Exhibit 10(pp)
FIFTH AMENDMENT AND WAIVER AGREEMENT
THIS FIFTH AMENDMENT AND WAIVER AGREEMENT (this "Amendment"), dated as
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of February 22, 2002, is by and among Access Worldwide Communications, Inc. (the
"Borrower"), certain subsidiaries of the Borrower identified on the signature
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pages hereto (the "Guarantors;" together with the Borrower, the "Credit
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Parties"), the lenders identified on the signature pages hereto (the "Lenders")
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and Bank of America, N.A., successor to NationsBank, N.A., as agent for the
Lenders (in such capacity, the "Agent").
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W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, the Lenders and the Agent have
entered into that certain Credit Agreement dated as of March 12, 1999, as
amended by that certain Amendment Agreement and Waiver dated as of April 14,
2000, that certain Second Amendment Agreement and Waiver dated as of June 9,
2000, that certain Third Amendment dated as of March 28, 2001 and that certain
Fourth Amendment and Waiver Agreement dated as of April 3, 2001 (the "Credit
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Agreement");
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WHEREAS, as of February 22, 2002, the outstanding principal balance of
the Revolving Loans was $12,042,603.30, the outstanding principal balance of the
Swingline Loans was $4,378,296.70, the outstanding principal balance of LOC
Obligations was $1,079,100.00 and the outstanding principal balance of the Term
Loan was $16,910,991.61.
WHEREAS, (a) the Borrower has failed to make a mandatory prepayment of
principal sufficient to reduce the aggregate principal amount of Revolving
Obligations so that such amount does not exceed the Aggregate Revolving
Committed Amount, (b) the Borrower has failed to pay the $350,000 scheduled
installments of principal due on the Term Loan that were due on January 1, 2002
and February 1, 2002, respectively, (c) the Borrower has merged a Subsidiary, AM
Medica Communications, Ltd., into another Subsidiary, Phoenix Marketing Group
(Holdings), Inc., in violation of Section 8.3 of the Credit Agreement, and (d)
the Credit Parties have failed to maintain, as of fiscal quarter ended December
31, 2001: (i) the Consolidated Leverage Ratio required by Section 7.9(a) of the
Credit Agreement, (ii) the Consolidated Fixed Charge Coverage Ratio required by
Section 7.9(b) of the Credit Agreement, (iii) the minimum Consolidated Net Worth
required by Section 7.9(c) of the Credit Agreement, (iv) the Consolidated Senior
Leverage Ratio required by Section 7.9(d) of the Credit Agreement, and (v) the
Minimum Consolidated EBITDA required by Section 7.9(f) of the Credit Agreement,
(collectively, the "Acknowledged Events of Default");
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WHEREAS, the Borrower has advised the Agent and the Lenders that
Borrower and Phoenix Marketing Group Holdings, Inc. ("PMG"), a Subsidiary
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Guarantor, have agreed to sell certain assets to Express Scripts, Inc. ("Express
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Scripts") pursuant to the terms and conditions of that certain Asset Purchase
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Agreement dated as of December 19, 2001 among the Borrower, PMG, and Express
Scripts for a gross purchase price of $33,000,000;
WHEREAS, Section 7.5 of the Credit Agreement requires each Credit
Party, including PMG, to continue to conduct its business so long as any
Obligations to the Lenders remain outstanding;
WHEREAS, Section 8.3(b) of the Credit Agreement prohibits any Credit
Party, including Borrower and PMG, from selling any assets, property or
operations (other than sales of inventory in the ordinary course of its
business) to any party that is not a Credit Party;
WHEREAS, absent an express waiver by the Lenders, consummation of the
PMG Sale Agreement and the transaction contemplated thereby would violate
Section 7.5 and Section 8.3(b) of the Credit Agreement, thereby giving rise to
Defaults and Events of Default under Section 9.1(c) of the Credit Agreement; and
WHEREAS, the Credit Parties have asked the Lenders to: (a) waive the
Acknowledged Events of Default (b) waive any noncompliance with Section 7.5 and
Section 8.3 that shall arise from consummation of the PMG Sale Agreement, (c)
release the Agent's liens and security interests in those assets, and only those
assets, to be transferred to Express Scripts pursuant to the PMG Purchase
Agreement (defined below), and (d) amend certain provisions of the Credit
Agreement, each of which the Lenders have agreed to do, but only upon the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereby agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Definitions. Unless otherwise defined herein, or the
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context otherwise requires, terms used in this Amendment, including its preamble
and recitals, have the meanings provided in the Credit Agreement.
