Exhibit 10.1
EXECUTION VERSION
SECOND AMENDMENT
TO
CREDIT AGREEMENT
This SECOND AMENDMENT (this “
Second Amendment ”) to the Credit Agreement (as
defined below), dated as of March 25, 2009 (the “
Second Amendment Effective Date ”) is entered
into by and among NCO GROUP, INC. (the “ Parent
Borrower ”), NCO FINANCIAL SYSTEMS, INC. (the “
Subsidiary Borrower ” and, together with the
Parent Borrower, collectively, the “ Borrower
”), certain Guarantors under the Credit Agreement (as defined
below) (the “ Guarantors ”), CITIZENS
BANK OF PENNSYLVANIA (“ Citizens ”), as
Administrative Agent, Citizens Bank of Pennsylvania as sole Issuing
Bank and the Required Lenders pursuant to the Credit
Agreement.
The “ Credit Agreement
” is that certain Credit Agreement dated as of
November 15, 2006, among Collect Acquisition Corp., the
Initial Subsidiary Borrower, Collect Holdings, Inc. (now known
as NCO Group, Inc.), a Delaware corporation, the Subsidiary
Guarantors party thereto, the Lenders party thereto, the Issuing
Banks, the Swing Line Bank, Morgan Stanley & Co.
Incorporated (“ MS&Co ”), as
collateral agent for the Secured Parties and Morgan Stanley Senior
Funding, Inc. (“ MSSF ’) as
administrative agent for the Lender Parties, as amended pursuant to
the First Amendment to Credit Agreement dated as of
February 8, 2008 pursuant to which certain provisions of the
Credit Agreement were amended and pursuant to which Citizens
replaced MS&Co and MSSF as collateral agent and administrative
agent (the “ Existing Credit Agreement
”), and as such Credit Agreement as it may be further
amended, restated, supplemented or otherwise modified from time to
time. All capitalized terms not otherwise defined herein have
the meanings set forth in the Credit Agreement giving effect to
this Second Amendment (the “ As-Amended Credit
Agreement ”).
A. The Borrower has
requested that the Existing Credit Agreement be amended to, among
other things, modify certain covenants and interest rates, and
provide for the availability of an incremental revolving credit
facility.
B. The Required Lenders and
the Issuing Banks are willing to approve such amendments on the
terms and subject to the conditions of this Second
Amendment.
Accordingly, in consideration of the
mutual agreements herein contained and other good and valuable
consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1.
Amendment of the Credit Agreement . The Credit
Agreement is hereby amended, effective as of the Second Amendment
Effective Date, as follows:
1.
Section 1.01 of the Credit Agreement (Certain Defined Terms)
is hereby amended by inserting the following definitions in
alphabetical order:
“ Applicable Incremental
Lenders ” means, as to any Incremental Facility, the
Increasing Lenders under such Incremental Facility in their
capacity as such, together with the Assuming Lenders for the
applicable Incremental Facility.
“ Incremental
Commitment ” has the meaning specified in
Section 2.17(a).
“ Incremental
Facility ” has the meaning specified in
Section 2.17(a).
1
“ Initial Incremental
Advance ” means, with respect to any Incremental
Facility, the advance funded by the Applicable Incremental Lenders
on the applicable Increase Date pursuant to
Section 2.17(d)(iii), in the amount which, after giving effect
to the funding of the Initial Incremental Advance, will cause the
percentage of such Initial Incremental Advance relative to the
aggregate amount of such Incremental Facility to equal the
percentage of the outstanding Revolving Credit Advances relative to
the aggregate Revolving Credit Commitments of the Lenders
(including accrued unpaid interest, and excluding the Initial
Incremental Advances and Incremental Commitments under the
applicable Incremental Facility) as of such Increase
Date.
“ Other Incremental
Lender ” means (i) any Eligible Assignee,
(ii) any commercial bank having total assets and net worth
each in excess of $100,000,000, and (iii) any finance company,
insurance company, or other institution or fund that is engaged in
making, purchasing, or otherwise investing in commercial loans in
the ordinary course of its business and having total assets and net
worth each in excess of $100,000,000.
“Second
Amendment ”
means that certain Second Amendment to Credit Agreement dated
March 25, 2009 among the Initial Borrower, the Initial
Subsidiary Borrower, the Guarantors, Citizens, and the Lenders
party thereto.
“ Second Amendment
Effective Date ” has the meaning specified in
Section 3 of the Second Amendment.
2.
Section 1.01 of the Credit Agreement (Certain Defined Terms)
is hereby amended as follows:
(i) The
definition of “Advance” is hereby amended by deleting
such definition in its entirety and replacing such definition with
the following:
“ Advance
” means a Term B Advance, a Revolving Credit Advance
(including without limitation any Advance under an Incremental
Facility), a Swing Line Advance or a Letter of Credit
Advance.
(ii) The
definition of “Applicable Margin”
is hereby amended
by deleting such definition in its entirety and replacing such
definition with the following:
“ Applicable
Margin ” means (a) in respect of the Revolving
Credit Facility, a percentage per annum determined by reference to
the Leverage Ratio as set forth below:
|
Leverage Ratio
|
|
Base Rate Advances
|
|
Eurodollar Rate
Advances
|
|
|
Level I
Less than 3.0:1
|
|
2.25
|
%
|
3.25
|
%
|
|
|
|
|
|
|
|
|
Level II
3.0:1 or greater,
but less than 4.0:1
|
|
2.50
|
%
|
3.50
|
%
|
|
|
|
|
|
|
|
|
Level III
4.0:1 or greater
|
|
2.75
|
%
|
3.75
|
%
|
(b) in respect of the Swing
Line Facility, a percentage per annum determined by reference to
the Leverage Ratio as set forth above for Base Rate Advances;
and
(c) in respect of the Term B
Facility, a percentage per annum determined by reference to the
Leverage Ratio as set forth below:
|
Leverage Ratio
|
|
Base Rate Advances
|
|
Eurodollar Rate
Advances
|
|
|
Level I
Less than 3.5:1.0
|
|
3.75
|
%
|
4.75
|
%
|
|
|
|
|
|
|
|
|
Level II
3.5:1.0 or greater
|
|
4.00
|
%
|
5.00
|
%
|
The Applicable Margin for each Base
Rate Advance shall be determined by reference to the Leverage Ratio
in effect from time to time and the Applicable Margin for each
Eurodollar Rate Advance shall be determined by reference to the
Leverage Ratio in effect on the first day of each Interest Period
for such Advance; provided , however , that
(A) no reduction in the Applicable Margin shall be effective
until three Business Days after the date on which the
Administrative Agent receives the financial statements required to
be delivered pursuant to Section 5.03(b) or (c), as the case may
be, and a certificate of the Chief Financial Officer of the
Borrower demonstrating such Leverage Ratio and (B) the
Applicable Margin shall be at Level III (in the case of the
Revolving Credit Facility and the Swing Line Facility) and at Level
II (in the case of the Term B Facility) for so long as the Borrower
has not submitted to the Administrative Agent the information
described in clause (A) of this proviso as and when required
under Section 5.03(b) or (c), as the case may be;
provided , that no increase in the Applicable Margin (other
than on the Second Amendment Effective Date) shall be effective
under this clause (B) until 5 Business Days after the date on
which the Borrower receives written notice from the Administrative
Agent providing the effective date of such increase and the precise
reason for such increase.
(iii) The
definition of “Appropriate Lender”
is hereby amended
by deleting such definition in its entirety and replacing such
definition with the following:
“ Appropriate
Lender ” means, at any time, with respect to
(a) any of the Term B Facility or the Revolving Credit
Facility (including without limitation any Incremental
Facility
already in effect as of such time,
after giving effect to the Initial Incremental Advance, if any,
which has been made with respect to such Incremental Facility), or
any Incremental Facility (with respect to the Initial Incremental
Advance, if any made under such Incremental Facility pursuant to
Section 2.17(d)(iii)), a Lender that has a Commitment with
respect to such Facility at such time, (b) the Letter of
Credit Facility, (i) any Issuing Bank and (ii) if the
other Revolving Credit Lenders have made Letter of Credit Advances
pursuant to Section 2.03(c) that are outstanding at such
time, each such other Revolving Credit Lender and (c) the
Swing Line Facility, (i) the Swing Line Bank and (ii) if
the other Revolving Credit Lenders have made Swing Line Advances
pursuant to Section 2.02(b) that are outstanding at such
time, each such other Revolving Credit Lender.
(iv) The
definition of “ Base
Rate ” is hereby amended by
deleting such definition in its entirety and replacing such
definition with the following:
“ Base Rate
” means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to
the highest of:
(a)
the rate of interest published by The Wall Street Journal from time
to time, as the prime lending rate (in the event that The Wall
Street Journal shall, for any reason, fail or cease to publish the
prime lending rate, the Administrative Agent shall choose a
reasonably comparable index or source to use as the basis for the
Base Rate);
(b)
1 / 2
of 1% per annum above the
Federal Funds Rate; and
(c)
the then-current Eurodollar Rate that would be applicable to loans
of a three-month term made at such time, plus 1.00% per
annum.
