Exhibit 10.80
MANAGEMENT AGREEMENT
This Agreement is entered into as of February 28, 2006, between ATC
HEALTHCARE SERVICES, INC., a Georgia corporation, with its principal office at
0000 Xxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxx Xxxx 00000 (hereinafter referred to as
"ATC" or the "Company") and TRAVEL HEALTHCARE SOLUTIONS, LLC, a New York limited
liability company whose principal address is 0000 Xxxxxx Xxxxxx, Xxxx Xxxxxxx,
Xxx Xxxx 00000 (hereinafter referred to as "Manager").
Recitals
A. ATC presently operates several lines of business related to staffing
in the health care field, including its ATC's Travel division (the "Division"),
which places healthcare professionals with clients nationwide for long-term
assignments.
B. ATC desires to engage Manager to provide certain administrative,
management and professional services to ATC with regard to the Division per the
terms and conditions of this Agreement.
Agreements
1. Engagement of Manager. ATC hereby engages Manager to provide, and
Manager hereby agrees to provide, professional, management and administrative
services to ATC in accordance with the terms and conditions of this Agreement.
For so long as this Agreement is in effect, ATC shall not conduct a business
under the name ATC Travel Nursing or a substantially similar name other than
under the management of Manager under this Agreement. Except as expressly
provided in the preceding sentence, ATC shall not be precluded from conducting
other businesses or divisions.
2. Obligations and Rights.
(a) Manager shall provide to ATC all management and
administrative services, excluding financial and accounting services (which
shall be provided by ATC), related to the operation of the Division, including,
at a minimum, overseeing the staffing, promotion and sales for the Division. As
detailed herein, ATC shall fund a portion of Manager's monthly G&A expenses.
(See Section 5(b), and Exhibit E hereto).
(b) Manager shall be responsible for managing and overseeing
the recruitment of foreign nurses for the Division, the costs of which shall be
paid as provided herein, including relationships with recruiters of foreign
nurses and taking such actions as Manager deems appropriate to assure the
Division an adequate pipeline of nurses for the Division. In connection with
recruitment of foreign nurses, Manager shall not act in a manner that violates
any foreign nurse recruiting agreements to which ATC is a party that are in
place on the date of this Agreement. Copies of said agreements are collectively
annexed hereto as Exhibit A. ATC and Manager shall consult regularly about
Manager's foreign nurse recruitment efforts. ATC may give written notice to
Manager that ATC is not satisfied with the number of foreign nurses in the
Division's pipeline. In such case, unless Manager has provided ATC with a plan
satisfactory to ATC for increasing the Division's recruitment of foreign nurses,
ATC may at its option recruit foreign nurses or enter into agreements for the
recruitment of foreign nurses outside the Division for ATC's own account, in
which case the costs and revenues from such recruitment and the placement of
nurses so recruited shall not be deemed to be part of the Division or to have
any impact on this Agreement.
(c) Manager shall make a one-time payment to ATC concurrent
with the execution and delivery of this Agreement in the amount of Two Hundred
Forty Thousand Dollars ($240,000) (the "Information and Services Access
Payment"). In consideration of the Information and Services Access Payment, ATC
shall provide full and complete information to Manager regarding its proprietary
system for operating the Division, which shall continue to be the property of
ATC and its confidential information, as well as such other transitional
assistance as is reasonably required to operate such system.
(d) Manager shall initially provide on a full-time basis the
services of Xxxxxxxx XxXxxxxx to provide services under this Agreement. In the
event DiCorcia ceases to provide those services, Manager shall hire one or more
other people to provide the services, such personnel to be subject to the
consent of ATC, such consent not to be unreasonably withheld. In addition,
Manager may hire supplementary personnel to work with DiCorcia or his successor
in providing services under this Agreement. The personnel employed by Manager
under this paragraph shall be payrolled as at-will employees by ATC, which shall
be responsible for withholding and remitting all payroll and related taxes due
and payable with respect to all such employees. ATC shall provide its standard
benefits package to them, but shall for all other purposes be considered
employees of and under the supervision and control of Manager. In addition, all
employees currently employed by ATC to conduct the business will, as of the date
of this Agreement, be deemed to employees of Manager, as will any administrative
personnel hired by the Manager to work on Division business after the date
hereof, even though ATC will payroll those employees as at-will employees of ATC
under its standard administrative agreement. The hiring and firing of all
administrative employees for the Division will be within the discretion of
Manager. The costs of such employees will be deemed to be G&A Costs.
(e) ATC shall provide Manager office space (see diagram
attached here as Exhibit B) (the "Space") and the use of related common areas
and services, such as copiers, faxes and its phone system, at its headquarters
in Lake Success, New York or any other location at which it may from time to
time locate its headquarters (the "Headquarters"). The costs of such Space and
related services, as determined by ATC based on a reasonable allocation of its
actual costs related to the Space and related services, shall be included in G&A
Costs. Manager will be permitted the use of those furnishings and equipment
currently in the Space on an as is, where is basis, but will be responsible for
the costs associated with additional furnishings or equipment, if any, it elects
to place in the Space or use to manage the Division. On at least ninety (90)
days advance notice, ATC may terminate its obligations to provide the Space to
Manager in the event it is no longer able to satisfy at the Headquarters the
space requirements of ATC and its affiliates and those of Manager, in which case
ATC will work with Manager to relocate Manager to other appropriate space, the
costs of which will be G&A Costs. If, during the Term of this Agreement, ATC
should relocate the Headquarters more than twenty (20) miles from is present
Lake Success location, Manager shall have the right to relocate to a suitable
location of its choosing. ATC shall further provide to Manager support of its
human resources, payroll, accounting, information technology, quality assurance,
billing and collections functions.
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(f) The business of the Division shall belong to ATC, and any
material changes to that business or its operation are subject to the prior
consent and approval of ATC. The Manager shall use the methods of operating the
Division in effect prior to this Agreement to conduct the business of the
Division under this Agreement. Among other things, Manager shall provide ATC
such information, reports and other data as ATC reasonably requires to provide
financial and accounting services to the Division.
