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EXHIBIT 10.23
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (the "Second Amendment") is
entered into to be effective as of August 30, 1996, by and among F.Y.I.
Incorporated, a Delaware corporation ("F.Y.I."), Imagent Acquisition Corp., a
Delaware corporation ("Imagent"), Researchers Acquisition Corp., a Delaware
corporation ("Researchers"), Recordex Acquisition Corp., a Delaware
corporation ("Recordex"), DPAS Acquisition Corp., a Delaware corporation
("DPAS"), Xxxxxxx Archives Acquisition Corp., a Delaware corporation
("Xxxxxxx"), Deliverex Acquisition Corp., a Delaware corporation
("Deliverex"), Permanent Records Acquisition Corp., a Delaware corporation
("Permanent"), Deliverex Sacramento Acquisition Corp., a Delaware corporation
("Sacramento"), (F.Y.I., Imagent, Researchers, Recordex, DPAS, Xxxxxxx,
Deliverex, Permanent and Sacramento are collectively referred to as the
"Original Borrowers"), B&B (Baltimore-Washington) Acquisition Corp., a
Delaware corporation ("B&B"), Premier Acquisition Corp., a Delaware
corporation ("Premier"), Xxxxxx X. Xxxx Acquisition Corp., a Delaware
corporation ("Xxxx"), Peninsula Record Management, Inc., a California
corporation ("Peninsula"), RAC (California) Acquisition Corp., a Delaware
corporation ("RAC"), California Medical Record Service Acquisition Corp., a
Delaware corporation ("California Medical"), Minnesota Medical Record Service
Acquisition Corp., a Delaware corporation ("Minnesota Medical"), Texas Medical
Record Service Acquisition Corp., a Delaware corporation ("Texas Medical"),
ZIA Information Analysis Group, Inc., formerly known as ZIA Acquisition Corp.,
a Delaware corporation ("Zia") and Recordex Services, Inc., a Pennsylvania
corporation ("Recordex Services") (B&B, Premier, Xxxx, Peninsula, RAC,
California Medical, Minnesota Medical, Texas Medical, Zia and Recordex
Services are referred to collectively as the "New Borrowers") (the Original
Borrowers and the New Borrowers are referred to collectively as the
"Borrowers"), Banque Paribas, a bank organized under the laws of the Republic
of France, as Agent (the "Agent"), and the Lenders (as such term is defined in
the Credit Agreement, as hereinafter defined) which are parties hereto.
RECITALS
A. The Original Borrowers, the Agent and the Lenders entered into
that certain Credit Agreement dated as of April 18, 1996 (the "Original Credit
Agreement"), pursuant to which, among other things, the Lenders agreed to make
certain loans available to the Original Borrowers upon the terms and
conditions set forth therein;
B. The Borrowers, certain of the New Borrowers, the Agent and the
Lenders entered into that certain First Amendment to Credit Agreement dated as
of June 26, 1996 (the Original Credit Agreement, as amended, is hereinafter
referred to as the "Credit Agreement").
C. The Borrowers, the Agent and the Lenders desire to amend the Credit
Agreement in certain respects as more fully set out herein.
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AGREEMENT
NOW, THEREFORE, for and in consideration of the premises and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrowers, the Lenders, and the Agent hereby agree as
follows:
1. Terms. All terms used herein which begin with an initial capital
letter shall, unless otherwise expressly defined herein, have the same
definitions assigned to such terms in the Credit Agreement, as modified by
this Second Amendment.
