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Exhibit 10.16
SECOND AMENDMENT TO ATC REVOLVING CREDIT
LOAN AND SECURITY AGREEMENT
This Second Amendment to ATC Revolving Credit Loan and Security
Agreement ("Amendment"), dated October 20, 1999, is made by and among ATC
Healthcare Services, Inc., a Georgia corporation ("ATC Healthcare"), and ATC
Staffing Services, Inc., a Delaware corporation ("ATC Staffing") (each of the
foregoing individually, an "Original Borrower" and collectively, the "Original
Borrowers") and Staff Buildings, Inc., a Delaware corporation ("Staff Builders"
and together with the Existing Borrowers, the "Borrowers") and Mellon Bank, N.A.
("Lender").
BACKGROUND
A. Lender and Original Borrowers are parties to a certain ATC Revolving
Credit Loan and Security Agreement, dated June 25, 1999. Such parties and Staff
Builders are also parties to a certain First Amendment to the ATC Revolving Loan
and Security Agreement dated September 24, 1999 ("First Amendment"). The
foregoing Loan and Security Agreement, as heretofore or hereafter amended,
modified, supplemented or replaced from time to time is hereinafter referred to
as the "Loan Agreement". Capitalized terms used but not otherwise defined in
this Amendment shall have the meanings set forth in the Loan Agreement.
B. In conjunction with arrangements to consummate the Spin-Off, and as
a result of the variation of Borrowers' actual performance from projections
previously delivered to Lender, Borrowers have determined a need to change the
required minimum amounts of Excess Borrowing Availability required under Section
13(b)(v) of the Loan Agreement. Lender is willing to accommodate Borrowers'
request subject to the terms and conditions of this Amendment.
NOW, THEREFORE, the parties hereto intending to be legally bound hereby
promise and agree as follows:
1. Excess Borrowing Availability ATC. Section 13(b)(iv) of the First
Amendment is hereby amended as follows: "Lender shall have received evidence on
the date subsections (i) and (ii) above are satisfied that, after giving effect
to the payment described in sub-section (i) above, Borrowers have a minimum
Excess Borrowing Availability of $1,000,000."
2. Excess Borrowing Availability TLC. Section 13(b)(v) of the First
Amendment is hereby amended to read as follows: "Lender shall have received
evidence on the date subsections (i) and (ii) above are satisfied that, after
giving effect to the payment described in sub-section (i) above, TLC and the
Home Healthcare Group have a minimum Excess Borrowing Availability (as defined
in the TLC Loan Agreement) of $1,100,000."
3. Future Excess Availability Covenant. Apart from any other covenant
of Borrowers set forth in the Loan Agreement, Borrowers shall have and maintain,
on a consolidated basis, an Excess Formula Availability of not less than
$300,000 on Thursday of each week and not less than $500,000 on Friday of each
week (measured at 2:00 p.m. on every such date); provided, however, that for the
period from October 1, 1999 through December 11, 1999 (solely for the purposes
of this covenant), clause (i) of the definition of Excess Formula Availability
shall mean "an amount equal
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to seventy-five percent (75%) of Qualified Accounts."
4. Implementation of Action Plan. Borrowers covenant and agree that
they shall implement with the active assistance of the current President of the
Original Borrowers and University Management Associates (UMAC) and
PricewaterhouseCoopers the office expense reductions and expanded collection
efforts set forth in the Company Initiatives Relating to Cost Cuts and
Collections and ATC/University Management Associates & Consultants Action Plan
delivered to Lender on October 18, 1999 in accordance with the time schedules
set forth in such action plan. Borrowers will further cause such outside
consultants to periodically report to Lender concerning the status of
implementation of such action plan.
5. Amendment Fee. In consideration of the agreements and undertaking
set forth herein, Lender has earned an amendment fee of $50,000, which shall be
paid by Borrowers as follows: $20,000 on October 28, 1999; $15,000 on November
4, 1999; and $15,000 on November 11, 1999.
6. Acknowledgment, Waiver and Release. Borrowers acknowledge and agree
that the outstanding principal indebtedness under the Loan Agreement as of the
close of business on October 19, 1999 is $16,181,829.78, which, together with
accrued interest, fees and expenses, is owing without offset, defense,
deduction, claim or counterclaim. Borrowers each waive any defense of any kind
or nature whatsoever to their obligations to Lender and each releases and
discharges Lender, its successors, assigns, officers, agents and
representatives, of and from any and all claims, demands, counterclaims,
cross-claims, losses, liabilities and damages, whether direct or indirect, known
or unknown, matured or contingent, due or to become due, asserted or unasserted,
at law or in equity.
7. No Waiver by Lender. This Amendment does not and shall not be deemed
to constitute a waiver by Lender of any breach or violation of any
representation, warranty or covenant made or agreed to by any Borrower under the
Loan Agreement as amended hereby, and all of Lender's claims and rights
resulting from any such breach or misrepresentation by any Borrower, are
expressly reserved by Lender. This Amendment does not obligate Lender to agree
to any further extension or any other modification or the Loan Agreement nor
does it constitute a waiver of any other rights or remedies of Lender.
8. Incorporation. This Amendment shall amend, and is incorporated into
and made part of, the Loan Agreement. All references to the Loan Agreement shall
mean the Loan Agreement as amended hereby. To the extent that any term or
provision of this Amendment is or may be deemed expressly inconsistent with any
term or provision in the Loan Agreement, the terms and provisions hereof shall
control. Except as expressly amended by this Amendment, all of the terms and
conditions of the Loan Agreement continue unchanged and remain in full force and
effect.
9. No Modification. No modification hereof or of any agreement referred
to herein shall be binding or enforceable unless in writing and signed on behalf
of the party against whom enforcement is sought. This Amendment supersedes any
drafts or prior versions of this document and represents the agreement of the
parties regarding the subject matter hereof.
10. Successors and Assigns. This Amendment will be binding upon and
inure to the
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benefit of the parties hereto and their respective successors and assigns.
11. Governing Law. This Amendment shall be governed by, and construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania,
excluding its conflict of laws rule.
12. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Signature by facsimile shall also bind the parties hereto.
[Remainder of page intentionally left blank]
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the undersigned have executed this Amendment on the
date first written above.
LENDER:
MELLON BANK, N.A.
By: /s/ Xxxxxxx Xxxxxxxxxx
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Xxxxxxx Xxxxxxxxxx, Vice President
BORROWERS:
ATC HEALTHCARE SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx, President
ATC STAFFING SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx, President
STAFF BUILDERS, INC.
By: /s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx, Chief Executive
Officer
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