FIFTH AMENDMENT TO
FIFTH AMENDED AND RESTATED CREDIT AGREEMENT
AND OTHER LOAN DOCUMENTS
THIS FIFTH AMENDMENT, dated as of February 20, 2001, (this "Amendment")
to FIFTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 31, 1999,
as amended pursuant to that certain First Amendment to the Fifth Amended and
Restated Credit Agreement, dated as of March 24, 2000, as further amended
pursuant to that certain Second Amendment and Waiver to Fifth Amended and
Restated Credit Agreement, dated as of October 26, 2000, as further amended
pursuant to that certain Third Amendment to Fifth Amended and Restated Credit
Agreement and Commitment for Subfacility Amendment to Fifth Amended and Restated
Credit Agreement, dated as of December 15, 2000, and as further amended pursuant
to that certain Fourth Amendment to Fifth Amended and Restated Credit Agreement,
dated as of January 23, 2001 (as so amended, the "Current Credit Agreement",
and, as the same may be further amended, from time to time, the "Credit
Agreement") by and between NCO GROUP, INC., a Pennsylvania corporation, CERTAIN
SUBSIDIARIES OF NCO GROUP, INC., THE LENDERS LISTED ON THE SIGNATURE PAGES
HERETO, MELLON BANK, N.A., a national banking association for itself and as
Administrative Agent and Collateral Agent for the other Lenders. Capitalized
terms used in this Amendment are used as defined in the Credit Agreement unless
otherwise defined herein.
WHEREAS, the Borrower has notified the Lenders of its desire to obtain
a controlling interest in Creditrust Corporation ("Creditrust") through a merger
of Creditrust with and into NCO Portfolio Management, Inc. (f/k/a NCO Portfolio
Funding, Inc.), an Excluded Subsidiary (the "Merger"). Upon consummation of the
Merger, the Borrower shall not have invested more than Twenty Five Million
Dollars ($25,000,000) in Post-Merger NCOP (as defined below);
WHEREAS, in connection with the Merger, the Borrower would like to
extend credit in an amount not to exceed Fifty Million Dollars ($50,000,000) to
Post-Merger NCOP;
WHEREAS, the Borrower has requested that the Lenders provide for a
subfacility under the existing $350,000,000 Revolving Credit Facility provided
for in the Credit Agreement to facilitate such financing of Post-Merger NCOP;
and
WHEREAS, the Lenders are willing to provide for the amendments
requested by the Borrower on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the
Borrower and the Lenders agree as follows:
1. AMENDMENTS TO CREDIT AGREEMENT. The Current Credit Agreement is
hereby amended as follows:
a. Subfacility. Section 1.2 of the Current Credit Agreement is
amended in its entirety to read as follows:
"1.2 Subfacility. Upon the terms and subject to the
conditions of this Agreement, (including all conditions
precedent in Section 3.2 (Conditions to All Loans) and
the limitation on use of proceeds set forth in Section
5.9 (Use of Proceeds) below), each Lender agrees to
make, from time to time, from the Amendment Effective
Date to, but excluding the Subfacility Maturity Date,
one or more revolving credit loans ("Subfacility Loans")
to the Borrower in an aggregate unpaid principal amount
not exceeding any time such ▇▇▇▇▇▇'s Subfacility
Commitment at such time; provided, however, that the
Borrower shall not request, and the Lenders shall have
no obligation to make, any Subfacility Loans at any time
in excess of the Available Subfacility Commitment or at
any time that there shall have occurred and be
continuing any "Default" or "Event of Default" as each
such term is defined in the NCOP/NCOG Credit Agreement.
The total amount of the Subfacility Commitment of all
Lenders on the Amendment Effective Date is $50,000,000."
b. Proceeds of Subfacility Loans. Section 5.9 of the Current
Credit Agreement (Use of Proceeds) is amended by adding the following proviso at
the end of the first sentence thereof:
"provided, however, that the Borrower shall apply the proceeds
of the Subfacility Loans hereunder only to make loans to
Post-Merger NCOP pursuant to the NCOP/NCOG Credit Agreement."
c. Manner of Borrowing. Paragraph (a) of Section 1.3 of the
Current Credit Agreement (Notice of Borrowing) is amended by replacing the words
"RC Loans" with the word "Loans" at the end of the first sentence thereof and by
replacing the parenthetical at the end of the second sentence thereof with the
following parenthetical:
"(except that the amount of a requested RC Loan may be less if
the amount requested is equal to the total Available RC
Commitment and except that the amount of a requested
Subfacility Loan may be less if the amount requested is equal
to the total Available Subfacility Commitment)".
