Exhibit 99.1
EXTENSION AND MODIFICATION OF
WAIVER
TO
CREDIT
AGREEMENT
This EXTENSION AND MODIFICATION OF
WAIVER TO CREDIT
AGREEMENT (this “ Extension and Modification of
Waiver ”) is executed to be effective as of
March 15, 2005, by and among SOURCECORP, INCORPORATED , formerly
known as F.Y.I. Incorporated, a Delaware corporation (“
Borrower
”), Bank of America,
N.A. , as a Lender and as Administrative Agent for
Lenders (in such capacity, “Administrative
Agent ” ) and the other Agents and Lenders
party hereto.
A.
Borrower, Administrative Agent and Lenders entered into that
certain Credit Agreement dated as of April 3, 2001, as amended
by the First Amendment to Credit Agreement dated as of
June 27, 2001, as further amended by the Second Amendment to
Credit Agreement dated as of September 27, 2002, as further
amended by the Third Amendment to Credit Agreement dated as of
March 26, 2003, and as further amended by the Fourth Amendment
to Credit Agreement dated as of July 30, 2004 (such Credit
Agreement, as so amended, the “ Credit
Agreement ”).
B.
On or before November 12, 2004, Borrower advised
Administrative Agent and Lenders that, based on the results of an
ongoing investigation of historical revenue recognition practices,
(a) the financial statements of Borrower, and the related
compliance certificate, for the fiscal quarter ended
September 30, 2004 would not be delivered to Administrative
Agent on or before November 15, 2004, as required by
Sections 8.1(b) and 8.1(c) of the Credit Agreement, (b) the
previously reported financial statements of Borrower for the fiscal
quarter and year ended December 31, 2003 and the fiscal
quarters ended March 31, 2004 and June 30, 2004 (and
possibly for one or more fiscal quarters ended prior to
December 31, 2003) should no longer be relied upon and may be
restated, (c) until the investigation was complete, the impact on
previously reported financial statements of Borrower could not be
finally determined and further adjustments to previously reported
financial statements of Borrower may be required, (d) Borrower may
not have been in compliance with Section 10.3 of the Credit
Agreement for fiscal quarters ended on or prior to
September 30, 2004 and may not be in compliance with
Section 10.3 of the Credit Agreement for the fiscal quarter
ending December 31, 2004, (e) at least three putative
shareholder class action lawsuits had been filed against Borrower
and some of its officers and directors as a result of
Borrower’s announcement that certain previously reported
financial statements should not be relied upon and that its
forecasts were being updated, (f) a Material Adverse Effect may
have occurred and been continuing as of November 12, 2004, as
a result of the events described in clauses (a), (b), (c), (d)
and (e) preceding, and (g) a Default or Event of Default may have
occurred and been continuing as of November 12, 2004, as a
result of the events described in clauses (a), (b), (c), (d)
and (e) preceding.
C.
On or before November 12, 2004, Borrower requested that
Lenders waive the matters set forth in the immediately preceding
paragraph (the “Subject
Matters” ), that Lenders agree that the
Subject Matters did not (and, in the case of the Subject Matter
described in clause (d) of the immediately preceding
paragraph, would not) constitute a Material Adverse Effect, a
Default or an Event of Default, and that the Subject Matters be
excluded from the representations and warranties that were required
to be true and correct on and as of the date of the making of any
Loan or the issuance of any Letter of Credit as conditions
precedent thereto (the waiver, agreement and exclusion requested by
Borrower being herein called the “Subject
Waiver” ).
D.
In response to such request, Borrower and Lenders entered into that
certain Waiver to Credit Agreement dated as of November 12,
2004 (the “ Waiver
”), wherein, subject to and upon certain terms and
conditions, the Lenders granted the Subject Waiver.
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E.
Borrower has requested that the Subject Waiver be extended to
March 23, 2005 and that the Subject Matters be modified to
include any noncompliance by Borrower with Section 10.2 of the
Credit Agreement for fiscal quarters ended on or prior to
December 31, 2004 and any Material Adverse Effect, Default or
Event of Default that may have occurred as a result of such
noncompliance.
NOW, THEREFORE
, in consideration of the
mutual promises herein contained, and for other valuable
consideration, the parties hereto agree as follows:
Section 1 . Defined Terms; References . Unless
otherwise specifically defined herein, each term used herein that
is defined in the Credit Agreement shall have the meaning assigned
to such term in the Credit Agreement.
Section 2 . Extension and Modification of Waiver .
Effective as of the date hereof, but subject to satisfaction of the
conditions precedent set forth in Section 4
hereof, Lenders hereby agree that (a) the “March 15,
2005” date appearing in Section 2(a) and
Section 2(e) of the Waiver is amended to read
“March 23, 2005” each place it appears, and (b)
that the Subject Matters covered by the Subject Waiver shall
include any noncompliance by Borrower with Section 10.2 of the
Credit Agreement for fiscal quarters ended on or prior to
December 31, 2004; provided that, if the Subject Waiver
hereafter becomes permanent as contemplated by the Waiver, the
waiver of compliance by Borrower with Section 10.2 of the
Credit Agreement for the fiscal quarter ended December 31,
2004 shall expire and be of no further force or effect.
Section 3 . Ratification of Waiver . Except as
extended and modified hereby, the Waiver is unchanged and is hereby
ratified and confirmed.
Section 4 . Conditions to Effectiveness . This
Extension and Modification of Waiver shall become effective as of
the date hereof when and if Administrative Agent has received the
following:
(a)
this Amendment and Waiver, duly executed by Borrower, each
guarantor, the Required Lenders and Administrative
Agent;
(b)
if requested by Administrative Agent, a certificate of the
secretary or an assistant secretary of Borrower certifying the
names and true signatures of the officers of Borrower authorized to
execute and deliver this Extension and Modification of Waiver;
and
(c)
such other assurances, certificates, documents, consents and
opinions as Administrative Agent may reasonably require.
Section 5 . Representations and Warranties of
Borrower . Borrower represents and warrants to Lenders and
Administrative Agent as follows:
(a)
The execution, delivery and performance by Borrower of this
Extension and Modification of Waiver, have been duly authorized by
all necessary corporate action and do not and will not
(i) require any consent or approval not heretofore obtained of
any director, stockholder, security holder or creditor of Borrower,
(ii) violate or conflict with any provision of
Borrower’s Articles of Incorporation or bylaws,
(iii) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or leased or
hereafter acquired by Borrower, (iv) violate any laws
applicable to Borrower or (v) result in a breach of or
constitute a default under, or cause or permit the acceleration of
any obligation owed under, any indenture or loan or credit
agreement or any other material agreement to which Borrower is a
party or by which Borrower or any of its Property is bound or
affected.
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(b)
No authorization, consent, approval, order, license or permit from,
or filing, registration or qualification with, any Governmental
Authority is or will be required to authorize or permit under
applicable law the execution, delivery and performance by Borrower
of this Extension and Modification of Waiver.
(c)
This Extension and Modification of Waiver has been duly executed
and delivered by Borrower and constitutes the legal, valid and
binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except as enforcement may be limited by
the Bankruptcy Code and other debtor relief laws or equitable
principles relating to the granting of specific performance and
other equitable remedies as a matter of judicial
discretion.
(d)
After giving effect to this Extension and Modification of Waiver,
the representations and warranties (other than the representations
and warranties with respect to the Subject Matters and the facts
and circumstances underlying or relating to the Subject Matters) of
Borrower contained in Article 7 of
the Credit Agreement are true and correct in all material respects
as though made on and as of the date hereof (except to the extent
such representations and warranties expressly
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