PART II
AMENDMENTS AND AGREEMENTS
SUBPART 2.1. Amendments to Section 1.1. The following new
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definitions (or replacement definitions, where appropriate) are hereby added to
Section 1.1 of the Credit Agreement in the alphabetically appropriate places:
"Aggregate Revolving Committed Amount" means the aggregate
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amount of Revolving Commitments in effect from time to time, not to
exceed SEVENTEEN MILLION, FIVE HUNDRED THOUSAND DOLLARS
($17,500,000.00); provided, however, that (a) from the earlier to occur
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of (i) consummation of the PMG Transaction or (ii) March 15, 2002,
through May 31, 2002 the aggregate amount of Revolving Commitments in
effect from time to time shall not exceed SEVEN MILLION DOLLARS
($7,000,000) and (b) for the following periods the aggregate amount of
Revolving Commitments in effect from time to time shall not exceed the
following amounts:
2
Amount Applicable Period
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$8,000,000 June 1, 2002 through March 31, 2003
$7,200,000 April 1, 2003 through June 30, 2003
"Consolidated Net Income" means for any period for the
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Consolidated Group, net income on a consolidated basis determined in
accordance with GAAP applied on a consistent basis, but excluding, for
purposes of determining Consolidated EBITDA, (a) any extraordinary
gains or losses and related tax effects thereon and (b) severance
accruals relating to corporate overhead downsizing. Except as expressly
provided otherwise, the applicable period shall be for the four
consecutive quarters ending as of the date of determination.
"Net Sale Proceeds" means the aggregate proceeds paid in cash
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or Cash Equivalents received by any Credit Party in respect of any
sale, lease, transfer or other disposition of assets, property and/or
operations (including any sale-leaseback transaction, but excluding the
sale of inventory in the ordinary course of business), net of (a)
direct costs (including, without limitation, legal, accounting and
investment banking fees, and sales commissions, but excluding any
amendment or other fees paid to the Agent or the Lenders) paid or
payable as a result thereof, (b) taxes paid or payable as a result
thereof, (c) repayment of Indebtedness that is required to be repaid in
connection with such sale, lease, transfer or other disposition of
assets, property and/or operations, and (d) appropriate amounts to be
provided by such Credit Party, as a reserve, in accordance with GAAP,
against liabilities associated with such sale, lease, transfer or other
disposition of assets, property and/or operations and retained by such
Credit Party after such sale, lease, transfer or other disposition of
assets, property and/or operations, including, without limitation,
pension and other post-employment benefit liabilities, liabilities
related to environmental matters and liabilities under any
indemnification obligations associated with such sale, lease, transfer
or other disposition of assets, property and/or operations; provided
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that "Net Sale Proceeds" shall include an amount equal to any reserves
previously taken against liabilities associated with such sale, lease,
transfer or other disposition of assets, property and/or operations
immediately upon those reserves being determined to be in excess of
such liabilities. The "Net Sale Proceeds" shall also include, without
limitation, any cash or Cash Equivalents received upon the sale or
other disposition of any non-cash consideration received by any Credit
Party.
"PMG Sale Agreement" means that certain Asset Purchase
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Agreement, dated as of December 19, 2001 among the Borrower, Phoenix
Marketing Group Holdings, Inc. and Express Scripts, Inc., as may be
amended from time to time with the express written consent of the
Lenders.
"PMG Transaction" means the sale by Borrower and Phoenix
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Marketing Group Holdings, Inc., a Subsidiary Guarantor, of certain
assets to Express Scripts, Inc. pursuant to the terms and conditions of
the PMG Sale Agreement.
"Termination Date" means July 1, 2003.
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SUBPART 2.2. Amendment to Section 2.4(d). Section 2.4(d) of the
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Credit Agreement is amended and restated in its entirety to read as follows:
(d) Repayment. The aggregate principal amount of the Term Loan
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shall be repaid as follows:
(i) Monthly Installments.
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Date Amount
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March 1, 2002 $ 350,000
April 5, 2002 $ 350,000
May 1, 2002 $ 350,000
June 1, 2002 $ 350,000
July 1, 2002 $ 350,000
August 1, 2002 $ 350,000
September 1, 2002 $ 350,000
October 1, 2002 $ 350,000
November 1, 2002 $ 350,000
December 1, 2002 $ 350,000
Total $4,200,000
(ii) Final Payment.