d. Disbursements of Funds to Borrower. Paragraph (d) of Section
1.3 of the Credit Agreement (Disbursements of Funds to Borrower) is amended by
adding the following phrase at the end thereof immediately preceding the period:
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"except that the proceeds of any Subfacility Loans shall be
made available to the Borrower only by crediting the
Disbursement Account".
e. Repayments of Loans. Section 1.4 of the Current Credit
Agreement (Repayments) is amended by inserting the phrase "(a) Repayments of RC
Loans" at the beginning thereof immediately preceding the first sentence of said
Section 1.4 and by adding the following paragraph at the end of said Section:
"(b) Repayments of Subfacility Loans. The aggregate
outstanding principal amount of the Subfacility Loans
shall mature and become due and payable, and shall be
repaid by Borrower, on the Subfacility Maturity Date.
Borrower shall also repay the following amounts, at the
times specified, in respect of the Subfacility Loans:
(i) At any time that the amount of outstanding
Subfacility Loans exceeds the amount of the
Subfacility Commitment, Borrower shall make a
principal payment in respect of the Subfacility
Loans in an amount equal to the amount of such
excess.
(ii) At any time that Borrower receives a principal
payment on the NCOP/NCOG Note, (exclusive of
payments in respect of borrowings under the swing
line provided for in the NCOP/NCOG Credit
Agreement), it shall make a principal payment in
respect of the Subfacility Loans in an amount
equal to the amount of the principal payment
received under the NCOP/NCOG Note; provided,
however, that if the making of such principal
payment would cause the Borrower to incur any
obligation under Section 2.4 (Breakage) herein, so
long as no Default or Event of Default has
occurred and is continuing, the Borrower shall be
entitled to retain such amount until such time as
the making of such principal payment would not
cause the Borrower to incur such obligation but
not later than the Maturity Date. Borrower shall
provide notice to the Administrative Agent of any
such repayment under the NCOP/NCOG Note."
f. Optional Prepayments. Paragraph (a) of Section 1.5 of the
Current Credit Agreement (Optional Prepayments) is amended by replacing the
second parenthetical phrase therein with the following:
"(other than a prepayment of all outstanding RC Loans or a
prepayment of all outstanding Subfacility Loans)".
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g. Application and Timing of Prepayments. Paragraph (b) of Section
1.5 of the Current Credit Agreement (Application and Timing of Prepayments) is
amended by replacing the words "RC Loan" in the second sentence thereof with the
word "Loan". In addition, clause (ii) of paragraph (b) is amended and restated
in its entirety and two new clauses, designated as (iii) and (iv) are added as
follows:
"(ii) Timing and Application of Voluntary Prepayments of
RC Loans. Any voluntary prepayments of RC Loans
pursuant to paragraph (a) of this Section 1.5
shall be applied in the following order unless
otherwise directed by the Borrower:
(1) First, prepayments shall be applied against
any interest, breakage and other fees,
charges and expenses due and payable in
respect of the RC Loans and RC Commitment.
(2) Second, prepayments shall be applied against
the RC Loans but with no corresponding
reduction in the amount of the Commitment
unless otherwise specified by Borrower in
accordance with Section 1.7 hereof.
Any excess shall be applied to any other amounts owing
in respect of the Obligations (first to interest, fees
and indemnities and then to principal) and, if all such
Obligations have been then paid in full, then any excess
amount shall be returned to Borrower or as otherwise
required by applicable Law.
(iii) Timing and Application of Voluntary Prepayments of
Subfacility Loans. Any voluntary prepayments of
Subfacility Loans pursuant to paragraph (a) of
this Section 1.5 shall be applied in the following
order unless otherwise directed by the Borrower:
(1) First, prepayments shall be applied against
any interest, breakage and other fees,
charges and expenses due and payable in
respect of the Subfacility Loans and
Subfacility Commitment.
(2) Second, prepayments shall be applied against
the Subfacility Loans but with no
corresponding reduction in the amount of the
Subfacility Commitment unless otherwise
specified by Borrower in accordance with
Section 1.7 hereof.
