Exhibit 99.1
FIFTH
AMENDMENT AND WAIVER
to
CREDIT
AGREEMENT
This FIFTH
AMENDMENT AND WAIVER
TO CREDIT AGREEMENT (this “ Amendment and
Waiver ”) is executed to be effective as of
March 23, 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, as extended and modified by that certain Extension and
Modification of Waiver dated as of March 15, 2005 (the “
Waiver
”), wherein, subject to and upon certain terms and
conditions, the Lenders granted the Subject Waiver.
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E.
Borrower has performed its obligations under Section 2 of the
Waiver and has requested that the Subject Waiver be made permanent,
that the provisions and restrictions set forth in
Sections 2(b), (c), (d) and (e) of the Waiver expire and have
no further force or effect and that the Credit Agreement be amended
to, among other things, allow certain Letters of Credit to expire
after the Maturity Date, modify certain definitions, modify certain
representations and warranties, modify certain Schedules to the
Credit Agreement, and modify Exhibit E to the Credit
Agreement, all as set forth in this Amendment and Waiver.
F.
For purposes of this Amendment and Waiver, 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 September 30, 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 . Permanent
Waiver . Effective as of the date hereof, but subject to
satisfaction of the conditions precedent set forth in
Section
5 hereof, Lenders hereby grant the Subject Waiver on
a permanent basis and agree on a permanent basis that the Subject
Matters do not constitute a Material Adverse Effect, a Default or
an Event of Default and that the Subject Matters (and the facts and
circumstances underlying or relating to the Subject Matters) are
excluded from the representations and warranties that are 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 or for any other
purpose under the Loan Documents; provided that the waiver of
compliance by Borrower with Section 10.2 and Section 10.3
of the Credit Agreement for the fiscal quarter ended
December 31, 2004 has expired and is of no further force or
effect.
Section 3 . Reinstatement
of Credit Agreement Terms . Effective as of the date
hereof, but subject to satisfaction of the conditions precedent set
forth in Section 5
hereof, Lenders hereby agree that the provisions and restrictions
set forth in Sections
2(b) , (c) , (d) and (e) of the Waiver have expired and
are of no further force and effect.
Section 4 . Amendments
. Effective as of the date hereof, but subject to
satisfaction of the conditions precedent set forth in
Section
5 hereof, the Credit Agreement is hereby amended as
follows:
(a)
The definition of “ EBITDA ” in
Section 1.1
of the Credit Agreement is hereby amended in its entirety to read
as follows:
“‘ EBITDA’ means, for
any period, without duplication, the sum of the following for
F.Y.I. and its Subsidiaries (or other applicable Person) for such
period determined on a consolidated basis in accordance with GAAP:
(a) Consolidated Net Income, plus (b) Interest Expense,
plus (c) income and franchise taxes to the extent deducted
in determining Consolidated Net Income, plus (d)
depreciation and amortization expense and other non-cash, non-tax
items to the extent deducted in determining Consolidated Net
Income, plus (e) the Subject Seller Earn Outs paid in cash
during such period to the extent deducted in determining
Consolidated Net Income, minus (f) non-cash income to the
extent included in determining Consolidated Net Income,
minus (g) any cash payments received as the result of any
claim or cause of action arising out of the payment of the Subject
Seller Earn Outs, whether under any insurance policy,
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through litigation
or negotiated settlement, or otherwise, to the extent included in
determining Consolidated Net Income; provided, however, that for
purposes of calculating the EBITDA of F.Y.I. and its consolidated
Subsidiaries for any period of four consecutive fiscal quarters
including, without limitation, the four consecutive fiscal quarter
period used in determining compliance with the twelve month
trailing EBITDA requirement in the definition of Permitted
Acquisition, (i) the EBITDA associated with any Person or assets
acquired in a Permitted Acquisition during such period of four
consecutive fiscal quarters shall be added, without duplication, if
either (A) the financial statements of the Person or assets
acquired from which such EBITDA would be determined were audited by
independent certified public accountants of recognized standing
acceptable to the Administrative Agent or (B) the Permitted
Acquisition and the EBITDA of the Person or assets acquired were
approved in writing by the Required Lenders; and (ii) the EBITDA
associated with any Person or assets disposed of in a Permitted
Disposition during such period of four consecutive fiscal quarters
shall be deducted.”