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The remaining outstanding balance of the Term Loan
shall be due and payable on January 2, 2003.
SUBPART 2.3. Amendment to Section 3.3(b)(iv). Section 3.3(b)(iv)
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of the Credit Agreement is amended so that the references to "March 31, 2002"
are changed to "April 5, 2002."
SUBPART 2.5. Amendment to Section 7.9. Sections (a), (b), (c),
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(d), (e) and (f) appearing in Section 7.9 of the Credit Agreement are hereby
amended and restated in their entireties to read as follows:
(a) [Reserved.]
(b) [Reserved.]
(c) [Reserved.]
(d) [Reserved.]
(e) Capital Expenditures. The aggregate amount of Capital
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Expenditures for the Consolidated Group shall not exceed:
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Quarter Ending Cumulative Capital Expenditures for Fiscal Year
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March 31, 2002 $ 600,000
June 30, 2002 $ 950,000
September 30, 2002 $ 1,200,000
December 31, 2002 $ 1,800,000
March 31, 2003 $ 250,000
(f) Minimum Consolidated EBITDA. Consolidated EBITDA shall be not
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less than the respective amounts set forth below:
Quarter Ending Cumulative EBITDA for Fiscal Year
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March 31, 2002 ($875,000)
June 30, 2002 ($550,000)
September 30, 2002 ($670,000)
December 31, 2002 $100,000
March 31, 2003 $250,000
SUBPART 2.6. Addition to Section 9.1. The following provisions shall be
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inserted as Subsections (k) and (l) respectively to Section 9.1:
(k) PMG Sale Agreement. There shall be a termination, breach or
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material amendment of the PMG Sale Agreement.
(l) Job #1803 Representations. The representations made by Xxxx
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Xxxxxxxx, chief financial officer of the Borrower, in his February 22, 2002
letter to Xxx Xxxxxxxx, a senior vice president of the Agent, shall prove
untrue in any material respect.
SUBPART 2.7. Amendment to Section 11.1. Section 11.1 of the Credit
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Agreement is amended to change the notice address for the Agent to the
following:
if to the Agent:
Bank of America, N.A.
000 Xxxxx Xxxxxx Xxxxxx
TX0-300-02-06
Amarillo, TX 79106
Attn: Xxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
SUBPART 2.8 Consent to PMG Transaction. The Lenders hereby consent to
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the consummation of the PMG Transaction, notwithstanding Section 7.5 and Section
8.3 of the Credit Agreement, provided that: (a) the PMG Transaction is
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consummated in accordance with the terms of the PMG Purchase Agreement (without
giving effect to any amendment, consent, waiver or other modification to the PMG
Purchase Agreement unless the Lenders have consented in writing to such
amendment, consent, waiver or other modification), (b) no Default
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or Event of Default exists immediately prior to the PMG Transaction or would
exist immediately after giving effect to the PMG Transaction, (c) the Net Sale
Proceeds of the PMG Transaction are not less than $27,000,000, and (d) the Net
Sale Proceeds are immediately delivered to the Agent for application first to
repay the Term Loan, then to repay Revolving Obligations, then to a cash
collateral account to secure LOC Obligations and then to pay any other amounts
outstanding under the Credit Documents. The Lenders' consent to the PMG
Transaction upon the terms and conditions set forth herein shall not be deemed
to imply their consent to any other sale, lease, transfer or other disposition
of assets, property and/or operations that would violate the terms of Section
7.5 or Section 8.3 of the Credit Agreement. Upon receipt of the Net Sale
Proceeds of the PMG Transaction in accordance with the terms and conditions set
forth herein: (a) the Agent and the Lenders shall release the security interests
granted by the Credit Parties in those assets, and only those assets, being
transferred pursuant to the PMG Purchase Agreement and (b) the Borrower's
obligation to make the Mandatory Prepayment described in Section 3.3(b)(iv) of
the Credit Agreement shall be deemed satisfied.
