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EXHIBIT 10.108
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FIRST AGREEMENT TO LOAN AND SECURITY AGREEMENT ("First Amendment")
dated as of July 31, 2000, is by and between HEALTHCARE BUSINESS CREDIT
CORPORATION (FORMERLY KNOWN AS COPELCO/AMERICAN HEALTHFUND, INC.), ("Lender")
and ATC HEALTHCARE SERVICES, INC., ("HEALTHCARE") and ATC STAFFING SERVICES,
INC. ("Staffing", and together with Healthcare, "Borrowers", and is consented to
by STAFF BUILDERS, INC. ("Surety").
BACKGROUND
A. Lender and Borrowers entered into a Loan and Security Agreement dated
March 28, 2000 (the "Original Agreement", and as amended from time to time,
including without limitation by this First Amendment, the "Agreement"), whereby
Lender agreed to lend to Borrowers and Borrowers agreed to borrow from Lender,
all on the terms and conditions set forth in the Original Agreement, the sum of
Twenty Million Dollars (the "Loan"). All capitalized terms used herein have the
meanings ascribed to them in the Agreement.
B. As of the fiscal quarter ending May 31, 2000, Borrowers are in default
under the Original Agreement by failing to maintain a Tangible Net Worth of not
less than Two Million Dollars as required by Section 6.6(a) thereof, by failing
to maintain a Debt Service Coverage Ratio of not less than 1.25 to 1 as required
by Section 6.6(b), and by failing to deliver financial statements within the
time frame required by Section 6.7(a)(i) within one hundred twenty (120) days of
the end of Borrower's fiscal year ended February 29, 2000 (collectively the
"Existing Defaults").
C. Borrowers have requested that Lender agree to waive the Existing
Defaults and consent to certain amendments of the Original Agreement.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
1. Waivers of Existing Defaults; Consents. (a) Subject to the terms and
conditions hereinafter set forth, Lender agrees to waive the Existing Defaults,
provided however that such waiver shall not be construed to constitute a waiver
of any other Event of Default under the Agreement.
(b) Lender consents to Surety's acquisition of Advance Management
Solutions, Inc. from Tender Loving Care Health Care Services, Inc. on
June 1, 2000.
2. Amendments. The parties agree to amend the Agreement as follows:
(a) Those certain definitions identified below, set forth in
Section 1.1 of the Agreement are amended as follows:
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(i) ""Agreement" shall mean the Loan and Security Agreement
dated March 28, 2000, as amended by the First Amendment and as further
amended from time to time thereafter."
(ii) ""Applicable Margin" means from the Closing Date through
May 31, 2000, two percent (2%) per annum and, from June 1, 2000, three
percent (3%) per annum, provided that, from and after August 1, 2000,
"Applicable Margin" shall be calculated in accordance with the table and
the text below:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
Leverage Ratio Applicable Margin
-------------------------------------------------------------------------------------------
<S> <C>
Greater than or equal to 14/1 3.00%
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Greater than or equal to 12/1, but less than 14/1 2.00%
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Greater than or equal to 10/1, but less than 12/1 1.75%
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Greater than or equal to 8/1, but less than 10/1 1.50%
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Greater than or equal to 6/1, but less than 8/1 1.00%
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Less than 6/1 0.50%
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</TABLE>
The calculation of Applicable Margin shall be made quarterly based upon the
Consolidated financial statements of Borrowers. Changes to Applicable Margin
shall become effective for the then outstanding balance of the Loans and all
Advances thereafter made as of the Funding Date immediately following receipt by
Lender of the financial statements on which such change is based, provided
however that, if Borrowers fail to deliver to Lender financial statements in a
timely manner, as required by this Agreement, Applicable Margin shall be 3% for
the period commencing with the first day of the fiscal quarter immediately
following the fiscal quarter to which such financial statements relate and
ending on the first Funding Date following receipt by Lender of such financial
statements."
(b) Section 1.1 of the Agreement shall be further amended by adding
the following definition:
""First Amendment" means the First Amendment to Loan and Security
Agreement dated as of July 31, 2000, by and between Borrowers and Lender."
(c) Section 6.6 of the Agreement shall be amended in its entirety
to read as follows:
"6.6 Financial Covenants. Borrowers shall maintain and comply with
the following financial covenants as reflected on and computed from their
financial statements:
(a) Borrower shall maintain Tangible Net Worth at all times
through the end of fiscal year 2000 of not less than $1,000,000.00.
