EXHIBIT
10.3
July 16, 1999
Staff Builders, Inc.
0000 Xxxxxx Xxxxxx
Xxxx xxxxxxx, XX 00000
ATTN: Xx. Xxxxxxx Xxxxxxxx, Chairman and
Chief Executive Officer
Dear Xxxxx:
Reference is hereby made to that certain Amendment and
Forbearance Agreement, dated June 25, 1999, by and among Staff
Builders, Inc., a Delaware corporation ("Staff Builders") and
certain of the direct and indirect subsidiaries of Staff Builders
listed on the signature pages attached thereto (all of the
foregoing each individually, a "Borrower" and collectively, the
"Borrowers") and Mellon Bank, N.A. ("Mellon") (as previously
amended, "Forbearance Agreement"). Capitalized terms used but not
expressly defined in this letter shall have the meanings given to
such terms in the Forbearance Agreement.
This letter is in response to your request that Mellon
consider granting a further forbearance under the Forbearance
Agreement. You have indicated that your business consultant needs
additional time to put together a business plan and you need
additional time to evaluate options (such as the sale of Chelsea,
the sale or refinancing of ATC and the refinancing of the HC
Borrowers) in order to address the financial problems of the HC
Borrowers and our desire to be replaced as your lender with respect
to all Borrowers. You have given us projections through the end of
July which we trust represent numbers reflecting estimates and
assumptions included in good faith on your part.
Notwithstanding anything to the contrary contained in the
Forbearance Agreement, all references to the "Termination Date"
contained in the Forbearance Agreement shall be deemed to mean the
date that is the earlier to occur if (i) the occurrence of an Event
of Default under the Existing Loan Documents and/or the ATC Loan
Documents, other than the Existing Defaults (including, without
limitation, the occurrence of any breach or default of any covenant
or obligation under this Agreement) or (ii) July 30, 1999.
Xx. Xxxxxxx Xxxxxxxx
Staff Builders, Inc.
July 16, 1999
Page 2
The extension of the Termination Date set forth above is
expressly conditioned upon your timely acceptance of this
letter and the following:
1. The line limit of Revolving Credit borrowings
outstanding at any one time as part of the Home Healthcare Group
Revolving Credit shall be increased from $15,900,000 to $16,900,000
as of July 19, 1999 and shall continue at such higher level until
July 29, 1999 on and after which date such limit shall
automatically return to $15,900,000.
2. Mellon is willing to permit overformula
advances (advances in excess of the applicable Revolving Credit
Borrowing Base) for the HC Borrowers as of July 19, 1999 to be
outstanding up to $750,000 until July 29, 1999 on and after which
date no overformula advances shall be permitted to be outstanding.
3. Based on your projections, we assume that
during this extended forbearance period, no offsets will be taken
by any governmental entity against payments otherwise to be paid to
you.
4. We shall receive a draft of your business
plan by July 29, 1999.
5. As a sign of your good faith commitment to
cost-cutting (which you acknowledged to be a necessary component of
your efforts to continue the operations of the HC Borrowers), an
immediate reduction of at least 20% in the salaries of each of
Xxxxxxx and Xxxxx Xxxxxxxx shall occur.
6. As an additional accommodation, as of July 19,
1999, Mellon shall (a) permit the Maximum Revolving Credit Amount
for the ATC Borrowers to be $16,500,000 until July 29, 1999 on and
after which date it shall increase to S17,500,000, and (b) permit
overformula. advances for the ATC Borrowers under the ATC Loan
Agreement to be outstanding up to $2,500,000 until July 29, 1999 on
and after which date it shall increase to $3,000,000.
7. As consideration for the forbearance extension
and agreements contained herein, Mellon shall receive
contemporaneously herewith, a forbearance fee of $25,000.
By agreeing to extend the Termination Date, Mellon does
not waive any of the Existing Defaults or any breach or
violation of the Forbearance Agreement. Moreover, the
extension of the forbearance period shall not be deemed a
waiver of Mellon's rights and remedies or constitute a course
of conduct or dealing on behalf of Mellon. Nothing contained
herein is, in any way, intended to obligate or create any
duty on the part of Mellon's rights and options are expressly
preserved.
Xx. Xxxxxxx Xxxxxxxx
Staff Builders, Inc.
July 16, 1999
Page 3
Please acknowledge and return a copy of this letter to us
to confirm your agreement. By acceptance of the terms and
conditions of this letter, Borrowers represent and warrant
that there is no current violation or default of any
undertaking or covenant on their part under the Forbearance
Agreement. If Melon does nor receive a signed counterpart of
6,is letter from Borrowers by July 16, 1999 at 4:00 p.m.,
then the terms and conditions of this letter shall be deemed
of no force and effect.
This letter may be signed and exchanged in counterparts,
all of which when taken together shall constitute one and the
same agreement. Signature by facsimile will also bind the
parties hereto.
Very truly yours,
Mellon Bank, N.A.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Xxxxxxx X. Xxxxxxxxxx,
Vice President
Acknowledged and Agreed to:
Staff Builders, Inc.
(for itself and on behalf of all HC
Borrowers and ATC Borrowers)
By: /s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title:Chief Executive Office
cc: Xxxxx Silver, Esquire
Xxxxxxxx Xxxxxxxx, Esquire
Xxxxxx X Xxxxxx, Esquire
Mellon Bank letter/kl