Any excess shall be applied to any other amounts owing
in respect of the Obligations (first to interest, fees
and indemnities and then to principal) and, if all such
Obligations have been then paid in full, then any excess
amount shall be returned to Borrower or as otherwise
required by applicable Law.
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(iv) Application as between RC Loans and Subfacility
Loans. Funds received by the Borrower from
Post-Merger NCOP in respect of the NCOP/NCOG
Credit Agreement (other than repayments of
swingline loans and other than fees and interest
that exceed the amount of fees and interest in
respect of Subfacility Loans hereunder) shall be
applied by the Borrower to prepay or repay
Subfacility Loans and fees and interest related
thereto; provided, however, that if the making of
such principal payment would cause the Borrower to
incur any obligation under Section 2.4 (Breakage)
herein, so long as no Default or Event of Default
has occurred and is continuing, the Borrower shall
be entitled to retain such amount until such time
as the making of such principal payment would not
cause the Borrower to incur such obligation but
not later than the Maturity Date. The
Administrative Agent may assume that any repayment
or prepayment of Loans hereunder shall be applied
against the RC Loans unless the Borrower notifies
the Administrative Agent that such amounts are to
be applied against the Subfacility Loans."
h. Time, Place and Manner of Payments by ▇▇▇▇▇▇▇▇. Paragraph (a)
of Section 1.6 of the Current Credit Agreement (Time, Place and Manner) is
amended by inserting the following phrase at the end of the first sentence
thereof immediately preceding the period:
"except that any payments in respect of
Subfacility Loans (including principal thereof,
interest thereon or fees in respect thereof) shall
be made by depositing the applicable amount in the
Disbursement Account."
i. Disposition of equity in NCOP. Section 1.7(a) of the Current
Credit Agreement (Reductions of RC Commitment) is amended by adding a new clause
(iv) immediately following clause (iii) thereof as follows:
"(iv) At anytime that an Obligor makes a disposition of equity
in Post-Merger NCOP, Borrower shall apply at least 50%
of the net cash proceeds received in exchange for such
disposition to reduce the RC Commitment."
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j. Reductions of Subfacility Commitment. The Current Credit
Agreement is amended by inserting a new Section 1.7A immediately following the
existing Section 1.7 as follows:
"1.7A Reductions of Subfacility Commitment.
(a) Mandatory Reductions.
(i) Reductions Related to Reductions in RC
Commitment.
The amount of the Subfacility Commitment
shall never exceed the amount of the RC
Commitment. Accordingly, at any time that
the amount of the RC Commitment is reduced
to an amount that would be less than the
amount of the Subfacility Commitment, the
amount of the Subfacility Commitment shall
be automatically reduced by an amount equal
to such excess.
(ii) Reductions in Connection with Reductions on
NCOP/NCOG Credit Agreement Commitment.
The amount of the Subfacility Commitment
shall never exceed the amount of the
commitment under the NCOP/NCOG Credit
Agreement. Accordingly, at any time that the
amount of the commitment under the NCOP/NCOG
Credit Agreement is reduced to an amount
that would be less than the amount of the
Subfacility Commitment, the amount of the
Subfacility Commitment shall be
automatically reduced by an amount equal to
such excess. The Borrower shall give the
Administrative Agent notice of any reduction
in the commitment under the NCOP/NCOG Credit
Agreement.
(iii) Other Reductions Beginning 3/31/02.
If the Subfacility Commitment has not been
reduced to Twenty Five Million Dollars
($25,000,000) or less by March 31, 2002, the
amount of the Subfacility Commitment will be
reduced by an amount equal to Two Million
Five Hundred Thousand Dollars ($2,500,000)
per quarter (or such lesser amount as would
result in the Subfacility Commitment being
equal to $25,000,000) beginning on March 31,
2002 through the quarter ending December 31,
2002 and will be further reduced by an
amount equal to Three Million Seven Hundred
Fifty Thousand Dollars ($3,750,000) per
quarter (or such lesser amount as would
result in the Subfacility Commitment being
equal to $25,000,000) beginning on March 31,
2003 until the Subfacility Commitment has
been reduced to Twenty Five Million Dollars
($25,000,000).
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(b) Optional Reductions and Termination.
The Borrower may reduce or terminate the
Subfacility Commitment by giving the
Administrative Agent notice (which shall be
irrevocable) thereof no later than 11:00 a.m.
