1
EXHIBIT 10.3
TRANSITIONAL SERVICES AGREEMENT
THIS TRANSITIONAL SERVICES AGREEMENT (the "AGREEMENT") is
made as of ____ , 1999 between STAFF BUILDERS, INC., a Delaware corporation
("STAFF BUILDERS"), and TENDER LOVING CARE HEALTH CARE SERVICES, INC., a
Delaware corporation ("TLC").
RECITALS
WHEREAS, the Board of Directors of Staff Builders has
determined that it is in the best interest of Staff Builders and its
shareholders to separate its home health care business from the remainder of
its business;
WHEREAS, Staff Builders and TLC recognize that it is
advisable for TLC to continue providing certain administrative and other
services to Staff Builders until Staff Builders has had a reasonable
opportunity to evaluate its continued need for the services and to investigate
other sources of the services; and
WHEREAS, this Agreement is entered into pursuant to the
Distribution Agreement dated as of _____ , 1999 between Staff Builders and TLC
(the "DISTRIBUTION AGREEMENT") (All capitalized terms used and not otherwise
defined herein shall have the meanings set forth in the Distribution
Agreement);
NOW, THEREFORE, in consideration of the mutual covenants and
agreements made herein, the parties hereto agree as follows:
SECTION 1 - SERVICES
1.1 Services. Beginning on the Distribution Date (as defined
in the Distribution Agreement) TLC, through its corporate staff, will provide
or otherwise make available to Staff Builders, upon the reasonable request of
Staff Builders, certain general corporate services, including but not limited
to accounting and audit, tax, legal, financial and human resources, and arrange
for administration of insurance and employee benefit programs. The services may
include the following:
(a) ACCOUNTING RELATED SERVICES. Provision of general
financial advice and services including, without limitation, assistance with
respect to matters such as cash management and financial controls.
(b) TAX RELATED SERVICES. Preparation of Federal tax returns,
preparation of state and local tax returns (including income tax returns), tax
research and planning and assistance on tax audits (Federal, state and local)
in accordance with the terms of the Tax Allocation Agreement.
2
(c) LEGAL RELATED SERVICES. Provision of certain legal
services, including without limitation, assistance in the preparation of
reports under the Securities Exchange Act of 1934, as amended, proxy statements
in connection with meetings of shareholders and offering documents used in
connection with the sale of franchises.
(d) INSURANCE AND EMPLOYEE BENEFIT RELATED SERVICES.
Assistance, if requested, with respect to the liability, property, casualty,
and other normal business insurance coverage. Administration of employee
benefit plans and insurance programs sponsored by Staff Builders. Filing of all
required reports under ERISA for employee benefit plans sponsored by Staff
Builders.
(e) ADDITIONAL SERVICES. Services in addition to those
enumerated in subsections 1.1(a) through 1.1(d) above as may be agreed upon by
Staff Builders and TLC from time to time.
SECTION 2 - CHARGES AND PAYMENTS
2.1 CHARGES FOR GENERAL SERVICES. For performing general
services of the types described above in Section 1 TLC will charge Staff
Builders 110% of the costs actually incurred (including overhead and general
administrative expenses). To the extent such direct costs cannot be separately
measured, TLC shall charge Staff Builders for a portion of the total cost
determined according to a method reasonably selected by TLC and approved by
Staff Builders.
The charges for services pursuant to subsection 2.1 above
will be determined and payable no less frequently than quarterly. The charges
will be due when billed and shall be paid no later than thirty (30) days from
the date of billing.
2.2 CHARGES FOR THIRD-PARTY SERVICES. When services of the
type described above in Section 1 are provided, upon the mutual agreement of
Staff Builders and TLC, by outside providers or, in connection with the
provision of such services out-of-pocket costs are incurred such as travel, the
cost thereof will be paid by Staff Builders. To the extent that Staff Builders
is billed by the provider directly, Staff Builders shall pay the xxxx directly.
If TLC is billed for such services, TLC may pay the xxxx and charge Staff
Builders the amount of the xxxx or forward the xxxx to Staff Builders for
payment by Staff Builders.
2.3 Staff Builders shall pay any sales, use or similar tax,
excluding any income tax or taxes levied with respect to gross receipts,
payable by Staff Builders or TLC with respect to amounts payable under this
Agreement.
