Exhibit 10.13
FIFTH AMENDMENT TO THE CREDIT AGREEMENT
This FIFTH AMENDMENT TO THE CREDIT AGREEMENT dated as of February 28,
2002 (this "Fifth Amendment") is among MEMBERWORKS INCORPORATED, a Delaware
corporation (the "Company"), the lenders parties hereto (each a "Lender" and
collectively the "Lenders") and XXXXX BROTHERS XXXXXXXX & CO., as agent for the
Lenders (in such capacity, the "Agent").
PRELIMINARY STATEMENTS. The Company, the Lenders, and the Agent entered
into a Credit Agreement dated as of September 15, 1999, which Credit Agreement
was amended pursuant to that certain First Amendment to the Credit Agreement
dated as of February 25, 2000, that certain Second Amendment to the Credit
Agreement dated as of March 13, 2001, that Waiver and Third Amendment to the
Credit Agreement dated as of November 14, 2001 and that Fourth Amendment to the
Credit Agreement dated as of February 1, 2002 (as so amended, the "Existing
Credit Agreement").
The Company has requested that the Agent and the Lenders, and the Agent
and the Lenders are willing to, among other things, extend the Final Maturity
Date to May 1, 2002 upon the terms and conditions presented herein.
Accordingly, the Company, the Lenders and the Agent agree as follows:
Section 1.1 Amendments to the Existing Credit Agreement. Effective as
of the date hereof and subject to the satisfaction of the conditions precedent
set forth in Section 1.2 hereof, the Existing Credit Agreement is hereby amended
as follows:
(a) The definition of "Final Maturity Date" in Section 1.1 of the
Existing Credit Agreement is deleted in its entirety and replaced with the
following:
"Final Maturity Date" shall mean May 1, 2002 or such
later date as determined in accordance with Subsection 2.8;
provided however, notwithstanding anything to the contrary
herein, if the Final Maturity Date is extended in accordance
with Subsection 2.8, the "current Final Maturity Date" for
purposes of Subsection 2.8 shall be April 1, 2002 and the
Final Maturity Date shall be extended for an additional 364
days from April 1, 2002.
Section 1.2 Conditions of Effectiveness. This Fifth Amendment shall
become effective when, and only when, the Agent and each of the Lenders shall
have received a counterpart of this Fifth Amendment executed by the Company and
the Agent shall have additionally received, in form and substance satisfactory
to the Agent and the Lenders, all corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Fifth Amendment, as the Lenders and the Agent
may reasonably request, all in form and substance satisfactory to the Agent and
its counsel which request the Lenders and Agent acknowledge and agree, by their
execution hereof, has been satisfied in full.
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Section 1.3 Representations and Warranties of the Company. The
Company represents as follows:
(a) The representations and warranties contained in Section 5
of the Existing Credit Agreement are correct on and as of the date hereof as
though made on and as of such date (or, if such representation or warranty is
expressly stated to have been made as of a specific date, as of such specific
date); provided however, that Schedule 5.7 of the Existing Credit Agreement is
deleted in its entirety and restated in the form of Schedule 5.7 annexed hereto;
(b) No Event of Default or Default has occurred and is
continuing or would result from the signing of this Fifth Amendment or the
transactions contemplated hereby;
(c) There has been no material adverse change in the
financial condition, operations, Properties, business or business prospects of
the Company and its Subsidiaries, if any, since June 30, 2001.
(d) The execution, delivery and performance by the Company of
this Fifth Amendment have been duly authorized by all necessary corporate action
and do not and will not (i) require any consent or approval of its shareholders;
(ii) violate any provisions of its articles of incorporation or by-laws; (iii)
violate any provision of, or require any filing, registration, consent or
approval under, any law, rule, regulation (including without limitation,
Regulation U and X), order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to and binding upon the Company
or any Subsidiary; or (iv) result in a breach of or constitute a default or
require any consent under any indenture or loan or credit agreement or any other
material agreement, lease or instrument to which the Company or any Subsidiary
is a party or by which it or its properties may be bound.
(e) This Fifth Amendment and the Existing Credit Agreement, as
amended hereby, constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally and by general principles of equity.
(f) No information, exhibit or report furnished in writing by
or on behalf of the Company or any officer or director of the Company to the
Lenders or the Agent in connection with the negotiation of, or pursuant to the
terms of, this Fifth Amendment contained when made any material misstatement of
fact or omitted to state a material fact necessary to make the statements
contained therein not misleading.
Section 1.4 Reference to and Effect on the Credit Agreement.