(v) The
definition of “Commitment” is hereby amended by deleting
such definition in its entirety and replacing such definition with
the following:
“ Commitment
” means a Term B Commitment, a Revolving Credit Commitment
(including without limitation any Incremental Commitments then in
effect pursuant to an Incremental Facility), a Letter of Credit
Commitment.
(vi) The
definition of “ Eurodollar Rate ” is hereby amended by
deleting such definition in its entirety and replacing such
definition with the following:
“
Eurodollar Rate
” means,
for any Interest Period for all Eurodollar Rate Advances comprising
part of the same Borrowing, an interest rate per annum equal to the
rate per annum obtained by dividing (a) the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in U.S. dollars at
11:00 A.M. (London time) two Business Days before the first
day of such Interest Period for a period equal to such Interest
Period (provided that (A) if for any reason such rate is not
available, the term “Eurodollar Rate” shall mean, for
any Interest Period for all Eurodollar Rate Advances comprising
part of the same Borrowing, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London time) two Business
Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such
rates, and
(B) if the rate otherwise determined pursuant to this clause
(a), whether pursuant to part (A) of this parenthetical or
otherwise, is less than 2.50% per annum, then for purposes of this
Agreement and the Loan Documents, such rate shall be deemed to be
2.50% per annum) by (b) a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Interest
Period.
(vii) The
definition of “Disqualified Stock”
is hereby amended
by adding the following clause after the word “payment”
in clause (a) of such definition: “(other than payments
made in Equity Interests which are not otherwise Disqualified
Stock)”.
(viii) The
definition of “Facility” is hereby amended by deleting
such definition in its entirety and replacing such definition with
the following:
“ Facility
” means the Term B Facility, the Revolving Credit Facility
(including without limitation any Incremental Facility after the
satisfaction or waiver of the conditions and actions prescribed in
Section 2.17(d)), the Swing Line Facility, or the Letter of
Credit Facility.
(ix) The
definition of “ Letter of Credit Commitment
” is hereby
amended by the deletion of the final sentence thereof, and the
replacement of such sentence with the following:
The aggregate amount of the Letter
of Credit Commitments as of the date hereof is
$30,000,000.
3.
Section 2.06(b)(ii) ( Mandatory Prepayments ) is
hereby amended by deleting part (y) of the proviso to clause
(B) thereof and replacing it with the following:
(y) from the issuance or sale
of Equity Interests to any Person as long as such Net Cash Proceeds
are (I) designated (in a written notice to the Administrative
Agent) upon receipt thereof by any Loan Party for use to pay for
(1) any purchase, acquisition or other investment permitted
under Section 5.02(f)(vi) and/or (2) any prepayment,
repurchase or redemption of the Senior Notes, the Senior
Subordinated Notes and/or Refinanced Notes (including, without
limitation, pursuant to open market purchases or secondary market
purchases at a discount) permitted pursuant to
Section 5.02(j)(i)(D)(3), (II) maintained, in a deposit
account subject to an account control agreement, as collateral for
the Obligations and not used for any purpose other than those
described in clause (I) above, and (III) used for
purposes described in clause (I) above within twelve (12)
months following the date of such issuance or sale, by any Loan
Party (and, if not so used within twelve (12) months, used to
prepay Term B Advances on the first anniversary of the receipt
thereof by any Loan Party).
4.
Section 2.17 ( Incremental Facilities ) is hereby
deleted in its entirety and replaced with the
following:
Section 2.17. Incremental
Facilities . (a) The Borrower may, from time to
time, by notice to the Administrative Agent, request an increase in
the Revolving Credit Facility (each such facility increase being an
“ Incremental Facility ”), pursuant to
additional commitments (the “ Incremental
Commitments ”), in an aggregate principal amount for
all such Incremental Facilities not to exceed $50,000,000 for all
Incremental Facilities, each of which is to be effective as of a
date that is at least 180 days prior to the Termination Date then
in effect in respect of the Revolving Credit Facility (such date
for each such Incremental Facility, the “ Increase
Date ”), as specified in the related notice
to
the Administrative Agent;
provided , however , that (i) in no event shall
any Incremental Facility be in a principal amount of less than
$10,000,000 (or such lesser amount as shall be approved by the
Administrative Agent); (ii) the total Incremental Commitments
at any time shall not exceed 50% of the amount of payments of
principal made on the Term B Advances (including without limitation
any prepayment of principal made on the Term B Advances with Net
Cash Proceeds of an asset sale permitted under
Section 5.02(e)(xii)) from and including the date of the
Second Amendment until (and including) the Increase Date;
(iii) there shall be no more than four (4) Incremental
Facilities (or such greater number as shall be approved by the
Administrative Agent); (iv) on the Increase Date, the
applicable conditions set forth in Sections 3.02(a)(i)(y) and
3.02(a)(ii), and in clause (d) of this Section 2.17,
shall be satisfied or waived by the Applicable Incremental Lenders
holding a majority-in-interest of the Incremental Commitments under
the applicable Incremental Facility; (v) as of the last day of
the fiscal quarter of the Borrower immediately preceding the
Increase Date, after giving pro forma effect to any such
Incremental Facility and any borrowing made thereunder and other
customary and appropriate pro forma adjustment events,
including any acquisitions or dispositions or repayment of Debt
after the beginning of such fiscal quarter but prior to or
substantially contemporaneously with any borrowing under the
Revolving Credit Facility related to the Incremental Facility
becoming effective, the Borrower shall be in pro forma
compliance with all financial covenants set forth in Section 5.04;
(vi) on the Increase Date, after giving pro forma
effect to any such Incremental Facility, no Default or Event of
Default shall have occurred and be continuing; (vii) the
interest rates applicable to any Incremental Facility shall be
determined by the Borrower and the Applicable Incremental Lenders;
provided that if the Applicable Margin (or pricing grid
thereunder) relating to any Incremental Facility exceeds the
Applicable Margin (or pricing grid thereunder) then applicable to
the Revolving Credit Advances (as previously adjusted, whether
pursuant to this clause or otherwise), the Applicable Margin and/or
pricing grid thereunder relating to the Revolving Credit Advances
and prior Incremental Facilities shall be adjusted to be equal to
the Applicable Margin and pricing grid thereunder relating to such
Incremental Facility; (viii) each Incremental Facility, after
such Incremental Facility becomes effective, and after completion
of payments, reimbursements, advances, repayments, and other
actions, if any, to be made or taken under,
Section 2.17(d) (including, without limitation, the
Initial Incremental Advance, if any, for such Incremental
Facility), shall become part of the Revolving Credit Facility, the
Applicable Incremental Lenders thereunder shall become and be
Revolving Credit Lenders, commitments thereunder shall be Revolving
Credit Commitments, advances thereunder (including without
limitation the Initial Incremental Advance) shall be Revolving
Credit Advances (including for purposes of Section 2.06), and
the Revolving Credit Facility and all Incremental Facilities shall
be treated as a single Revolving Credit Facility, with any advances
thereafter made under or payments received in respect of the
Revolving Credit Facility and Incremental Facilities to be made and
received based on the treatment of all lenders under all
Incremental Facilities as Revolving Credit Lenders, and with terms
of the Loan Documents relating to the Revolving Credit Facility to
be applied based on the treatment of the Incremental Facilities as
part of the Revolving Credit Facility (and each Base Rate Advance
and Eurodollar Rate Advance (including the applicable Initial
Incremental Advance) then outstanding shall be deemed to be
reallocated as among the Revolving Credit Lenders (including the
Applicable Incremental Lenders) so that each Revolving Credit
Lender (including each Applicable Incremental Lender) shall hold a
pro rata fraction of each Base Rate Advance and Eurodollar Rate
Advance (including the applicable Initial Incremental Advance) then
outstanding); (ix) the existing Revolving Credit Lenders shall
initially have the right, but not the obligation, to commit to up
to their Pro Rata Share (or,
if consented to by the Borrower and
the Administrative Agent to cover declines by other Lenders, more
than their Pro Rata Share) of each Incremental Facility ratably
based on the applicable Revolving Credit Commitments of the
Revolving Credit Lenders (with such Pro Rata Shares calculated and
determined as of a time selected by the Administrative Agent in
connection with the syndication or arrangement of the applicable
Incremental Facility, prior to the implementation of such
Incremental Facility, and with such right to commit Pro Rata Shares
to be subject to limitations and modifications for purposes of
convenience, rounding, and minimum commitment amounts, by agreement
of the Borrower and Administrative Agent); and
(x) notwithstanding any other provision of any Loan Document
(including, without limitation, Section 9.01), the Loan
Documents may be amended by the Administrative Agent and the
Borrower, if necessary, to provide for terms applicable to each
Incremental Facility consistent with the terms hereof.
(b)
The Administrative Agent shall promptly notify the Lenders of a
request by the Borrower for an Incremental Facility, which notice
shall include (i) the proposed amount of such requested
Incremental Facility, (ii) the proposed Increase Date and
(iii) the date by which t