(g) It is understood that both ATC and DiCorcia are parties to
non-compete obligations under agreements with Onward Healthcare, Inc. that
relate to the business of the Division. The parties shall take such steps as
reasonably required to ensure they do not violate those obligations. In no event
shall ATC require Manager to provide any services or manage any business that
would cause DiCorcia to violate his non-compete obligations to Onward which he
has disclosed in writing to ATC. Relevant portions thereof are annexed hereto
and made part hereof as Exhibit X. XxXxxxxx is prohibited until June 30, 2007
from engaging in a travel nurse business in certain counties in southern New
Jersey in which ATC is not so prohibited. Until June 30, 2007, Manager shall in
no way assist ATC in, or in any way be engaged in or consult or provide any
advice or services to, the business of Division or in any travel nurse business
insofar as any such business is conducted in any part of New Jersey, and the
revenues and operations from any such business insofar as they are conducted in
any part of New Jersey shall not be deemed to be revenues or operations of the
Division for purposes of this Agreement until July 1, 2007.
(h) Manager will assume responsibility for ATC's "Partners in
Profit" program, and shall operate the program in the same fashion as it had
been operated by the Division prior to the Agreement. Sales generated by the
"Partners in Profit" program shall be included in Section 5's Gross and Net
Sales calculations.
(i) ATC will provide to Manager computer related software
(the "Computer System") for its use in operating the Division, as well as, on an
as, is where is basis, the use of any computer hardware and related software
currently in the Space or used by ATC to manage the Division Manager will
utilize this Computer System during the term of this Agreement and shall provide
to ATC such reports as ATC requires using the Computer System. ATC is under no
obligation to purchase or license different computer hardware or related
software for Manager's use, and any such costs will be the sole responsibility
of the Manager. In addition, ATC will provide for the hosting of a Web site that
includes links related to the Division. ATC is under no obligation to make
changes to the site, and may in its discretion make such changes to it as ATC
deems appropriate. To the extent ATC makes any change to the Web site requested
by Manager, ATC will share equally the costs of the change.
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(j) Manager shall be solely responsible for all costs of
recruiting staffing employees to the Division from the United States.
3. Performance.
Manager and its employees, representatives, and agents (the "Manager
Staff") shall conduct their activities under this Agreement in a prudent and
professional manner, with due diligence and dispatch, and in compliance with all
applicable laws and regulations. Manager shall ensure that the Division is at
all times adequately staffed and promoted, and generally run in a manner
commensurate with the overall business objectives of the Division.
4. Term and Termination.
(a) Initial Term.
The initial term of this Agreement ("Initial Term") shall be ten (10)
years commencing on the date of execution hereof (the "Effective Date") unless
sooner terminated in accordance with the provisions of this Agreement.
(b) Renewal Terms.
After the expiration of the Initial Term, ATC and Manager shall have
the respective rights of purchase outlined in Section 4(c) herein. If neither
party chooses to exercise its Section 4(c) rights , the term of this Agreement
shall automatically renew for an additional five (5) year term, after the
expiration of which, the parties shall again have the option(s) of exercising
their Section 4(c) rights. Thereafter, this renewal/purchase option cycle shall
continue, unless the Agreement is terminated in accord with the terms thereof.
(c) Right of Purchase and Purchase Price Calculation.
(i) ATC shall have the right, commencing ninety (90)
days prior to the end of the Initial Term or of any Renewal Term, and expiring
thirty-one (31) days prior to the end of that Term, to notify Manager of its
intention to exercise its right to purchase Manager's rights under this
Agreement and any and all assets (the "Manager Assets") owned and used by
Manager to provide services under this Agreement in accord with this Section
(the "Exercise Date"). If ATC so elects, the purchase price shall be equal to
50% of the amount by which Net Sales of the Division for the 12-month-period
immediately preceding the Exercise Date exceed six-million dollars ($6,000,000).
ATC shall not assume any liabilities of Manager as part of such purchase.
(ii) If ATC elects not to exercise its right to
purchase the Manager's rights under this Agreement and the Manager Assets under
Section 4(c)(i), Manager will have the right, commencing thirty (30) days prior
to the end of the Initial Term or of any Renewal Term, and expiring on the last
day of that Term, to purchase the Travel Nursing Division Assets (as defined
herein) from ATC. If Manager so elects, the purchase price shall be equal to the
sum of (A) $6,000,000 plus (B) 50% of the amount by which Net Sales of the
Division for the 12-month-period immediately preceding the Exercise Date exceed
$6,000,000.
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(iii) Unless otherwise agreed to by both parties in
writing, any purchase under Sections 4(c)(i) or 4(c)(ii) shall be completed as a
cash transaction. For the purposes of this section a "cash transaction" shall be
defined as a transaction consisting entirely of cash and/or negotiable
securities, and shall not require the buyer's acceptance of notes as part of the
purchase price. The inability of either Party to complete a purchase in accord
with this Section within fifteen (15) days of the Exercise Date will extinguish
any Section 4(c)(i) or 4(c)(ii) right to purchase with regard to that Term. In
the event ATC notifies Manager of its intent to exercise its Section 4(c)(i)
purchase right, but is ultimately unable to complete the transaction, Manager
shall have thirty (30) days from the date it is notified by ATC regarding its
inability to complete the transaction in which to exercise its Section 4(c)(ii)
purchase right.
(iv) For purposes hereof, the term "Travel Nursing
Division Assets shall mean the (A) customer contracts, recruitment contracts,
customer and vendor lists and other information, date and records relating to
the Division and its operation, (B) data and records relating to all employees
of the Division, (C) payroll and accounting records of the Division and (D)
ownership or leasehold interests (as currently held) in computer hardware and
related that is used by Manager that is not part of or related to ATC's general
systems and processes (the "Assets"). Furthermore, it is understood that the
Manager will also acquire and assume the liabilities of the Division relating to
the performance of obligations under agreements arising after consummation of
the purchase and sale by the Manager of the Travel Nursing Division Assets.
(v) Purchases and sales under this subsection (c)
shall be effected through customary documents of conveyance in such forms as are
reasonably satisfactory to the purchasing party.
(d) Early Termination.