(a) Upon the effectiveness of this Fifth Amendment, on and
after the date hereof, each reference in the Credit Agreement to "this Credit
Agreement", "this Agreement", "hereunder", "hereof", "herein" or words of like
import shall mean and be a reference to the Existing Credit Agreement as amended
hereby.
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(b) Except as specifically amended and waived above, the
Existing Credit Agreement shall remain in full force and effect and is hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Fifth
Amendment shall not operate as a waiver of any right, power or remedy of the
Lenders under the Existing Credit Agreement, nor constitute a waiver of any
provision of the Existing Credit Agreement.
Section 1.5 Costs, Expenses and Taxes. The Company agrees to pay on
demand all reasonable costs and expenses of the Lenders and the Agent in
connection with the preparation, execution and delivery of this Fifth Amendment
and the other instruments and documents to be delivered hereunder, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Lenders with respect thereto and with respect to advising the Lenders as
to its rights and responsibilities hereunder and thereunder. In addition, the
Company shall pay any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of this Fifth Amendment
and the other instruments and documents to be delivered hereunder, and agrees to
save the Lenders harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes.
Section 1.6 Execution in Counterparts. This Fifth Amendment may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute but one and the same instrument.
Section 1.7 Governing Law. This Fifth Amendment shall be governed
by, and construed in accordance with, the laws of the State of New York.
Section 1.8 Defined Terms. Capitalized terms used herein which are
not expressly defined herein shall have the meanings ascribed to them in the
Existing Credit Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
MEMBERWORKS INCORPORATED
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: SVP and CFO
XXXXX BROTHERS XXXXXXXX & CO., as Agent
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
Title: Vice President
XXXXX BROTHERS XXXXXXXX & CO., as Lender
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
Title: Vice President
LASALLE BANK NATIONAL ASSOCIATION, as Lender
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Vice President
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SCHEDULE 5.7
MATERIAL LITIGATION
In January 2001, an action was instituted by plaintiff Xxxxxx X. Xxxx against
the Company and other defendants in the Court of Common Pleas in Cuyahoga
County, Ohio. The suit, which seeks unspecified monetary damages, alleges that
the Company and the other defendants violated various provisions of Ohio's
consumer protection laws in connection with the marketing of certain membership
programs offered by the Company. The plaintiff's motion to have the suit
certified as a class action was denied on February 6, 2002. The Company believes
that the claims asserted against it are unfounded and the Company will
vigorously defend its interests against this suit.
In March 2001, an action was instituted by plaintiff Xxxxxx XxXxxxx against
Xxxxxxxxx & Company ("Xxxxxxxxx"), a wholly-owned subsidiary of the Company,
Monumental Life Insurance Company and other defendants in the United States
District Court for the Eastern District of Michigan, Southern Division. The
suit, which seeks unspecified monetary damages, alleges that Xxxxxxxxx and the
other defendants violated the Michigan Consumer Protection Act and other
applicable Michigan laws in connection with the marketing of Monumental Life
Insurance Company insurance products. The complaint includes a claim that the
suit should be certified as a class action and the plaintiff has filed a motion
for class certification to which all of the defendants have filed opposing
papers regarding the same. The court has not ruled on the motion. The Company
believes that the claims asserted against Xxxxxxxxx are unfounded and the
Company and Xxxxxxxxx will vigorously defend their interests against this suit.
In June 2001, actions were instituted by plaintiffs Xxxxxx Xxxxxxxxx and Xxxxxx
Xxxxxxx against the Company and other defendants in Circuit Court of the Tenth
Judicial District, Highlands County Civil Division, Florida, and Circuit Court
of the Sixth Judicial Circuit, Pinellas County Civil Division, Florida,
respectively. The suits, which seek unspecified monetary damages, allege that
the Company and the other defendants violated the Florida Deceptive and Unfair
Trade Practices Act, in connection with the marketing of certain membership
programs offered by the Company. While the respective complaints include claims
that the suits should be certified as class actions, the plaintiffs have not
filed motions for class certification. The Company believes that the allegations
made in this lawsuit are unfounded and the Company will vigorously defend its
interests against the suits.
In July 2001, an action was instituted by Xxxx Xxxxx against the Company and
other defendants in Superior Court of the State of California, County of Orange.
The suit, which seeks unspecified monetary damages, alleges that the Company and
the other defendants violated California business practices law. While the
complaint includes a claim that the suit should be certified as a class action,
the plaintiff has not filed a motion for class certification. The Company
believes that the allegations made in this lawsuit are unfounded and the Company
will vigorously defend its interests against this suit.
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