SECTION 3 - GENERAL OBLIGATIONS
3.1 STAFF BUILDERS' DIRECTORS AND OFFICERS. Nothing contained
herein will be construed to relieve the directors or officers of Staff Builders
from the performance of their respective duties or to limit the exercise of
their powers in accordance with
2
3
the Amended and Restated Articles of Incorporation or the Amended and Restated
Bylaws of Staff Builders or in accordance with any applicable statute or
regulation.
3.2 LIABILITIES. In furnishing Staff Builders with management
advice and other services as herein provided, neither TLC nor any of its
officers, directors, employees or agents shall be liable to Staff Builders or
its creditors or shareholders for errors of judgment or for anything except
willful malfeasance, bad faith or gross negligence in the performance of their
duties or reckless disregard of their obligations and duties under the terms of
this Agreement. The provisions of this Agreement are for the sole benefit of
Staff Builders and TLC and will not, except to the extent otherwise expressly
stated herein, inure to the benefits of any third party.
Staff Builders shall indemnify and hold harmless TLC and each
of its officers, directors, employees or agents against any claims of any kind
arising out of or relating to this Agreement or services provided hereunder,
except for claims caused by the willful malfeasance, bad faith or gross
negligence of the person seeking such indemnification.
3.3 TERM. The initial term of this Agreement shall begin on
the date of this Agreement and continue until the first anniversary date
hereof. This Agreement shall automatically renew at the end of the initial term
or any renewal term for successive three-month-terms until terminated by either
party upon written notice to the other party at least ninety (90) days prior to
the expiration of the initial term or any renewal terms of this Agreement.
3.4 STANDARD OF CARE. TLC will use (and will cause its
Subsidiaries to use) reasonable efforts in providing the scheduled services to
Staff Builders and will perform such services with the same degree of care,
skill and prudence customarily exercised for its own operations; provided,
however, that TLC shall not be required to devote full time and attention to
the performance of its duties under this Agreement, but shall devote only so
much of its time and attention as it deems reasonable or necessary to perform
the services required hereunder. To the extent possible, such services will be
substantially identical in nature and quality to the services currently
available to Staff Builders. TLC has the right to reasonably supplement,
modify, substitute or otherwise alter such services from time to time in a
manner consistent with supplements, modifications, substitutions or alterations
made with respect to similar services provided or otherwise made available by
TLC to its wholly-owned subsidiaries. In providing such services, TLC will not
be responsible for the accuracy, completeness or timeliness of any advice or
service or any return, report, filing or other document which it provides,
prepares or assists in preparing, except to the extent that any inaccuracy,
incompleteness or untimeliness arises from TLC's gross negligence or willful
misconduct. Staff Builders and TLC will cooperate in planning the scope and
timing of services provided by TLC under this Agreement in order to minimize or
eliminate interference with the conduct of TLC's business activities. If such
interference is unavoidable, TLC will apportion, in its sole discretion, the
available services in a fair and reasonable manner. Notwithstanding anything
set forth in this Section 3.4 neither TLC nor any of its officers, directors,
employees or agents shall have any liability under this Agreement except to the
extent provided in Section 3.2.
3.5 INDEPENDENCE. Except for those individuals named on
Schedule A hereto, all employees and representatives of TLC providing the
scheduled services to Staff Builders will be deemed for purposes of all
compensation and employee benefits to be
3
4
employees or representatives of TLC and not employees or representatives of
Staff Builders. In performing such services, such employees and representatives
will be under the direction, control and supervision of TLC (and not of Staff
Builders) and TLC will have the sole right to exercise all authority with
respect to the employment (including termination of employment), assignment and
compensation of such employees and representatives.
3.6 NON-EXCLUSIVITY. Nothing in this Agreement obligates
Staff Builders to use TLC to provide the specified services or precludes Staff
Builders from obtaining the identified services, in whole or in part, from its
own employees or from providers other than TLC.
3.7 CONFIDENTIALITY. TLC agrees to hold, and to use its best
efforts to cause its employees and representatives to hold, in confidence all
confidential information concerning Staff Builders, furnished to or obtained by
TLC after the Distribution Date in the course of providing the identified
services, in a manner consistent with TLC's standard policies with respect to
the preservation and disclosure of confidential information concerning TLC and
its subsidiaries.