(Philadelphia, Pennsylvania time) on the third
Business Day (fifth Business Day for termination
of the Subfacility Commitment) before the
requested date of such reduction or termination,
provided, that each partial reduction thereof
shall be in an amount equal to One Million Dollars
($1,000,000) or an integral multiple of thereof
and, provided, further, that no reduction shall
reduce the Subfacility Commitment to an amount
less than the aggregate of the principal amount of
all Subfacility Loans outstanding on such date
(after giving effect to any repayment or
prepayment of Subfacility Loans made on or prior
to such date). Upon receipt of any such notice,
the Administrative Agent shall promptly notify
each Lender of the contents thereof and the amount
(based on a pro rata reduction to each Lender's
Subfacility Commitment) to which such Lender's
Subfacility Commitment is to be reduced.
(c) No Reinstatement of Subfacility Commitment.
All reductions of the Subfacility Commitment are
permanent.
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(d) Payment.
On each date ("Subfacility Reduction Date") on
which the Subfacility Commitment is reduced
(either voluntarily or involuntarily) the Borrower
shall pay to the Administrative Agent the amount,
if any, by which the outstanding principal balance
of the Subfacility Loans exceeds the amount of the
Subfacility Commitment as reduced on such
Subfacility Reduction Date."
It is understood that the NCOP/NCOG Credit Agreement will provide that the
commitment thereunder will be reduced by, among other things, an amount equal to
the proceeds from any equity or mezzanine financing of Post-Merger NCOP (or its
subsidiaries) until such time as such facility is reduced to $25,000,000.
Accordingly, pursuant to this new Section 1.7A, the Subfacility Commitment will
be reduced at the same time.
k. Additional Fees. Section 1.9 of the Current Credit Agreement
(Fees) is amended by redesignating paragraph (c) thereof as paragraph (e) and by
inserting the following two paragraphs immediately preceding such paragraph:
"(c) Swing Line Subfacility Fee. Until such time as the
Subfacility Commitment has been reduced to Twenty Five
Million Dollars ($25,000,000), the Borrower shall pay to
the Administrative Agent for the account of the Lenders
a monthly fee in an amount equal to one percent (1%) per
annum of the average daily outstanding amount of the
swing line under the NCOP/NCOG Credit Agreement. Such
fee shall be payable monthly, in arrears, within five
(5) Business Days of the last day of each calendar
month. Upon request or at any time that the Disbursement
Account is not maintained with the Administrative Agent,
Borrower shall provide Administrative Agent with
information sufficient to confirm the amount of such
fees.
(d) Additional Subfacility Fee. In the event that the amount
of the Subfacility Commitment has not been reduced to
Twenty Five Million Dollars ($25,000,000) by the
sixth-month anniversary of the Amendment Effective Date,
the Borrower will pay to the Administrative Agent for
the account of the Lenders an additional fee equal to
one quarter of one percent (1/4 of 1%) per quarter on
the full amount of the then existing Subfacility
Commitment, payable quarterly in advance, until the
amount of the Subfacility Commitment is reduced to
Twenty Five Million Dollars ($25,000,000)."
l. Notes. Section 1.11 of the Current Credit Agreement (Promissory
Notes; Records of Account) is amended by adding the following sentence at the
end thereof:
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"No additional Notes shall be required in connection with the
Subfacility Loans and Subfacility Commitment; rather the
existing Notes shall evidence the Borrower's obligations in
connection therewith."
m. Pro Rata Treatment. Section 1.12 of the Current Credit
Agreement (Pro Rata Treatment) is amended by adding the following sentence at
the end thereof:
"Except to the extent otherwise provided herein, Subfacility
Loans shall be made by, and principal, interest and fees in
respect thereof shall be paid or repaid to, the Lenders pro
rata in accordance with their respective Subfacility
Commitments and interest in Subfacility Loans."
n. Loans, Advances and Investments. Section 6.5 of the Current
Credit Agreement (Loans, Advances and Investments) is amended by deleting the
word "and" at the end of existing paragraph (h) thereof, by replacing the period
at the end of existing paragraph (i) thereof with the phrase, "; and" and by
inserting the following new paragraph (j) at the end of said Section:
"(j) The NCOP/NCOG Note and extensions of credit under the
NCOP/NCOG Credit Agreement, which extensions of credit
(other than the swing line loans) may only be made from
proceeds of Subfacility Loans (subject to the
limitations set forth in Section 6.13)."
o. Disposition of Equity in Post-Merger NCOP. Section 6.10 of the
Current Credit Agreement (Disposition of Properties) is amended by deleting the
word "and" at the end of the existing paragraph (c) thereof, by replacing the
period at the end of existing paragraph (d) thereof with the phrase, "; and" and
by inserting the following new paragraph (e) at the end of said Section:
"(e) Subject to the conditions set forth in Section 1.7
hereof, Obligors may dispose of equity in Post-Merger
NCOP in return for the fair market value of the disposed
equity in cash, provided that after giving effect to
such disposition, the Obligors collectively retain
equity entitling them to at least 51% of the voting
power in Post-Merger NCOP."
p. Dealings with Affiliates. Section 6.12 of the Current Credit
Agreement (Dealings with Affiliates) is amended by deleting the word "and" at
the end of paragraph (c) thereof, replacing the period at the end of paragraph
(d) thereof with the phrase "; and" and by inserting a new paragraph (e) at the
end thereof as follows:
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"(e) The transactions under the NCOP/NCOG Credit Agreement
and related documents."
q. Limitations on Modifications of Certain Agreements and
Instruments. Section 6.15 of the Current Credit Agreement (Limitations on
Modification of Certain Agreements and Instruments) is amended by adding the
following sentence at the end thereof:
"Borrower shall not amend, or provide any waiver of the terms
of, the NCOP/NCOG Note or NCOP/NCOG Credit Agreement, without
the prior written consent of the Majority Lenders except for
Permitted Amendments."
r. Acquired Delinquent Pools of Accounts. Section 6.13 of the
Current Credit Agreement (Acquired Delinquent Pools of Accounts) is amended and
restated in its entirety to read as follows:
"No Obligor shall acquire delinquent pools of Accounts or make
investments in entities purchasing delinquent pools of Accounts
except
(i) during any time that there shall exist any
outstanding Subfacility Loans or any
Subfacility Commitment, (1) an investment in
Post-Merger NCOP in an aggregate amount (in
cash or the net fair market value of other
assets (determined as of the time the
applicable investment is made)) not in
excess of Twenty-five Million Dollars
($25,000,000), (2) the extensions of credit
in an aggregate principal amount not
exceeding Fifty Million Dollars
($50,000,000) under the NCOP/NCOG Credit
Agreement (with the limitations on source of
funding referred to in Section 6.5(j)) and
(3) investments and acquisitions in an
amount up to $5,000,000 made by foreign
Subsidiaries provided, that no funding for
such purpose is provided by an Obligor; and
(ii) at all other times, the amount of the
investment in Post-Merger NCOP plus other
investments and acquisitions made through
Subsidiaries of the Borrower that are
Obligors or foreign Subsidiaries in an
aggregate amount not exceeding at any time
$50,000,000 (for all such investments and
acquisitions including the one in
Post-Merger NCOP).
For purposes of subclause (3) of clause (i) and clause (ii) of
this Section 6.13, the "amount" of any investment or
acquisition shall be determined as follows:
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(a) with respect to any acquisition of delinquent
pools of Accounts, the amount of the unamortized
remaining invested balance for all such pools on
the consolidated balance sheet of the Borrower,
the other Obligors and the foreign Subsidiaries
and
(b) with respect to any investment in entities
purchasing such pools,
(i) an amount equal to the amount of cash or the
net fair market value of other assets
(determined as of the time the applicable
investment is made) paid by the Borrower or
any other Obligors to acquire such
investments less
(ii) the amount of any cash dividends or other
equity distributions or proceeds of any
permitted sales of such equity received by
the applicable Obligor or foreign
Subsidiary, in the case of equity
investments and the amount of any principal
repayments received by the applicable
Obligor or foreign Subsidiary in the case of
investments in the form of loans or
advances.
For purposes of this Section 6.13, the determination of the
"amount" of the Borrower's investment in Post-Merger NCOP shall
be governed by clause (b) above irrespective of whether
Post-Merger NCOP's financial results are consolidated on the
Borrower's balance sheet. Any further amendment to this Section
6.13 in a manner that provides greater flexibility for the
Borrower hereunder shall require the written consent of the
Super Majority Lenders."
s. Limitation on Transactions with Excluded Subsidiaries. Section
6.19 of the Current Credit Agreement (Limitation on Transactions with Excluded
Subsidiaries) is amended in its entirety to read as follows:
"No Obligor shall sell or lease any assets to, or make any loan
or advance to, or make any other investment in, or comingle any
funds or other assets with, an Excluded Subsidiary except (a)
as is permitted by Section 6.13 above (Acquired Delinquent
Pools of Accounts), (b) cash management functions approved by
the Administrative Agent, (c) loans to and investments in
Post-Merger NCOP and other investments permitted by Section 6.5
(Investments), (d) servicing arrangements among the Borrower
and/or NCO Financial Systems, Inc. and any Excluded Subsidiary,
and (e) as is permitted for such transactions with unaffiliated
third parties."
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t. Additional Events of Default. Section 7.1 of the Current Credit
Agreement (Events of Default) is amended by adding the following sentence at the
end of paragraph (d) thereof:
"Without limiting the generality of the foregoing, there shall
be any default by any Person (other than the Administrative
Agent and/or Lenders) under the Special Suretyship Agreement,
NCOP/NCOG Subordination Agreement, Additional Subfacility
Security and Pledge Agreement and instruments and agreements
delivered in connection therewith."
Section 7.1 of the Current Credit Agreement is also amended by adding the
following additional paragraphs (s) and (t) at the end thereof:
"(s) At any time that there shall exist any Subfacility Loans
outstanding or there is any Subfacility Commitment in
effect, the Special Suretyship Agreement, the Additional
Subfacility Security and Pledge Agreement or the
NCOP/NCOG Subordination Agreement shall fail to remain
in full force and effect or the Administrative Agent
shall fail to have a valid and perfected first-priority
security interest in the Additional Subfacility Security
subject only to permitted liens."
(t) The principal amount outstanding under the NCOP/NCOG
Credit Agreement (exclusive of swing line loans provided
thereunder) shall exceed the principal amount of
outstanding Subfacility Loans and such condition shall
exist for more than three (3) Business Days."
u. Additional Definitions. The following new definitions are added
in their correct alphabetical location in Section 10.1 of the Current Credit
Agreement (Certain Definitions):
"Additional Subfacility Security" means the significant
unencumbered personal property (excluding fixtures) of Post-Merger
NCOP and its Subsidiaries (excluding the Non-Surety Entities and
excluding assets transferred to Non-Surety Entities) but including,
in any event, all equity of Subsidiaries of Post-Merger NCOP held,
directly or indirectly, by Post-Merger NCOP (exclusive of such
equity of Non-Surety Entities as is properly designated, from time
to time, as "Excluded Properties" in the Additional Subfacility
Security and Pledge Agreement) as more fully set forth in the
Additional Subfacility Security and Pledge Agreement.
"Additional Subfacility Security and Pledge Agreement" means
the one or more security agreements in favor of Mellon Bank as
Collateral Agent, (for itself, the Lenders and other secured
parties referred to therein), granting a security interest pursuant
to the Uniform Commercial Code in the Additional Subfacility
Security, executed by Post-Merger NCOP and its Subsidiaries (other
than the Non-Surety Entities), as the same may be amended,
restated, modified and/or supplemented from time to time with the
consent of the Majority Lenders.
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"Adjusted Consolidated NCO Group" means the following:
(i) For so long as there shall exist any
outstanding Subfacility Loans or
there shall exist any Subfacility
Commitment, "Adjusted Consolidated
NCO Group" shall mean the Borrower
and its consolidated Subsidiaries,
(including, without limitation,
Post-Merger NCOP and its
Subsidiaries).
(ii) At all other times, "Adjusted
Consolidated NCO Group" shall mean
Borrower and its consolidated
Subsidiaries (except Post-Merger
NCOP and its Subsidiaries).
"Amendment Effective Date" means the date on which the
amendments set forth in Section 1 of the Fifth Amendment and Waiver
to Fifth Amended and Restated Credit Agreement ("Fifth Amendment")
becomes effective in accordance with the terms of the Fifth
Amendment.
"Available Subfacility Commitment" means, as of any date, the
difference obtained by subtracting (b) from (a) where (a) is the
amount of the Subfacility Commitment on such date and (b) is the
aggregate outstanding principal amount of all Subfacility Loans,
provided, however, the amount of the Available Subfacility
Commitment shall never exceed the amount of the Available RC
Commitment.
"Creditrust" has the meaning ascribed to that term in the
recitals to the Fifth Amendment.