(i) The 365 days immediately following the Effective
Date shall constitute the "Initial Contract Year." The "Net Sales Baseline" in
any Contract Year with regard to ATC's Early Termination rights under this
Paragraph shall be the amount set forth opposite the Contract Year in Exhibit D.
(ii) If, for any Contract Year following the Initial
Contract Year, Net Sales are not equal to or greater than the Net Sales Baseline
applicable to that Contract Year, ATC, by written notice given to Manager within
ninety (90) days after the Gross Margin and Net Sales for the Division for the
Contract Year were determined, may terminate this Agreement.
(iii) In the event ATC exercises its termination
rights under this paragraph within the first three (3) years of the Agreement,
ATC shall return the Manager the Two Hundred Forty Thousand Dollar ($240,000)
Information and Services Access Payment as well as any prepaid expenses of
Manager under this Agreement, determined as of the date of the termination.
(e) Buy-Out/Termination Reconciliation
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In the event of a termination of the Agreement or a buyout in accord
with the terms of this Section, there shall be a one-time reconciliation
adjustment, which will account for any unpaid or outstanding items as of the
date of the termination/buy-out. The reconciliation will include any outstanding
amounts owed for excess G&A (Section 5(b)), foreign recruiting costs (Section
5(c)), management fees (Section 5(d)), or allocation of delinquent accounts
(Section 6(g)). In the event of a buy-out, the total reconciliation amount shall
be added to or subtracted from the purchase price paid by the party exercising
the buy-out right. In the event of a termination, the total reconciliation
amount shall consist of a one-time payment, due within fifteen (15) days of the
notification of termination.
(f) Termination Transition
Upon any termination of this Agreement, Manager shall transition
management of the Division to ATC or its designee, which transition shall
include, but not be limited to, assisting ATC in hiring such employees of
Manager as ATC at its option wishes to hire. In addition, Manager will cease to
take any actions for ATC or to in any way use any marks or proprietary or
confidential information of ATC and will promptly pay any and all amounts
Manager may owe to ATC.
5. Compensation and Reimbursement.
(a) Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(i) Gross Sales -- The total amount of all sales
generated by the Division for personnel services, and services and products
related to personnel services, whether received in cash, in services, in kind or
on credit (and if on credit, whether or not payment is received therefore),
including fees received for the permanent hiring of personnel or liquidated
damages.
(ii) Net Sales -- Gross Sales less the amount of all
sales taxes or similar taxes which, by law, are chargeable to clients of the
Division (but only to the extent they have been included), if such taxes are
separately stated when the client is charged and paid to the appropriate taxing
authority, and the amount of any authorized and documented credits, sales
allowances, discounts and/or rebates given to clients by the Division in good
faith and in accordance with provisions of this Agreement
(iii) Direct Costs -- The wages actually paid to
Division staffing employees, plus any employment-related or wage-related taxes,
insurance, Quick Pay Program expenses, and fringe benefits (including, without
limitation, FICA, Workers' Compensation, health and hospitalization insurance;
fidelity bonding, liability insurance, Unemployment Insurance and, if required,
Disability Insurance, vacation programs, amounts written for Quick Pay Program
checks, and, if applicable, sick pay programs) applicable to temporary
employees. Direct costs also include any travel costs, travel allowances,
housing (including rental) or meal expenses, performance or completion bonuses
paid to nurses. Recruiting costs for foreign and domestic nurses will be paid as
described in Section 2 and will not be deemed to be Direct Costs. A more
detailed list of Direct Costs is set forth in Exhibit E hereto.
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(iv) Gross Margin -- Net Sales Minus Direct Costs.
(v) Contract Year -- The successive one-year periods
beginning on the Effective Date this Agreement and on each successive
anniversary of that date occurring during the term of this Agreement and ending
on the day immediately prior to each such anniversary.
(vi) G&A Costs -- The general and administrative
costs of the Division's business determined in accordance with generally
accepted accounting principles consistently applied, including office rental
costs, advertising costs, costs of direct supervisory personnel (including
DiCorcia's salary as established by Manager, and the costs of Manager's
additional personnel), phone and data transmission charges and other similar
costs, but excluding any allocation of the general overhead of ATC or its
affiliates not directly attributable to conducting the business of the Division.
In addition, G&A shall not include any charges for accounting costs related to
administering this Agreement or Recruiting Costs (as defined herein). A more
detailed list of G&A Costs is set forth in Exhibit F hereto.
(vii) Revenue Baseline -- Six million dollars
($6,000,000) in Net Sales for each Contract Year, which equates to a weekly
revenue baseline of $115,385.
(b) Allocation of G&A Cost.
(i) ATC shall pay up to the ATC G&A Amount, as
defined herein, of the G&A Costs of the Division. To the extent the G&A Costs of
the Division exceed the ATC G&A Amount, they shall be paid by Manager. To the
extent the G&A Costs of the Division are less than the ATC G&A Amount in any
month, the amount by which they are less than the ATC G&A Amount shall be
credited against the future month's G &A Costs, reducing the amount of those
costs for purposes of determining whether they exceed the ATC G&A Amount for
purposes of this paragraph. ATC at its option may invoice Manager for any excess
G&A Costs for which Manager is responsible under this Section, which shall be
paid within ten (10) business days by Manager, or may withhold the amount
payable by Manager from any Management Feeowed to Manager.
(ii) For purposes of this subsection, the term ATC
G&A Amount shall mean during the Initial Contract Year Seventy Thousand Dollars
($70,000) per month. During each Contract Year after the Initial Contract Year,
it shall mean Seventy Thousand Dollars ($70,000) $70,000 per month; provided,
however, that if Net Sales of the Division during any Contract Year are less
than Six Million Dollars ($6,000,000), the monthly amount for that Contract Year
shall be reduced so it is equal to the product of (A) $70,000 multiplied by (B)
a fraction, the numerator of which is the Net Sales of the Division during the
Contract Year and the denominator of which is $6,000,000. For purposes of
calculations under this Agreement, the ATC G&A Amount shall tentatively be set
for each quarter of a Contract Year after the Initial Contract Year based on
annualized Net Sales during the immediately preceding quarter, with a
reconciliation of the ATC G&A Amount being made as of the end of the Contract
Year based on actual Net Sales of the Division during the Contract Year. To be
clear, the first adjustment calculation under this subsection shall be made
beginning the sixth (6th) quarter of the term hereof based upon data from the
fifth (5th) quarter. If as a result of the reconciliation, the actual ATC G&A
Amount for the Contract Year is less than previously determined and allocated to
ATC, the Manager shall promptly remit the amount of the deficit to ATC.
