Exhibit 10.11
WAIVER AND THIRD AMENDMENT TO THE CREDIT AGREEMENT
This WAIVER AND THIRD AMENDMENT TO THE CREDIT AGREEMENT dated as of
November 14, 2001 (this "Third 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 AND WAIVER. 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 and that certain Second Amendment
to the Credit Agreement dated as of March 13, 2001 (as so amended, the "Existing
Credit Agreement").
The Company has requested that the Agent and the Lenders consent to a
waiver of an Event of Default by the Company pursuant to Section 8.1(c) of the
Existing Credit Agreement due to the failure of compliance by the Company with
the provisions contained in Section 7.12 of the Existing Credit Agreement
(requiring a minimum Fixed Charge Coverage Ratio of 4.0 to 1) with respect to
the Company's Fixed Charge Coverage Ratio of 2.18 to 1 as of September, 2001
(the "Fixed Charge Coverage Violation"). The Agent and the Lenders hereby
consent to such waiver solely with respect to the Fixed Charge Coverage
Violation, provided that the Company agrees to and accepts the terms and
conditions presented in this Third Amendment. The Company has further requested
that the Lenders and the Agent, and the Lenders and the Agent are willing to,
amend the Existing Credit Agreement to reflect the revisions provided herein
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) Section 2.1 of the Existing Credit Agreement is deleted in
its entirety and replaced with the following:
2.1 Loans
1. Loans . Each Lender severally agrees, on the terms and
subject to the conditions of this Agreement, from time to time during the period
from the Closing Date to but not including the Final Maturity Date, to make
Loans to the Company in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount of its Commitment, provided, that
(i) to the extent any Letters of Credit have been issued by the Issuing Lender
and remain outstanding, the Commitment of each Lender shall be reduced by such
Lender's Commitment Percentage of the aggregate principal amount of such
outstanding Letters of Credit, (ii) the sum of all outstanding Loans and Letters
of Credit immediately after the making of each Loan shall not exceed the Total
Commitment and (iii) at any time when the Company has not maintained a Fixed
Charge Coverage Ratio of 4.0 to 1 for each of the two (2) consecutive
immediately preceding fiscal quarters, the sum of all outstanding Loans and
Letters of Credit shall not exceed the total amount of cash and Eligible
Securities on deposit with the Agent. Within such limit, the Company may borrow,
prepay, repay and reborrow pursuant to this Subsection 2.1.
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(b) Subparagraph (a) of Section 2.5 of the Existing Credit
Agreement is deleted in its entirety and replaced with the following:
The Company shall repay to the Agent for the account of the
Lenders the outstanding principal amount of each Lender's Loans on the Final
Maturity Date. In addition, if at any time the aggregate outstanding principal
amount of all Loans exceeds the Total Commitment or such other amounts set forth
in Section 2.1 hereof, then the Company shall immediately pay to the Agent for
the account of the Lenders the amount equal to such excess, together with
accrued interest thereon.
(c) Section 2.8 of the Existing Credit Agreement is deleted in
its entirety and replaced with the following:
2.8 Extension of Final Maturity Date. So long as no Default exists,
the Final Maturity Date shall automatically be extended for an additional 364
days from the then current Final Maturity Date unless the Company or any Lender
provides written notice to the Agent no later than 30 days prior to such Final
Maturity Date that it does not agree to such extension; provided however, the
final Maturity Date shall not be so extended more than three (3) times.
(d) Section 7.12 of the Existing Credit Agreement is deleted in
its entirety and replaced with the following:
Section 7.12 Fixed Charge Coverage Ratio. The Company will not
permit its Fixed Charge Coverage Ratio to be, as of the end of any Test Period,
less than the corresponding amount indicated below for such Test Period:
Minimum Permitted Fixed
Ending Date of Test Period Charge Coverage Ratio
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12/31/01 2.0 to 1
3/31/02 2.2 to 1
6/30/02 2.8 to 1
All Test Periods after 6/30/02 4.0 to 1
Section 1.2 Conditions of Effectiveness. This Third Amendment shall
become effective when, and only when, the Agent and each of the Lenders shall
have received a counterpart of this Third Amendment executed by the Company and
the Agent shall have additionally received, in form and substance satisfactory
to the Agent and the Lenders:
(a) All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Third Amendment as the Lenders and the Agent may reasonably
request, all in form and substance satisfactory to the Agent and its counsel.
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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);
(b) No Event of Default or Default has occurred and is
continuing or would result from the signing of this Third Amendment or the
transactions contemplated thereby;
(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 Third 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 Third 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 Third 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 Third 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 Third
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 except with respect to the Fixed
Charge Coverage Violation as provided in the Preliminary Statements and Waiver
herein.
Section 1.5 Costs, Expenses and Taxes. As consideration for the
granting of this Third Amendment, the Company shall pay to the Agent, acting on
behalf of the Lenders, an amendment fee of $5,000 to be charged to the Company's
account at the Agent on the date of the Company's execution and delivery of this
Third Amendment. In addition, the Company agrees to pay on demand all costs and
expenses of the Lenders and the Agent in connection with the preparation,
execution and delivery of this Third 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 Third 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 Third 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 Third 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 Third 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/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Sr. Vice President
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