SUBPART 2.9. PMG Transaction Tax Account. The Borrower and PMG shall
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deposit $3,000,000 of the gross sale proceeds of the PMG Transaction into an
interest-bearing blocked account (the "PMG Transaction Tax Account") to be
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maintained with the Agent and subject to a first priority security interest in
favor of the Agent for the benefit of the Lenders until all Obligations and
other amounts outstanding under the Credit Documents are satisfied and the
Commitments are terminated. The Borrower and PMG shall execute such
documentation as the Agent reasonably deems necessary to reflect such security
interest. The Agent shall be obligated to release funds in the PMG Transaction
Tax Account to pay state and federal taxes ("PMG Transaction Taxes") certified
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by the Borrower, by no later than June 30, 2002, to be due and payable directly
as a result of the PMG Transaction. Any excess funds remaining in the PMG
Transaction Tax Account after payment of PMG Transaction Taxes shall then
constitute Net Sale Proceeds of the PMG Transaction and shall be promptly
applied by the Agent to any outstanding Obligations and other amounts
outstanding under the Credit Documents, with the balance remitted to Borrower;
provided, however, that failure by the Borrow to certify PMG Transaction Taxes
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to the Agent by June 30, 2002 shall free the Agent to apply any and all funds in
the PMG Transaction Tax Account to any outstanding Obligations and other amounts
outstanding under the Credit Documents.
SUBPART 2.10 Amendment Fees. In consideration of the willingness of the
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Lenders to enter the Amendment, the Borrower shall pay to the Agent for the
ratable benefit of the Lenders a fee (the "Amendment Fee"). The Amendment Fee
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shall be fully earned upon execution of this Amendment and shall be due and
payable upon the earliest to occur of (a) the Agent's receipt, for distribution
to the Lenders, of the Net Sale Proceeds of the PMG Transaction, (b) April 5,
2002 and (c) acceleration of the Loans after an Event of Default. The Amendment
Fee shall be equal to 0.50 % of Aggregate Revolving Committed Amount on the date
the Amendment Fee becomes due and payable; provided, however, that in the event
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that the Amendment Fee becomes due and payable upon acceleration of the Loans
after an Event of Default and termination of the Commitments, the Amendment Fee
shall be equal to 0.50 % of Aggregate Revolving Committed Amount immediately
prior to such acceleration and termination.
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PART III
WAIVER
SUBPART 3.1. Waiver of Acknowledged Events of Default. The Lenders hereby
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waive the Acknowledged Events of Default. The foregoing waiver shall not modify
or affect the Borrower's obligation to comply with each and every term and
condition of the Credit Documents, as amended hereby, from and after the date
hereof.
PART IV
CONDITIONS TO EFFECTIVENESS
As conditions precedent to the effectiveness of this Amendment, on or
before the date hereof:
SUBPART 4.1. Execution of Counterparts of Amendment. The Agent shall have
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received executed counterparts (or other evidence of execution, including
facsimile signatures, satisfactory to the Agent) of this Amendment, which
collectively shall have been duly executed on behalf of each of the Borrower,
the Guarantors, the Agent and the Lenders.
SUBPART 4.2. Other Documents. The Agent shall have received such other
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documents in connection with this Amendment as the Agent may reasonably request.
SUBPART 4.3. Legal Opinion. The Agent shall have received opinions of
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counsel for the Credit Parties relating to the Amendment and related Credit
Documents, in form and substance satisfactory to the Agent.
SUBPART 4.4. Fees and Expenses. The Borrower shall have reimbursed the
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Agent and the Lenders for all reasonable costs and expenses, including
reasonable attorneys' fees, incurred by them in connection with or related to
the negotiation, drafting or execution of (a) this Amendment, (b) any and all
other and previous forbearance or amendment documentation and (c) documents
related to the Borrower's and Phoenix Marketing Group (Holdings), Inc.'s
attempts to sell Phoenix Marketing Group (Holdings), Inc.'s AM Medica division.
PART V
MISCELLANEOUS
SUBPART 5.1. Instrument Pursuant to Credit Agreement; Conflict. This
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Amendment is a Credit Document executed pursuant to the Credit Agreement and
shall (unless otherwise expressly indicated therein) be construed, administered
and applied in accordance with the terms and provisions of the Credit Agreement.
If there is any inconsistency or conflict between this Amendment and the Credit
Agreement, the provisions of this Amendment shall govern and control.