Conversely, if, as a result of the reconciliation, it is determined that the
actual ATC G&A Amount for the Contract Year is greater than previously
determined and allocated to ATC, then ATC shall promptly remit the amount of the
difference to Manager.
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(c) Foreign Recruiting Costs.
(i) For purposes of this Agreement, there are three
categories of costs relating to the recruitment of foreign
nurses for the Division: costs for nurses ("Fully Prepaid
Foreign Nurses") in the pipeline as of the date of this
Agreement that have been fully prepaid by ATC; costs for
nurses ("Partially Prepaid Foreign Nurses") in the pipeline as
of the date of this Agreement that have been partially prepaid
by ATC, the balance of which are payable after the date of
this Agreement; and (iii) costs incurred after the date of
this Agreement for nurses ("Future Foreign Nurses") not in the
pipeline as of the date of this Agreement. ATC shall pay the
remainder of the recruiting costs for Partially Prepaid
Foreign Nurses. As to any Fully Prepaid Foreign Nurse and any
Partially Prepaid Foreign Nurse, as such nurse is placed and
arrives in the United States, ATC shall charge to and be
repaid as a Direct Cost, as and to the extent Gross Margin is
partially allocable to Manager because Net Sales exceed the
Revenue Baseline, the full amount of the costs prepaid with
respect to the Nurse. A list of all Fully Prepaid Foreign
Nurses and Partially Prepaid Foreign Nurses, and a list of all
agreements to which ATC is party relating to the recruitment
of such nurses, is attached hereto as Exhibit A. ATC shall be
fully responsible for paying the costs of recruitment of all
such nurses, subject to reimbursement as provided herein.
(ii) Any costs incurred to recruit Future Foreign
Nurses for the Division during the term of this Agreement
shall for purposes of this Agreement be immediately treated as
an expense, and Manager shall immediately be responsible for
fifty percent (50%) of those costs. ATC at its option may xxxx
Manager monthly for the all recruitment expenses for which it
is responsible, which bills shall be paid within ten (10)
business days Manager, or may withhold Manager's share of
those expenses from any Management Fee owed to Manager.
(iii) Nothing contained in this Section 5(c) shall be construed as creating any
obligation on the part of Manager to recruit any particular nurse or group of
nurses, and Manager will not be considered to be in violation of this Agreement
if it opts not to recruit or place any particular nurses (other than Fully
Prepaid Foreign Nurses or Partially Prepaid Foreign Nurse listed on Exhibit A).
(d) Management Fee. Manager shall receive from ATC a
Management Fee as follows:
(i) For fiscal months in which there are
five weeks, the Revenue Baseline for that month shall equal $576,925 (5 X
$115,385), while for fiscal months in which there are four weeks, the Revenue
Baseline for that month shall equal $461,540 (4 X $115,385). For Contract
Year-to-date periods, the Revenue Baseline shall equal the number of weeks in
the period multiple by $115,385.
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(ii) When the Division's Net Sales in a given fiscal
month surpass the applicable monthly Revenue Baseline, Manager shall be entitled
to receive a Management Fee for that month. That Management Fee shall be an
amount equal to fifty percent (50%) of the Gross Margin on the revenue that
exceeds the Revenue Baseline for that month. Payments of Management Fees shall
be made as provided in Section 6 below. Notwithstanding the foregoing, there
shall be a reconciliation on a quarterly basis in which the Management Fee shall
be recalculated so that it is equal to fifty percent (50%) of the Gross Margin
on the amount by which Contract Year-to-date Net Sales during the relevant
period exceed the Revenue Baseline. If as a result of such recalculation, the
Management Fee previously paid to the Manager during the Contract Year or
portion thereof exceeds the amount of the Management Fee previously paid to the
Manager during the Contract Year, the Manager shall promptly remit the amount of
the overpayment to ATC. Conversely, if, as a result of the recalculation, it is
determined that the Management Fee previously paid to the Manager during the
Contract Year or portion thereof was insufficient in light of the actual Net
Sales achieved in those periods, then ATC shall promptly remit the amount of the
underpayment to Manager.
Similarly, there shall be a reconciliation at the close of each
Contract Year in which the Management Fee shall be recalculated so that it is
equal to fifty percent (50%) of the Gross Margin on the amount by which Contract
Year Net Sales exceeded the Revenue Baseline. If as a result of such
recalculation, the Management Fee previously paid to the Manager during the
Contract Year or portion thereof exceeds the amount of the Management Fee
previously paid to the Manager during the Contract Year, the Manager shall
promptly remit the amount of the overpayment to ATC. Conversely, if, as a result
of the recalculation, it is determined that the Management Fee previously paid
to the Manager during the Contract Year was insufficient in light of the actual
Net Sales achieved in those periods, then ATC shall promptly remit the amount of
the underpayment to Manager
6. Xxxxxxxx, Deductions And Remittances.
(a) General. All payroll and billing activities related to the
Division shall be accomplished by ATC or its designee, based upon information
submitted to ATC by Manager. ATC shall have the principal responsibility for
credit and collection activities. ATC shall be the legal employer of temporary
employees assigned or available for assignment to clients and shall be
responsible for compensating such temporary employees (except in certain
circumstances and in certain locations which may be specified from time to time
in the Regulations).
(b) Billing.
i) ATC will alone conduct all billing activities
related to the Division.
(ii) Manager shall not generate or otherwise create
bills to be sent to any of Division clients for any personnel services rendered
or other services or products sold by the Division.
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(iii) Manager shall inform all Division clients that
all payments are to be made directly to ATC.
(c) Business Reports.
(i) Manager agrees to forward to ATC either
electronically or by overnight or express mail (as may be specified from
time-to-time by the ATC) weekly reports of all activities of the Division during
the prior week in the form, content and on the day of the week specified by ATC.