"Disbursement Account" means a deposit account maintained
exclusively for the Subfacility Loans and repayments thereof and
the extensions of credit and repayments thereof under the NCOP/NCOG
Note, which account shall be subject to a valid, first-priority
security interest in favor of the Administrative Agent (for the
benefit of itself, the Lenders and other secured parties referred
to in the Additional Subfacility Security and Pledge Agreement).
"Merger" shall have the meaning ascribed to that term in the
recitals to the Fifth Amendment.
"NCOP/NCOG Credit Agreement" means a credit agreement between
the Borrower and Post-Merger NCOP providing for revolving credit
loans from Borrower to Post-Merger NCOP in an aggregate principal
amount not to exceed $50,000,000 at any time, in form and substance
satisfactory to the Majority Lenders, as the same may be amended,
restated, modified and/or supplemented from time to time with the
consent of the Majority Lenders (except for Permitted Amendments).
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"NCOP/NCOG Note" means a promissory note to be issued by
Post-Merger NCOP to the Borrower pursuant to the NCOP/NCOG Credit
Agreement, in form and substance satisfactory to the Majority
Lenders, as the same may be amended, restated, modified and/or
supplemented from time to time with the consent of the Majority
Lenders (except for Permitted Amendments).
"NCOP/NCOG Subordination Agreement" means a subordination
agreement among Post-Merger NCOP and the Administrative Agent
pursuant to which the obligations under the NCOP/NCOG Note shall be
subordinated to the Obligations, as the same may be amended,
restated, modified and/or supplemented from time to time with the
consent of the Majority Lenders.
"Non-Surety Entities" means those Subsidiaries of Post-Merger
NCOP or other entities in which Post-Merger NCOP owns an interest
that are not required to guaranty the Subfacility Loans pursuant to
the Special Suretyship Agreement. Initially, the Non-Surety
Entities are those entities set forth on Schedule 10.1A hereto,
provided, however, Borrower, at the request of Post-Merger NCOP,
may submit additional names of subsidiaries of Post-Merger NCOP,
from time to time, that it wishes to be included on the list of
Non-Surety Entities subject to the limitations thereon provided in
the NCOP/NCOG Credit Agreement. If the Administrative Agent
consents to the inclusion of such entities as Non-Surety Entities
(which consent will be given so long as the applicable designation
is made in conformity with the relevant provisions of the NCOP/NCOG
Credit Agreement and Suretyship Agreement), those additional named
entities shall be added to the list of Non-Surety Entities, and the
Borrower shall deliver to each of the Lenders a revised Schedule
10.1A which will replace the Schedule 10.1A attached hereto.
"Permitted Amendments" means, with respect to the NCOP/NCOG
Credit Agreement or any agreements or instruments entered into in
connection therewith, any amendment that (a) does not increase the
total amount of the NCOP/NCOG Credit Agreement commitment; that
does not decrease the rate of interest or fees payable thereunder;
does not extend the final maturity or any mandatory reduction in
the amount of the facility; does not change the unsecured nature of
the facility; does not change financial covenants; does not permit
additional Indebtedness in an aggregate amount in excess of
$500,000; does not permit additional Liens except to secure the
aforesaid permitted additional indebtedness; does not change the
definition of Excluded Subsidiaries or Non-Surety Entities; does
not change provisions respecting transactions between Post-Merger
NCOP and its Subsidiaries (other than the Non-Surety Entities), on
the one hand, and the Non-Surety Entities, on the other hand; and
does not permit additional acquisitions or dispositions outside of
the ordinary course of business; and (b) is acceptable to the
Administrative Agent in its sole discretion. Any determination made
by the Administrative Agent as to whether an amendment is a
Permitted Amendment is conclusive, absent manifest error.
-14-
"Post-Merger NCOP" means the surviving entity following the
Merger. Post-Merger NCOP will be an Excluded Subsidiary.
"Servicing Agreement" means an agreement between Post-Merger
NCOP and its significant subsidiaries, on the one hand, and the
Borrower and/or NCO Financial Systems, Inc., on the other hand,
providing for the servicing of accounts receivable portfolios by
the Borrower or NCO Financial Systems, Inc., as the case may be, as
such agreement may be amended, restated, supplemented and/or
modified from time to time with the consent of the Administrative
Agent.
