10,000
Option Price per Share: $.50
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 December 1, 1998
3,333 December 1, 1999
3,333 December 1, 2000
Schedule B
NOTICE OF ELECTION TO EXERCISE
[
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. Class A 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
EXHIBIT
10.10<PAGE>
STAFF BUILDERS, INC.
December 1, 1998
To the Person Named as
Optionee on Schedule A
to this Agreement
Re: Grant of Nonqualifying Stock Options
to Purchase Shares of the Common
Stock of Staff Builders, Inc.
Dear Optionee:
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(1) of the Corporation's 1994 Performance-
Based Stock Option Plan (the "Plan"). The stock option this
Agreement grants is a Nonqualifying Stock Option, as set forth in
Section 5 below. This Agreement incorporates all terms, conditions
and provisions of the Plan.
2. Stock Option.
(a) 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 in Paragraph (b) of this Section. 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 between six months and 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.
(b) The Stock Option shall vest and become
exercisable pursuant to Section 7(c) of the plan.
3. Exercise of Stock Option. The Optionee may
To the Person Named as
Optionee on Schedule A
Date
Page 2
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. 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. The Optionee must exercise the Stock Option
on or before December 1, 2008 after which it will lapse.
4. Purchase Price. The option price per share shall
be the Option Price as defined in Section 7(b) of the Plan.
5. Tax Treatment of the Stock Option. The following
is a summary of the federal income tax consequences of the issuance
and exercise of nonqualifying stock options under the Plan to
optionees and to the Corporation under the Internal Revenue Code of
1986, as amended (the "Code"). The following discussion does not
purport to be complete and does not cover, among other things,
state and local tax treatment of participation in the Plan.
Furthermore, differences in optionees' financial situations may
cause federal, state and local tax consequences of participation in
the Plan to vary. Therefore, each optionee in the Plan is urged to
consult his own accountant, legal counsel or other financial
advisor regarding the particular tax consequences to him of
participation in the Plan, including the applicability and effect
of any state or local tax laws, and of changes in applicable tax
laws.
The grant of a nonqualifying stock option will not result
in the recognition of taxable income to the optionee for federal
income tax purposes or in deduction to the Corporation. Upon the
exercise of a nonqualifying stock option, the optionee will
recognize ordinary income for federal income tax purposes in an
amount equal to the excess of the fair market value of the shares
of Common Stock of the Corporation over the exercise price. Such
amount may be deductible by the Corporation if it complies with
applicable reporting requirements.
If an optionee disposes of any shares of Class A Common
Stock received upon the exercise of a nonqualifying stock option,
such optionee will recognize a capital gain or loss for federal
income tax purposes equal to the difference between the amount
realized on the disposition of such shares and the fair market
value of such shares at the time the option was exercised. The
To the Person Named as
Optionee on Schedule A
Date
Page 3
gain or loss will be either long-term or short-term, depending on
the holding period. The Corporation will not be entitled to any
tax deduction in connection with such disposition of shares.
6. 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.
7. 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; provided, however, that pursuant to Section
7(g) of the Plan, upon settlement of the Stock Option, it shall be
a condition to the obligation of the Corporation that the Optionee
pay to the Corporation such amount as the Corporation may request
for the purpose of satisfying its liability to withhold federal,
state or local income or other taxes.
8. 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 Corporation has been obtained. All shares of Class
A Common Stock purchased pursuant to this Agreement shall be
purchased for investment by the Optionee.
9. 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.
10. 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.
/s/ Stephen Savitsky
By: Stephen Savitsky
Accepted and Agreed to:
/s/ Ed Teixeira
Ed Teixeira
SCHEDULE A
Nonqualifying Stock Options
Date of Grant: December 1, 1998
Name of Optionee: Ed Teixeira
Number of Shares as to
which the Option is Granted: 50,000
Option Price per Share: $.53
Additional Vesting Provision: All options will automatically
become exercisable on December 1, 2004 regardless of the market
price of the Class A Common Stock.
SCHEDULE B
NOTICE OF ELECTION TO EXERCISE
STAFF BUILDERS, INC.