Thereafter Borrowers at all times shall maintain Tangible Net Worth of
not less than the sum of (i) the greater of $1,000,000 or Tangible Net
Worth as of the immediately prior fiscal year-end, plus (ii) 50% of
positive (but not negative) net income (as determined in accordance
with GAAP) for such fiscal year, provided however that, Borrowers shall
not be obligated to maintain a Tangible Net Worth in excess of
$2,000,000.00 at any time.
(b) Borrowers shall maintain a Debt Service Coverage Ratio at
all times, measured as of the end of each fiscal quarter in accordance
with the following table:
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<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Period Not Less than
------------------------------------------------------------------------------------------
<S> <C>
Through 8/31/00 1.10 to 1
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Through 11/30/00 1.15 to 1
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Through 2/28/01 1.25 to 1
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Through 5/31/01 1.30 to 1
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Through 8/31/01 1.35 to 1
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Through 11/30/01 1.40 to 1
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Thereafter 1.50 to 1
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</TABLE>
Through February 28, 2001, Debt Service Coverage Ratio shall be computed by
analyzing financial performance from the period between June 1, 2000, and the
date of determination. From and after the quarter ending May 31, 2001, Debt
Service Coverage Ratio shall be computed on a rolling four quarter basis.
3. Representations and Warranties. Borrowers represent and warrant to
Lender as follows:
(a) The representations and warranties set forth in Section 5 of the
Agreement are true and correct as of the date hereof.
(b) After giving effect to this First Amendment, no Event of Default
has occurred or is continuing.
(c) Each Borrower has the requisite corporate power and authority to
enter into and perform this First Amendment and to incur the obligations
herein provided for, and has taken all the proper and necessary corporate
action to authorize the execution, delivery and performance of this First
Amendment and this First Amendment constitutes the valid, binding and
enforceable agreement of each Borrower.
(d) The Loan Documents continue in full force and effect and the
Borrowers have no charge, lien, claim or offset against Lender, or any
defense to enforcement of the Loan Documents by Lender.
4. Conditions Precedent. The obligation of Lender hereunder and
effectiveness of this First Amendment are subject to the satisfaction of each of
the following conditions precedent:
(a) This First Amendment shall be duly executed by each Borrower and
consented to by Surety and delivered to Lender;
(b) Borrower shall pay to Lender an amendment fee of $75,000.00,
$50,000.00 of which shall be payable in immediately available funds with
Borrowers' delivery of the executed First Amendment, and the balance of
$25,000 shall be payable in immediately available funds no later than
August 30, 2000.
(c) Borrowers shall pay all costs and out-of-pocket expenses
(including without limitation attorneys' fees and costs) of Lender in
connection with this First Amendment and the transactions contemplated
hereby, including the preparation, review and negotiation of this First
Amendment.
Borrowers hereby agree that they shall satisfy the conditions set forth in this
section 4 as and when required hereby, and the failure to do so shall constitute
an Event of Default under the Agreement.
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5. Miscellaneous. (a) This First Amendment contains all the
modifications to the Agreement intended by the parties. No further modifications
shall be deemed effective unless in writing executed by the parties hereto.
(a) The execution, delivery and effectiveness of this First
Amendment shall not operate as a waiver of any right, power or remedy of
Lender under the Agreement or any of the Loan Documents, nor constitute a
waiver of any Event of Default or any provision of the Agreement or any of
the Loan Documents, except as expressly set forth herein.
(b) This First Amendment shall be construed and enforced in
accordance with the laws of the State of New Jersey.
(c) This First Amendment may be executed in a number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this First Amendment
by signing any such counterpart.
(d) The Agreement shall remain in full force and effect. Execution
of this First Amendment shall not constitute a novation between Borrowers
and Lender.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have this caused this First Amendment to be executed by their respective
duly authorized officers, as of the date first above written.
ATC STAFFING SERVICES, INC. ATC HEALTHCARE SERVICES, INC.
By: /s/ Alan Levy By: /s/ Alan Levy
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Name: Alan Levy Name: Alan Levy
Title: Vice President - CFO Title: Vice President - CFO
HEALTHCARE BUSINESS CREDIT The foregoing is consented to
CORPORATION (formerly known as by Surety:
Capelco/American HealthFund, Inc.) STAFF BUILDERS, INC.
By: /s/ Stacey Allen By: /s/ Alan Levy
--------------------------- ----------------------------
Name: Stacey Allen Name: Alan Levy
Title: Senior Portfolio Manager Title: Vice President - CFO