2. Amendment to Definition of "EBITDA." Effective as of the date
hereof, the definition of "EBITDA" contained in Section 1.1 of the Credit
Agreement is hereby amended and restated to read in its entirety 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)
Consolidated 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,
minus (e) non-cash income to the extent included in determining
Consolidated Net Income. 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 clause (e) of the
definition of Permitted Acquisition, 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, in accordance with the following procedures: (a) if the
Permitted Acquisition and the EBITDA of the Person or assets acquired
were approved in writing by Required Lenders, that EBITDA will be
included for such period, and (b) if the Permitted Acquisition was
not required to be approved in writing by Required Lenders, (i) for
any calculation of EBITDA which takes place at the end of the fiscal
quarter in which the Permitted Acquisition took place, only the
actual EBITDA generated by the acquired Person or assets following
the Permitted Acquisition will be included in the calculation of
EBITDA for such period, (ii) for any calculation of EBITDA which
takes place at the end of the fiscal quarter following the fiscal
quarter in which the Permitted Acquisition took place, the actual
EBITDA generated by the acquired Person or assets following the
Permitted Acquisition in the most recent two fiscal quarters will be
multiplied by two and the result will be included in the calculation
of EBITDA for such period, (iii) for any calculation of EBITDA which
takes place at the end of the second fiscal quarter following the
fiscal quarter in which the Permitted Acquisition took place, the
actual EBITDA generated by the acquired Person or assets following
the Permitted Acquisition in the most recent
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three fiscal quarters will be multiplied by four-thirds (4/3) and the
result will be included in the calculation of EBITDA for such period,
and (iv) for any calculation of EBITDA which takes place at the end
of the third fiscal quarter following the fiscal quarter in which the
Permitted Acquisition took place, the actual EBITDA generated by the
acquired Person or assets following the Permitted Acquisition in the
most recent four fiscal quarters will be included in the calculation
of EBITDA for such period.
3. Amendment to Definition of "Permitted Acquisition." Effective as
of the date hereof, the definition of "Permitted Acquisition" contained in
Section 1.1 of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
"Permitted Acquisition" means any Acquisition which has been
approved in writing by the Agent and Required Lenders or any other
Acquisition which satisfies each of the following requirements: (a)
the acquiror (or surviving corporation if the acquisition is by means
of a merger) is (i) F.Y.I. or any other Borrower (subject to the
limitations of Section 9.18), or (ii) any Acquisition Subsidiary
which becomes a Borrower prior to or concurrently with the
Acquisition pursuant to Section 5.3 (unless disapproved by the Agent,
which disapproval shall be conclusively presumed by the failure of
the Agent for any reason to execute the appropriate Borrower Addition
Agreement in the space provided for acceptance by the Agent), (b) the
assets to be acquired in connection with such Acquisition are assets
that are to be used in the existing businesses of the acquiror as
such business is presently conducted, (c) such Acquisition has been
approved by the Board of Directors of the acquired entity, (d) the
acquired entity shall have generated positive EBITDA during the
twelve-month period preceding the Acquisition, as audited or reviewed
by an accounting firm acceptable to the Agent, after adjusting for
excess owners' compensation and other pro forma charges as validated
by the Agent, (e) Loans to fund such Acquisition will be permitted
only if the aggregate outstanding principal amount of the Loans after
giving effect to such Acquisition and (including any Loans required
in connection with such Acquisition) do not exceed 2.5 times EBITDA
for the four fiscal quarters most recently completed of F.Y.I. and
its Subsidiaries (and including the acquired entity's trailing twelve
month EBITDA, if audited or reviewed by an accounting firm acceptable
to the Agent) (EBITDA may include proforma adjustments to an acquired
entity's earnings acceptable to the Agent), (f) the highest possible
amount of Seller Earn Out to be paid in cash by any Borrower in
connection with an Acquisition shall not exceed $3,000,000 without
Required Lenders' approval, (g) from and after October 29, 1996, no
single Acquisition shall exceed $4,000,000 in total consideration
(including any Debt assumed or guaranteed in connection therewith),
without Required Lenders' approval, provided that all proposed
Acquisitions placed under contract or consummated in the same
calendar year and involving acquired entities each of which are more
than 50% owned by the same individuals or entities shall be
considered a single Acquisition for purposes of this clause (g), (h)
from and after October 29, 1996, the aggregate
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amount of all such Acquisitions closed without Required Lenders'
approval shall not exceed $4,000,000, in total consideration
(including any Debt assumed or guaranteed in connection therewith) in
any twelve month period without Required Lenders' approval, (i) prior
to and after giving effect to the Acquisition, no Default shall
exist, (j) after giving effect to such Acquisition, F.Y.I. will not
violate any financial covenant, (k) no material part of the Property
or business operations to be acquired is located outside the U.S. or
Canada, and (l) the Borrower shall have complied with Sections 6.5
and 8.15; provided, however, that up to $2,000,000 (valued at total
purchase consideration including any Debt assumed or guaranteed in
connection therewith) in Acquisitions made during the term of this
Agreement will be deemed to satisfy the requirements of items (d) or
(k) preceding so long as (i) all other elements of a Permitted
Acquisition have been satisfied, (ii) no such acquired entity or
entities shall have annual sales in excess of $4,000,000 or
cumulative EBITDA losses (individually for any one such acquired
entity or in the aggregate for all such acquired entities) in excess
of $300,000 incurred in the twelve-month period preceding the
respective dates of acquisition, and (iii) Mexico is the only
jurisdiction outside the U.S. or Canada where any material part of
the Property or business operations of the entity or entities to be
acquired is located.