1981 Marcus Avenue
Lake Success, New York 11042
Attention:
Gentlemen:
I hereby irrevocably elect to exercise the Stock Option
held by me under the 1994 Performance-Based Stock Option Plan of
Staff Builders, Inc. (the "Company") to purchase shares of the
Class A Common Stock, par value $.01 per share, of the Company at
an option price of $ per share.
Enclosed is a check, payable to the order of the Company,
in the amount of $ .
A completed Exercise of Stock Option Payment Remittance
Form is attached.
Please issue certificate(s) for
shares each and, if applicable, a separate certificate for the
remaining shares in my name as shown below.
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
Company.
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.
1994
PERFORMANCE-BASED 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. Class A Common
Stock at an option price of $ per share, for a total
purchase price of $ , I enclose in full payment of the
purchase price a check in the amount of $ made payable
to Staff Builders, Inc.
Dated:
Signature
Type Name
EXHIBIT
10.11<PAGE>
STAFF BUILDERS, INC.
December 1, 1998
To the Person Named as
Optionee on Schedule A
to this Agreement
Re: Grant of Nonqualifying Stock Options
to Purchase Shares of the Common
Stock of Staff Builders, Inc.
Dear Optionee:
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(1) of the Corporation's 1994 Performance-
Based Stock Option Plan (the "Plan"). The stock option this
Agreement grants is a Nonqualifying Stock Option, as set forth in
Section 5 below. This Agreement incorporates all terms, conditions
and provisions of the Plan.
2. Stock Option.
(a) 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 in Paragraph (b) of this Section. 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 between six months and 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.
(b) The Stock Option shall vest and become
exercisable pursuant to Section 7(c) of the plan.
3. Exercise of Stock Option. The Optionee may
To the Person Named as
Optionee on Schedule A
Date
Page 2
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. 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. The Optionee must exercise the Stock Option
on or before December 1, 2008 after which it will lapse.
4. Purchase Price. The option price per share shall
be the Option Price as defined in Section 7(b) of the Plan.
5. Tax Treatment of the Stock Option. The following
is a summary of the federal income tax consequences of the issuance
and exercise of nonqualifying stock options under the Plan to
optionees and to the Corporation under the Internal Revenue Code of
1986, as amended (the "Code"). The following discussion does not
purport to be complete and does not cover, among other things,
state and local tax treatment of participation in the Plan.
Furthermore, differences in optionees' financial situations may
cause federal, state and local tax consequences of participation in
the Plan to vary. Therefore, each optionee in the Plan is urged to
consult his own accountant, legal counsel or other financial
advisor regarding the particular tax consequences to him of
participation in the Plan, including the applicability and effect
of any state or local tax laws, and of changes in applicable tax
laws.
The grant of a nonqualifying stock option will not result
in the recognition of taxable income to the optionee for federal
income tax purposes or in deduction to the Corporation. Upon the
exercise of a nonqualifying stock option, the optionee will
recognize ordinary income for federal income tax purposes in an
amount equal to the excess of the fair market value of the shares
of Common Stock of the Corporation over the exercise price. Such
amount may be deductible by the Corporation if it complies with
applicable reporting requirements.
If an optionee disposes of any shares of Class A Common
Stock received upon the exercise of a nonqualifying stock option,
such optionee will recognize a capital gain or loss for federal
income tax purposes equal to the difference between the amount
realized on the disposition of such shares and the fair market
value of such shares at the time the option was exercised. The
To the Person Named as
Optionee on Schedule A
Date
Page 3
gain or loss will be either long-term or short-term, depending on
the holding period. The Corporation will not be entitled to any
tax deduction in connection with such disposition of shares.
6. 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.
7. 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; provided, however, that pursuant to Section
7(g) of the Plan, upon settlement of the Stock Option, it shall be
a condition to the obligation of the Corporation that the Optionee
pay to the Corporation such amount as the Corporation may request
for the purpose of satisfying its liability to withhold federal,
state or local income or other taxes.
8. 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 Corporation has been obtained. All shares of Class
A Common Stock purchased pursuant to this Agreement shall be
purchased for investment by the Optionee.
9. 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.
10. 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.
/s/ Stephen Savitsky
By: Stephen Savistky
Accepted and Agreed to:
/s/ Ed Teixeira
Ed Teixeira
SCHEDULE A
Nonqualifying Stock Options
Date of Grant: December 1, 1998
Name of Optionee: Ed Teixeira
Number of Shares as to
which the Option is Granted: 27,800
Option Price per Share: $.53
Additional Vesting Provision: All options will automatically
become exercisable on December 1, 2004 regardless of the market
price of the Class A Common Stock.
SCHEDULE B
NOTICE OF ELECTION TO EXERCISE
STAFF BUILDERS, INC.
1981 Marcus Avenue
Lake Success, New York 11042
Attention:
Gentlemen:
I hereby irrevocably elect to exercise the Stock Option
held by me under the 1994 Performance-Based Stock Option Plan of
Staff Builders, Inc. (the "Company") to purchase shares of the
Class A Common Stock, par value $.01 per share, of the Company at
an option price of $ per share.
Enclosed is a check, payable to the order of the Company,
in the amount of $ .
A completed Exercise of Stock Option Payment Remittance
Form is attached.
Please issue certificate(s) for
shares each and, if applicable, a separate certificate for the
remaining shares in my name as shown below.
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
Company.
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.
1994
PERFORMANCE-BASED 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. Class A Common
Stock at an option price of $ per share, for a total
purchase price of $ , I enclose in full payment of the
purchase price a check in the amount of $ made payable
to Staff Builders, Inc.
Dated:
Signature
Type Name
EXHIBIT
10.12
<PAGE>
STAFF BUILDERS, INC.
1998 STOCK OPTION PLAN
December 1, 1998
Ed Teixeira
Re: Grant of Qualifying Stock Options
to Purchase Shares of the Class A
Common Stock of Staff Builders, Inc.
Dear Optionee:
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 1998 Stock Option
Plan (the "Plan"). The stock option this Agreement grants is an
Incentive Stock Option, as set forth in Section 5 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 one 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 in part, except by will or by the laws of
descent and distribution. Except as described in the Plan, the
Optionee alone may exercise the Stock Option. 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
Stephen Savitsky
Accepted and Agreed to:
/s/ Ed Teixeira
Ed Teixeira
Schedule A
Qualifying Stock Option
Date of Grant: December 1, 1998
Name of Optionee: Ed Teixeira
Number of Shares as to
which the Option is Granted: 15,000
Option Price per Share: $.50
Exercisability of Options:
Number of Shares Target Price of
as to which the Class A Common Stock
Optionee May Exercise at which Optionee
the Option Granted May Exercise the
Hereby Option Granted Hereby
3000 $1.50
1500 $2.00
1500 $2.50
1500 $3.00
1500 $3.50
1500 $4.00
1500 $4.50
1500 $5.00
1500 $6.00
All options will automatically become exercisable on December 1,
2004 regardless of the market price of the Class A Common Stock.
Schedule B
NOTICE OF ELECTION TO EXERCISE
[
Attention:
Gentlemen:
I hereby irrevocably elect to exercise the Stock Option
held by me under the 1998 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.
1998
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. Class A 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
EXHIBIT
10.13<PAGE>
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This First Amendment ('Amendment') to an Employment Agreement
('Agreement'), dated as of February 9, 1998 by and between STAFF
BUILDERS INC., a New York Corporation ("Staff Builders" or the
"Corporation"), and DALE R. CLIFT ("Executive") is Effective
December 1,1998.
NOW, THEREFORE, in consideration of their mutual promises and
other adequate consideration, Staff Builders and the Executive do
hereby agree as follows:
I. Paragraphs 1,3,4,5,6, and 10 of the Agreement are hereby
deleted in their entirety and are replaced by the following
Paragraphs:
1. EMPLOYMENT. Staff Builders will employ the Executive
as Chief Financial Officer and Chief Operating Officer, in
accordance with the terms and provisions of this Agreement.
2. TERM. This Agreement shall be effective upon execution
by Staff Builders and the Executive, and shall remain in effect
until February 28, 2002, unless terminated earlier pursuant to
the terms hereof.
3. COMPENSATION.
Salary. The Executive shall be paid a salary of $300,000
per annum during the term hereof, payable in weekly
installments. The Executive's salary will be reviewed
by Staff Builders on December 1, 1999, December 1,
2000 and December 1, 2001.
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. The Executive may enroll
in the Staff Builders health program effective upon
the first date of employment.
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.
Relocation Expenses. Staff Builders will reimburse
the Executive for relocation expenses incurred
during the first six (6) months of employment
directly related to the Executive's move to the Long
Island area. Reimbursable expenses will include:
packing and shipping of household goods, Realtor
fees and closing costs related to the sale of the
Executive's current residence. The total amount of
relocation expenses to be reimbursed to the
Executive will not exceed $40,000.
Car Allowance. The Executive will be paid a car
allowance of $725 per month.
Misc. Expense. In connection with the Executive's start
of employment at Staff Builders, the Executive will
be paid a one time payment of $18,000, on or before
February 27, 1998.
Vacation. The Executive shall be entitled to three (3)
weeks of paid vacation during each twelve (12)
month period of employment during the term.
Incentive Compensations. The Executive is entitled to
participate in the TIP TOP Program or other Program
as designated by the CEO or Board.
Deferred Compensation. The Executive is entitled to
participate in the Deferred Compensation Program as
described in the plan documents.
Employee Stock Purchase Plan. The Executive is entitled
to participate in the Employee Stock Purchase Plan
as described in the plan documents.
4. TERMINATION: RIGHTS AND OBLIGATIONS UPON TERMINATION.
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.
If, as a result of the Executive's incapacity due to
physical or mental illness, whether or not job
related, the Executive is absent from his duties
hereunder for 90 consecutive days, or an aggregate of
120 days during the Term, the Executive's employment
hereunder and this Agreement shall terminate. In such
event, the Executive shall be entitled only to
compensation and expenses accrued and unpaid as at the
date of termination of the Executive's employment.
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 fails to fulfill in a material aspect, when
taken as a whole, his obligations under this
Agreement, has breached any material term or condition
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.
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 equal to 2.99 times the 'average
annual base salary' paid to him at the same rate of
pay in effect at the date of the Change of Control
to be paid in weekly installments for the three (3)
year period following such discharge or resignation.
For the purposes of this Section 5, 'average annual
base salary' shall mean the average of Employee's
annual income in the nature of compensation payable
by the Company and includible in gross income over
the three most recent taxable years ending before
the Change of Control. Anything contained herein to
the contrary notwithstanding, for a Change of
Control occurring before 2001, 'average annual base
salary' shall be equal to the average salary paid
the employee as follows:
Years Considered in Calculating
Year of Change in Control Average Base Salary
1998-1999 1998
1999 1998
2000 1999
2001 2000
2002 2001
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.
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.
The obligations of the Corporation and the Executive
pursuant to this Section 5 shall survive the
termination of this Agreement.
5. 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: Stephen Savitsky, President
or
if to the Executive:
Dale R. Clift
38 The Hollows North
Muttontown, NY 11732
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.
6. STOCK OPTIONS. The Executive will be granted stock
options to purchase 700,000 shares of Staff Builders, Inc.
(Delaware) stock, which will be issued and will vest in accordance
with the terms of an Option Agreement between the Executive and the
Corporation.
7. Except as specifically amended by this Amendment the
terms and conditions of the Agreement remain unchanged.
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, CEO
/s/ Dale R. Clift
Dale R. Clift
EXHIBIT
10.14<PAGE>
Agreement and Release
WHEREAS, the parties to this Agreement and Release,
STAFF BUILDERS, INC. , a New York Corporation ("Staff Builders"
or the "Corporation") and CYNTHIA NYE, an individual who resides
at 1 Prospect Rd., Centerport, New York 11721 ("NYE") wish to
terminate the Employment Agreement between the parties, annexed
hereto as Exhibit A; and
WHEREAS, for good and valuable consideration and other
adequate considerations between the parties; and
WHEREAS, each party to this Agreement and Release, Staff
Builders and NYE have consulted with legal counsel;
NOW THEREFORE, the parties hereby agree as follows:
1. Termination.
NYE's employment with Staff Builders as Sr. Vice
President - Corporate Support Services is terminated effective
December 31, 1998, and except as provided herein and except for the
terms of the Employment Agreement that survive its termination, the
Employment Agreement executed as of October 1, 1997 shall be
terminated.
2. Salary.
a. Staff Builders will pay to NYE 14 months salary in
weekly increments at the rate required by her Employment Agreement
for said period. See Exhibit A, paragraph 4:
January 1, 1999 - February 28, 2000 NYE will receive
Thirteen Thousand Two Hundred Eighty Four Dollars and Sixty
Eight Cents ($13,284.68) per month on the first day of each
month. [To be paid in weekly increments.]
b. If NYE has not received any income from any other
source, including any consulting revenue, or otherwise secured
alternative employment by February 28, 2000, Staff Builders will
pay to NYE an additional two months salary at the following rate:
March 1, 2000 - April 30, 2000 NYE will receive Thirteen
Thousand Two Hundred Eighty Four Dollars and Sixty Eight Cents
($13,284.68) per month, paid in weekly increments.
2(c) NYE agrees that during the term hereof, she will
provide consulting services as requested by Staff Builders
representatives.
3. Medical Benefits.
Staff Builders will continue to provide medical benefits
to NYE during the entire duration of this Agreement as provided for
in her Employment Agreement on the terms and conditions as such
benefits are offered presently.
4. Paid Vacation.
NYE shall be paid all accrued vacation through December
31, 1998 in one lump sum at the time this Agreement is executed.
5. Non-Discrimination.
NYE understands that there are various state and federal
laws that prohibit employment discrimination on the basis of age,
race, sex, religion, national origin, marital status and disability
and that these laws are enforced by the courts and various
government agencies. By signing this Agreement and Release, NYE
intends to give up any rights she may have under these laws or any
other laws with respect to her employment or the termination of her
employment with or by STAFF BUILDERS and acknowledges that STAFF
BUILDERS has not (a) discriminated against her; (b) breached any
express or implied contract with her; or (c) otherwise acted
unlawfully towards her.
6. Release.
a. As a material inducement to the parties to enter
into this Agreement and Release, NYE covenants not to sue and
hereby irrevocably and unconditionally releases, 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 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 tortious, 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. NYE represents that she has received complete
satisfaction of any and all claims, whether known, suspected or
unknown, that she may have or have had against any of the Releasees
as of the date of this Agreement and Release, and she hereby waives
any and all relief for such claims not explicitly provided for
herein.
b. NYE affirms that she is not aware of any outstanding
administrative or judicial claims, charges, lawsuits or proceedings
of any kind against any of the Releasees to which she is a party or
which were filed on her behalf, and promises not to commence any
proceeding or action against STAFF BUILDERS except to enforce this
Agreement and Release. NYE further agrees not only to release and
discharge the Releasees of and from any and all claims which she
could make on her own behalf, but also those which may have been or
may be made by any other person or organization on her behalf as of
the date of this Agreement and Release.
7. Surrender of Stock Options.
NYE hereby agrees to surrender any and all Stock Options of
STAFF BUILDERS, Inc. (Delaware) ('SBD') granted to her pursuant to
the 1983 Incentive Stock Option Plan, the 1986 Non-Qualified Stock
Option Plan, the 1993 Stock Option Plan and the 1994 Performance-
Based Stock Option Plan (as more particularly described in Exhibit
B), or otherwise, including any options which are vested as of the
date hereof, within 90 days of this Agreement. Within the 90 day
period, NYE may exercise any such options.
8. Confidentiality.
a. NYE acknowledges that as a result of her employment
by STAFF BUILDERS, she has had access to confidential, proprietary
business information belonging to STAFF BUILDERS, as those terms
are defined in paragraph 7 of the Employment Agreement, and hereby
agrees not us use or disclose of any such information personally or
for the benefit of Others. NYE also agrees (1) not to disclose to
anyone any such confidential and proprietary information; and (2)
to comply with any and all provisions of her Employment Agreement
that, by their terms, survive the termination of her employment.
On the date she signs this agreement and Release, NYE further
promises and agrees to return to STAFF BUILDERS any and all
documents or diskettes now in her possession which she received,
sent, generated or had access to in the course of her employment by
STAFF BUILDERS, together with any and all property of STAFF
BUILDERS she has in her possession.
b. She will not disclose, either directly or
indirectly, in any manner whatsoever, any specific information,
fact or opinion of any kind regarding the terms of this Agreement
and Release, to any person or organization, including, but not
limited to, members of the press and media, present and former
officers, employees (except with respect to certain restrictions
upon her concerning future solicitation of Staff Builders'
employees) and agents of the Releasees, and other members of the
public, except to her husband, accountants, lawyers or as otherwise
directed by law, whom shall be bound by this paragraph to the same
extent as NYE and whose violation of this paragraph shall be deemed
to constitute a violation by NYE as if she, herself had personally
violated this paragraph. NYE shall specifically advise her
husband, that he must comply with this paragraph and shall
specifically advise him that a violation by her or him of this
paragraph shall be deemed to be a violation by NYE.
9. Forfeiture.
If in violation of paragraphs 5, 6 or 7 above, NYE 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, or in the event NYE violates the provisions
contained in paragraphs 9 or 10 herein, NYE agrees to forego any
claim to any additional monies or benefits she might otherwise have
a claim to receive pursuant to this Agreement and Release or
otherwise. NYE further agrees that the release set forth in
paragraphs 5, 6 and 7 remains in full force and effect, and that
the balance of this Agreement and Release provides adequate
consideration for such Release.
10. Professional References and Non-Disparagement.
a. Staff Builders will provide positive professional
references for NYE including her dates of service, position held
and duties and responsibilities. Staff Builders will not provide
any negative references to any inquiries by NYE's potential
employers nor will Staff Builders fail to respond to inquiries by
NYE's potential employers; and
b. NYE agrees that subsequent to the date of this
Agreement and Release she shall make no verbal or written
statements of any kind regarding Staff Builders or the Releasees
to any person or organization, including, but not limited to,
members of the press and media, present and former officers,
employees and agents of Staff Builders, and other members of the
public, which denigrate, disparage or defame any of the Releasees,
their services, capabilities or reputations.
11. Removal of Non-Compete Clause.
By mutual consent paragraph 7(b) of Exhibit A entitled
'Confidentiality Obligations: Non-Competition by Executive' is null
and void and without legal effect. All remaining subsections of
said paragraph 7 shall remain in full force and effect.
12. Non-Waiver.
The waiver by any party of a breach of any provision
hereof shall not operate or be construed as a waiver of any
subsequent breach by any Party.
13. Entire Agreement.
This Agreement and Release and the exhibits attached
hereto contain the full agreement between NYE and STAFF BUILDERS,
and may not be modified, altered or changed except upon the express
prior written consent of both NYE and STAFF BUILDERS.
14. Consultation with Legal Counsel.
NYE affirms that she has been given at least 21 days to
consider this Agreement and Release and that she has voluntarily
chosen not to wait 21 days to execute this Agreement and Release.
Her choice to execute this Agreement and Release was knowing and
voluntary and made after consultation with her counsel. NYE
understands that she may revoke her agreement hereto by so
notifying STAFF BUILDERS' General Counsel in writing within seven
(7) days after she signs this Agreement and Release.
15. New York Law/Jurisdiction.
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. NYE 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.
16. Construction.
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.
17. Severability.
The invalidity or unenforceability of any provision of
this Agreement and Release shall in no way affect the validity or
enforceability of any other provision, or any part thereof.
IN WITNESS WHEREOF, Staff Builders and NYE have
executed this Agreement and Release as of this 24th day of
December, 1998.
/s/ Cynthia Nye
CYNTHIA NYE
STAFF BUILDERS
By: /s/ David Savitsky
David Savitsky
Title: President
