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