SUBPART 5.2. Representations and Warranties. Each Credit Party hereby
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represents and warrants that: (a) each Credit Party that is party to this
Amendment (i) has the requisite corporate power and authority to execute,
deliver and perform this Amendment, (ii) is duly
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authorized to, and has been authorized by all necessary corporate action, to
execute, deliver and perform this Amendment, (b) the Credit Parties have no
claims, counterclaims, offsets, or defenses to the Credit Documents and the
performance of their obligations thereunder, (c) the representations and
warranties contained in Section 6 of the Credit Agreement are, subject to the
limitations set forth therein, true and correct in all material respects on and
as of the date hereof as though made on and as of such date (except for those
which expressly relate to an earlier date), (d) after giving effect to this
Amendment, no Default or Event of Default exists under the Credit Agreement on
and as of the date hereof or will occur as a result of the transactions
contemplated hereby, (e) the audited financial statements of Borrower for fiscal
year ended 2001 will not reflect any material negative variance from Borrower's
internally prepared financial statements for fiscal year ended 2001, (f) except
as specifically set forth in Schedule 8.1 of the Credit Agreement, as amended,
no earn-out payments are due any entity by any Credit Party and (g) this
Amendment constitutes a legal, valid and binding obligation of each Credit Party
enforceable against each Credit Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
SUBPART 5.3. Liens. The Borrower and the Guarantors, as applicable,
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affirm the liens and security interests created and granted in the Credit
Documents and agree that this Amendment shall in no manner adversely affect or
impair such liens and security interests, except as expressly indicated herein.
SUBPART 5.4. Acknowledgment of Guarantors. The Guarantors acknowledge and
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consent to all of the terms and conditions of this Amendment and agree that this
Amendment and all documents executed in connection herewith do not operate to
reduce or discharge the Guarantors' obligations under the Credit Agreement or
the other Credit Documents.
SUBPART 5.5. No Other Changes. Except as expressly modified in this
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Amendment, all the terms, provisions and conditions of the Credit Documents
shall remain unchanged and shall continue in full force and effect.
SUBPART 5.6. Counterparts. This Amendment may be executed by the parties
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hereto in several counterparts (including facsimile counterparts), each of which
shall be deemed to be an original and all of which shall constitute together but
one and the same agreement. Delivery of an executed counterpart of this
Amendment by telecopy shall be effective as an original and shall constitute a
representation that an original shall be delivered to the Agent.
SUBPART 5.7. Entirety. This Amendment, the Credit Agreement and the other
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Credit Documents embody the entire agreement between the parties and supersede
all prior agreements and understandings, if any, relating to the subject matter
hereof. The Credit Documents represent the final agreement among the parties and
may not be contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties.
SUBPART 5.8. Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
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OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
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CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH
CAROLINA.
SUBPART 5.9. Successors and Assigns. This Amendment shall be binding
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upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 5.10. Release. In consideration of the Lenders' willingness
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to enter into this Amendment, each of the Credit Parties hereby releases the
Agent, the Lenders, and the Agent's and the Lenders' respective officers,
employees, affiliates, representatives, agents, counsel, trustees and directors
from any and all actions, causes of action, claims, demands, damages and
liabilities of whatever kind or nature, in law or in equity, now known or
unknown, suspected or unsuspected to the extent that any of the foregoing arises
from any action or failure to act on or prior to the date hereof.
SUBPART 5.11. Further Assurances. The Credit Parties expressly agree
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to execute any documents that may reasonably be necessary to effectuate the
terms and conditions as contemplated herein.
[Remainder of this page left blank intentionally.]
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IN WITNESS WHEREOF the Borrower, the Guarantors and the Lenders have
caused this Amendment to be duly executed as of the date first above written.
BORROWER: ACCESS WORLDWIDE COMMUNICATIONS, INC.
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By:_________________________
Name:
Title:
GUARANTORS: ASH CREEK, INC.
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By: ________________________
Name:
Title:
TLM HOLDINGS, CORP.
By: ________________________
Name:
Title:
XXXXXXX POND, INC.
By: ________________________
Name:
Title:
PHOENIX MARKETING GROUP (HOLDINGS), INC.
By: ________________________
Name:
Title:
[Signatures continue.]
TELEMANAGEMENT SERVICES, INC.
By: ____________________________
Name:
Title:
HISPANIC MARKET CONNECTIONS, INC.
By: ____________________________
Name:
Title:
AWWC TEXAS I, L.P.
By: ____________________________
Name:
Title:
[Signatures continue.]
LENDERS: BANK OF AMERICA, N.A., successor to
------- NationsBank, N.A., individually in its
capacity as a Lender and in its capacity as
Agent
By:__________________________
Name:
Title:
ARK CLO 2000-1, LIMITED
By: Patriarch Partners, LLC
its Collateral Manager
By: ____________________________
Name: __________________________
Title: _________________________
FLEET NATIONAL BANK
By: _________________________
Name:
Title:
CITIBANK, N.A.
By: _________________________
Name:
Title:
