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EXHIBIT 10.112
RECEIVABLES
PURCHASE AND TRANSFER
AGREEMENT
Dated as of April 6, 2001
Among
ATC HEALTHCARE SERVICES, INC.
as a Provider and as Primary Servicer
and
ATC STAFFING SERVICES, INC.,
as a Provider
and
STAFF BUILDERS, INC.,
as the Parent
and
ATC FUNDING, LLC,
as Purchaser
ALL THE RIGHT, TITLE AND INTEREST OF THE PURCHASER IN AND TO, ALL
BENEFITS OF THE PURCHASER UNDER AND ALL MONIES DUE OR TO BECOME DUE TO
THE PURCHASER UNDER OR IN CONNECTION WITH, THIS AGREEMENT HAVE BEEN
ASSIGNED TO HFG HEALTHCO-4 LLC, AS COLLATERAL SECURITY FOR ANY AND ALL
THE OBLIGATIONS OF THE PURCHASER PURSUANT TO A LOAN AND SECURITY
AGREEMENT DATED AS OF APRIL 6, 2001 BETWEEN THE PURCHASER AND HFG
HEALTHCO-4 LLC.
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TABLE OF CONTENTS
Page
ARTICLE I. TERMS OF THE PURCHASES AND CONTRIBUTIONS
SECTION 1.01 Sale, Contribution and Purchase of
Receivables..................................1
SECTION 1.02 Receivable Information and Transferred Batch
Determination................................1
SECTION 1.03 The Transfers..................................1
SECTION 1.04 Collection and Payment Procedures..............2
SECTION 1.05 Allocation of Servicer Responsibilities........2
ARTICLE II. PAYMENT MECHANICS; MISDIRECTED PAYMENTS
SECTION 2.01 Payment Mechanics..............................3
SECTION 2.02 Misdirected Payments...........................3
SECTION 2.03 Unidentified Payments; Purchaser's Right of
Presumption..................................4
SECTION 2.04 No Rights of Withdrawal........................4
ARTICLE III. REPRESENTATIONS AND WARRANTIES; COVENANTS; EVENTS OF TERMINATION
SECTION 3.01 Representations and Warranties; Covenants......4
SECTION 3.02 Events of Termination..........................4
ARTICLE IV. INDEMNIFICATION; GRANT OF SECURITY INTEREST
SECTION 4.01 Denied Receivables.............................4
SECTION 4.02 Indemnities by the Providers...................5
SECTION 4.03 Right of Set-Off...............................6
SECTION 4.04 Grant of Security Interest.....................6
ARTICLE V. MISCELLANEOUS
SECTION 5.01 Amendments, etc................................7
SECTION 5.02 Notices, etc...................................7
SECTION 5.03 Assignability..................................7
SECTION 5.04 Further Assurances.............................8
SECTION 5.05 Costs, Expenses and Termination Fee............8
SECTION 5.06 Confidentiality................................9
SECTION 5.07 Term and Termination...........................9
SECTION 5.08 Sale Treatment.................................9
SECTION 5.09 Grant of Security Interest....................10
SECTION 5.10 No Liability of the Purchaser.................10
SECTION 5.11 Attorney-in-Fact..............................10
SECTION 5.12 Entire Agreement; Severability................10
SECTION 5.13 GOVERNING LAW.................................10
SECTION 5.14 WAIVER OF JURY TRIAL, JURISDICTION AND
VENUE.......................................10
SECTION 5.15 Execution in Counterparts.....................11
SECTION 5.16 No Proceedings................................11
SECTION 5.17 Survival of Termination.......................11
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EXHIBITS
Exhibit I Definitions
Exhibit II Conditions of Purchases
Exhibit III Representations and Warranties
Exhibit IV Covenants
Exhibit V Events of Termination
Exhibit VI Receivable Information
Exhibit VII Form of Notice to Obligors
Exhibit VIII Primary Servicer Responsibilities
Exhibit IX Servicer Termination Events
Exhibit X Interface Between Master Servicer and the Primary Servicer
Exhibit XI-A Form of Opinion of Provider's and Purchaser's Counsel
with Respect to Certain Corporate Matters
Exhibit XI-B Form of Opinion of Provider's and Purchaser's Counsel
with Respect to Certain Bankruptcy Matters
Exhibit XII Form of Depositary Agreement
SCHEDULES
Schedule I Addresses for Notices
Schedule II Credit and Collection Policy
Schedule III Disclosures
Schedule IV Lockbox Information
Schedule V Tradenames
Schedule VI Net Value Factors
Schedule VII Permitted Liens
Schedule VIII Debt
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RECEIVABLES PURCHASE AND TRANSFER AGREEMENT
Dated as of April 6, 2001
ATC HEALTHCARE SERVICES, INC., a corporation organized under
the laws of the State of Georgia ("ATC HEALTHCARE"), ATC STAFFING SERVICES,
INC., a corporation organized under the laws of the State of New York ("ATC
STAFFING"; ATC Staffing and ATC Healthcare, each a "PROVIDER" and together, the
"PROVIDERS", and ATC Healthcare in its capacity as primary servicer hereunder,
the "PRIMARY SERVICER"), and ATC FUNDING, LLC, a limited liability company
organized under the laws of the State of Delaware (together with its corporate
successors and assigns, the "PURCHASER"), and STAFF BUILDERS, INC., a Delaware
corporation ("PARENT") agree as follows:
PRELIMINARY STATEMENTS. Certain terms that are capitalized and
used throughout this Agreement are defined in Exhibit I to this Agreement.
References herein and in the Exhibits and Schedules hereto to the "Agreement"
refer to this Agreement, as amended, restated, modified or supplemented from
time to time in accordance with its terms (the "AGREEMENT").
The Providers wish to sell or contribute to the Purchaser on a
continuing basis all of their healthcare receivables. The Purchaser is prepared
to purchase or to accept the contribution of such healthcare receivables on the
terms and subject to the conditions set forth herein. Accordingly, the parties
agree as follows:
ARTICLE 1. TERMS OF THE PURCHASES AND CONTRIBUTIONS
SECTION 1.1 Sale, Contribution and Purchase of Receivables. On
each Transfer Date until the Facility Termination Date and on the terms and
conditions set forth herein, each Provider agrees to sell or contribute, without
recourse except to the extent expressly provided herein, all of such Provider's
Receivables to the Purchaser, and the Purchaser agrees to purchase or accept
such contribution of, all of each Provider's Receivables.
SECTION 1.2 Weekly Report. On or prior to the first Business
Day of each Week, the Primary Servicer, on behalf of each Provider, shall
provide the Master Servicer by Transmission (or, if the Primary Servicer has
used reasonable efforts to send a Transmission but cannot do so, another method
of transmission acceptable to the Master Servicer) a report (the "WEEKLY
REPORT") containing the information listed on Exhibit VI hereto (as such Exhibit
may be modified by the Purchaser from time to time, the "RECEIVABLE
INFORMATION") with respect to new Receivables sold or contributed to the
Purchaser during the Week ended the second Saturday prior to such Business Day
and all other outstanding Receivables sold or contributed to the Purchaser prior
to such Week. Based on the Weekly Report, the Providers and the Purchaser shall
designate those Receivables that were purchased and those that were contributed,
and record such determination on their respective books and records.
SECTION 1.3 The Transfers. (a) On each Transfer Date (i)
subject to satisfaction of the applicable conditions set forth in Exhibit II
hereto, the Providers shall sell to the Purchaser all Eligible Receivables that
the Providers have submitted to the Purchaser for purchase hereunder and to be
included in the Purchased Batch, (ii) the Providers will contribute to the
capital of the Purchaser all other Eligible Receivables in the Transferred
Batch, and (iii) the Providers will contribute to the capital of the Purchaser
all Receivables that do not constitute Eligible Receivables. The Purchase shall
(x) pay to the Primary Servicer for the benefit of the Providers, at the Primary
Servicer Account, an amount equal to the
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Purchase Price of the Purchased Batch, and (y) record on the books and records
of the Purchaser the capital contribution with respect to those Receivables
contributed to the capital of the Purchaser in such Transferred Batch, in each
case, promptly and in no event later than three Business Days after the
applicable Transfer Date for such Batch. The Primary Servicer shall remit the
proceeds of the Purchase Price of the Purchased Batch to each Provider in
accordance with their respective interests.
(1) Effective on each Transfer Date, in consideration of the
payment of the Purchase Price, or the increase in the capital accounts of the
applicable Provider in the Purchaser, and for other good and valuable
consideration, each Provider hereby sells, contributes, assigns and conveys to
the Purchaser and the Purchaser hereby purchases and accepts, as absolute owner,
all right, title and interest in and to the Batch Receivables purchased or
contributed on such Transfer Date.
SECTION 1.4 Collection and Payment Procedures. (a) Collections
on Batches. The Purchaser shall be entitled with respect to each Batch, (i) to
receive all Collections on such Batch and (ii) to have and to exercise any and
all rights to collect, record, track and, during the continuance of an Event of
Termination or a Servicer Termination Event, take all actions to obtain
Collections with respect to each Receivable included in a Batch.
(1) Collections Not Part of a Batch. On each Settlement Date,
and provided that (i) each Provider shall have paid all amounts then due and
owing to the Purchaser under this Agreement and (ii) each Provider, or the
Primary Servicer on behalf of such Provider, shall have successfully sent by
Transmission to the Master Servicer all information required with respect to the
Batch Receivables for the immediately preceding Settlement Period, and (iii) no
Event of Termination shall have occurred and be continuing, the Purchaser shall
pay or turn over, as the case may be, to the Primary Servicer for the benefit of
the applicable Provider any and all cash collections or other cash or non-cash
proceeds received by the Purchaser during the immediately preceding Settlement
Period with respect to Receivables that are not part of any Batch. The Primary
Servicer shall remit such cash and proceeds to each Provider in accordance with
their respective interests.
(2) Distributions on Each Business Day. On each Business Day
and with respect to each Batch, Total Collections shall be distributed to the
Purchaser.
SECTION 1.5 Allocation of Servicer Responsibilities. (a)
Tracking of purchases, Collections and other transactions pertaining to each
Batch shall be administered by the Master Servicer in a manner consistent with
the terms of this Agreement. The responsibilities of the Providers and Primary
Servicer are set forth in Exhibit X attached hereto. Each Provider shall
cooperate fully with the Primary Servicer and the Master Servicer in
establishing and maintaining the Transmission of the Receivable Information,
including, without limitation, the matters described in Exhibit X, and shall
provide promptly to the Master Servicer such other information necessary or
desirable for the administration of Collections on the Batch Receivables as may
be requested from time to time.
(1) The Purchaser hereby appoints ATC Healthcare as its agent
for the administration and servicing obligations set forth in Exhibit VIII
hereto with respect to the Receivables sold or transferred by the Providers to
the Purchaser hereunder (the "PRIMARY SERVICER RESPONSIBILITIES"), and ATC
Healthcare hereby accepts such appointment and agrees to perform the Primary
Servicer Responsibilities on behalf of the Providers and ATC Staffing hereby
consents to such appointment; provided, however, that such appointment shall not
release any Provider from any of its duties, responsibilities, liabilities and
obligations resulting or arising hereunder. Each Provider and the Purchaser
hereby acknowledges that ATC Healthcare's appointment as Primary Servicer is
expressly limited by and subject to Healthco-4's right under the Loan Agreement
to replace the Purchaser or its agent as the
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Primary Servicer (which replacement may be effectuated through the outplacement
to a qualified and experienced third-party of all back office duties, including
billing, collection and processing responsibilities, and access to all
personnel, hardware and software utilized in connection with such
responsibilities). The Purchaser may, at any time following the occurrence of a
Servicer Termination Event (and shall, without requirement of notice to any
party, upon a Servicer Termination Event resulting from the events described in
clauses (g) or (i) of Exhibit V hereto) appoint another Person (which may be the
Master Servicer) to succeed ATC Healthcare as its agent for performance of the
Primary Servicer Responsibilities (which appointment may be effectuated through
the outplacement to a qualified and experienced third-party of all back office
duties, including billing, collection and processing responsibilities, and
access to all personnel, hardware and software utilized in connection with such
responsibilities).
(2) As compensation for the performance of the Primary
Servicer Responsibilities, the Providers shall pay ATC Healthcare (or the
successor Primary Servicer who performs such Primary Servicer Responsibilities)
the Primary Servicing Fee.
ARTICLE 2. PAYMENT MECHANICS; MISDIRECTED PAYMENTS
SECTION 2.1 Payment Mechanics. (a) On or prior to the Initial
Transfer Date each of the Primary Servicer, the Providers, the Purchaser,
Healthco-4 and the Lockbox Bank shall have entered into the Lockbox Agreements
and shall have caused the Lockbox Bank to establish the Lockboxes and the
Lockbox Account.
(1) Each Provider shall prepare, execute and deliver to each
of its Obligors, with copies to the Purchaser, on or prior to the Initial
Transfer Date, a Notice to Obligors addressed to each such Obligor, which Notice
to Obligors shall state that all present and future Receivables owing to such
Provider have been and will be transferred to the Purchaser and that all checks
from such Obligor on account of Receivables shall be sent to a Lockbox and all
wire transfers from such Obligor on account of Receivables shall be wired
directly into a Lockbox Account.
(2) Each Provider covenants and agrees that, on and after the
Initial Transfer Date, all invoices (and, if provided by such Provider, return
envelopes) to be sent to Obligors shall set forth only the address of a Lockbox
as a return address for payment of Receivables and only the Lockbox Account with
respect to wire transfers for payment of Receivables. Each Provider hereby
further covenants and agrees to instruct and notify each of the members of its
accounting and collections staff to provide identical information in
communications with Obligors with respect to payment of Receivables and wire
transfers.
SECTION 2.2 Misdirected Payments. (a) In the event that the
Parent or any Provider receives a Misdirected Payment in the form of a check,
the Parent or such Provider shall immediately send such Misdirected Payment, in
the form received by the Parent or such Provider, by hand or overnight delivery
service to a Lockbox for deposit into the corresponding Lockbox Account. In the
event the Parent or any Provider receives a Misdirected Payment in the form of
cash or wire transfer, the Parent or such Provider shall immediately wire
transfer the amount of such Misdirected Payment directly to the Lockbox Account.
All Misdirected Payments shall be sent promptly upon receipt thereof, and in no
event later than the close of business, on the first Business Day after receipt
thereof.
(1) If a Misdirected Payment in the form of a check is
received by the Parent or any Provider more than six days after the date of such
check with respect thereto, then the relevant Provider shall pay interest on
such Misdirected Payment to the Purchaser from such sixth subsequent day to and
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including the date such check is received in the Lockbox Account, at a rate
equal to LIBOR then in effect under the Loan Agreement.
(2) Each Provider hereby agrees and consents to the Purchaser
taking such actions as are reasonably necessary to ensure that future payments
from the Obligor of a Misdirected Payment shall be made in accordance with the
Notice to Obligors previously delivered to such Obligor, including, without
limitation, to the maximum extent permitted by law, (i) the Purchaser, its
assigns or designees, or any member of the HFG Group executing on such
Provider's behalf and delivering to such Obligor a new Notice to Obligors, and
(ii) the Purchaser, its assigns or designees, or any member of the HFG Group
contacting such Obligor by telephone to confirm the instructions previously set
forth in the Notice to Obligor to such Obligor. Upon the Purchaser's request,
each Provider shall promptly (and in any event, within two Business Days from
such request) take such similar actions as the Purchaser may reasonably request.
SECTION 2.3 Unidentified Payments; Purchaser's Right of
Presumption. Each Provider and the Purchaser agree and consent that the HFG
Group or its designees or assigns, may apply any payment it receives from an
Obligor or any other payor against a Transferred Batch if the HFG Group is
unable in good faith to determine whether such payment relates to a Transferred
Batch.
SECTION 2.4 No Rights of Withdrawal. None of the Parent, the
Providers, the Primary Servicer or the Purchaser shall have any rights of
direction or withdrawal with respect to amounts held in the Lockbox Accounts or
the Concentration Account.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES; COVENANTS; EVENTS OF
TERMINATION
SECTION 3.1 Representations and Warranties; Covenants. The
Parent and each Provider makes, on the Initial Transfer Date and on each
subsequent Transfer Date, the representations and warranties on and as of such
dates, and hereby agrees to perform and observe the covenants, set forth in
Exhibits III and IV, respectively, hereto.
SECTION 3.2 Events of Termination. If an Event of Termination
shall occur and be continuing, the Purchaser may, by notice to the Providers
(which notice shall be deemed to have been given to the Providers and the
Primary Servicer), take either or both of the following actions: (x) declare the
Facility Termination Date to have occurred (except with respect to the Event of
Termination in clause (g) of Exhibit V, in which case the Facility Termination
Date shall be deemed to have occurred automatically and without notice), and (y)
without limiting any rights hereunder, terminate the appointment of ATC
Healthcare as Primary Servicer and replace ATC Healthcare as Primary Servicer in
the manner set forth in Section 1.05(b). Upon any such declaration or
designation, the Purchaser shall have, in addition to the rights and remedies
which it may have under this Agreement, all other rights and remedies provided
after default under the UCC and under other applicable law, which rights and
remedies shall be cumulative.
ARTICLE 4. INDEMNIFICATION; GRANT OF SECURITY INTEREST
SECTION 4.1 Denied Receivables. (a) If a breach of any of the
representations or warranties contained herein relating to a Batch Receivable
shall be discovered at any time (each, a "DENIED RECEIVABLE"), the Primary
Servicer or the relevant Provider shall on the next Settlement Date, purchase
such Denied Receivable from the Purchaser at the Return Price.
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(1) For ease of administration, the Purchaser shall be
entitled to presume that the failure of any Batch Receivable (or portion
thereof) to be paid in full on or after the 180th day following the Last Service
Date thereof is the result of a breach of a representation or warranty contained
herein with respect to such Batch Receivable unless (i) the Purchaser shall have
actual knowledge to the contrary (such as, by way of example, actual knowledge
of the financial inability of an Obligor to pay its obligations represented by a
Receivable), or (ii) the Primary Servicer shall have submitted a certificate to
the Program Manager (which certificate and underlying documentation shall be
reasonably satisfactory to the Program Manager) stating that (1) it has reviewed
the representations and warranties and Eligibility Criteria and has made due and
appropriate inquiry of the applicable Obligor and such Batch Receivables, (2)
the Obligor does not maintain and has not asserted any dispute with the
applicable Provider that could impair payment by the Obligor of its payment
obligations with respect to such Batch Receivable, and (3) all representations
and warranties and Eligibility Criteria with respect to such Batch Receivable
were, as of the date of transfer thereof, true and correct in their entirety and
such failure to pay is exclusively the result of reasons unrelated to the breach
of such representations, warranties or Eligibility Criteria (such as the
financial inability of an Obligor to pay its obligations). In the event the
Purchaser receives the Return Price for any such Batch Receivable and it is
thereafter determined that the failure of such Batch Receivable to be paid in
full was not the result of a breach of representation or warranty contained
herein, the parties hereto shall make an appropriate adjustment by increasing
the Purchase Price of any Purchased Batch to be purchased on or after such date.
(2) Upon receipt by (or on behalf of) the Purchaser of the
Return Price with respect to any Denied Receivable, the Purchaser shall be
deemed to have reassigned and resold to the relevant Provider such Denied
Receivable without any representation, warranty or recourse whatsoever, and,
thereafter, neither the Purchaser nor any member of the HFG Group shall have any
further servicing or other obligation to such Provider with respect to such
Denied Receivable.
(3) From time to time at the request of any Provider, the
Purchaser shall promptly deliver to such Provider (at such Provider's sole cost
and expense) such documents, assignments, releases, notices and instruments of
termination as such Provider may reasonably request to evidence the reconveyance
by the Purchaser of a Denied Receivable pursuant to the terms of Section
4.01(c).
SECTION 4.2 Indemnities by the Providers. Without limiting any
other rights that the Purchaser, the Program Manager, the Master Servicer or any
of their respective Affiliates (together with their respective officers,
directors, agents, representatives, shareholders, counsel, employees and
lenders, each, an "INDEMNIFIED PARTY") may have hereunder or under applicable
law, each Provider hereby, jointly and severally, agrees to indemnify each
Indemnified Party from and against any and all claims, losses and liabilities
(including, without limitation, reasonable attorneys' fees) (all of the
foregoing being collectively referred to as "INDEMNIFIED AMOUNTS") arising out
of or resulting from any of the following:
(1) the sale or contribution of any Receivable which
purports to be part of a Transferred Batch but which is not, at the
date of such sale or contribution, an Eligible Receivable;
(2) any representation or warranty made or deemed made
by any Provider (or any of its officers) under or in connection with
this Agreement (and not relating to the Eligibility Criteria) which
shall have been incorrect in any material respect when made; (1)
(3) the failure by any Provider or any Batch Receivable
to comply with any applicable law, rule or regulation;
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(4) the failure to vest in the Purchaser a perfected
ownership interest in each Receivable included in a Transferred Batch
and the proceeds and Collections in respect thereof, free and clear of
any Liens;
(5) any dispute, claim, set-off or defense to the
payment, in whole or in part, of any Receivable (including, without
limitation, a defense based on such Receivable not being a legal, valid
and binding obligation) or any other claim resulting from the services
or merchandise related to such Receivable or the furnishing or failure
to furnish such services or merchandise or relating to collection
activities with respect to such Receivable (if such collection
activities were performed by any Provider or any of their Affiliates
acting as Primary Servicer), provided, however, this clause (e) shall
not be deemed to include any dispute, claim, set-off or defense to the
payment of any Receivable (i) arising out of the financial inability of
an Obligor to pay its obligations represented by such Receivable
including, without limitation, a discharge in bankruptcy, or (ii)
arising solely as a result of actions taken by any member of the HFG
Group;
(6) a failure of any Provider, including, without
limitation, the Primary Servicer's actions on behalf of the Providers
under Section 1.05(b) of this Agreement with respect to Primary
Servicer Responsibilities, to perform its duties or obligations in
accordance with the provisions hereof or to perform its duties or
obligations hereunder; or
(7) the commingling by any Provider of Collections at
any time with other funds of any Provider;
provided, however, that in all events there shall be excluded from the foregoing
indemnification any claims, losses or liabilities resulting from the gross
negligence or willful misconduct of an Indemnified Party or which constitutes
credit recourse for an uncollectible Batch Receivable.
Such Indemnified Party shall notify the Primary Servicer, on
behalf of the Providers, of such claim, provided that the failure to so notify
shall not affect or invalidate the indemnity granted pursuant to this Section
4.02.
SECTION 4.3 Right of Set-Off. Each Provider hereby irrevocably
instructs the Purchaser to set-off the full amount of the Return Price or the
Indemnified Amounts, as the case may be, against the Purchase Price of any
Purchased Batch to be purchased on or after such date and unless any Provider
notifies the Purchaser in writing that it desires to pay on the date when due
the Return Price under Section 4.01 or any Indemnified Amounts under Section
4.02 and such Provider makes such payment to the Purchaser in immediately
available funds on such date any such amount shall be so set-off. No further
notification, act or consent of any nature whatsoever is required prior to the
right of the Purchaser to exercise such right of set-off; provided, however, the
Purchaser or a member of the HFG Group shall notify the Primary Servicer on
behalf of the Providers that a set-off pursuant to this Section 4.03 occurred,
the amount of such set-off and a description of the Denied Receivable or
Indemnified Amounts, as the case may be; provided, further that the failure to
so notify shall not affect or invalidate the indemnity granted pursuant to
Section 4.02. The Purchaser shall exercise its right to set-off hereunder to the
extent funds are available prior to making a demand for indemnification under
Section 4.02.
SECTION 4.4 Grant of Security Interest. (a) As collateral
security for each Provider's existing and future (i) obligations to purchase
Denied Receivables under Section 4.01 hereof, (ii) indemnification obligations
to the Purchaser under Section 4.02 hereof, and (iii) obligations to pay
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costs, expenses and fees under Section 5.05 hereof, each Provider hereby grants
to the Purchaser a first priority lien on and security interest in, and right of
set-off against, (v) all of the Accounts now or hereafter owned or held by such
Provider, (w) all of the Additional Collateral, (x) any and all cash collateral
reserve accounts established pursuant to this Agreement from time to time, (y)
any and all amounts held in any accounts maintained at any bank and (z) all
proceeds of the foregoing (all of the foregoing, the "COLLATERAL").
(1) In connection with the grant under (a) above, this
Agreement shall be deemed to be a security agreement as understood under the
UCC. Each Provider agrees to execute, and hereby authorizes the Purchaser to
file, one or more financing statements or continuation statements or amendments
thereto or assignments thereof in respect of the lien created pursuant to this
Section 4.04 which may at any time be required or, in the opinion of the
Purchaser, be desirable, and to do so without the signature of such Provider
where permitted by law.
ARTICLE 5. MISCELLANEOUS
SECTION 5.1 Amendments, etc. (a) No amendment or waiver of any
provision of this Agreement or consent to any departure therefrom by a party
hereto shall be effective unless in writing signed by the Primary Servicer, the
Providers, the Purchaser, the Parent and consented to in writing by Healthco-4
as assignee of all of the Purchaser's rights and remedies hereunder, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
the Purchaser, the Parent, the Primary Servicer or any Provider to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right.
(1) The parties hereto agree to make any change, modification
or amendment to this Agreement as may be requested by Fitch, Inc. or any other
rating agency then rating the healthcare finance program of Healthco-4, so long
as any such change, modification or amendment does not materially adversely
affect the parties hereto.
SECTION 5.2 Notices, etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which may
include facsimile communication) and shall be faxed or delivered, (i) to each
Provider, the Parent, the Primary Servicer and the Purchaser, at its address set
forth under its name on the signature pages hereof or at such other address as
shall be designated by such party in a Written Notice to the other parties
hereto (the Parent and each Provider hereby acknowledges and agrees that notices
and communications to or for the benefit of the Parent and such Provider may be
delivered to the Primary Servicer and such delivery to the Primary Servicer
shall be deemed to be received by the Parent and such Provider), and (ii) to the
Program Manager and the Master Servicer at the addresses set forth on Schedule I
attached hereto (as such Schedule may be amended from time to time). Notices and
communications by facsimile shall be effective when sent (and shall be followed
by hard copy sent by regular mail) and notices and communications sent by other
means shall be effective when received.
SECTION 5.3 Assignability. (a) This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
permitted successors and assigns.
(1) Subject to Section 5.03(b) of the Loan Agreement, this
Agreement and the Purchaser's rights and obligations herein (including, without
limitation, ownership of the Batch Receivables in each Transferred Batch, the
Lockboxes and the Lockbox Accounts and rights in relation to
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the Lockboxes and the Lockbox Accounts) shall be assignable by the Purchaser and
its successors and assigns. Each Provider hereby acknowledges that the Purchaser
is granting to Healthco-4, which is further granting to its lenders, a security
interest in, and collateral assignment of, this Agreement and all of the
Purchaser's rights, title and interests hereunder (including, without
limitation, the Batch Receivables, such Provider's obligations hereunder, the
Lockboxes and the Lockbox Accounts, and rights in relation to the Lockboxes and
the Lockbox Accounts).
(2) Neither the Parent nor any Provider may assign its rights
or obligations hereunder or any interest herein without the prior written
consent of the Purchaser and Healthco-4.
SECTION 5.4 Further Assurances. The Parent and each Provider
shall, at its cost and expense, upon the request of the Purchaser, duly execute
and deliver, or cause to be duly executed and delivered, to the Purchaser such
further instruments and do and cause to be done such further acts as may be
necessary or proper in the reasonable opinion of the Purchaser to carry out more
effectively the provisions and purposes of this Agreement.
SECTION 5.5 Costs, Expenses and Termination Fee. (a) In
addition to the rights of indemnification granted under Section 4.02 hereof,
each Provider, jointly and severally, agrees to pay on demand all reasonable
costs and expenses in connection with the preparation, execution and delivery of
this Agreement and any waiver, modification, supplement or amendment hereto,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Purchaser and the members of the HFG Group, and all costs and
expenses, if any (including reasonable counsel fees and expenses), of the
Purchaser, its Affiliates and the members of the HFG Group in connection with
the enforcement of this Agreement. Each Provider further agrees to pay on the
Initial Transfer Date (and with respect to costs and expenses incurred following
the Initial Transfer Date, within seven days of demand therefor) (i) all
reasonable costs and expenses incurred by the Purchaser or its agent in
connection with periodic audits of the Receivables, (ii) all reasonable costs
and expenses (not to exceed $3,000 in any fiscal year of the Providers) incurred
by the Master Servicer or the Program Manager to accommodate any significant
coding or data system changes made by any Provider that would affect the
transmission or interpretation of data received through the interface, and (iii)
all reasonable costs and expenses incurred by the Purchaser for additional time
and material expenses of the Master Servicer resulting from a lack of
cooperation or responsiveness of any Provider or the Primary Servicer to
agreed-upon protocol and schedules with the Master Servicer; provided, that the
Providers or the Primary Servicer, as applicable, has received Written Notice of
the alleged lack of cooperation or responsiveness and has been provided an
opportunity to correct such problems.
(1) In the event that any Facility Termination Date is
declared (or is deemed to have occurred) pursuant to an Event of Termination,
the Providers shall pay to the Purchaser an early termination fee in an amount
equal to the termination fee payable by the Purchaser pursuant to Section
5.07(d) of the Loan Agreement.
(2) In the event that, following the occurrence and
continuance of an Event of Termination or a Servicer Termination Event, the
Purchaser or any member of the HFG Group shall retain an attorney or attorneys
to collect, enforce, protect, maintain, preserve or foreclose its interests with
respect to this Agreement, any related documents, any Collateral, any Lien, or
under any instrument or document delivered pursuant to this Agreement, the
Providers shall pay all of the reasonable costs and expenses of such collection,
enforcement, protection, maintenance, preservation or foreclosure, including
reasonable attorneys' fees, and the Purchaser may take judgment for all such
amounts. The attorneys' fees arising from such services, including those of any
appellate proceedings, and all reasonable out-of-pocket expenses, charges, costs
and other fees incurred by such counsel in any way or in any respect to or
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arising out of or in connection with or relating to any of the events or actions
described in this Section 5.05 shall be payable by the Providers to the
Purchaser on demand (with interest accruing from the tenth Business Day
following the date of such demand).
SECTION 5.6 Confidentiality. (a) The Parent, each Provider,
the Primary Servicer and the Purchaser hereby acknowledge that this Agreement,
the Loan Agreement and the documents delivered hereunder, thereunder or in
connection with, including, without limitation, any information relating to any
member of the HFG Group, contains confidential and proprietary information.
Unless otherwise required by applicable law, the Parent, each Provider, the
Primary Servicer and the Purchaser hereby agree to maintain the confidentiality
of this Agreement (and all drafts, memos and other documents delivered in
connection therewith including, without limitation, any information relating to
any member of the HFG Group delivered hereunder or under the Loan Agreement) in
communications with third parties and otherwise and to take all reasonable
action to prevent the unauthorized use or disclosure of and to protect the
confidentiality of such confidential information; provided, that such
confidential information may be disclosed to (i) the Parent's, the Providers'
and the Purchaser's legal counsel, accountants and auditors, (ii) the Program
Manager, Healthco-4, the Primary Servicer, each member of the HFG Group,
investors in and creditors of Healthco-4, appropriate rating agencies with
respect to Healthco-4, and each of their respective legal counsel, accountants
and auditors, (iii) any Person, if such information otherwise becomes available
to such Person or publicly available through no fault of any party governed by
this Section 5.06, (iv) any Governmental Entity requesting such information, and
(v) to any other Person with the written consent of the applicable party, which
consent shall not be unreasonably withheld, and provided further that none of
the Parent, the Primary Servicer or any Provider shall disclose such
confidential information to any financial adviser except with the consent of the
Program Manager. Notwithstanding the foregoing, the parties hereto agree that
the Parent, as a public company, may make such disclosure as is required by
state and federal law, including, but not limited to, such filings as are
required by the Securities and Exchange Commission.
(1) The Parent, each of the Providers, the Primary Servicer
and the Purchaser understands and agrees that the other or the HFG Group may
suffer irreparable harm if the obligations under this Section 5.06 are breached
and that monetary damages shall be inadequate to compensate the injured party
for such breach. Accordingly, the Parent, each of the Providers, the Primary
Servicer and the Purchaser agrees that, in the event of their respective breach
of Section 5.06(a), the injured party, in addition and not in limitation of its
rights and remedies under law, shall be entitled to a temporary restraining
order, preliminary injunction and permanent injunction to prevent or restrain
any such breach.
SECTION 5.7 Term and Termination. This Agreement shall
continue in full force and effect from the date hereof until the Final Payment
Date; provided, however, that, with respect to any Transferred Batches
transferred prior to the Final Payment Date and not purchased pursuant to
Section 4.01, the occurrence of the Final Payment Date shall not terminate any
security interest of the Purchaser hereunder, nor shall it relieve or discharge
the Parent, any Provider, the Primary Servicer or the Purchaser of or from their
respective duties, obligations or covenants hereunder and all the terms,
provisions and conditions of this Agreement shall remain in effect for such
purpose until such obligations have been satisfied and performed in full. Upon
the satisfaction in full of all the obligations, the Purchaser shall deliver all
assignments, certificates, releases, notices and other documents at the
Providers' expense, as the Providers may reasonably request to effect such
termination.
SECTION 5.8 Sale and Contribution Treatment. The Providers and
the Purchaser have structured the transactions contemplated by this Agreement
with respect to each Transferred Batch as a sale or contribution and intend that
such transactions constitute a sale or contribution, and each Provider and the
Purchaser agree to treat each such transaction as a sale or contribution for all
purposes, including,
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without limitation, in their respective books, records, computer files, tax
returns (federal, state and local), regulatory and governmental filings (and
shall reflect such sale in their respective financial statements). The Providers
will advise all persons inquiring about the ownership of the Receivables that
all Receivables have been sold or contributed to the Purchaser. The Providers
will pay all taxes (excluding income or franchise taxes of the Purchaser), if
any, relating to the transactions contemplated under this Agreement, including,
without limitation, the sale, transfer and contribution of each Batch to the
Purchaser.
SECTION 5.9 Grant of Security Interest. In the event that,
contrary to the mutual intent of the Providers and the Purchaser, any purchase
or contribution of a Batch is not characterized as a sale or contribution, each
Provider shall, effective as of the date hereof, be deemed to have granted (and
such Provider hereby does grant) (in addition to and not in substitution of the
grant under Section 4.04 hereof) to the Purchaser a first priority security
interest in and to any and all present and future Receivables and the proceeds
thereof to secure the repayment of all amounts paid to any Provider hereunder
with accrued interest thereon, and this Agreement shall be deemed to be a
security agreement. With respect to such grant of a security interest, the
Purchaser may at its option exercise from time to time any and all rights and
remedies available to it under the UCC or otherwise. Each Provider agrees that
five Business Days shall be reasonable prior notice to such Provider or to the
Primary Servicer on behalf of the Providers of the date of any public or private
sale or other disposition of all or any of the Batch Receivables.
SECTION 5.10 No Liability of the Purchaser. Neither this
Agreement nor any document executed in connection herewith shall constitute an
assumption by the Purchaser of any obligation to an Obligor.
SECTION 5.11 Attorney-in-Fact. Each Provider hereby
irrevocably designates and appoints the Purchaser, the Primary Servicer, the
Master Servicer and each Person in the HFG Group, to the extent permitted by
applicable law and regulation, as such Provider's attorneys-in-fact, which
irrevocable power of attorney is coupled with an interest, with authority to (i)
endorse or sign such Provider's name to financing statements, remittances,
invoices, assignments, checks, drafts or other instruments or documents in
respect of the Batch Receivables, (ii) notify Obligors to make payments on the
Batch Receivables directly to the Purchaser, and (iii) bring suit in such
Provider's name and settle or compromise such Batch Receivables as the
Purchaser, the Primary Servicer, the Master Servicer or any Person in the HFG
Group may, in its discretion, deem appropriate.
SECTION 5.12 Entire Agreement; Severability. (a) This
Agreement, including all exhibits and schedules hereto, and the documents
referred to herein, embody the entire agreement and understanding of the parties
concerning the subject matter contained herein. This Agreement supersedes any
and all prior agreements and understandings between the parties, whether written
or oral.
(1) If any provision of this Agreement shall be declared
invalid or unenforceable, the parties hereto agree that the remaining provisions
of this Agreement shall continue in full force and effect.
SECTION 5.13 GOVERNING LAW. THIS AGREEMENT SHALL, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK, BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
ANY CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION OF
THE LAWS OF ANY OTHER JURISDICTION.
SECTION 5.14 WAIVER OF JURY TRIAL, JURISDICTION AND VENUE.
EACH OF THE PARTIES HERETO HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY
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IN THE EVENT OF ANY LITIGATION WITH RESPECT TO ANY MATTER RELATED TO THIS
AGREEMENT, AND HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK CITY, NEW YORK IN CONNECTION
WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN
ANY SUCH LITIGATION, EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE
BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH PARTY AT ITS ADDRESS SET FORTH
ON THE SIGNATURE PAGE HEREOF. EACH OF THE PARTIES HERETO SHALL APPEAR IN ANSWER
TO SUCH SUMMONS, COMPLAINT OR OTHER PROCESS WITHIN THE TIME PRESCRIBED BY LAW,
FAILING WHICH SUCH PARTY FAILING TO SO APPEAR SHALL BE DEEMED IN DEFAULT AND
JUDGMENT MAY BE ENTERED BY THE OTHER PARTY FOR THE AMOUNT OF THE CLAIM AND OTHER
RELIEF REQUESTED THEREIN.
SECTION 5.15 Execution in Counterparts. This Agreement may be
executed in counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same agreement.
SECTION 5.16 No Proceedings. The Parent and each Provider
hereby agrees that it will not institute against the Purchaser or Healthco-4 any
proceeding of the type referred to in paragraph (g) of Exhibit V so long as any
senior indebtedness issued by the Purchaser or Healthco-4 shall be outstanding
or there shall not have elapsed one year plus one day since the last day on
which any such senior indebtedness shall have been outstanding.
SECTION 5.17 Survival of Termination. The provisions of
Article IV (and the representations and warranties with respect thereto) (other
than Section 4.04) and Sections 5.05, 5.06, 5.10 and 5.16 shall survive any
termination of this Agreement.
SECTION 5.18 Joint and Several Liability; Providers . Each
Provider agrees that each reference to "the Providers" in this Agreement shall
be deemed to refer to each such Provider jointly and severally with the other
Providers. Each Provider (i) shall be jointly and severally liable for the
obligations, duties and covenants of each other such Provider under this
Agreement and the acts and omissions of each other such Provider including,
without limitation, under Article IV hereof, and (ii) jointly and severally
makes each representation and warranty for itself and each other Provider under
this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
PROVIDERS: ATC HEALTHCARE SERVICES, INC.
By:
----------------------------------------
Name:
Title:
Address: ATC Healthcare Services, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxx, CFO
Facsimile Number:(000) 000-0000
ATC STAFFING SERVICES, INC.
By:
----------------------------------------
Name:
Title:
Address: ATC Staffing Services, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxx, CFO
Facsimile Number: (000) 000-0000
PURCHASER: ATC FUNDING, LLC
By:
------------------------------------
Name:
Title:
Address: ATC Funding, LLC
0000 Xxxxxx Xxxxxx
Xxxxx X-000
Xxxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxx, CFO
Facsimile Number: (000) 000-0000
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PRIMARY SERVICER: ATC HEALTHCARE SERVICES, INC.
By:
----------------------------------------
Name:
Title:
Address: ATC Healthcare Services,
Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxx, CFO
Facsimile Number: (000) 000-0000
PARENT: STAFF BUILDERS, INC.
By:
----------------------------------------
Name:
Title:
Address: Staff Builders, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxx, CFO
Facsimile Number: (000) 000-0000
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EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits and
Schedules), the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):
"ACCOUNTS" means all accounts, chattel paper, instruments,
general intangibles and goodwill, whether now existing or hereafter arising,
including, all Receivables and all proceeds of any of the foregoing.
"ACCOUNTS RECEIVABLE TURNOVER PARENT" means, at any date, for
the 12-Month period then ending, the quotient obtained by dividing (i) aggregate
gross revenue of the Parent and its Subsidiaries on a consolidated basis for
such period by (ii) aggregate Receivables of the Parent and its Subsidiaries on
a consolidated basis of such date.
"ACCOUNTS RECEIVABLE TURNOVER PROVIDERS" means, at any date,
for the 12-Month period then ending, the quotient obtained by dividing (i)
aggregate gross revenue of ATC Healthcare and its Subsidiaries on a consolidated
basis for such period by (ii) aggregate Receivables of ATC Healthcare and its
Subsidiaries on a consolidated basis as of such date.
"ADDITIONAL COLLATERAL" means (including, without limitation,
the items listed on any separate schedule(s) at any time or from time to time
furnished by any Provider to the Purchaser and made part of this Agreement and
all accessions to the Additional Collateral, substitutions and replacements
thereof (unless the description of Additional Collateral expressly excludes
after-acquired Additional Collateral), now owned or existing and hereafter
acquired, created or arising, and all products and proceeds thereof (including,
without limitation, claims of any Provider against third parties for loss or
damage to or destruction of any Additional Collateral)) (a) all of each
Provider's right, title and interest in and to all equipment in all of its
forms, wherever located, now or hereafter existing, including, but not limited
to, all fixtures and all parts thereof and all accessions thereto (any and all
such equipment, fixtures, parts and accessions being the "EQUIPMENT"); (b) all
inventory in all of its forms, wherever located, now or hereafter existing,
including, but not limited to, (i) all raw materials, work in process,
semi-finished products and finished products, intended for sale or lease or to
be furnished under contracts of service in the ordinary course of business, of
every kind and description; (ii) goods in which such Provider has an interest en
masse or a joint or other interest or right of any kind (including, without
limitation, goods in which such Provider has an interest or right as consignee),
and (iii) goods which are returned to or repossessed by such Provider, and all
accessions thereto and products thereof and documents (including, without
limitation, all warehouse receipts, negotiable documents, bills of lading and
other title documents) therefor (any and all such inventory, accessions,
products and documents being the "INVENTORY"); (c) all present and future
securities, security entitlements and securities accounts (collectively,
"INVESTMENT PROPERTY"); (d) all deposits and all other goods and personal
property (including, without limitation, patents, patent applications, trade
names and trademarks and Federal, state and local tax refund claims of all
kinds), whether tangible or intangible, or whether now owned or hereafter
acquired and wherever located; (e) all proceeds of every kind and nature,
including proceeds of proceeds, of any and all of the foregoing Additional
Collateral (including, without limitation, proceeds which constitute property of
the types described in clauses (a) through (e) of this paragraph) and, to the
extent not otherwise included, all (i) payments under insurance (whether or not
the Purchaser is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Additional Collateral and (ii) money and cash; and all
books, records and other property relating to or referring to any of the
foregoing Additional Collateral, including all books, records, ledger cards,
data processing records, computer software and other property and general
intangibles at any time used or useful
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in connection with, evidencing, embodying, referring to, or relating to, any of
the foregoing Additional Collateral.
"ADDITIONAL REPORTING EVENT" means the formation by the Parent
of any Subsidiary other than ATC Healthcare and its Subsidiaries.
"AFFILIATE" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under common
control with such Person or is a director or officer of such Person. For the
purposes of this definition, "control", when used with respect to any specified
Person, means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.
"AGREEMENT" has the meaning set forth in the preliminary
statements hereto.
"APPLIED MANAGEMENT" means Applied Management Solutions, Inc.,
a Delaware corporation.
"BATCH" means, with respect to any Transfer Date, all
Receivables, including the Transferred Batch with respect to such Transfer Date,
which are purchased by the Purchaser or contributed to capital of the Purchaser.
"BATCH RECEIVABLE" means a Receivable that is included in a
Transferred Batch, but excludes a Denied Receivable for which the Return Price
has been received by the Purchaser.
"BUSINESS DAY" means any day on which banks are not authorized
or required to close in New York City, New York.
"CAPITAL EXPENDITURES" means, with respect to any Person for
any period, the aggregate of all expenditures (including, without limitation,
obligations created under Capital Leases in the year in which created but
excluding payments made thereon) of any Person in respect of the purchase or
other acquisition of fixed or capital assets.
"CAPITAL LEASE" means, as applied to any Person, any lease of
any Property (whether real, personal or mixed) by that Person as lessee, the
obligations of which are required, in accordance with GAAP, to be capitalized on
the balance sheet of that Person.
"CAPITALIZED LEASE OBLIGATION" means an obligation to pay rent
or other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with GAAP, and for purposes hereof the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"CHANGE OF CONTROL" means (a) the sale, lease or transfer of
all or substantially all of the assets of the Parent or any Provider to any
Person or group (as such term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended); (b) the liquidation or dissolution of (or the
adoption of a plan of liquidation by) the Parent or any Provider; (c) the
acquisition by any Person or group (as such term is defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) of a direct or indirect
majority interest (more than 25%) of the voting stock of the Parent or any
Provider by way of merger or consolidation or otherwise; or (d) the failure of
the Parent to own, directly or indirectly, 100% of the equity interests of each
Provider.
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"CLOSING DATE" means April 6, 2001.
"COLLATERAL" has the meaning set forth in Section 4.04(a)
hereto.
"COLLECTIONS" means, with respect to any Receivable included
in a Batch, all cash collections, wire transfers, electronic funds transfers and
other cash proceeds of such Receivable, deposited in or transferred to a Lockbox
Account, including, without limitation, all cash proceeds thereof.
"CONCENTRATION ACCOUNT" means account number 205779 at the
Bank of New York, ABA#000000000.
"CONSOLIDATED CURRENT ASSETS PARENT" means, at any date of
determination, the aggregate amount of all assets of the Parent and its
Subsidiaries on a consolidated basis that would be classified as current assets
at such date, computed and calculated in accordance with GAAP.
"CONSOLIDATED CURRENT ASSETS PROVIDERS" means, at any date of
determination, the aggregate amount of all assets of ATC Healthcare and its
Subsidiaries on a consolidated basis that would be classified as current assets
at such date, computed and calculated in accordance with GAAP.
"CONSOLIDATED CURRENT LIABILITIES PARENT" means, at any date
of determination, the aggregate amount of all liabilities of the Parent and its
Subsidiaries on a consolidated basis that would be classified as current
liabilities at such date, computed and calculated in accordance with GAAP.
"CONSOLIDATED CURRENT LIABILITIES PROVIDERS" means, at any
date of determination, the aggregate amount of all liabilities of ATC Healthcare
and its Subsidiaries on a consolidated basis that would be classified as current
liabilities at such date, computed and calculated in accordance with GAAP.
"CONSOLIDATED DEBT SERVICE COVERAGE RATIO PARENT" means, for
the Parent and its Subsidiaries on a consolidated basis, at the end of each
fiscal quarter of the Parent, for the four fiscal quarter period then ended, the
quotient obtained by dividing (i) Consolidated EBITDA Parent for such period by
(ii) the sum of (x) Consolidated Interest Expense Parent for such period and (y)
the current portion of long term debt and Capital Leases as of such date of
determination.
"CONSOLIDATED DEBT SERVICE COVERAGE RATIO PROVIDERS" means,
for ATC Healthcare and its Subsidiaries on a consolidated basis, at the end of
each fiscal quarter of the Providers, for the four fiscal quarter period then
ended, the quotient obtained by dividing (i) Consolidated EBITDA Providers for
such period by (ii) the sum of (x) Consolidated Interest Expense Providers for
such period and (y) the current portion of long term debt and Capital Leases of
ATC Healthcare and its Subsidiaries on a consolidated basis, as of such date of
determination.
"CONSOLIDATED EBITDA PARENT" means, for any period, the EBITDA
of the Parent and its Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP.
"CONSOLIDATED EBITDA PROVIDERS" means, for any period, the
EBITDA of ATC Healthcare and its Subsidiaries on a consolidated basis in
accordance with GAAP.
"CONSOLIDATED INTEREST COVERAGE RATIO PARENT" means, at the
end of each fiscal quarter of the Parent, for the four fiscal quarter period
ending on such date, the quotient obtained by dividing
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(i) Consolidated EBITDA Parent for such period by (ii) Consolidated Interest
Expense Parent for such period.
"CONSOLIDATED INTEREST COVERAGE RATIO PROVIDERS" means, at the
end of each fiscal quarter of the Providers, for the four fiscal quarter period
ending on such date, the quotient obtained by dividing (i) Consolidated EBITDA
Providers for such period by (ii) Consolidated Interest Expense Providers for
such period.
"CONSOLIDATED INTEREST EXPENSE PARENT" means, for any period,
the Interest Expense of the Parent and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE PROVIDERS" means, for any
period, the Interest Expense of ATC Healthcare and its Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET WORTH PARENT" means, at any date of
determination, an amount equal to (a) the total unrestricted assets of the
Parent and its Subsidiaries on a consolidated basis in accordance with GAAP
minus (b) the total liabilities of the Parent and its Subsidiaries on a
consolidated basis in accordance with GAAP .
"CONSOLIDATED NET WORTH PROVIDERS" means, at any date of
determination, an amount equal to (a) the total unrestricted assets of ATC
Healthcare and its Subsidiaries on a consolidated basis in accordance with GAAP
minus (b) the total liabilities of ATC Healthcare and its Subsidiaries on a
consolidated basis in accordance with GAAP
"CONSOLIDATED TANGIBLE NET WORTH PARENT" means with respect to
the Parent and its Subsidiaries determined on a consolidated basis in accordance
with GAAP, at any date of determination, (i) the sum of capital stock, capital
in excess of par or stated value of shares of its capital stock, retained
earnings and any other account which, in accordance with GAAP constitutes
stockholder's equity, less (ii) treasury stock and any minority interest in
subsidiaries, less (iii) the amount of any write-up subsequent to the Closing
Date in the value of any asset above the cost or depreciated cost thereof and
less (iv) all intangible assets, including, without limitation, goodwill, which
would be classified as such in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH PROVIDERS" means with respect
to ATC Healthcare and its Subsidiaries on a consolidated basis in accordance
with GAAP, at any date of determination, (i) the sum of capital stock, capital
in excess of par or stated value of shares of its capital stock, retained
earnings and any other account which, in accordance with GAAP constitutes
stockholder's equity, less (ii) treasury stock and any minority interest in
subsidiaries, less (iii) the amount of any write-up subsequent to the Closing
Date in the value of any asset above the cost or depreciated cost thereof and
less (iv) all intangible assets, including, without limitation, goodwill, which
would be classified as such in accordance with GAAP.
"CONSOLIDATED TOTAL NET INCOME PARENT" means, for any period,
the total net income of the Parent and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED TOTAL NET INCOME PROVIDERS" means, for any
period, the total net income of ATC Healthcare and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP.
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"CONSOLIDATED WORKING CAPITAL PARENT" means at any date of
determination, an amount equal to Consolidated Current Assets Parent minus
Consolidated Current Liabilities Parent.
"CONSOLIDATED WORKING CAPITAL PROVIDERS" means at any date of
determination, an amount equal to Consolidated Current Assets Providers minus
Consolidated Current Liabilities Providers.
"CREDIT AND COLLECTION POLICY" means those receivables credit
and collection policies and practices of the Providers in effect on the date of
the Agreement and set forth in Schedule II hereto, as modified from time to time
with the consent of the Purchaser and Healthco-4.
"DEBT" means as to any Person (without duplication): (i) all
obligations of such party for borrowed money, (ii) all obligations of such party
evidenced by bonds, notes, debentures, or other similar instruments, (iii) all
obligations of such party to pay the deferred purchase price of property or
services (other than trade payables in the ordinary course of business), (iv)
all Capital Leases of such party, (v) all Debt of others directly or indirectly
Guaranteed (which term shall not include endorsements in the ordinary course of
business) by such party, (vi) all obligations secured by a Lien existing on
property owned by such party, whether or not the obligations secured thereby
have been assumed by such party or are non-recourse to the credit of such party
(but only to the extent of the value of such property), (vii) all reimbursement
obligations of such party (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptance and similar instruments and (viii) all
obligations of such Party under this Agreement and the Loan Agreement.
"DEFAULTED RECEIVABLE" means a Batch Receivable (i) as to
which the Obligor thereof or any other Person obligated thereon has taken any
action, or suffered any event to occur, of the type described in paragraph (g)
of Exhibit V or (ii) which, consistent with the Credit and Collection Policy,
would be written off the applicable Provider's books as uncollectible.
"DELINQUENCY RATIO" means, as of the last Business Day of each
Month, a percentage equal to:
DLR
---
ENV
where:
DLR= The Expected Net Value of all Receivables which
became Delinquent Receivables in the Month prior to
the date of calculation.
ENV= The Expected Net Value of all Receivables which were
purchased in the Month immediately prior to the date
of calculation.
"DELINQUENT RECEIVABLE" means a Batch Receivable (a) that has
not been paid in full on or following the 180th day following the date of
original invoicing thereof, or (b) that is a Denied Receivable.
"DENIED RECEIVABLE" has the meaning set forth in Section
4.01(a) hereto.
"DEPOSITARY AGREEMENT" means those certain depositary account
agreements, among Healthco-4 and the applicable Lockbox Bank, in substantially
the form attached hereto as Exhibit XII, as such agreements may be amended,
modified or supplemented from time to time in accordance with their terms.
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"EBITDA" means, for any Person during any period, the sum
(determined without duplication on a consolidated basis) of (a) net income (or
net loss) of such Person (calculated before extraordinary items) during such
period plus (b) the Interest Expense of such Person during such period deducted
in the determination of such net income (or net loss) plus (c) depreciation,
amortization and other non-cash items of such Person during such period to the
extent included in the determination of net income (or net loss) plus or minus
(d) all taxes accrued by such Person during such period on or measured by income
to the extent deducted or credited in determining such net income (or net loss)
minus or plus (e) gains (or losses) from asset dispositions by such Person
during outside of the normal course of business to the extent included in
determining such net income (or net loss) plus (f) losses due to asset
impairment minus (g) non-cash, non-recurring items to the extent included in
determining such net income (or net loss).
"ELIGIBILITY CRITERIA" has the meaning specified in the Loan
Agreement, as such Eligibility Criteria may be modified from time to time by
Healthco-4 upon Written Notice to the Primary Servicer.
"ELIGIBLE RECEIVABLES" has the meaning specified in the Loan
Agreement.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within
the meaning of Section 3(3) of ERISA maintained by the Parent, any Provider or
any ERISA Affiliate thereof, or with respect to which any of them have any
liability.
"EQUITY" means the amount set forth on the balance sheet of
the any Provider as equity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" means any entity which is under common
control with the Parent or any Provider within the meaning of ERISA or which is
treated as a single employer with any Provider under the Internal Revenue Code
of 1986, as amended.
"EVENT OF TERMINATION" means any of the events specified in
Exhibit V hereto.
"EXPECTED NET VALUE" means, with respect to any Batch
Receivable, the gross unpaid amount of such Receivable on the Transfer Date
therefor, times the applicable Net Value Factor.
"FACILITY TERMINATION DATE" means the earlier of (a) April 5,
2004 (subject to automatic extensions of such date to coincide with extensions
under Section 5.07 of the Loan Agreement) and (b) the date of delivery of notice
of the occurrence of an Event of Termination, if required pursuant to Section
3.02 hereof, or the date of occurrence of an Event of Termination if no notice
is required, unless such Event of Termination is waived by the Purchaser in
writing.
"FINAL PAYMENT DATE" means the first Settlement Date following
the Settlement Period in which final collection has been received for all Batch
Receivables have become Denied Receivables or Defaulted Receivables.
"GAAP" means generally accepted accounting principles in the
United States of America, applied on a consistent basis, as set forth in
Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants or in statements of the Financial Accounting
Standards Board or the rules and regulations of the Securities and Exchange
Commission or their respective successors and which are applicable in the
circumstances as of the date in question.
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"GOVERNMENTAL ENTITY" means the United States of America, any
state, any political subdivision of a state and any agency or instrumentality of
the United States of America or any state or political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"GUARANTY" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay), or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect the obligee of such Debt or other obligation of
the payment thereof or to protect the obligee against loss in respect thereof
(in whole or in part), provided that the term Guaranty shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "GUARANTEE" used as a verb has a corresponding meaning.
"HEALTHCO-4" means HFG Healthco-4 LLC, a Delaware limited
liability company.
"HFG GROUP" means (i) Healthco-4, the Program Manager and the
Master Servicer and (ii) Healthco-4's agents, delegates, designees and assigns
identified from time to time to effectuate the Agreement.
"INDEMNIFIED AMOUNTS" has the meaning set forth in Section
4.02 hereto.
"INDEMNIFIED PARTY" has the meaning set forth in Section 4.02
hereto.
"INITIAL TRANSFER DATE" means the date of the initial purchase
and contribution of Receivables hereunder.
"INTEREST EXPENSE" means, with respect to any Person for any
period, the interest expense of such Person during such period as determined in
accordance with GAAP.
"LAST SERVICE DATE" means, with respect to any Receivable the
date set forth on the related invoice or statement as the most recent date on
which services or merchandise were provided by the related Provider to the
related Obligor.
"LIBOR" has the meaning specified in the Loan Agreement.
"LIEN" means any lien, mortgage, security interest, tax lien,
pledge, hypothecation, assignment, preference, priority, other charge or
encumbrance, or any other type of preferential arrangement of any kind or nature
whatsoever by or with any Person (including, without limitation, any conditional
sale or title retention agreement), whether arising by contract, operation of
law, or otherwise.
"LOAN AGREEMENT" means the Loan and Security Agreement dated
as of the date hereof between the Purchaser as borrower and Healthco-4 as
lender, as such agreement may be modified, supplemented or amended from time to
time in accordance with its terms.
"LOCKBOX" means a lockbox set forth on Schedule IV hereto to
receive checks with respect to Receivables payable by Obligors.
"LOCKBOX ACCOUNT" means a lockbox account set forth on
Schedule IV hereto associated with a Lockbox established by the Providers, in
the name of and for the benefit of Healthco-4, to deposit
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Collections from Obligors, including Collections received in related Lockbox and
Collections received by wire transfer directly from Obligors, all as more fully
set forth in the relevant Depositary Agreement.
"LOCKBOX BANK" means a financial institution in its capacity
as lockbox bank under a Depositary Agreement.
"LOSS-TO-LIQUIDATION RATIO" means, as of the last Business Day
of each Month, a percentage equal to:
DFR
---
C
where:
DFR= The Expected Net Value of all Batch Receivables which
became Defaulted Receivables in the Month prior to
the date of calculation.
C= Collections in the Month prior to the date of
calculation.
"MASTER SERVICER" means the Program Manager and any other
Person then identified by the Program Manager to the Providers, or the Primary
Servicer on behalf of the Providers, as being authorized to administer and
service Receivables.
"MATERIAL ADVERSE EFFECT" means any event, condition, change
or effect that (a) has a materially adverse effect on the business, Properties,
capitalization, liabilities, operations, prospects or financial condition of (i)
Providers (in the aggregate) or (ii) the Parent on a consolidated basis, (b)
materially impairs the ability of the Providers (in the aggregate) or the Parent
to perform its obligations under the Agreement, (c) materially impairs the
validity or enforceability of, or materially impairs the rights, remedies or
benefits available to the Purchaser under the Agreement, or (d) changes, or
could reasonably be expected to change, the characterization and treatment of
the sales and contributions of Receivables under the Agreement as something
other than a true sale or complete transfer of ownership.
"MISDIRECTED PAYMENT" means any form of payment in respect of
a Batch Receivable made by an Obligor in a manner other than as provided in the
Notice to Obligor sent to such Obligor.
"MONTH" means a calendar month.
"MULTIEMPLOYER PLAN" means a plan, within the meaning of
Section 3(37) of ERISA, as to which the Parent, Primary Servicer, any Provider
or any ERISA Affiliate contributed or was required to contribute within the
preceding five years.
"NET VALUE FACTOR" means, initially, the percentages set forth
on Schedule VI attached hereto, as such percentages may be adjusted, upwards or
downwards in accordance with the Loan Agreement based on the historical actual
final collections received on the Providers' Receivables within 180 days of the
Last Service Date of such Receivables (without regard to the factors set forth
in the definition of "Defaulted Receivable").
"NOTICE TO OBLIGOR" means a notice letter on the relevant
Provider's corporate letterhead in substantially the form attached hereto as
Exhibit VII.
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"OBLIGOR" means the Person who is responsible for the payment
of all or any portion of a Receivable.
"PARENT" has the meaning set forth in the preamble hereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"PERMITTED LIENS" means (i) those Liens on Additional
Collateral existing as of the date hereof and set forth on Schedule VII hereto
and (ii) Liens arising after the date hereof securing the purchase money Debt
and Capitalized Lease Obligations of the Parent or any Provider, in an aggregate
amount not to exceed $2,000,000 for the Parent and the Providers taken as a
whole at any time, provided that no such Lien described in this clause (ii),
shall apply to any other property of the Parent or any Provider.
"PERSON" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock company,
trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"PLEDGE AGREEMENT" means that certain Pledge Agreement, dated
the date hereof, by the Parent and ATC Healthcare in favor of Healthco-4 as
lender under the Loan Agreement, as the same may be amended, modified or
supplemented from time to time.
"PRIMARY SERVICER" as defined in the preamble, means ATC
Healthcare, if then authorized to perform the Primary Servicer Responsibilities
pursuant to Section 1.05(b), or the Master Servicer, or any other Person then
authorized to perform the Primary Servicer Responsibilities that is acceptable
to the Program Manager.
"PRIMARY SERVICER ACCOUNT" means account number 777-522683 of
the Primary Servicer at The Chase Manhattan Bank, ABA number 000000000, or such
other bank account designated by the Primary Servicer by Written Notice to the
Master Servicer, the Purchaser and the Program Manager from time to time, as the
account for receipt of proceeds on behalf of the Providers.
"PRIMARY SERVICER RESPONSIBILITIES" has the meaning set forth
in Section 1.05(b) hereto.
"PRIMARY SERVICING FEE" means, with respect to any Transferred
Batch, an amount equal to $8.00 multiplied by the number of Receivables in such
Transferred Batch.
"PROGRAM MANAGER" means (i) Healthcare Finance Group, Inc. or
(ii) any other Person then identified by Healthco-4 to the Primary Servicer as
being authorized to provide administrative services with respect to the
Purchaser and the Purchaser's purchase, funding and collection of healthcare
receivables.
"PROPERTY" means property of all kinds, movable, immovable,
corporeal, incorporeal, real, personal or mixed, tangible or intangible
(including, without limitation, all rights relating thereto), whether owned or
acquired on or after the date of this Agreement.
"PROVIDER", "PROVIDERS" have the meanings set forth in the
preamble hereto.
"PROVIDER DOCUMENTS" means this Agreement, the Depositary
Agreement, the Pledge Agreement, each agreement now existing or hereafter
created providing collateral security for the payment
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or performance of any Provider's obligations described in Section 4.04(a) or any
Person's obligations under a Guaranty of such obligations of the Providers, and
each other document or instrument now or hereafter executed and delivered to the
Purchaser by or on behalf of the Providers pursuant to or in connection herewith
or therewith.
"PURCHASE PRICE" means, with respect to Eligible Receivables
in each Purchased Batch, an amount equal to 95% of the aggregate Expected Net
Value of such Receivables.
"PURCHASED BATCH" means all Eligible Receivables purchased on
any Transfer Date.
"PURCHASED RECEIVABLE" means a Receivable that has been
purchased by the Purchaser.
"PURCHASER" has the meaning set forth in the preamble hereto.
"RECEIVABLE INFORMATION" has the meaning set forth in Section
1.02(a) hereto.
"RECEIVABLES" means all accounts or general intangibles and
all other obligations for the payment of money, in each case, owing (or in the
case of Unbilled Receivables, to be owing) by an Obligor to a Provider and
arising out of the rendition of professional services, or the sale of products
by a Provider in the ordinary course of its business, including all rights to
reimbursement under any agreements with and payments from Obligors or other
Persons, together with, to the maximum extent permitted by law, all accounts and
general intangibles related thereto, all rights, remedies, guaranties, security
interests and Liens in respect of the foregoing, all books, records and other
Property evidencing or related to the foregoing, and all proceeds of any of the
foregoing.
"RETURN PRICE" means, with respect to a Denied Receivable, an
amount equal to (x) either the Purchase Price or the increase in the capital
account of the applicable Provider with respect to the prior contribution
thereof, in each case, of such Denied Receivable, minus (y) any cash received
from the Obligor in a Lockbox Account with respect to such Denied Receivable,
plus (z) accrued and unpaid interest on such amount calculated at the interest
rate then in effect under the Loan Agreement on the average outstanding
difference between clauses (x) and (y) from and including the Business Day
following the Transfer Date of such Denied Receivable to the date the Return
Price is received by the Purchaser.
"SERVICER TERMINATION EVENT" means any of the events specified
in Exhibit IX hereto.
"SETTLEMENT DATE" means the third Business Day of each Week;
provided, that, if, following the occurrence of an Event of Termination, the
Purchaser shall have selected a period shorter than one Week as the Settlement
Period, the Settlement Date shall mean the fifth Business Day following the end
of each such Settlement Period.
"SETTLEMENT PERIOD" means each Week; provided, that
notwithstanding the foregoing, the first Settlement Period shall be the period
from and including the Initial Transfer Date through April 7, 2001; and
provided, further, that following the occurrence of an Event of Termination, the
Purchaser may from time to time, by notice to the Primary Servicer on behalf of
the Providers, select a shorter period as the Settlement Period.
"SUBSIDIARY" means, with respect to the Parent and each
Provider, any corporation or entity of which at least a majority of the
outstanding shares of stock or other ownership interests having by the terms
thereof ordinary voting power to elect a majority of the board of directors (or
Persons performing similar functions) of such corporation or entity
(irrespective of whether or not at the time, in the case of a
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corporation, stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by the Parent or such
Provider.
"TANGIBLE NET WORTH" means, with respect to any Person at any
time, the sum of (i) such Person's capital stock, capital in excess of par or
stated value of shares of its capital stock, retained earnings and any other
account which, in accordance with GAAP, constitutes stockholders' equity, minus
(ii) treasury stock, minus (iii) the book value of all assets classified as
intangible under GAAP, including, without limitation, goodwill, deferred taxes,
deferred financing costs, trademarks, trade names, patents, copyrights and
licenses.
"TOTAL COLLECTIONS" means, as to each Batch, the sum of all
Collections, Return Prices and Indemnified Amounts (but only to the extent that
such Indemnified Amounts are received in lieu of Collections) distributed to and
received by the Purchaser with respect thereto.
"TRANSFER DATE" means the Initial Transfer Date and each
Business Day thereafter.
"TRANSFERRED BATCH" means, with respect to any Transfer Date,
all Receivables purported by the Primary Servicer and applicable Provider to
constitute Eligible Receivables and which are purchased by the Purchaser or
contributed to capital of the Purchaser as of such Transfer Date.
"TRANSMISSION" means, upon establishment of computer interface
between the Providers and the Master Servicer in accordance with the
specifications established by the Master Servicer, the transmission of
Receivable Information through computer interface to the Master Servicer in a
manner satisfactory to the Master Servicer.
"UCC" means the Uniform Commercial Code as in effect from time
to time in the specified jurisdiction.
"UNBILLED RECEIVABLE" means a Receivable in respect of which
the goods have been shipped, or the services rendered, to the relevant Obligor,
and rights to payment therefor have accrued, but the invoice has not been
rendered to the such Obligor.
"WEEK" means a calendar week which in each instance shall
begin on Sunday and end on Saturday.
"WEEKLY REPORT" has the meaning set forth in Section 1.02
hereof.
"WRITTEN NOTICE" and "IN WRITING" mean any form of written
communication or a communication by means of telex, facsimile device, telegraph
or cable.
Other Terms. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. All terms used in Article 9
of the UCC in the State of New York, and not specifically defined herein, are
used herein as defined in such Article 9.
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EXHIBIT II
CONDITIONS OF PURCHASES AND CONTRIBUTIONS
1. Conditions Precedent on the Initial Transfer Date. The
purchase or contribution of the Transferred Batch under the Agreement on the
Initial Transfer Date is subject to the conditions precedent that the Purchaser
shall have received on or before the Initial Transfer Date the following, each
(unless otherwise indicated) dated such date, in form and substance satisfactory
to the Purchaser:
(1) For the Parent, each Provider and the Primary Servicer, a
certificate issued by the Secretary of State of the state of such entity's (i)
organization as to the legal existence and good standing of such entity and (ii)
locale of operation, if different from its state of organization, as to the
foreign qualification, authorization and good standing of such entity in such
locale (all of which certificates shall be dated not more than 20 days prior to
the Initial Transfer Date).
(2) For the Parent, each Provider and the Primary Servicer,
certified copies of the charter and by-laws of such entity, certified copies of
resolutions of the board of directors of such entity approving the Agreement,
certified copies of all documents filed to register any and all assumed/trade
names of such entity, and certified copies of all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
the Agreement.
(3) For the Parent, each Provider and the Primary Servicer, a
certificate of the Secretary or Assistant Secretary of such entity certifying
the names and true signatures of the incumbent officers of such entity
authorized to sign the Agreement and the other documents to be delivered by it
hereunder.
(4) (i) Certified copies of the balance sheets of the Parent
and its Subsidiaries as at February 29, 2000, and February 28,1999 and the
related statements of income and expense and retained earnings of the Parent and
its Subsidiaries for the fiscal year then ended, certified in a manner
acceptable to the Purchaser by independent public accountants acceptable to the
Purchaser and demonstrating that there has been no Material Adverse Effect and
(ii) unaudited balance sheets of the Parent and its Subsidiaries for the fiscal
quarters ended May 31, 2000, August 31, 2000 and November 30, 2000 and the
related statements of income and expense and retained earnings of the Parent and
its Subsidiaries for such fiscal quarter then ended.
(5) Acknowledgment or time stamped receipt copies of proper
financing statements (showing each Provider as debtor/seller, the Purchaser as
secured party/purchaser and Healthco-4 as assignee, and stating that the
financing statements are being filed because UCC Section 9-102 does not
distinguish between a sale and a secured loan for filing purposes) duly filed on
or before the Initial Transfer Date under the UCC of all jurisdictions that the
Purchaser may deem necessary or desirable in order to perfect the ownership
interests contemplated by the Agreement.
(6) Acknowledgment or time-stamped receipt copies of proper
financing statements (showing each Provider as debtor and the Purchaser as
secured party and Healthco-4 as assignee with respect to the grant by the
Providers of a first priority security interest to the Purchaser in the
Collateral, as contemplated by Section 4.04 of the Agreement) duly filed on or
before the Initial Transfer Date under the UCC of all jurisdictions that the
Purchaser may deem necessary or desirable in order to perfect such security
interest.
(7) Completed requests for information (UCC search results)
dated within 20 days of the Initial Transfer Date, and a schedule thereof
listing all effective financing statements filed in the jurisdictions referred
to in subsections (e) and (f) above that name the Parent or any Provider as
debtor,
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together with copies of all other financing statements filed against the
Parent or any Provider (none of which shall cover any Collateral or the
Receivables).
(8) Releases of, and acknowledgment copies of proper
termination statements (Form UCC-3), if any, necessary to evidence the release
of all security interests, ownership and other rights of any Person previously
granted by the Parent or any Provider in any of the Collateral or the
Receivables.
(9) A favorable opinion of Xxxxxxxx Chance Xxxxx & Xxxxx LLP,
counsel for the Primary Servicer, the Parent and the Providers, substantially in
the form attached hereto as Exhibit XI-A, and as to such other matters as the
HFG Group requests.
(10) A favorable opinion of Xxxxxxxx Chance Xxxxx & Xxxxx LLP,
counsel for the Primary Servicer, the Parent and the Providers, substantially in
the form attached hereto as Exhibit XI-B, and as to such other matters as the
HFG Group requests.
(11) Proof of payment of the $250,000 facility fee payable by
the Purchaser to Healthcare Finance Group, Inc.
(12) Proof of payment of all reasonable attorneys' fees and
disbursements incurred by the Purchaser and the HFG Group.
(13) A duly executed Depositary Agreement for each Lockbox and
Lockbox Agreement, together with evidence satisfactory to the Purchaser that all
Lockboxes and the Lockbox Accounts have been established such that all funds on
deposit in the Lockbox Accounts are transmitted to the Concentration Account
each Business Day.
(14) Copies of all Notices to Obligors required pursuant to
Article II of the Agreement, together with evidence satisfactory to the
Purchaser that such Notices to Obligors have been or will be delivered to the
addressees thereof.
(15) A copy of each new form of invoice from each Provider
showing the proper Lockbox as the remittance address.
(16) A certificate from the Master Servicer stating that all
computer linkings and interfaces necessary or desirable, in the judgment of the
Master Servicer, to effectuate the transactions and information transfers
contemplated hereunder, are fully operational to the reasonable satisfaction of
the Master Servicer.
(17) Executed acknowledgment letters regarding the ownership
of the Receivables from franchisees who are owed fees in connection with
Receivables consisting of at least 90% of such Receivables.
2. Conditions Precedent on All Transfer Dates. Each purchase
and contribution of a Transferred Batch on a Transfer Date (including the
Initial Transfer Date) shall be subject to the further conditions precedent that
the Primary Servicer and the Providers and the Purchaser shall have agreed upon
the terms of such purchase and also that:
(1) The Providers shall have delivered to the Purchaser or the
Master Servicer, as the case may be, no later than 10:30 a.m. on such Transfer
Date, in form and substance satisfactory to the Purchaser or the Master Servicer
(as the case may be), to the extent not previously provided, an executed
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Notice to Obligors to each Obligor responsible for the payment of any of the
Batch Receivables to be transferred on such Transfer Date, directing such
Obligors to make payment to the addresses and accounts designated in such Notice
to Obligors, as set forth in Article II hereof, together with evidence that such
Notice to Obligors has been delivered to such Obligors.
(2) On each such Transfer Date the following statements shall
be true and correct:
(1) the representations and warranties contained in Exhibit
III are true and correct in all material respects on and as of the date
of such purchase as though made on and as of such date, and
(2) no event has occurred and is continuing, or would result
from such purchase, that constitutes an Event of Termination or that
would constitute an Event of Termination but for the requirement that
notice be given or time elapse or both.
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EXHIBIT III
REPRESENTATIONS AND WARRANTIES
The Parent, the Primary Servicer and each Provider represents
and warrants as follows:
(3) It is a corporation duly incorporated, validly existing
and in good standing under the laws of the state of its incorporation as set
forth in the preamble hereto, and is duly qualified to do business, and is in
good standing, in every jurisdiction where the nature of its business requires
it to be so qualified, except in any jurisdiction other than that of its chief
executive offices where the failure to be so qualified would not have a Material
Adverse Effect.
(4) The execution, delivery and performance by it of the
Agreement and the other documents to be delivered by it thereunder, (i) are
within its corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) do not contravene (1) its charter or by-laws, (2) any
law, rule or regulation applicable to it, (3) any contractual restriction
binding on or affecting it or its Property, or (4) any order, writ, judgment,
award, injunction or decree binding on or affecting it or its Property, and (iv)
do not result in or require the creation of any Lien upon or with respect to any
of its Properties, other than the interests created by the Agreement. The
Agreement has been duly executed and delivered by it. It has furnished to the
Purchaser a true, correct and complete copy of its certificate of incorporation
and by-laws, including all amendments thereto.
(5) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Entity is required for the due
execution, delivery and performance by it of the Agreement or any other document
to be delivered thereunder.
(6) The Agreement constitutes the legal, valid and binding
obligation of it, enforceable against it in accordance with its terms, except as
limited by bankruptcy, insolvency, moratorium, fraudulent conveyance or other
laws relating to the enforcement of creditors' rights generally and general
principles of equity (regardless of whether enforcement is sought at equity or
law).
(7) It has all power and authority, and has all permits,
licenses, accreditations, certifications, authorizations, approvals, consents
and agreements of all Obligors, accreditation agencies and any other Person,
other than those permits, licenses, accreditations, certifications,
authorizations, approvals, consents and agreements, the failure of which to have
is not reasonably likely to result in a Material Adverse Effect, for it (i) to
own the assets (including Receivables) that it now owns, and (ii) to carry on
its business as now conducted.
(8) It has not been notified by any Obligor, or any other
Person, during the immediately preceding 12 Month period, that such party has
rescinded or not renewed, or is reasonably likely to rescind or not renew, any
such permit, license, accreditation, certification, authorization, approval,
consent or agreement granted to it or to which it is a party except as disclosed
in Schedule III hereto or which is not reasonably likely to result in a Material
Adverse Effect. (1)
(9) As of the Initial Transfer Date, all conditions precedent
set forth in Exhibit II have been fulfilled or waived in writing by the
Purchaser, and as of each Transfer Date, the conditions precedent set forth in
paragraph 2 of such Exhibit II have been fulfilled or waived in writing by the
Purchaser.
(10) The balance sheets of the Parent and its Subsidiaries as
at February 29, 2000, and the related statements of income and expense, cash
flows and retained earnings of the Parent and its Subsidiaries for the fiscal
periods then ended, copies of which have been furnished to the Purchaser, fairly
present the financial condition of the Parent and its Subsidiaries as at such
date and the results of the
III-1
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operations of the Parent and its Subsidiaries for the period ended on such date,
all in accordance with GAAP, and since February 29, 2000 there has been no
change resulting in a Material Adverse Effect.
(11) There is no pending or, to its knowledge, threatened
action or proceeding or injunction, writ or restraining order affecting it or
any of its Subsidiaries before any court, Governmental Entity or arbitrator
which could reasonably be expected to result in a Material Adverse Effect, and
it or any Subsidiary thereof is not currently the subject of, and has no present
intention of commencing, an insolvency proceeding or petition in bankruptcy.
(12) Such Provider is the legal and beneficial owner of the
each Batch Receivable free and clear of any Lien; upon each purchase or
contribution of a Transferred Batch, the Purchaser shall acquire valid ownership
of each Batch Receivable therein and in the collections with respect thereto
prior to all other Liens thereon. No effective financing statement or other
instrument similar in effect covering any Collateral or any Batch Receivable is
on file in any recording office, except those filed in favor of the Purchaser,
Healthco-4 or any permitted assignee of Healthco-4 relating to the Agreement (or
with respect to the Additional Collateral those filed in connection with
Permitted Liens securing Debt which remains outstanding), and no competing
notice or notice inconsistent with the transactions contemplated in the
Agreement remains in effect with respect to any Obligor.
(13) All Receivable Information, information provided in the
application for the program effectuated by the Agreement, and each other
document, report and Transmission provided by the Primary Servicer or any
Provider to the HFG Group is or shall be accurate in all material respects as of
its date and as of the date so furnished, and no such document contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained therein, in
the light of the circumstances under which they were made, not misleading.
(14) The principal place of business and chief executive
office of the Parent and each Provider and the office where the Parent and such
Provider keeps its records concerning the Collateral and the Batch Receivables
are located at the respective address referred to on the signature pages of the
Agreement and there have been no other such locations for the four immediately
prior Months.
(15) Each transfer of a Transferred Batch will constitute a
purchase or other acquisition of notes, drafts, acceptances, open accounts
receivable or other obligations representing part or all of the sales price of
merchandise, insurance or services within the meaning of Section 3(c)(5) of the
Investment Company Act of 1940, as amended.
(16) Each Receivable included in a Purchased Batch is, as of
the Transfer Date of such Purchased Batch, an Eligible Receivable.
(17) The provisions of the Agreement create legal and valid
security interests in all of the Collateral owned or held by each Provider in
the Purchaser's favor, and when all proper filings and other actions necessary
to perfect such Liens have been completed, will constitute a perfected and
continuing Lien on all of the Collateral owned or held by such Provider
(excluding the Batch Receivables sold or contributed to the Purchaser pursuant
to the provisions of the Agreement), having priority over all other Liens on
such Collateral (other than Permitted Liens on Additional Collateral existing on
the date hereof) of such Provider, enforceable against such Provider and all
third parties.
(18) All required Notices to Obligors have been prepared and
delivered to each applicable Obligor, and all invoices now bear only the
appropriate remittance instructions for payment direction to the proper Lockbox
and the proper Lockbox Account, as the case may be.
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(19) Except as disclosed on Schedule III hereto, neither the
Parent nor any Provider has changed its principal place of business or chief
executive office in the last five years.
(20) The exact name of the Parent and each Provider is as set
forth on the signature pages of the Agreement and, except as set forth on such
signature page, neither the Parent nor any Provider has changed its name in the
last five years and, except as set forth on Schedule III, during such period and
neither the Parent nor any Provider has used or now uses, any other fictitious,
assumed or trade name.
(21) With respect to itself or any Subsidiary there exists no
event which has or is reasonably likely to have a Material Adverse Effect.
(22) It is not in violation under any applicable statute,
rule, order, decree or regulation of any court, arbitrator or governmental body
or agency having jurisdiction over it which could reasonably be expected to have
a Material Adverse Effect.
(23) Except as disclosed in writing by the Parent to the
Master Servicer prior to the Closing Date, it has filed on a timely basis all
tax returns (federal, state and local) required to be filed and has paid, or
made adequate provision for payment of, all taxes, assessments and other
governmental charges due from it, unless contested in good faith by appropriate
proceedings. No tax Lien has been filed and is now effective against it or any
of its Properties, except any Lien in respect of taxes and other charges not yet
due or contested in good faith by appropriate proceedings. To its knowledge,
there are no pending investigations of it by any taxing authority or any pending
but unassessed tax liability of it. It does not have any obligation under any
tax sharing agreement. (1)
(24) It is solvent and will not become insolvent after giving
effect to the transactions contemplated by the Agreement; it has not incurred
debts or liabilities beyond its ability to pay; it will, after giving effect to
the transaction contemplated by the Agreement, have an adequate amount of
capital to conduct its business in the foreseeable future; the sales and
contributions of Receivables hereunder are made in good faith and without intent
to hinder, delay or defraud its present or future creditors.
(25) Other than as set forth on Schedule III attached hereto,
the Lockboxes are the only post office boxes and the Lockbox Accounts are the
only lockbox accounts maintained for Receivables, all funds on deposit in each
Lockbox Account are transmitted each Business Day to the Concentration Account,
and no direction is in effect directing Obligors to remit payments on
Receivables other than to the Provider Lockbox or the Lockbox Account, each as
described on Schedule IV. The Providers agree (i) not to instruct any Obligor to
make any payment in respect of the Receivables to the account described on
Schedule III and to use reasonable efforts (including, without limitation, the
sending of a Notice to Obligors to the applicable Obligors, in multiple copies
if necessary) to prevent any payment in respect of the Receivables from being
made to such account and (ii) to deposit any funds received in such account into
a Lockbox Account within one Business Day of receipt thereof.
(26) Each pension plan or profit sharing plan to which it is a
party has been fully funded in accordance with its obligations as set forth in
such plan.
(27) Except as disclosed on Schedule III, there are no pending
civil or criminal investigations by any Governmental Entity involving it or its
officers or directors, in their capacity as such, and neither it nor any of its
officers or directors, in their capacity as such, has been involved in, or the
subject of, any civil or criminal investigation by any Governmental Entity.
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(28) The primary business of the Providers is the provision of
healthcare and healthcare related services, products, merchandise or equipment.
(29) The assets of the Parent each Provider are free and clear
of any Liens in favor of the Internal Revenue Service, any Employee Benefit Plan
or the PBGC other than inchoate tax liens resulting from an assessment of the
Parent or such Provider.
(30) With respect to each Employee Benefit Plan of it,
including to its knowledge as to any Multiemployer Plan, such Employee Benefit
Plan has complied and been administered in accordance with its terms and in
substantial compliance with all applicable provisions of ERISA and the Internal
Revenue Code of 1986, as amended; neither it nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is
in reorganization or has been terminated, within the meaning of Title IV of
ERISA; and it has no material unpaid liability for any Employee Benefit Plan.
(31) No Batch Receivable constitutes or has constituted an
obligation of the Parent, the Primary Servicer, any Subsidiary or other Person
which is its Affiliate.
(32) No transaction contemplated under this Agreement requires
compliance with any bulk sales act or similar law.
(33) It has, or has the right to use, valid provider
identification numbers and licenses to generate the Receivables.
(34) It shall treat each sale of Receivables hereunder as a
sale for federal and state income tax, reporting and accounting purposes and
shall treat each contribution of Receivables hereunder as a contribution for
federal and state income tax, reporting and accounting purposes.
(35) It is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation T, U, or X of the Board
of Governors of the Federal Reserve System), and no part of the proceeds of any
extension of credit under this Agreement will be used to purchase or carry any
such margin stock or to extend credit to others for the purpose of purchasing or
carrying margin stock.
(36) With respect to each Receivable contributed to the
capital of the Purchaser in each Batch, the Purchaser shall record in each
applicable Provider's own capital account the aggregate Expected Net Value of
such Receivables as a capital contribution.
(37) All of the employees of each Provider are salaried
employees and are not, and do not claim to be independent contractors. No such
employee has any rights in, and has not claimed any rights in any Receivable.
(38) Each Receivable represents the direct payment obligation
of the applicable Obligor, and is not subject to any condition that such Obligor
receive any payment or reimbursement from any third party.
(39) ATC Staffing has no Subsidiary other than the Purchaser;
ATC Healthcare has no Subsidiaries other than the Purchaser, ATC Staffing and
Applied Management; Applied Management has no Subsidiaries; and the Purchaser
has no Subsidiaries.
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(40) Except as listed on Schedule VIII hereto, no Provider or
any of their respective Subsidiaries has any Debt (other than the Debt of the
Purchaser under the Loan Agreement). (1)
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EXHIBIT IV
COVENANTS
Until the later of the Facility Termination Date and the Final
Payment Date, the Parent, the Primary Servicer and each Provider agrees as
follows:
(41) Compliance With Laws, etc. It will comply in all material
respects with all applicable laws, rules, regulations and orders and preserve
and maintain its corporate existence, rights, franchises, qualifications, and
privileges.
(42) Offices, Records and Books of Account. It will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Collateral and the Batch Receivables at the
address set forth under its name on the signature pages to the Agreement or,
upon 30 days' prior Written Notice to the Purchaser, at any other locations in
jurisdictions where all actions reasonably requested by the Purchaser or
otherwise necessary to protect, perfect and maintain the Purchaser's security
interest in the Collateral have been taken and completed. It shall keep its
books and accounts in accordance with GAAP and shall make a notation on its
books and records, including any computer files, to indicate which Receivables
have been sold or contributed to the Purchaser and the security interest of the
Purchaser in the Collateral and its Receivables not sold or contributed to the
Purchaser. It shall maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing Receivables and related contracts in the event of the destruction of
the originals thereof), and keep and maintain all documents, books, records and
other information reasonably necessary or advisable for collecting all Batch
Receivables (including, without limitation, records adequate to permit the daily
identification of each Batch Receivable and all Collections of and adjustments
to each existing Batch Receivable) and for providing the Receivable Information.
(43) Performance and Compliance With Contracts and Credit and
Collection Policy. It will, at its expense, timely and fully perform and comply
with all material provisions, covenants and other promises required to be
observed by it under the contracts and other documents related to the Batch
Receivables and its responsibilities under the Agreement, and timely and fully
comply in all material respects with the Credit and Collection Policy in regard
to each Batch Receivable and the related contract, and it shall maintain, at its
expense, in full operation each of the bank accounts and lockboxes required to
be maintained under the Agreement. It shall not do anything to impede or
interfere, or suffer or permit any other Person to impede or interfere in any
material respect, with the collection by the Purchaser, or the Master Servicer,
or any other Person designated by the Purchaser on behalf of the Purchaser, of
the Batch Receivables.
(44) Notice of Breach of Representations and Warranties. It
shall promptly (and in no event later than one Business Day following actual
knowledge thereof) inform the Purchaser and the Master Servicer of any breach of
covenants or representations and warranties hereunder, including, without
limitation, upon discovery of a breach of the Eligibility Criteria set forth in
the Loan Agreement. (1)
(45) Sales, Liens, etc. It will not sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer to exist any
Liens (other than Permitted Liens on Additional Collateral) upon or with respect
to, the Collateral, the Batch Receivables, or upon or with respect to any
account to which any Collections of any Batch Receivable are sent, or assign any
right to receive income in respect thereof except those Liens in favor of the
Purchaser, Healthco-4 or any assignee of Healthco-4 relating to the Agreement.
(46) Extension or Amendment of Batch Receivables. It shall not
amend, waive or otherwise permit or agree to any deviation from the terms or
conditions of any Batch Receivable except in
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accordance with the Credit and Collection Policy or in the ordinary course of
its business consistent with its past practice.
(47) Change in Credit and Collection Policy. It will not make
any material change in the Credit and Collection Policy without the prior
written consent of the Purchaser; provided, however, that during the continuance
of an Event of Termination, it will not make any change in the Credit and
Collection Policy.
(48) Audits and Visits. It will, at any time and from time to
time during regular business hours as requested by the Purchaser, permit the
Purchaser, or its agents or representatives (including the Master Servicer),
upon reasonable notice, (i) on a confidential basis, to examine and make copies
of and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in its possession or under its control
relating to Batch Receivables including, without limitation, the related
contracts, and (ii) to visit its offices and properties for the purpose of
examining and auditing such materials described in clause (i) above, and to
discuss matters relating to Batch Receivables or its performance hereunder or
under the contracts with any of its officers or employees having knowledge of
such matters. During the continuance of an Event of Termination, it shall permit
the Master Servicer to have at least one agent or representative physically
present in its administrative office during normal business hours to assist it
in performing its obligations under the Agreement, including its obligations
with respect to the collection of Batch Receivables pursuant to Article I of the
Agreement.
(49) Change in Payment Instructions. It will not terminate any
Lockbox or Lockbox Account, or make any change or replacement in the
instructions contained in any invoice, Notice to Obligors or otherwise, or
regarding payments with respect to Receivables to be made to any Lockbox or
Lockbox Account, except upon the prior and express written consent of the
Program Manager.
(50) Reporting Requirements. It will provide to the Purchaser
and the Master Servicer (in multiple copies, if requested by the Purchaser or
the Master Servicer) the following:
(1) as soon as available and in any event within 45
days after the end of each of the first three quarters of each fiscal
year of the Parent, consolidated balance sheets of the Parent and its
Subsidiaries and, if an Additional Reporting Event has occurred,
consolidated balance sheets of ATC Healthcare and its Subsidiaries, in
each case, as of the end of such quarter and consolidated statements of
income, cash flows and retained earnings of the Parent and its
Subsidiaries, and if an Additional Reporting Event has occurred
consolidated statements of income, cash flows and retained earnings of
ATC Healthcare and its Subsidiaries, in each case, for the period
commencing at the beginning of the current fiscal year and ending with
the end of such quarter, all in reasonable detail, fairly presenting
the financial position and results of operations of the Parent and its
Subsidiaries, or ATC Healthcare and its Subsidiaries, as the case may
be, as set forth above, as at the date thereof and for such periods,
and prepared in accordance with GAAP, certified by the chief financial
officer of Parent and each Provider, and accompanied by a certificate
of a Responsible Officer of the Parent, Primary Servicer and each
Provider detailing the Parent's, Primary Servicer's and the Providers'
compliance for such fiscal period with all terms, including the
financial covenants, contained in the Agreement, and to the extent any
non-compliance exists, a description of the steps being taken by the
Parent, Primary Servicer or the Providers to address such
non-compliance;
(2) as soon as available and in any event within 90
days after the end of each fiscal year of the Parent, a copy of the
audited consolidated financial statements (together with explanatory
notes thereon) and the auditor's report letter for such year for the
Parent and its
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Subsidiaries, containing financial statements for such year audited by
Deloitte & Touche or other independent public accountants of recognized
standing acceptable to the Purchaser, and accompanied by a certificate
of an authorized officer of the Parent, Primary Servicer and each
Provider detailing the Parent's, Primary Servicer's and the Providers'
compliance for such fiscal period with all terms, including the
financial covenants, contained in the Agreement, and to the extent any
non-compliance exists, a description of the steps being taken by the
Parent, Primary Servicer or the Providers to address such
non-compliance;
(3) if an Additional Reporting Event has occurred, as
soon as available and in any event within 90 days after the end of each
fiscal year of the Parent, a copy of consolidated financial statements
for such year for ATC Healthcare and its Subsidiaries, containing
financial statements for such year, all in reasonable detail, fairly
presenting the financial position and results of operations of ATC
Healthcare and its Subsidiaries as set forth above, as at the date
thereof and for such period, and prepared in accordance with GAAP,
certified by the chief financial officer of each Provider, and
accompanied by a certificate of a Responsible Officer of each Provider
detailing such Provider's compliance for such fiscal period with all
terms, including the financial covenants, contained in the Agreement,
and to the extent any non-compliance exists, a description of the steps
being taken by such Provider to address such non-compliance;
(4) promptly and in any event within five Business
Days after the occurrence of each Event of Termination or event which,
with the giving of notice or lapse of time, or both, would constitute
an Event of Termination, a statement of the chief financial officer of
the Parent and each Provider setting forth details of such Event of
Termination or event, and the action that it has taken and proposes to
take with respect thereto;
(5) promptly after the sending or filing thereof, if
any, copies of all reports and registration statements that the Parent,
such Provider or any Subsidiary files with the Securities and Exchange
Commission or any national securities exchange and official statements
that the Parent, such Provider or any Subsidiary files with respect to
the issuance of tax-exempt indebtedness and after an Event of
Termination or Servicer Termination Event, copies of all reports (if
any) that the Parent, such Provider or any Subsidiary sends to any of
its security holders;
(6) promptly after the filing or receiving thereof,
copies of all reports and notices that the Parent, such Provider or any
of its Affiliates files under ERISA with the Internal Revenue Service
or the PBGC or the U.S. Department of Labor or that the Parent, such
Provider or any of its Affiliates receives from any of the foregoing or
from any Multiemployer Plan to which the Parent, such Provider or any
of its Affiliates is or was, within the preceding five years, a
contributing employer, in each case in respect of the assessment of
withdrawal liability or an event or condition which could, in the
aggregate, result in the imposition of liability on the Parent, such
Provider or any such Affiliate in excess of $250,000;
(7) at least ten Business Days prior to any change in
the Parent's or such Provider's name or any implementation of a new
trade/assumed name, a Written Notice setting forth the new name or
trade name and the proposed effective date thereof and copies of all
documents required to be filed in connection therewith;
(8) promptly (and in no event later than three
Business Days following actual knowledge or receipt thereof), Written
Notice in reasonable detail, of (w) any Lien in excess of $50,000
asserted or claim made against the Batch Receivables, (x) the
occurrence of a Servicer Termination Event, (y) the occurrence of any
other event which could have a material adverse
IV-3
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effect on the value of a Batch Receivable or on the interest of the
Purchaser in a Batch Receivable or (z) the results of any cost report,
investigation or similar audit being conducted by any federal, state or
county Governmental Entity or its agents or designees;
(9) at least 30 days prior to the commencement of each
fiscal year, a consolidated and consolidating operating plan (together
with a complete statement of the assumptions on which such plan is
based) of each Provider certified by a Responsible Officer, which shall
include quarterly budgets for the prospective year in reasonable detail
acceptable to the Purchaser and will integrate operating profit and
cash flow projections and personnel, capital expenditures, and
facilities plans;
(10) promptly upon receipt thereof, a copy of any
management letter or written report submitted to the Parent or such
Provider by independent certified public accountants with respect to
the Subsidiaries, business, condition (financial or otherwise),
operations, prospects, or Properties of the Parent or such Provider;
(11) no later than five Business Days after the
commencement thereof, Written Notice of all actions, suits, and
proceedings before any Governmental Entity or arbitrator affecting the
Parent or such Provider which, if determined adversely to the Parent or
such Provider, could have a Material Adverse Effect;
(12) promptly after the furnishing thereof, copies of
any statement or report furnished by the Parent or such Provider to any
other party pursuant to the terms of any indenture, loan, or credit or
similar agreement and not otherwise required to be furnished to the
Purchaser pursuant to this Agreement;
(13) as soon as possible and in any event within three
Business Days after becoming aware of the occurrence thereof, Written
Notice of any matter that could reasonably be expected to result in a
Material Adverse Effect;
(14) as soon as available, (A) one copy of each
financial statement, report, notice or proxy statement sent by the
Parent to its stockholders generally, (B) and one copy of each regular,
periodic or special report, registration statement, or prospectus filed
by the Parent or such Provider with any securities exchange or the
Securities and Exchange Commission or any successor agency or the
Bankruptcy Court, and (C) all press releases and other statements made
available by the Parent or such Provider to the public concerning
developments in the business of the Parent or such Provider;
(15) within the sixty (60) day period prior to the end
of each fiscal year of the Parent, a report satisfactory in form to the
Purchaser, listing all material insurance coverage maintained as of the
date of such report by the Parent and its Subsidiaries and all material
insurance planned to be maintained by the Parent and its Subsidiaries
in the subsequent fiscal year; and
(16) such other information respecting the Receivables
or the condition or operations, financial or otherwise, of the Parent,
such Provider or any Subsidiary or Affiliate as the Purchaser may from
time to time reasonably request.
(51) Notice of Proceedings; Overpayments. The Primary Servicer
shall promptly notify the Master Servicer in the event of any action, suit,
proceeding, dispute, set-off, deduction, defense or counterclaim in excess of
$35,000 that is or may be asserted by an Obligor with respect to Receivables
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related to such Obligor. The relevant Provider shall make any and all payments
to the Obligors necessary to prevent the Obligors from offsetting any earlier
overpayment to such Provider against any amounts the Obligors owe on any Batch
Receivables.