(ii) Manager hereby agrees to cause to be transmitted
or forwarded to ATC all jobs received by Manager for ATC, in the order that they
are received by Manager, on the day of the week specified by ATC. Such shall
contain all information which ATC requests and must be accompanied by the copies
required by ATC of all related time sheets, job orders, sales and marketing
reports, recruitment records and such other documents as ATC requests.
(iii) ATC reserves the right to change at any time
the number, scope, format, content or time for submission of reports which
Manager is required to send to ATC, whether manually or by computer interface.
(d) Remittances to Manager; Deductions.
(i) ATC shall transmit to Manager within forty-five
(45) days of the end of each month of the term hereof, a statement (the "Monthly
Report") reporting all Gross Sales, Direct Costs, deductions and additions for
the immediately preceding period and for the portion of the Yearly-Period and
the Fee, if any, payable to Manager for the immediately preceding period.
(ii) Concurrently with the submission of each such
monthly report, ATC shall remit to Manager the full amount of Manager's Fee if
any share, payable for the month covered by said Report.
(iii) ATC shall deduct from Manager's Fee any other
amounts due ATC as follows:
1) the amount of charges against Manager's
Fee arising from or related to any delinquent account (as provided for hereafter
in this Agreement);
2) any monies paid to temporary employees or
otherwise by ATC which ATC shall subsequently determine to have been paid based
upon forged or erroneous time sheets; fraudulent, erroneous or improper
authorizations; for standby time (amounts paid to temporary employees for time
not worked for a client; or for any reason not billable to a client; or for
unconfirmed (as provided for in Regulations or otherwise) overtime paid to
temporary employees; and
3) amounts refunded to a client through the
exercise of any guarantee, or for any other reason.
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(iv) ATC may also deduct from Manager's Fee any other
amounts due ATC under this Agreement; any sums due to ATC for any other debts or
obligations of Manager; and any amounts ATC reasonably determines are necessary
to secure itself pursuant to the indemnification provisions of this Agreement.
Any and all reserves established by ATC via the authority of this Section or
related provisions of this Agreement shall be made in good faith.
(v) If at any time, upon making applicable deductions
from amounts due Manager as its Fee and any other monies due to Manager, a
condition exists which creates a balance owed to ATC by Manager, then said
balance must be tendered to ATC and received by it within thirty (30) days of
Manager's receipt of (or the first attempted delivery to Manager of) the
aforementioned Monthly Report. Manager acknowledges that failure to tender such
balance owed to ATC within the above time limit shall constitute a breach of
this Agreement.
(e) Credit. Prior to opening or establishing any new account
for ATC, Manager shall request from ATC's Credit Department credit approval and
credit limits for each such new account pursuant to the procedures set forth in
the Regulations or otherwise established by ATC. Manager agrees to strictly
adhere to ATC's credit approval policies and procedures and other pertinent
systems, procedures and policies pertaining to the granting of credit to clients
of Manager.
(f) Delinquent Accounts - Collection.
(i) For the purposes of this Agreement, an invoice
for temporary personnel services shall be deemed "delinquent" if it remains
unpaid in whole or in part for ninety (90) days after its date and as indicated
on Manager's form of Trial Balance Aging Report, or if it remains unpaid in
whole or in part twenty-five (25) days beyond the payment date agreed to by the
client (it being understood by the Manager that the ATC's normal payment terms
are "net cash sixty (60) days after start date" and that any extension of time
requires the approval of ATC), or if ATC, following collection efforts or upon
its receipt of an updated credit report, deems such invoice(s) to be delinquent
in its sole and exclusive discretion. Manager hereby acknowledges that it is the
policy of the ATC to cancel any guarantee given to a client who is delinquent in
the payment of any fee due for a particular permanent placement.
(ii) ATC shall have responsibility to conduct
collection efforts from the time an invoice is generated until it is either
collected or deemed to be uncollectible by ATC. Manager hereby agrees to
cooperate fully with ATC in connection with ATC's collection activities. Manager
understands and agrees that ATC shall have the right to pursue whatever
collection activities ATC alone deems appropriate, and further agrees that ATC
has the right to negotiate or settle any such delinquent invoices in any fashion
which ATC determines. Finally, Manager understands and agrees that ATC may
determine not to pursue any collection activities regarding any particular
account or invoice whatsoever, and ATC's decision with regard thereto shall be
final.
(g) Delinquent Accounts - Allocation of Loss and Reserve.
(i) In no event shall Manager have any responsibility
for any delinquent receivable or payable created prior to the Effective Date.
This provision shall in no way diminish or affect Manager's responsibilities and
obligations under Section 5(c) with respect to recruiting costs for foreign
nurses incurred by ATC or created prior to the Effective Date.
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(ii) With respect to receivables that arise after the
Effective Date with customers that were ATC's as of the Effective Date, if the
receivable becomes delinquent during a Contract Year in which the Revenue
Baseline is not achieved by the Division, provided Manager has strictly adhered
to ATC's credit approval policies and procedures and other pertinent procedures
established from time to time by ATC, and Manager has furnished to ATC all of
the assistance, reports and properly prepared documentation requested by ATC,
except as provided otherwise below, Manager shall have no liability for the
delinquent invoice.
(iii) With respect to receivables that arise after
the Effective Date with customers that were ATC's as of the Effective Date, if
the receivable becomes delinquent during a Contract Year in which the Revenue
Baseline is achieved or exceeded by the Division, provided Manager has strictly
adhered to ATC's credit approval policies and procedures and other pertinent
procedures established from time to time by ATC, and Manager has furnished to
ATC all of the assistance, reports and properly prepared documentation requested
by ATC, then Manager's liability (the "Delinquent Account Allocation") for a
delinquent invoice after ninety (90) days shall be equal to the percentage
attributable to the Division's performance in excess of the applicable Monthly
revenue baseline during the month in which the receivable arose. For example, if
Net Sales for the Division were $8,000,000 during the Contract Year in which the
receivable at issue arose, Manager would be responsible for 25% of the
delinquent receivable in question, calculated as (Net Sales minus Revenue
Baseline) divided by Net Sales, or ($8,000,000 - $6,000,000) / $8,000,000 =
0.25.
