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EXHIBIT 10.2
October 24, 1997
Medaphis Corporation
0000 Xx. Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx XxXxxxxx
Chief Executive Officer
RE: Participation Agreement, dated as of April 21, 1995, as amended
(the "Participation Agreement") among Medaphis Corporation (the
"Lessee"), SunTrust Bank, Atlanta, and Creditanstalt Corporate
Finance, Inc. (the "Lenders"), and SunTrust Bank, Atlanta, as
agent for the Lenders (the "Agent")
Gentlemen:
All capitalized terms used herein and not otherwise defined herein shall
have the meanings given such terms in the Participation Agreement.
We refer to the September 18, 1997 letter under which the Lenders, among
other things, waived Lessee's compliance with certain of the financial
covenants in the Credit Agreement as incorporated into the Participation
Agreement pursuant to Section 5.4 thereof (the "WAIVER LETTER"). The Lessee
has requested that the Lenders waive the deadline in paragraph (ii) of the
Waiver Letter for the payment of all Lender Balances.
The Lessee also has requested that the Lenders waive any Event of Default
or Potential Event of Default which may occur under clause (e) of Article XIII
of the Lease solely as a result of any breach of the Lessee's representations
and warranties in Section 6.02 of the Credit Agreement and any breaches of the
Borrower's covenants in Sections 7.01(a), 7.01(b), 7.01(c) and 7.03 of the
Credit Agreement which result from any downward restatement by up to
$40,000,000 in total of Lessee's consolidated revenues for its fiscal years
ended December 31, 1995 and December 31, 1996 and its two fiscal quarters
ending June 30, 1997 (of which no more than $5,000,000 of any such restatement
may relate to downward adjustments of results for the two-quarter period ending
June 30, 1997), which restatement, in turn, is the result of any change in the
Lessee's recognition of income on certain contracts of Health Data Sciences
Corporation. The Lessee also has requested that the Lenders confirm that any
such restatement and the commencement of any investigation, action or
proceeding before or by any court or governmental or regulatory authority as a
result thereof will not result in a Material Adverse Effect as defined in the
Credit Agreement.
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The Lessee also has requested that the Lenders extend the deadline under
Section 5.3(b) of the Participation Agreement for the delivery of the
Borrower's financial statements for its fiscal quarter ending September 30,
1997 from November 15, 1997 to November 30, 1997 and waive solely to the extent
of the aforesaid restatement the requirement under Section 5.3(a) of the
Participation Agreement that the monthly financial statements for the months of
September, 1997 and October, 1997 required to be delivered by Borrower to each
Lender be prepared in accordance with GAAP.
Subject to the terms and conditions of this letter, the Lenders hereby (i)
extend the aforesaid Waiver Letter payment deadline from November 30, 1997 to
January 31, 1998; (ii) waive any such aforesaid Event of Default or Potential
Event of Default; (iii) confirm that any such aforesaid restatement and the
commencement of any such aforesaid investigation, action or proceeding will not
result in a Material Adverse Effect as defined in the Credit Agreement; (iv)
extend the aforesaid quarterly financial statement deadline; and (v) waive the
aforesaid monthly financial statement preparation requirement; provided,
however, that (1) in consideration of such extensions, waivers and confirmation,
Lessee shall pay to the Agent, on the effective date of this letter as provided
below, a fee (which fee shall be fully earned upon the effectiveness of this
letter) in an amount equal to one-quarter of one percent (0.25%) of the
aggregate outstanding principal balance of the Loans as of such date, and such
fee shall be distributed by the Agent to all Lenders in accordance with their
respective pro rata shares thereof; (2) the aforesaid extensions relates solely
to the above-described deadlines and nothing in this letter is intended, or
shall be construed, to extend, waive or otherwise modify any of the other terms
and conditions of the Waiver Letter; (3) the aforesaid waivers relate solely to
the specific provisions, restatement and time periods described above and
nothing in this letter is intended, or shall be construed, to constitute a
waiver of or a consent to a departure from any other provisions of the Lease;
and (4) the aforesaid confirmation relates solely to the specific restatement
described above and the commencement of the investigations, actions or
proceedings described above and nothing in this letter is intended, or shall be
construed, to constitute the confirmation or agreement by any Lender or the
Agent that any other event which is or may be the direct or indirect result of
such restatement or that any subsequent development in any such investigation,
action or proceeding (including without limitation any adverse outcome therein)
will not result in a Material Adverse Effect.
Please note that this letter (and the extensions, waivers and confirmation
provided herein) shall not become effective unless and until (a) the aforesaid
fee has been paid and (b) this letter has been signed by the Lenders and this
letter has been accepted and agreed to by the Lessee, in each case by such
person's signing a copy of this letter in the appropriate space indicated below
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and returning the same to the Agent's counsel (which may be done by telecopy
and in counterparts).
SUNTRUST BANK, ATLANTA, as Agent
and as a Lender
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: S.V.P.
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By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: S.V.P.
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CREDITANSTALT CORPORATE
FINANCE, INC., as a Lender
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
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Title: EVP
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By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
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Title: Senior Associate
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ACCEPTED AND AGREED TO
this 24th day of October, 1997:
MEDAPHIS CORPORATION
By: /s/ Xxxxxxxx X. X. Xxxxx
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Name: Xxxxxxxx X. X. Xxxxx
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Title: Executive Vice President
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