(52) Officer's Certificate. On the date the financial
statements referred to in clause (j) above are to be delivered in each fiscal
year after the Initial Transfer Date, the chief financial officer of the Parent
and each Provider shall deliver a certificate to the Purchaser, stating that, as
of such date, (i) all representations and warranties set forth in the Agreement
are true and correct, (ii) the conditions precedent set forth in paragraph 2 of
Exhibit II have been fulfilled or waived in writing by the Purchaser, (iii) the
Parent and each of its Subsidiaries has paid all payroll taxes and charges then
due and (iv) no Event of Termination exists and is continuing. (1)
(53) Further Instruments, Continuation Statements. It shall,
at its expense, promptly execute and deliver all further instruments and
documents, and take all further action that the Program Manager or the Purchaser
may reasonably request, from time to time, in order to perfect, protect or more
fully evidence the full and complete transfer of ownership of the Batch
Receivables and the security interest in the Collateral, or to enable the
Purchaser or the Program Manager to exercise or enforce the rights of the
Purchaser hereunder or under the Batch Receivables. Without limiting the
generality of the foregoing, the Parent, the Primary Servicer and each Provider
will upon the request of the Program Manager execute and file such UCC financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be, in the opinion of the Program
Manager, necessary or appropriate. The Parent, the Primary Servicer and each
Provider hereby authorizes the Program Manager or its designees, to file one or
more financing or continuation statements and amendments thereto and assignments
thereof, relative to all or any of the Batch Receivables or the Collateral now
existing or hereafter arising without the signature of the Parent or such
Provider where permitted by law. If the Parent, the Primary Servicer or any
Provider fails to perform any of its agreements or obligations under the
Agreement, the Program Manager may (but shall not be required to) itself
perform, or cause performance of, such agreement or obligation, and the expenses
of the Program Manager incurred in connection therewith shall be payable by the
Parent, the Primary Servicer or such Provider.
(54) Taxes. It shall pay any and all taxes (excluding the
Purchaser's income, gross receipts, franchise, doing business or similar taxes)
relating to the transactions contemplated under the Agreement, including but not
limited to the sale, transfer and assignment of each Batch Receivable.
(55) Deviation from Terms of Batch Receivable, etc. None of
the Parent, the Primary Servicer or any Provider shall, without the prior
written consent of the Purchaser:
(1) other than in connection with the purchase of a
Denied Receivable or as consistent with past practice in the operation
of its business, compromise, adjust, extend, satisfy, subordinate,
rescind, set off, waive, amend, or otherwise modify, or permit or agree
to any deviation from, the terms and conditions of any Batch
Receivable, or materially or adversely amend, modify or waive any term
or condition of any contract related thereto;
(2) (x) amend, modify, supplement or delete in any way
or to any extent any provision for uncollectible accounts and free care
applicable to any Batch Receivable or (y) amend, modify or supplement
in any way or to any extent any financial category or change in any way
or to any extent the manner in which any financial category is treated
or reflected in the Parent or such Provider's records;
(3) materially or adversely alter or modify its claims
processing system; or
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(4) change, modify or rescind any direction contained
in any invoice or previously delivered Notice to Obligors. (1)
(56) Purchaser's Ownership of Batch Receivables. It shall not
prepare or permit to be prepared any financial statements which shall account
for the transactions contemplated hereby in a manner which is, or in any other
respect account for the transactions contemplated hereby in a manner which is,
inconsistent with the Purchaser's ownership of the Batch Receivables.
(57) Merger, Consolidation. It shall not, and shall not enter
into an agreement to, merge with or into or consolidate with or into, another
Person, or sell, convey, transfer, lease, assign or otherwise dispose of all or
substantially all of its assets (whether now owned or hereafter acquired).
(58) No "Instruments". It shall not take any action which
would allow, result in or cause any Transferred Batch or Batch Receivable to be
evidenced by an "instrument" within the meaning of the UCC of the applicable
jurisdiction.
(59) Intentionally omitted.
(60) Implementation of New Invoices. The Parent and such
Provider shall take all reasonable steps to ensure that all invoices rendered or
dispatched on or after the Initial Transfer Date contain only the remittance
instructions required under Article II of this Agreement.
(61) Notice of Termination or Suspension of Contracts. It
shall promptly (and in no event later than one Business Day following actual
knowledge thereof) inform the Purchaser and the Master Servicer of any
termination or suspension of any of its contracts, the termination or suspension
of which could reasonably be expected to have a Material Adverse Effect.
(62) Fiscal Year. To cause the fiscal year for the Parent and
each of its Subsidiaries to end on the last day of February of each year.
(63) Franchise Agreements. After the Initial Transfer Date no
Provider shall execute any franchise agreement unless (i) such franchise
agreement is in form and substance acceptable to the Program Manager or (ii) is
accompanied by an additional agreement in form and substance acceptable to the
Program Manager.
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EXHIBIT V
EVENTS OF TERMINATION
Each of the following shall be an "EVENT OF TERMINATION":
(64) The Primary Servicer, in its capacity as agent for the
Providers and the Purchaser pursuant to Section 1.05(b), shall fail to perform
or observe any term, covenant or agreement included in the Primary Servicer
Responsibilities (other than a Servicer Termination Event resulting from the
events described in paragraph (g) of this Exhibit) and such failure shall remain
unremedied for 15 days or the Primary Servicer, the Parent or any Provider shall
fail to make when due any payment or deposit to be made by it under the
Agreement.
(65) The Parent or any Provider or the Primary Servicer (i)
fails to transfer in a timely manner any servicing rights and obligations with
respect to the Batch Receivables to any successor designated pursuant to Section
1.05(b) of the Agreement or (ii) fails to make any payment required under the
Agreement within three Business Days of the date when due (unless such payment
obligation has been fulfilled in full pursuant to the Purchaser's set-off rights
under Section 4.03 of the Agreement).
(66) Any representation or warranty (other than those
representations and warranties (i) with respect to the purchase of Receivables
that are covered by paragraph (f) of this Exhibit V and (ii) with respect to
Batch Receivables, the Return Price with respect thereto is paid to the
Purchaser in the manner set forth in Article IV of this Agreement within five
Business Days following demand therefor) made or deemed made by the Parent, the
Primary Servicer or any Provider under or in connection with the Agreement, any
Provider Document or any information or report delivered by the Parent, the
Primary Servicer or any Provider pursuant to the Agreement or any Provider
Document shall prove to have been incorrect or untrue in any material respect
when made or deemed made or delivered.
(67) The Parent, the Primary Servicer or any Provider fails to
perform or observe any other term, covenant or agreement contained in the
Agreement or in any Provider Document on its part to be performed or observed
and any such failure shall remain unremedied for fifteen (15) Business Days
after the earlier of (i) the discovery thereof by the Parent, the Primary
Servicer or such Provider and (ii) written notice thereof shall have been given
to the Parent, such Provider or the Primary Servicer by the Purchaser.
(68) The Parent or any Provider shall fail to pay any
principal of or premium or interest on any of its Debt which has an outstanding
balance in excess of $150,000 when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating to
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required prepayment),
redeemed, purchased or defeased, or an offer to repay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof.
(69) Any purchase or contribution of a Transferred Batch
pursuant to the Agreement shall for any reason (other than pursuant to the terms
hereof) fail or cease to create or fail or cease to be a valid and perfected
ownership interest in each Batch Receivable in such Transferred Batch and the
Collections with respect thereto free and clear of all Liens (other than Liens
in favor of the Purchaser, Healthco-4, or any assignee of Healthco-4 relating to
the Agreement) unless, as to any such Batch
V-1
43
Receivable, the Return Price with respect thereto is paid to the Purchaser in
the manner set forth in Article IV of the Agreement within five Business Days
following demand therefor.
(70) The Parent, the Primary Servicer or any Provider shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors; or any proceeding shall be instituted by or against
the Parent, the Primary Servicer or such Provider seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its Property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 30 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its Property)
shall occur; or the Parent, the Primary Servicer or any Provider shall take any
action to authorize any of the actions set forth above in this paragraph (g).
(71) There shall have occurred any Material Adverse Effect.
(72) The Parent, the Primary Servicer or any Provider shall
have consummated, or have entered into any transaction or agreement which shall
result in the consummation of (i) the merger or consolidation of the Parent, the
Primary Servicer or any Provider into or with another Person, (ii) the
acquisition of all or a substantial portion of the assets of any Person, (iii)
the transfer, sale, assignment, lease or other disposition of all or a
substantial portion of the Parent, the Primary Servicer's or any Provider's
assets or Properties, (iv) a change in the general nature of the Primary
Servicer or any Provider's business, or the Parent engages in any activity other
than owning stock and activities incidental thereto, or (v) the sale of a
controlling interest, directly or indirectly, in the Parent, the Primary
Servicer or any Provider; provided, however, that the Parent or any Provider may
acquire all or substantially all of the assets or equity interests of any Person
so long as (i) in the case of an acquisition by a Provider, such Person engages
in a substantially similar line of business to such Provider and (ii) prior to
the consummation of such acquisition the Parent has delivered a certificate,
executed by its chief financial officer, to the Master Servicer demonstrating,
in a manner acceptable to the Master Servicer, pro forma compliance with each of
the financial covenants contained herein both immediately prior to and after
giving effect to such acquisition.
(73) Judgments or orders for payment of money (other than
judgments or orders in respect of which adequate insurance is maintained for the
payment thereof) against the Parent and its Subsidiaries in excess of $250,000
in the aggregate remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of 30 days or more.
(74) Any governmental authority (including, without
limitation, the Internal Revenue Service or the PBGC) files a notice of a Lien
against the assets of the Parent, the Primary Servicer or any Provider other
than a Lien (i) that is limited by its terms to assets other than Receivables,
and (ii) that does not result in a Material Adverse Effect.
(75) The Parent, the Primary Servicer or any Provider does not
maintain, keep, and preserve all of its material Properties necessary or useful
in the proper conduct of its business in good repair, working order, and
condition (ordinary wear and tear excepted) and make all necessary repairs,
renewals, replacements, betterments, and improvements thereof.
V-2
44
(76) The Parent, the Primary Servicer or any Provider does not
pay or discharge at or before maturity or before becoming delinquent (i) all
taxes, levies, assessments, and governmental charges imposed on it or its income
or profits or any of its Property, and (ii) all lawful claims for labor,
material, and supplies, which, if unpaid, might become a Lien upon any of its
Property, other than in connection with good faith disputes for which adequate
reserves in accordance with GAAP have been taken.
(77) The Parent or any Provider does not keep insured by
financially sound and reputable insurers all Property of a character usually
insured by corporations engaged in the same or similar business similarly
situated against loss or damage of the kinds and in the amounts customarily
insured against by such corporations and carry such other insurance as is
usually carried by such corporations. Each policy referred to in this clause (n)
shall provide that it will not be canceled, amended, or reduced except after not
less than thirty (30) days' prior written notice to the Purchaser and Healthco-4
and shall also provide that the interests of the Purchaser shall not be
invalidated by any act or negligence of the Parent or any Provider. The Parent
or any Provider does not advise the Purchaser promptly of any policy
cancellation, reduction, or amendment. Any insurance policy for property,
casualty, liability and business interruption coverage for the Parent or any
Provider does not name Healthco-4 as assignee of the Purchaser as loss payee (as
the Purchaser's interests may appear) or an additional insured, as appropriate.
(78) The Parent, the Primary Servicer or any Provider does not
maintain proper books of record and account in which full, true and correct
entries in conformity with GAAP are made of all dealings and transactions in
relation to its business and activities.
(79) The Parent, the Primary Servicer or any Provider does not
comply in all material respects with (i) any document directly relating to the
responsibilities of the Parent, the Primary Servicer or such Provider,
respectively, under the Agreement or (ii) any agreement, contract, or instrument
that results in a Material Adverse Effect.
(80) The Parent, the Primary Servicer or any Provider does not
comply with all minimum funding requirements and all other material requirements
of ERISA, if applicable, so as not to give rise to any liability thereunder.
(81) The Parent, the Primary Servicer or any Provider engages
in any line or lines of business activity other than businesses reasonably
related to the businesses in which it is engaged on the date hereof, provided,
however, after the Closing Date the Parent may form a new direct Subsidiary of
the Parent, which Subsidiary may engage in a business not related to the
businesses of the Parent on the Closing Date.
(82) An "Event of Default" (as defined in the Loan Agreement)
shall occur under the Loan Agreement.
(83) Any operative provision or any other material provision
of this Agreement shall for any reason cease to be valid and binding on the
Parent, the Primary Servicer or any Provider, or the Primary Servicer or any
Provider shall so state in writing.
(84) The Loss-to-Liquidation Ratio in any Month exceeds 7.50%.
(85) The Delinquency Ratio in any Month exceeds 15%.
(86) Consolidated Net Worth. Consolidated Net Worth Parent at
the end of any fiscal quarter is less than $8,000,000.
V-3
45
(87) Consolidated EBITDA. Consolidated EBITDA Parent as of the
end of any fiscal quarter for the four fiscal quarter period then most recently
ended, is less than $1,500,000.
(88) Accounts Receivable Turnover. The Accounts Receivable
Turnover Parent as of the end of any fiscal quarter, is less than 3.50.
(89) Debt to Consolidated Tangible Net Worth Ratio. The ratio
of Debt of the Parent and its Subsidiaries on a consolidated basis to its
Consolidated Tangible Net Worth Parent exceeds 20 at the end of any fiscal
quarter.
(90) Current Ratio. The ratio of Consolidated Current Assets
Parent to Consolidated Current Liabilities Parent at the end of any fiscal
quarter, is less than 1.75.
(91) Consolidated Interest Coverage Ratio. Consolidated
Interest Coverage Ratio Parent as of the end of any fiscal quarter, is less than
1.1.
(92) Consolidated Tangible Net Worth. Consolidated Tangible
Net Worth Parent at the end of any fiscal quarter (i) from the Closing Date
through the fiscal quarter ending February 28, 2002, is less than $400,000 and
(ii) thereafter, is less than $800,000.
(93) Restrictions on Parent. The Parent shall incur Debt
(including any Guaranty) in excess of $50,000, in the aggregate, or incur any
Liens other than Debt or Liens incurred in connection with this Agreement or any
of the Provider Documents and involuntary Liens which are discharged within 15
days of their creation or are being contested in good faith by the Parent and
for which the Parent is fully indemnified by a Person who is not a Affiliate of
the Parent to the satisfaction of the Master Servicer, in its good faith
discretion.
(94) Change of Control. A Change of Control shall occur.
(95) Debt Service Coverage Ratio. Consolidated Debt Service
Coverage Ratio Parent at the end of any fiscal quarter is less than 1.1.
If an Additional Reporting Event shall have occurred, in addition to the
foregoing, each of the following shall be an Event of Termination:
(96) Consolidated Net Worth. Consolidated Net Worth Providers
at the end of any fiscal quarter is less than $8,000,000.
(97) Consolidated EBITDA. Consolidated EBITDA Providers as of
the end of any fiscal quarter for the four fiscal quarter period then most
recently ended, is less than $1,500,000.
(98) Accounts Receivable Turnover. The Accounts Receivable
Turnover Providers, as of the end of any fiscal quarter, is less than 3.50.
(99) Debt to Consolidated Tangible Net Worth Ratio. The ratio
of Debt of ATC Healthcare and its Subsidiaries on a consolidated basis to
Consolidated Tangible Net Worth Providers, exceeds 20 at the end of any fiscal
quarter.
V-4
46
(100) Current Ratio. The ratio of Consolidated Current Assets
Providers to Consolidated Current Liabilities Providers, at the end of any
fiscal quarter, is less than 1.75.
(101) Consolidated Interest Coverage Ratio. Consolidated
Interest Coverage Ratio Providers as of the end of any fiscal quarter, is less
than 1.1.
(102) Consolidated Tangible Net Worth. Consolidated Tangible
Net Worth Providers at the end of any fiscal quarter (i) from the Closing Date
through the fiscal quarter ending February 28, 2002, is less than $400,000 and
(ii) thereafter, is less than $800,000.
(103) Debt Service Coverage Ratio. Consolidated Debt Service
Ratio Providers at the end of any fiscal quarter is less than 1.1. (1)
V-5
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EXHIBIT VI
RECEIVABLE INFORMATION
The following information shall, as appropriate, be provided
by each Provider to the Master Servicer with respect to each Batch Receivable,
together with such other information and in such form as may reasonably be
requested from time to time by the Master Servicer and as, in accordance with
applicable law, may be disclosed or released to the Master Servicer (the
"RECEIVABLE INFORMATION"):
(1) Obligor required information (i.e., information provided
in the ordinary course of business to any specified Obligor or any
other information required to be provided to an Obligor pursuant to any
agreement, contract or other arrangement with such Obligor); and
(2) billing information (i.e., all information provided by the
Providers on invoices to Obligors and any other information required to
be provided pursuant to the Credit and Collection Policy and a detailed
copy of the xxxx).