(iv) With respect to receivables generated with
customers that were not ATC's customers as of the Effective Date, if the
receivable becomes delinquent during a Contract Year in which the Revenue
Baseline is not achieved by the Division, provided Manager has strictly adhered
to ATC's credit approval policies and procedures and other pertinent procedures
established from time to time by ATC, and Manager has furnished to ATC all of
the assistance, reports and properly prepared documentation requested by ATC,
except as provided otherwise below, Manager shall have no liability for the
delinquent invoice.
(v) With respect to receivables generated with
customers that were not ATC's customers as of the Effective Date, if the
receivable becomes delinquent during a Contract Year in which the Revenue
Baseline is achieved or exceeded by the Division, if Manager has strictly
adhered to ATC's credit approval policies and procedures and other pertinent
procedures established from time to time by ATC, and Manager has furnished to
ATC all of the assistance, reports and properly prepared documentation requested
by ATC, then Manager's liability for any delinquent receivable after ninety (90)
days shall be limited to fifty percent (50%) of the sale amount attributable to
said delinquent invoice(s).
(vi) Allocation of responsibility for delinquent
receivables with customers that were ATC's as of the Effective Date shall be
made on a monthly basis with reference to annualized Net Sales as of the end of
the preceding Contract Month. In addition, there shall be a reconciliation on a
quarterly basis in which the Delinquent Account Allocation shall be recalculated
so that it is based on the actual percentage by which Contract Year-to-date Net
Sales during the relevant period exceeded the Revenue Baseline for the period.
If as a result of such recalculation, the Delinquent Account Allocation
previously charged to Manager exceeds the amount that should have been charged,
then ATC will promptly credit Manager for such overcharge. In the event that the
recalculation reveals a previous under-charge to the Manager, then Manager will
promptly remit to ATC the amount of the under-charge. Similarly, there shall be
a reconciliation at the close of each Contract Year in which the Delinquent
Account Allocation shall be recalculated so that it is based on the actual
percentage by which Contract Year Net Sales exceeded the Revenue Baseline. If as
a result of such recalculation, the Delinquent Account Allocation previously
charged to Manager exceeds the amount that should have been charged, then ATC
will promptly credit Manager for such overcharge. In the event that the
recalculation reveals a previous under-charge to the Manager, then Manager will
promptly remit to ATC the amount of the under-charge
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(vii) If Manager has not strictly adhered to ATC's
credit approval policies and procedures and other pertinent procedures
established from time to time by ATC, or has issued Quick Pay Program checks in
violation of the Quick Pay Program, then Manager shall be liable for one hundred
percent (100%) of the sale amount attributable to said delinquent invoice(s).
(viii) In either instance, Manager authorizes ATC to
remit to itself from collections made by ATC for Manager, and from Manager's
Fee, the amount(s) due to ATC by reason of such delinquent invoice(s).
(h) Accounts Receivable Reserve Program. ATC has, or has the
right to establish, an Accounts Receivable Reserve Program, which may be
modified from time to time. This program currently requires a reserve on
accounts over ninety (90) days. The reserve is calculated by determining the
accounts receivable outstanding for ninety (90) days or more, subtracting five
percent (5%) of the total of all accounts receivable, and reducing the
difference by half as the amount to be reserved. Unapplied credits for specific
clients are fully deducted from the delinquent accounts receivable when
performing the calculation.
(i) Collection of Previously Delinquent Accounts. Any amounts
collected after an account has been deemed to be delinquent or uncollectible
shall be divided so that Manager receives the amount of its liability for that
account and ATC receives the balance thereof.
(i) Accrued PTO Time
ATC assumes responsibility for any PTO time accrued by ATC employees
prior to the execution of this Agreement. Such accrued PTO time will be used
subsequent to the Management Agreement until exhausted by employees who continue
to be employed, and will be drawn upon before any PTO time that is earned
post-Agreement.
ATC and Manager will split on a pro-rata basis the expense associated
with the cashing out of the PTO balance of any Employee of ATC as of closing who
subsequently terminates employment with the Company. To the extent the PTO
accrued prior to the Agreement, ATC will be responsible. To the extent the PTO
accrued following the Agreement, Manager will be responsible. To this end, ATC
will Produce a report with PTO time accrued and keep an accounting with the
Manager as it is used.
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7. Right to New York Per Diem Medical Staffing Franchise/License. As
part of their noncompete obligations to Onward Healthcare, Inc., ATC and
DiCorcia are both prohibited from engaging in either the travel nurse or per
diem medical staffing businesses in certain areas in and around New York City.
ATC's obligations as to the per diem medical staffing business expire in April
2008 and DiCorcia's expire on June 30, 2008. Provided this Agreement is then in
full force and effect and Manager is not in breach hereof, Manager is hereby
granted the right, at Manager's option, to enter into a License Agreement with
ATC to conduct a per diem, but not a travel nurse, medical staffing business
under ATC's standard franchise/license agreement then in effect in each of the
three territories (the "Territories") described in Exhibit G hereto. Under ATC's
current franchise/license agreement, the initial franchise/license fee is
$29,500 for each territory, which fee is subject to change. Manager shall
exercise such right as to any or all of the Territories by giving ATC written
notice of intent to exercise not later than June 1, 2008 and by executing and
delivering to ATC on or before September 1, 2008 ATC's then standard
franchise/license agreement for such franchise/licenses (which ATC shall provide
to Manager, together with any and all documents it customarily then provides to
prospective franchisee/licensees following receipt of Manager's notice of intent
to exercise), together with any payment and other items required to be provided
to ATC under the franchise/license agreement.