4. Amendment to Definition of "Restricted Payment." Effective as of
the date hereof, the definition of "Restricted Payment" contained in Section
1.1 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
"Restricted Payment" means (a) any dividend or other
distribution (whether in cash, Property or obligations), direct or
indirect, on account of (or the setting apart of money for a sinking
or other analogous fund for) any shares of any class of Capital Stock
of F.Y.I. or any of its Subsidiaries now or hereafter outstanding,
except a dividend payable solely in equity securities of F.Y.I.; (b)
any redemption, conversion, exchange, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of Capital Stock of F.Y.I. or
any of its Subsidiaries now or hereafter outstanding (except that
California Medical may own the 36,670 shares of F.Y.I. common stock
acquired by California Medical by virtue of the merger of Texas
Medical Records Service, Inc. into Texas Medical); (c) any loan,
advance or payment (pursuant to a tax sharing agreement or otherwise)
to F.Y.I.; and (d) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of Capital Stock of F.Y.I. or any of its
Subsidiaries now or hereafter outstanding.
5. Amendment to Definition of "Seller Earn Out." Effective as of the
date hereof, the definition of "Seller Earn Out" contained in Section 1.1 of
the Credit Agreement is hereby amended and restated to read in its entirety as
follows:
"Seller Earn Out" means any obligation incurred by a Borrower in
connection with an Acquisition so long as such obligation either (a)
is approved in
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writing by the Agent and the Required Lenders as being Seller Earn
Out or (b) meets the following requirements: (i) is only payable by
the Borrower for performance by a seller, or a shareholder, officer
or director of a seller, of obligations over the passage of time
(e.g., non-compete payments) or in the event certain future
performance goals are achieved with respect to the assets or business
acquired, excluding any noncompete payments in excess of 15% of the
purchase price and excluding performance-based payments which are
greater than 750% of the earnings or cash flow on which they are
based and (ii) provides that the maximum potential liability of the
Borrower with respect thereto is limited.
6. Amendment to Section 9.5 of the Credit Agreement. Effective as of
the date hereof, Section 9.5 of the Credit Agreement is hereby amended by
deleting the last word of clause (i), "and", by adding the word "and" at the
end of clause (j), and adding the following new clause (k) as follows:
(k) California Medical may own the 36,670 shares F.Y.I. common
stock acquired by California Medical by virtue of the merger of Texas
Medical Records Service, Inc. into Texas Medical.
7. Amendment to Section 10.1 of the Credit Agreement. Effective as of
the date hereof, Section 10.1 of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
Section 10.1 Consolidated Net Worth. F.Y.I. will at all times
maintain Consolidated Net Worth in an amount not less than the sum
of (a) $18,000,000 plus (b) 75% of cumulative Consolidated Net
Income, if positive for any fiscal quarter, i.e., exclusive of
negative Consolidated Net Income for any fiscal quarter, after the
Closing Date, plus (c) all Net Proceeds of each Equity Issuance
after the Closing Date minus the amount of any stock repurchase
consummated under the terms of Section 9.4(c).