VI-1
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EXHIBIT VII
FORM OF NOTICE TO OBLIGORS
[Letterhead of the relevant Provider]
[Date]
[Name and Address
of Obligor]
Re: Change of Account and Address
To Whom it May Concern:
Please be advised that in connection with a financing, we (the
"Provider") are selling and contributing to ATC Funding, LLC (the "Purchaser"),
an affiliated company, all of our existing and future receivables payable by you
to us; and the Purchaser is assigning the aforementioned existing and future
arising receivables as collateral to HFG Healthco-4 LLC (the "Lender").
Accordingly, you are hereby directed to make:
(1) All wire transfers directly to the following account:
-------------------------------
-------------------------------
-------------------------------
Account #
----------------------
ABA #
--------------------------
Confirm Phone Number:
---------
Attention:
--------------------
(2) All remittance advices and other forms of payment,
including checks, to the following address:
-------------------------------
-------------------------------
Reference: HFG HEALTHCO-4 LLC
The foregoing directions shall apply to all existing
receivables payable to us and (until further written notice) to all receivables
arising in the future and may not be revoked except by a writing executed by the
Purchaser.
Please be advised that it is only the receivables being sold;
we shall continue to provide you the services we have provided you with to date.
VII-1
49
Please acknowledge your receipt of this notice by signing the
enclosed copy of this letter and returning it in the enclosed envelope.
Thank you for your cooperation in this matter.
[RELEVANT PROVIDER]
By:
---------------------------------
[Authorized Officer]
ATC FUNDING, LLC
By:
------------------------------
[Authorized Officer]
Receipt Acknowledged:
[Name of Obligor]
By:
---------------------------
Title:
VII-2
50
EXHIBIT VIII
PRIMARY SERVICER RESPONSIBILITIES
ATC Healthcare shall be responsible for the following
administration and servicing obligations (the "PRIMARY SERVICER
RESPONSIBILITIES") which shall be performed by the Primary Servicer on behalf of
the Providers until such time as a successor servicer shall be designated and
shall accept appointment pursuant to Section 1.05(b) of the Agreement:
(104) Servicing Standards and Activities. The Primary Servicer
agrees to administer and service the Batch Receivables sold or contributed by
the Providers in each Transferred Batch (i) to the extent consistent with the
standards set forth in clauses (b)(i) through (iv) below, with the same care
that it exercises in administering and servicing similar receivables for its own
account, (ii) within the parameters of services set forth in paragraph (b) of
this Exhibit VIII, as such parameters may be modified by mutual written
agreement of the Purchaser and the Primary Servicer, (iii) in compliance at all
times with applicable law and with the agreements, covenants, objectives,
policies and procedures set forth in the Agreement, and (iv) in accordance with
industry standards for servicing healthcare receivables unless such standards
conflict with the procedures set forth in paragraph (b) of this Exhibit VIII in
which case the provisions of paragraph (b) shall control. The Primary Servicer
shall establish and maintain electronic data processing services for monitoring,
administering and collecting the Batch Receivables in accordance with the
foregoing standards and shall, within three Business Days of the deposit of any
checks, other forms of cash deposits or other written matter into a Lockbox or
Lockbox Account, post such information to its electronic data processing
services.
(105) Parameters of Primary Servicing. The Primary Servicer
Responsibilities shall be performed within the following parameters:
(1) Subject to the review and authority of the
Purchaser and except as otherwise provided herein, the Primary Servicer
shall have full power and authority to take all actions that it may
deem necessary or desirable, consistent in all material respects with
its existing policies and procedures with respect to the administration
and servicing of accounts receivable, in connection with the
administration and servicing of Batch Receivables. Without limiting the
generality of the foregoing, the Primary Servicer shall, in the
performance of its servicing obligations hereunder, act in accordance
with all legal requirements and subject to the terms and conditions of
the Agreement. The Primary Servicer agrees that the Primary Servicing
Fee has been calculated to cover all costs and expenses incurred in the
performance of its servicing obligations hereunder and no other
reimbursement of costs and expenses shall be payable to the Primary
Servicer.
(2) The Primary Servicer shall not be entitled to xxx
to enforce or collect any Batch Receivable without the prior written
consent of the Purchaser unless the Primary Servicer shall have
purchased such Batch Receivable in accordance with the Agreement.
(3) The Primary Servicer shall not change in any
material respect its existing policies and procedures with respect to
the administration and servicing of accounts receivable (including,
without limitation, the amount and timing of write-offs) without the
prior written consent of the Purchaser.
(4) The Primary Servicer will be responsible for
monitoring and collecting the Batch Receivables, including, without
limitation, contacting Obligors that have not made payment
VIII-1
51
on their respective Batch Receivables within the customary time period
for such Obligor, and resubmitting any claim rejected by an Obligor due
to incomplete information.
(5) If the Primary Servicer determines that a payment
with respect to a Batch Receivable has been received by any other
Person, the Primary Servicer shall promptly advise the Purchaser, and
the Purchaser shall be entitled to presume that the reason such payment
was made to such other Person was because of a breach of representation
or warranty in the Agreement with respect to such Batch Receivable
(such as, by way of example, the forms related to such Batch Receivable
not being properly completed so as to provide for direct payment by the
Obligor to the Primary Servicer), unless the Primary Servicer shall
demonstrate that such is not the case. In the case of any such Batch
Receivable which is determined not to be a Denied Receivable, the
Primary Servicer shall promptly demand that such other Person remit and
return such funds. If such funds are not promptly received by the
applicable Provider, the Primary Servicer shall take all reasonable
steps to obtain such funds.
(6) Notwithstanding anything to the contrary contained
herein, no Provider may amend, waive or otherwise permit or agree to
any deviation from the terms or conditions of any Batch Receivable in
any material respect without the prior consent of the Purchaser.
(7) The Primary Servicer shall take no action
inconsistent with the Purchaser's ownership of the Receivables.
(106) The Loan Agreement. The Primary Servicer shall be
responsible, with the Purchaser, for the determination and application of the
Eligibility Criteria and the delivery and certification of information relating
to the Receivables required to be delivered under the Loan Agreement.
(107) Aged Term Servicing. The parties hereby agree that at
such time as any Batch Receivable is unpaid for more than 365 days after the
Last Service Date, the Primary Servicer shall, upon the request of the
Purchaser, turn over all of its Primary Servicer Responsibilities under this
Agreement with respect to such Batch Receivable to a successor servicer selected
by the Purchaser, and such servicer shall thereafter service such Batch
Receivable.
(108) Termination of Primary Servicer Responsibilities;
Cooperation. Upon the termination of the performance of the Primary Servicer
Responsibilities by the Primary Servicer in accordance with Section 1.05(b) of
the Agreement, the Primary Servicer shall immediately transfer to a successor
servicer designated by the Purchaser all records, computer access and other
information as shall be necessary or desirable, in the reasonable judgment of
such successor servicer, to perform such responsibilities. The Primary Servicer
shall otherwise cooperate fully with such successor servicer.
(109) Primary Servicing Fee. Upon the transfer of servicing
with respect to any Receivable pursuant to this Agreement, the Primary Servicer
shall no longer be paid the Primary Servicing Fee relating to such Receivables,
and such Primary Servicing Fee will be paid to the successor Person performing
the Primary Servicer Responsibilities with respect thereto. (1)
VIII-2
52
EXHIBIT IX
SERVICER TERMINATION EVENTS
Each of the following shall be a "SERVICER TERMINATION EVENT":
(110) An event has occurred and is continuing that constitutes
an Event of Termination or that would constitute an Event of Termination but for
the requirement that notice be given or time elapse or both.
(111) The Primary Servicer is not performing, or becomes
unable (in the commercially reasonable determination of the Purchaser) to
perform, fully the Primary Servicer Responsibilities set forth in Exhibit VIII
hereof or the Purchaser, in its sole judgment, which judgment shall be
commercially reasonable, is not satisfied with the performance by ATC
Healthcare, or the Primary Servicer on behalf of the Providers, of the Primary
Servicer Responsibilities.
(112) The Primary Servicer is unable to maintain the
Transmission interface described in Exhibit X to the satisfaction of the Master
Servicer, or the electronic information servicing capabilities of the Primary
Servicer are not functioning for a period of more than five consecutive Business
Days and the Primary Servicer has not replaced such system with another method
of transmission acceptable to the Master Servicer. During such five Business Day
period the most recent Transmission successfully sent shall be used until the
earlier of (i) five Business Days and (ii) the completion of the next successful
Transmission. The Primary Servicer and the Master Servicer agree to cooperate
in trying to correct any problem with the Transmission interface.
(113) The Primary Servicer has sent more than (i) one
Transmission in any one Month period or (ii) four Transmissions in any fiscal
year, to the Master Servicer in a manner that is not in compliance with the
specifications set forth in Exhibit X hereof.
(114) If, at any date, the aggregate Expected Net Value of all
Delinquent Receivables that became Delinquent during the prior 3 Months is in
excess of 15 % of the aggregate Expected Net Value of all Receivables sold by
the Providers to the Purchaser during the prior 3 Months (regardless of whether
the Denied Receivables are purchased by the relevant Provider or the Primary
Servicer pursuant to Article IV of the Agreement).
(115) As of any date after the Initial Transfer Date, more
than 15% of all outstanding Batch Receivables (excluding Denied Receivables) are
aged more than 120 days but less than 180 days from the respective Last Service
Dates of such Batch Receivables.
IX-1
53
EXHIBIT X
INTERFACE BETWEEN MASTER SERVICER AND THE PRIMARY SERVICER
1. The Master Servicer will convey appropriate data requirements
and instructions to the Primary Servicer to establish a
computer interface between the Primary Servicer's systems and
the Master Servicer's receivables monitoring system. The
interface will permit the Master Servicer to receive
electronically the Primary Servicer's accounts receivable
data, including the Receivable Information, billing data and
collection and other transaction data relating to the
Receivables.
2. The Primary Servicer shall give the Master Servicer and the
Purchaser at least ten Business Days' notice of any coding
changes or electronic data processing system modifications
made by the Primary Servicer which could affect the Master
Servicer's processing or interpretation of data received
through the interface.
3. The Master Servicer shall have no responsibility to return to
the Primary Servicer any information which the Master Servicer
receives pursuant to the computer interface.
4. The Primary Servicer will prepare weekly accounts receivable
data files of all transaction types for all of the Primary
Servicer's sites that are included in the program. The weekly
cutoff will occur at a predetermined time each week, and the
weekly cutoff date for all of the sites must occur at exactly
the same time. The cutoff date that will be selected will be
at the end of business for a specific day of the week, or in
other words, at the end of the Primary Servicer's transaction
posting process for that day. The Primary Servicer will
temporarily maintain a copy of the accounts data files in the
event that the data is degraded or corrupted during
transmission, and needs to be re-transmitted.
5. The Master Servicer will be responsible for the management of
the hardware, communications and software used in the program.
6. The Master Servicer's data center will receive the Receivable
files, and immediately confirm that the files have been passed
without degradation or corruption of data by balancing the
detailed items to the control totals that accompany the files.
Any problems in this process will be immediately reported to
the Primary Servicer so that the Receivable file can be
re-transmitted, if necessary.
7. Once the receipt of the Receivable data has been confirmed,
the Master Servicer will perform certain tests and edits to
ensure that each Receivable meets the specified eligibility
criteria for purchase by the Purchaser. Compliance with
concentration limits will be verified and the Master Servicer
will notify the Program Manager to initiate a Receivable
purchase using the Receivable file received. Upon the
successful completion of a purchase, the Master Servicer will
generate a one-line trial balance (listing all purchased
accounts) confirming the Receivables that have been purchased.
A copy of the trial balance will be forwarded to the
Providers, to the Primary Servicer, to the Purchaser, and to
the Program Manager to confirm the purchase.
X-1
54
8. The Primary Servicer's sites will continue to post daily
transactions to their respective Receivable files. The Primary
Servicer's Receivable files for each of the eligible sites
will include all transactions posted through that day. The
Primary Servicer will create a transaction report and a
Receivable file for each of the eligible sites. The
transaction report will contain all transactions posted to the
respective site Receivable file for the specified period (and
will indicate the respective site and the number of items and
total dollars on each transaction report for control
purposes). The Receivable file will contain balances that
reflect the transactions posted on the Primary Servicer's
systems through the end of business of the specified period.
9. The Primary Servicer will transmit the billing, transaction,
and the most current Receivable data files to the Master
Servicer's data center according to the established schedule.
Each Provider and the Primary Servicer should, again, maintain
the backup of each of these files in the event that a
re-transmission is necessary.
10. The Master Servicer's data center will confirm that the files
have been received intact, and will immediately communicate
any problems to the Primary Servicer in order to initiate a
re-transmission. The Master Servicer will then post the
transaction files to the accounts receivable for the
previously purchased accounts that the Master Servicer is
maintaining, and consequently update the affected balances.
Upon completion of the posting process, the Master Servicer
will generate summary reports of the posting process that the
Program Manager will use to complete various funding
activities. The Master Servicer summary reports will reference
the Primary Servicer's transaction codes and activity to codes
that are common to the funding program.
11. The Master Servicer will then compare the updated accounts
balances on the Master Servicer's system to the corresponding
account balances reflected on the Receivable file. The Master
Servicer expects that the balances for the funded Receivables
will be congruent, and any discrepancies will be immediately
examined and resolved through the cooperative effort of the
Master Servicer and the Primary Servicer. The Master Servicer
shall produce discrepancy reports (e.g., "Funding Only" or
"Out of Balance" reports) and the Primary Servicer shall
respond promptly to such reports.
12. Once the reconciliation process has been completed and any
discrepancies between the Master Servicer and the Primary
Servicer's Receivable files resolved through the discrepancy
report process described in paragraph 9 above, the Master
Servicer will then process the Receivable file and advise the
Purchaser that it may purchase any new Receivable that is
eligible. The Master Servicer will then proceed through
exactly the same process described in paragraph 6 above.
X-2
55
EXHIBIT XI-A
FORM OF OPINION OF PROVIDERS' AND PURCHASER'S COUNSEL
WITH RESPECT TO CERTAIN CORPORATE MATTERS
[See Tab 9]
56
EXHIBIT XI-B
FORM OF OPINION OF PROVIDERS' AND PURCHASER'S COUNSEL
WITH RESPECT TO CERTAIN BANKRUPTCY MATTERS
[See Tab 10]
57
EXHIBIT XII
FORM OF DEPOSITARY AGREEMENT
[See Tab 18]
58
SCHEDULE I
ADDRESSES FOR NOTICE
If to the Program Manager:
Healthcare Finance Group, Inc.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Chief Credit Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Master Servicer:
Healthcare Finance Group, Inc.
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx, Chief Credit Officer
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Providers:
ATC Healthcare Services, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxx, CFO
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Purchaser:
c/o ATC Healthcare Services, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxx, CFO
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Primary Servicer:
c/o ATC Healthcare Services, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxx, CFO
Tel: (000) 000-0000
Fax: (000) 000-0000
59
SCHEDULE II
CREDIT AND COLLECTION POLICY
[TO BE DELIVERED BY PROVIDERS]
60
SCHEDULE III
DISCLOSURES
[TO BE DELIVERED BY PROVIDERS]
61
SCHEDULE IV
LOCKBOX INFORMATION
Concentration Account:
HFG HEALTHCO-4 LLC
Account #0000000
Bank of New York
ABA #000000000
Lockboxes: Lockbox Accounts:
--------- ----------------
Post Office Box 40116 HFG HEALTHCO-4 LLC
Xxxxxxx Xxxx, XX 00000 Account #0-000-000
Mellon Bank, N.A.
ABA #000000000
Post Office Box 31718 HFG HEALTHCO-4 LLC
Xxxxxxxx, XX 00000 Account #9428406280
Fleet Bank, N.A.
ABA #000000000
Post Office Box 31726 HFG HEALTHCO-4 LLC
Xxxxxxxx, XX 00000 Account #0000000000
Fleet Bank, N.A.
ABA #000000000
Post Office Xxx 000000 HFG HEALTHCO-4 LLC
Xxxxxxx, XX 00000 Account #9428406301
Fleet Bank, N.A.
ABA #000000000
62
SCHEDULE V
TRADENAMES