8. Confidentiality.
(a) Without authorization by ATC, Manager shall not, and shall
take all required actions so that its employees, agents, and representatives do
not, at any time disclose or publish, or authorize anyone else to disclose or
publish in any manner, any "Confidential Information" as defined below relating
to the business of ATC known by Manager on the date of this Agreement or
obtained during its term. As used in this Agreement, "Confidential Information"
shall mean any and all confidential, proprietary, or otherwise nonpublic
information relating to ATC, including without limitation, periodic reports,
financial statements, files, records, research, designs, maps, analyses,
information or studies, drawings, prints, trade secrets, ideas, discoveries,
concepts, expertise, processes, billing or management or marketing or production
or operation or financial systems, customer and supplier lists, business plans
and records, cost data, and other information, concerning the business,
operations, owners, or employees of ATC. Manager, its officers, directors,
employees, agents, and representatives acknowledge that the Confidential
Information shall be and remain the property of ATC, and shall be surrendered to
ATC upon the termination of this Agreement. The provisions of this Section 9(a)
shall survive termination of this Agreement.
(b) Without authorization by Manager, ATC shall not, and shall
take all required actions so that its employees, agents, and representatives do
not, at any time disclose or publish, or authorize anyone else to disclose or
publish in any manner, any "Confidential Information" as defined below relating
to the business of Manager known by ATC on the date of this Agreement or
obtained during its term. As used in this Agreement, "Confidential Information"
shall mean any and all confidential, proprietary, or otherwise nonpublic
information relating to Manager, including without limitation, periodic reports,
financial statements, files, records, research, designs, maps, analyses,
information or studies, drawings, prints, trade secrets, ideas, discoveries,
concepts, expertise, processes, billing or management or marketing or production
or operation or financial systems, customer and supplier lists, business plans
and records, cost data, and other information, concerning the business,
operations, owners, or employees of Manager. ATC, its officers, directors,
employees, agents, and representatives acknowledge that the Confidential
Information shall be and remain the property of Manager, and shall be
surrendered to Manager upon the termination of this Agreement. The provisions of
this Section 9(b) shall survive termination of this Agreement.
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9. Covenant Not to Compete.
(a) In-Term. During the term of this Agreement,
Manager, and its officers, shareholders and members, shall not directly or
indirectly engage in any other business (other than with or as part of ATC)
which offers or sells travel nurses or competes in any of the activities which
this Agreement contemplates will be managed by Manager. In addition, unless
Manager exercises Manager's rights to a New York per diem medical staffing
franchise/license under Section 7 hereof, Manager shall not during term of this
Agreement, within the Territory, either directly or indirectly, engage in any
business which offers or sells per diem medical staffing services (i.e., a
business other than a travel nursing business that recruits and places nurses
and other medical staff personnel, other than physicians, on a per diem,
supplemental or permanent basis at a customer's facilities, which placement does
not ordinarily include relocation with travel and temporary housing).
If Manager is a corporation, Manager shall cause its proprietors,
principals, partners, shareholders, directors, officers, their respective
spouses, if any, and all employees to refrain from such activities (and those
described in subsection (b) below) in any manner which ATC may reasonably
request (including, without limitation, execution of a shareholders' agreement,
the Non-Compete and Confidentiality Agreement in the form attached hereto as
Exhibit H or an employees' confidentiality agreement, as is appropriate, setting
forth and prohibiting the activities hereby precluded).
(b) Post-Term. Manager agrees that for a period of one (1)
year immediately following the expiration, non-renewal, transfer, or termination
of this Agreement, within ten (10) miles of any office location of ATC, any
affiliate of ATC, or any licensee of ATC, either directly or indirectly, engage
in any business which offers or sells travel nursing services or engages in any
of the activities which this Agreement contemplates will be managed by Manager,
either as a proprietor, partner, investor, shareholder, director, officer,
employee, principal, agent, advisor, landlord, licensor, or consultant. Further,
Manager shall not solicit any employees or clients of ATC or its affiliates.
(c) Manager acknowledges that violation of the covenants not
to compete contained in this Agreement would result in immediate and irreparable
injury to ATC for which no adequate remedy at law may be available. Accordingly,
Manager hereby consents to the entry of an injunction prohibiting any conduct by
Manager in violation of the terms of those covenants not to compete set forth in
this Agreement. Manager expressly agrees that it may conclusively be presumed
that any violation of the terms of said covenants not to compete was
accomplished by and through Manager's unlawful utilization of ATC's confidential
information, know-how, methods and procedures. Further, Manager expressly agrees
that the existence of any claims it may have against ATC, whether or not arising
from this Agreement shall not constitute a defense to the enforcement by ATC of
the covenants not to compete set forth in this Agreement. Manager further agrees
to pay all costs and expenses (including reasonable attorneys' fees) incurred by
ATC in connection with the enforcement of those covenants not to compete set
forth in this Agreement in the event ATC prevails in any way in such enforcement
efforts provided ATC is not concurrently in material default of this Agreement.
The covenant not to compete may be reasonably reduced geographically or
temporally to comply with existing law or changed circumstances.
15
10. Indemnification.
(a) Limitation of Liability. Neither party shall be liable to
the other for any indirect or consequential damages arising out of or in
connection with its activities under this Agreement. Any damage claims payable
by one party to the other under this Agreement shall be net of any applicable
insurance available to the receiving party, less any deductible payable by that
party.
(b) Indemnification to ATC. Manager shall indemnify and hold
ATC harmless against and in respect of:
(i) Any and all claims, costs, losses, damages and
expenses, which Manager may suffer or incur on account of any liabilities or
obligations arising directly or indirectly out of any breach of any obligation
of Manager under this Agreement; and
(ii) All reasonable costs and expenses (including
attorneys' fees) incurred by ATC in connection with any action, suit,
proceeding, demand, assessment, or judgment incident to any of the matters
indemnified against in this Section 10(b).
(c) Indemnification to Manager. ATC shall indemnify and hold
Manager harmless against and in respect of:
(i) Any and all claims, costs, losses, damages and
expenses which Manager may suffer or incur on account of any liabilities or
obligations arising directly or indirectly out of breach of any obligation of
ATC under this Agreement except to the extent caused by the negligence or
willful misconduct of Manager or the breach by Manager of its obligations
hereunder; and
(ii) All reasonable costs and expenses (including
attorneys' fees) incurred by Manager in connection with any action, suit,
proceeding, demand, assessment, or judgment incident to any of the matters
indemnified against in this Section 10(c).
11. Events of Default.
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(a) Any of the following shall constitute an "Event of
Default" under this Agreement.