(b)
The definition of “ Fixed Charges ” in
Section
1.1 of the Credit Agreement is hereby amended in its
entirety to read as follows:
“‘ Fixed Charges’
means, for any period, the sum of (a) cash Interest Expense of
F.Y.I. and its Subsidiaries during such period, plus (b) all
scheduled payments (as such scheduled payments are reduced by
application of any prepayments) of principal with respect to the
Loans and other outstanding Debt during such period, plus
(c) Rental Expense of F.Y.I. and its Subsidiaries during such
period, plus (d) Seller Earn Outs paid in cash by F.Y.I. and
its Subsidiaries during such period (other than the Subject Seller
Earn Outs).”
(c)
A new definition, reading in its entirety as follows, is added to
Section 1.1
of the Credit Agreement in the appropriate alphabetical
location:
“‘ Subject Seller Earn
Outs’ means the Seller Earn Outs in an aggregate amount
not exceeding $26,000,000 paid on or before September 30, 2004
in connection with the Permitted Acquisition of an operating
Subsidiary in the Information Management Division of F.Y.I.’s
Information Management and Distribution reportable
segment.”
(d)
The third sentence of Section
2.14(b) of the Credit Agreement is amended in its
entirety to read as follows:
“Each Letter
of Credit shall have an expiration date that does not exceed one
year from the date of issuance ( provided , however ,
that the B&B Letter of Credit may have an expiration date that
is up to eighteen months after the date of issuance and the
Existing B of A Letter of Credit may have an expiration date that
extends to March 31, 2003) and that does not extend beyond the
date that is six months after the Maturity Date ( provided ,
however , that the B&B Letter of Credit may not extend
beyond the Maturity Date), shall be payable in Dollars, shall
support a transaction entered into in the ordinary course of the
account party’s or parties’ business, shall be
satisfactory in form and substance to the Issuing Bank and shall be
issued pursuant to such agreements, documents and instruments
(including a Letter of Credit Agreement) as the Issuing Bank may
reasonably require, none of which shall be inconsistent with this
Section 2.14 .”
(e)
The first sentence of Section
2.14(c) of the Credit Agreement is amended in its
entirety to read as follows:
“F.Y.I.
agrees to pay the Administrative Agent for the account of each
Lender, in arrears on each Quarterly Date beginning on June 30,
2001 and on the Maturity Date and on the date that any
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Letter of Credit
expires after the Maturity Date, a nonrefundable letter of credit
fee with respect to each Letter of Credit issued in an amount equal
to the product of (i) the Applicable Margin for Eurodollar Loans in
effect on the date of issuance of such Letter of Credit (with
respect to the fee due on the first Quarterly Date after issuance)
or on the first day of the applicable quarter or other period
beginning after the calendar quarter during which the issuance of
such Letter of Credit occurred (with respect to the fee due on each
subsequent Quarterly Date or on the Maturity Date and on the date
that any Letter of Credit expires after the Maturity Date,
multiplied by (ii) the daily average face amount of the Letters of
Credit in effect during the applicable period.”
(f)
A new Section
2.14(h) , reading in its entirety as follows, is
added to the Credit Agreement:
“(h)
Notwithstanding the foregoing provisions of this Section
2.14 or any other provision contained in the Loan Documents
that may be to the contrary, and provided that no Default or
Event of Default has occurred and is continuing on the Maturity
Date, from and after the Maturity Date, (i) no Lender other than
Bank of America shall have any participation risk or obligation in
respect of any Letter of Credit that expires after the Maturity
Date (other than any unreimbursed drawing made on or before the
Maturity Date under any such Letter of Credit), (ii) no Lender
other than Bank of America shall have the right to share in any
letter of credit fees accruing in respect of any such Letter of
Credit, and (iii) the Commitment Percentage of Bank of America in
respect of any such Letter of Credit shall be deemed to be 100%
(other than in respect of any unreimbursed drawing made on or
before the Maturity Date under any such Letter of
Credit).”
(g)
Section
7.6 of the Credit Agreement is hereby amended in its
entirety to read
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