8. Amendment to Section 10.2 of the Credit Agreement. Effective as of
the date hereof, Section 10.2 of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
Section 10.2 Ratio of Total Senior Debt to EBITDA.
(a) F.Y.I. will not permit the ratio, calculated as of the
end of each fiscal quarter of F.Y.I. commencing with the fiscal
quarter ended June 30, 1996, of (i) Total Senior Debt to (ii)
EBITDA for the four fiscal quarters then ended for F.Y.I. and its
Subsidiaries to exceed the ratio set forth below for the period
during which such fiscal quarter end occurs:
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Period Ratio
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From April 1, 1996, through September 30, 1997 2.75 to 1.00
From October 1, 1997, through March 31, 1998 2.50 to 1.00
From April 1, 1998, through March 31, 1999 2.25 to 1.00
From April 1, 1999, through March 31, 2000 1.75 to 1.00
From April 1, 2000 and at all times thereafter 1.25 to 1.00
(b) F.Y.I. will not permit the ratio, calculated as of the end of
each fiscal quarter of F.Y.I. commencing with the fiscal quarter
ended June 30, 1996, of (i) the sum of (A) Total Senior Debt, plus
(B) the highest possible amount of all unpaid Seller Earn Out
payable pursuant to an Acquisition contract in cash over any period
of time, whether the payment of such Seller Earn Out is contingent
or otherwise, to (ii) the sum of (A) EBITDA for the four fiscal
quarters then ended for F.Y.I. and its Subsidiaries plus (B) the
EBITDA or EBIT required by the applicable Acquisition contract(s) to
generate the amount of Seller Earn Out set forth in (i)(B) above to
exceed the ratio set forth below for the period during which such
fiscal quarter end occurs:
Period Ratio
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From April 1, 1996, through September 30, 1997 2.75 to 1.00
From October 1, 1997, through March 31, 1998 2.50 to 1.00
From April 1, 1998, through March 31, 1999 2.25 to 1.00
From April 1, 1999, through March 31, 2000 1.75 to 1.00
From April 1, 2000 and at all times thereafter 1.25 to 1.00
9. Amendment to Section 10.3 of the Credit Agreement. Effective as of
the date hereof, Section 10.3 of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
Section 10.3 Ratio of Total Debt to EBITDA.
(a) F.Y.I. will not permit the ratio, calculated as of the end of
each fiscal quarter of F.Y.I. commencing with the fiscal quarter
ended June 30, 1996, of (i) Total Debt to (ii) EBITDA for the four
fiscal quarters then ended for F.Y.I. and its Subsidiaries to exceed
the ratio set forth below for the period during which such fiscal
quarter end occurs:
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Period Ratio
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From April 1, 1996, through September 30, 1997 3.25 to 1.00
From October 1, 1997 through March 31, 1998 3.00 to 1.00
From April 1, 1998, through March 31, 1999 2.75 to 1.00
From April 1, 1999, through March 31, 2000 2.25 to 1.00
From April 1, 2000, and at all times thereafter 1.75 to 1.00
(b) F.Y.I. will not permit the ratio, calculated as of the end of
each fiscal quarter of F.Y.I. commencing with the fiscal quarter
ended June 30, 1996, of (i) the sum of (A) Total Debt, plus (B) the
highest possible amount of all unpaid Seller Earn Out payable
pursuant to an Acquisition contract in cash over any period of time,
whether the payment of such Seller Earn Out is contingent or
otherwise, to (ii) the sum of (A) EBITDA for the four fiscal
quarters then ended for F.Y.I. and its Subsidiaries plus (B) the
EBITDA or EBIT required by the applicable Acquisition contract(s) to
generate the amount of Seller Earn Out set forth in (i)(B) above to
exceed the ratio set forth below for the period during which such
fiscal quarter end occurs:
Period Ratio
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From April 1, 1996, through September 30, 1997 3.25 to 1.00
From October 1, 1997 through March 31, 1998 3.00 to 1.00
From April 1, 1998, through March 31, 1999 2.75 to 1.00
From April 1, 1999, through March 31, 2000 2.25 to 1.00
From April 1, 2000, and at all times thereafter 1.75 to 1.00
10. Representations and Warranties. The representations and
warranties made by the Borrowers in the Loan Documents, as the same are
amended hereby, are true and correct at the time this Second Amendment is
executed and delivered, except to the extent that such representations and
warranties are expressly by their terms made only as of the Closing Date or
another specified date.