SECTION 4 - MISCELLANEOUS
4.1 NOTICES. Notices hereunder shall be effective if given in
writing and delivered or mailed, postage prepaid, by registered or certified
mail to:
STAFF BUILDERS, INC.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx, President
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx, President
4.2 APPLICABLE LAW. This Agreement shall be governed by and
construed under the laws of the State of New York applicable to contracts made
and to be performed therein.
4.3 PARAGRAPH TITLES. The paragraph titles used in this
Agreement are for convenience of reference and will not be considered in the
interpretation or construction of any of the provisions thereof.
4.4 AMENDMENTS; WAIVERS. This Agreement may be amended or
modified only in writing executed on behalf of Staff Builders and TLC. No
waiver shall operate to waive any further or future act and no failure to
object or forbearance shall operate as a waiver.
4
5
4.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns, provided that this Agreement and the rights and
obligations contained herein or in any exhibit or schedule hereto shall not be
assignable, in whole or in part, without the prior written consent of the
parties hereto and any attempt to effect any such assignment without such
consent shall be void.
4.6 ARBITRATION.
(a) All disputes or differences of any kind or nature between
or among the parties (such parties being referred to individually as a
"DISPUTING PARTY," and _____, together, as the "DISPUTING PARTIES") arising out
of or in any way relating to this Agreement or the transactions contemplated
hereby, including issues of arbitrability, and including, without limitation,
any dispute between the parties under Section 3.2, which the parties are unable
to resolve themselves shall be submitted to and resolved by arbitration before
a single arbitrator in accordance with the commercial arbitration rules of the
American Arbitration Association (the "AAA"). Such arbitrator shall have
substantial professional experience with regard to corporate legal matters.
(b) The arbitrator shall consider the dispute at issue in New
York, New York, at a mutually agreed upon time within sixty (60) days (or such
longer period as may be acceptable to the Disputing Parties or as directed by
the arbitrator) of the designation of the arbitrator. The arbitration
proceeding shall be held in accordance with the rules for commercial
arbitration of the AAA in effect on the date of the initial request by the
Disputing Party, that gave rise to the dispute to be arbitrated (as such rules
are modified by the terms of this Agreement or may be further modified by
mutual agreement of the Disputing Parties) and shall include an opportunity for
the parties to conduct discovery in advance of the proceeding. Notwithstanding
the foregoing, the Disputing Parties shall agree that they will attempt, and
they intend that they and the arbitrator should use their best efforts in that
attempt, to conclude the arbitration proceeding and have a final decision from
the arbitrator within one hundred twenty (120) days from the date of selection
of the arbitrator; provided, however, that the arbitrator shall be entitled to
extend such one hundred twenty (120) day period for a total of two one hundred
twenty (120) day periods. The arbitrator shall deliver a written award with
respect to the dispute to each of the parties, who shall promptly act in
accordance therewith. Each Disputing Party to such arbitration agrees that any
award of the arbitrator shall be final, conclusive and binding and that it will
not contest any action by any other party thereto in accordance with an award
of the arbitrator. It is specifically understood and agreed that any party may
enforce any award rendered pursuant to the arbitration provisions of this
Section 4.6 by bringing suit in any court of competent jurisdiction.
(c) All costs and expenses attributable to the arbitrator
shall be allocated among the parties to the arbitration in such manner as the
arbitrator shall determine to be appropriate under the circumstances.
(d) The parties hereto recognize and agree that in the event
of a breach by a party of this Section 4.6, money damages would not be an
adequate remedy to the injured party for such breach and it would be impossible
to ascertain or measure with any degree of accuracy the damages sustained by
such injured party therefrom. Accordingly, if there should be a breach or
5
6
threatened breach by a party of the provisions of this Section 4.6, the injured
party shall be entitled to an injunction restraining the breaching party from
any breach without showing or proving actual damage sustained by the injured
party.
6
7
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their fully authorized officers as of the Distribution Date.
STAFF BUILDERS, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
By:
-----------------------------------------------
Title:
--------------------------------------------
7