(i) The filing by or against ATC or Manager of a
petition for any relief under any applicable bankruptcy or insolvency laws or
other similar proceedings seeking protection from creditors; provided, however,
that in the event that such a petition is filed against a party to this
Agreement by any other party, such filing shall not be an Event of Default if
such petition is dismissed within sixty (60) days after the date of filing.
(ii) An assignment by either party for the benefit of
creditors.
(iii) The failure of ATC to make any payment due
under this Agreement within sixty (60) days of the date due.
(iv) The written notice by either party to the other
of an uncured material default in the performance of a party's obligations under
this Agreement, which default is not cured within thirty (30) days from the date
of the written notice setting forth a default.
(v) The commission by Manager of willful misconduct
or fraud in connection with the performance of its duties under this Agreement.
(b) Upon the occurrence and continuance of an Event of
Default, the nondefaulting party may, at its option, (i) declare this Agreement
terminated, but subject to the requirements of Section 8 regarding
Confidentiality and to the payment in full of all amounts owed by each party to
the other, and/or (ii) enforce the provisions of this Agreement by appropriate
legal, injunctive, and/or other relief. The defaulting party shall pay all costs
and expenses, including reasonable attorneys' fees, incurred by the
nondefaulting party in the enforcement of the terms and covenants of the
defaulting party under this Agreement. No delay or failure on the part of the
nondefaulting party in exercising any of its rights under this Agreement shall
be deemed or operate as a waiver of this Agreement or of any rights or remedies
of the nondefaulting party with respect to the default or any future
occurrences. The rights and remedies of the nondefaulting party are cumulative
and in addition to, but not in limitation of, any rights or remedies which the
nondefaulting party may otherwise have at law or in equity. In the case of an
Event of Default, in addition to the remedies above, the nondefaulting party
shall have the full right to collect damages resulting from the breach of this
Agreement, which damages shall include but not be limited to costs of
termination, lost profits, and attorney's fees incurred in connection with
collection of the damages.
12. Miscellaneous.
(a) Notices. All notices, requests, demands, and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when delivered, or when
delivery is rejected, personally or by regular, express, or overnight mail or
delivery service which is capable of confirming delivery, postage or other
charges prepaid, or by confirmed fax, as follows:
17
(i) If to ATC, to:
ATC Healthcare, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx Xxxxxx
(ii) If to Manager, to:
Travel Healthcare Solutions, LLC
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx XxXxxxxx
or to such other address as either party shall have specified by notice in
writing to the other. In the event a party attempts to deliver a writing to the
other party and the writing is not deemed to have been duly given in accordance
with the above provisions, the writing shall be deemed to have been duly given
business two (2) days after the writing is sent by recognized overnight delivery
service to the above address(es).
(b) Independent Contractor Status. Manager understands and
agrees that under this Agreement, Manager is and shall be an independent
contractor. No staff employee of Manager's Centers shall be deemed to be an
employee of ATC. Nothing in this Agreement shall be construed so as to create a
partnership, joint venture or agency. Manager shall not, without the prior
written approval of ATC, have any power to obligate ATC for any expenses,
liabilities or other obligations, other than as is specifically provided for in
this Agreement. ATC shall not have the power to hire or fire Manager's
management and administrative staff employees and, except as herein expressly
provided, ATC may not control or have access to Manager's funds or the
expenditure thereof, or in any other way exercise dominion or control over
Manager's business.
(c) Waivers and Amendments.
(i) Each party may, by written notice to the other:
(a) extend the time for the performance of any of the obligations or other
actions of the other; (b) waive any inaccuracies in the representations or
warranties of the other in this Agreement; (c) waive compliance with any of the
agreements of the other in this Agreement; and (d) waive or modify performance
of any of the obligations of the other.
(ii) This Agreement may be amended, modified, or
supplemented only by a written instrument executed by both parties. Except as
provided in the preceding sentence, no action taken under this Agreement,
including without limitation any investigation by or on behalf of either party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with the representations, warranties, or agreements contained in this
Agreement. The waiver by either party of a breach of any provision of this
Agreement shall not be construed as a waiver of any later breach.
18
(d) Binding Effect and Benefits. This Agreement shall inure to
the benefit of, and be binding upon, the parties and their successors and
permitted assigns. Nothing in this Agreement, expressed or implied, is intended
to confer on any other person other than the parties, or their successors and
permitted assigns, any rights, remedies, obligations, or liabilities under or by
reason of this Agreement.
(e) Nonassignability. This Agreement and any and all rights
under it shall not be assignable by either party without the prior written
consent of the other.
(f) Applicable Law. This Agreement, and the legal
relationships between the parties, shall be governed by, and interpreted in
accordance with, the laws of the State of New York. Manager, its principals,
officers, directors, members, shareholders and affiliates hereby submit to the
exclusive jurisdiction of the United States District Courts of the State of New
York with respect to any dispute, claim, cause of action or the like arising
from or out of this Agreement (or any related Agreement, arrangement or
understanding) as if he, she, it or they were residents of the State of New York
for purposes of service of process. Manager further agrees that venue in any
action, suit, proceeding and the like arising from or out of this Agreement (or
any related agreement, arrangement or understanding) shall be exclusively laid
in United States District Court for the Eastern District of New York, New York
or the Supreme Court of the State of New York, County of Nassau.
(g) Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to their subject matter.
(h) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be considered to be an original and all of
which together shall be considered to be one and the same document.
19
IN WITNESS WHEREOF, the undersigned parties, intending to be legally
bound hereby, have duly executed and delivered this Agreement as of the date
first written above.
ATC HEALTHCARE SERVICES, INC.
By: \s\ Xxxxxx X. Xxxxxx
---------------------------
Printed Name: Xxxxxx X. Xxxxxx
-----------------
Title: Senior Vice President
------------------------
TRAVEL HEALTHCARE SOLUTIONS, LLC
By: \s\ Xxxxxxxx XxXxxxxx
---------------------------
Printed Name: Xxxxxxxx XxXxxxxx
-----------------
Title: President
------------------------
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Exhibits omitted; will be provided upon request of the Commission.
21