11. Costs. The Borrowers jointly and severally agree to pay all costs
incurred in connection with the negotiation, preparation, execution and
consummation of this Second Amendment and the transactions preceding and
contemplated by this Second Amendment including, without limitation, the fees
and expenses of counsel to the Agent and the Lenders.
12. Miscellaneous.
(a) Headings. Section headings are for reference only, and shall not
affect the interpretation or meaning of any provision of this Second
Amendment.
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(b) No Waiver. No failure on the part of the Agent or the Lenders
to exercise, and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under the Loan
Documents shall operate as a waiver thereof, and no single or
partial exercise of any right, power, or privilege under the Loan
Documents shall preclude any other or further exercise thereof or
the exercise of any other right, power, or privilege.
(c) Effect of this Second Amendment. The Credit Agreement, as
amended by this Second Amendment, shall remain in full force and
effect except that any reference therein, or in any other Loan
Document, referring to the Credit Agreement, shall be deemed to
refer to the Credit Agreement, as amended by this Second Amendment.
(d) Governing Law. EXCEPT TO THE EXTENT THAT THE CREDIT
AGREEMENT EXPRESSLY PROVIDES OTHERWISE, THIS SECOND AMENDMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS.
(e) Counterparts. This Second Amendment may be executed by the
different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same Second Amendment.
(f) NO ORAL AGREEMENTS. THE CREDIT AGREEMENT, AS AMENDED BY THIS
SECOND AMENDMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS
THE ENTIRE AGREEMENT AMONG THE PARTIES, AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed by their respective duly authorized officers as of
the date first above written.
BORROWERS:
F.Y.I. INCORPORATED
By: /s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx
Executive Vice President
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IMAGENT ACQUISITION CORP. RESEARCHERS ACQUISITION CORP.
RECORDEX ACQUISITION CORP. DPAS ACQUISITION CORP. XXXXXXX
ARCHIVES ACQUISITION CORP. DELIVEREX ACQUISITION CORP.
PERMANENT RECORDS ACQUISITION CORP. DELIVEREX SACRAMENTO
ACQUISITION CORP. B&B (BALTIMORE-WASHINGTON) ACQUISITION CORP.
PREMIER ACQUISITION CORP. XXXXXX X. XXXX ACQUISITION CORP.
PENINSULA RECORD MANAGEMENT, INC. RAC (CALIFORNIA) ACQUISITION
CORP. CALIFORNIA MEDICAL RECORD SERVICE ACQUISITION CORP.
MINNESOTA MEDICAL RECORD SERVICE ACQUISITION CORP. TEXAS
MEDICAL RECORD SERVICE ACQUISITION CORP. ZIA INFORMATION
ANALYSIS GROUP, INC. RECORDEX SERVICES, INC.
By: /s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxxxxx
Executive Vice President, acting on behalf of
each of the above
AGENT:
BANQUE PARIBAS, as Agent
By: /s/ Xxxxx X. Xxxx III
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Name: Xxxxx X. Xxxx III
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Title: Vice President
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By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
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Title: Vice President
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LENDERS:
BANQUE PARIBAS
By: /s/ Xxxxx X. Xxxx III
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Name: Xxxxx X. Xxxx III
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Title: Vice President
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By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
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Title: Vice President
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FIRST SOURCE FINANCIAL LLP
By: FIRST SOURCE FINANCIAL, INC., its
Agent/Manager
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
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Title: Vice President
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IBJ XXXXXXXX BANK & TRUST COMPANY
By: /s/ XxXxx X. Xxxxxx
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Name: XxXxx X. Xxxxxx
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Title: Vice President
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