"Special Suretyship Agreement" means a suretyship agreement
among Post-Merger NCOP and its Subsidiaries (other than the
Non-Surety Entities) and the Administrative Agent (for the benefit
of the Lenders and other Persons specified therein as beneficiaries
thereof) respecting the Subfacility Loans and certain related
obligations, as such agreement may be amended, restated,
supplemented and/or modified from time to time with the consent of
the Majority Lenders.
"Subfacility Commitment" means, with respect to any Lender, (a)
the obligation of such Lender to make Subfacility Loans in an
amount as set forth opposite such ▇▇▇▇▇▇'s name under the heading
"Subfacility Commitment" on Schedule 1.1 (as such Schedule may be
amended from time to time) hereto or, in the case of a Lender that
becomes a Lender pursuant to an assignment, the amount of the
assignor's Subfacility Commitment assigned to such Lender, in
either case, as the same may be reduced from time to time pursuant
to the terms hereof or increased or reduced from time to time
pursuant to assignments in accordance with Section 11.9 below, or
(b) as the context may require the obligation of such Lender to
make Subfacility Loans in an aggregate unpaid principal amount not
exceeding such amount; and "Subfacility Commitment" means, with
respect to all Lenders, the sum of their individual Subfacility
Commitment.
"Subfacility Maturity Date" means the Maturity Date or any
earlier date on which the Subfacility Commitment is terminated.
"Subfacility Loans" has the meaning ascribed to such term in
Section 1.2.
"Subfacility Reduction Date" has the meaning ascribed to such
term in Section 1.7A.
As to the Non-Surety Entities, it is understood that (a) the NCOP/NCOG Credit
Agreement will limit the amount that Post-Merger NCOP and its subsidiaries
(other than Non-Surety Entities) may invest in Non-Surety Entities and, (b)
except for those limited investment exceptions, Post-Merger NCOP and its
subsidiaries (other than Non-Surety Entities) will be prohibited from
transferring assets to, and commingling assets with, the Non-Surety Entities in
a manner similar to the restrictions set forth in Section 6.19 of the Credit
Agreement for transactions with Excluded Subsidiaries.
-15-
v. Amendment to Certain Definitions. The following definitions set
forth in Section 10.1 of the Current Credit Agreement (Certain Definitions) are
amended in the manner set forth below.
(i) The definition of "Applicable Margin" is amended by
inserting the following paragraph at the end thereof:
"Notwithstanding the foregoing, the Applicable Margin
for Subfacility Loans shall be 1.00% greater than the
Applicable Margin for all other Loans set forth above
until the later of (a) such time as the Subfacility
Commitment is reduced to an amount no greater than
$25,000,000 and (b) the date which is six months after
the Amendment Effective Date."
(ii) The term "NCO Group and its consolidated Subsidiaries"
in the definitions of "Consolidated EBIT", "Consolidated
EBITDA", "Consolidated Fixed Charge Coverage Ratio",
"Consolidated Funded Debt", "Consolidated Interest
Coverage Ratio", "Consolidated Interest Expense",
"Consolidated Net Income", "Consolidated Net Worth", and
"Consolidated Senior Debt" is replaced, in each case,
with the phrase "Adjusted Consolidated NCO Group".
(iii) The definition of "Indebtedness" is amended by adding
the following at the end thereof:
"Notwithstanding the foregoing, for financial covenant
purposes, Indebtedness will not include non-recourse
debt associated with securitized pools of receivables of
Post-Merger NCOP and its Subsidiaries.
(iv) The definition of "RC Commitment" is amended by
replacing the word "Loans" in both clause (a) and clause
(b) thereof with the phrase "RC Loans".
w. Indemnification. Section 11.12 of the Current Credit Agreement
(Indemnification) is amended by inserting the following sentence after the first
sentence thereof:
"Without limiting the generality of the foregoing, the
Indemnification provided for in the preceding sentence shall
include, without limitation, all losses, liabilities, claims,
damages, expenses, obligations, penalties, actions, judgments,
suits, costs or disbursements of any kind or nature whatsoever
arising out of, or any way related to the Subfacility Loans,
the Special Suretyship Agreement, the Additional Subfacility
Security and Pledge Agreement and the NCOP/NCOG Subordination
Agreement."
-16-
x. Expenses. Section 11.13 of the Current Credit Agreement
(Expenses) is amended by adding the following sentence at the end thereof:
"Without limiting the generality of the foregoing, the expense
obligations under this Section 11.13 relate to all expenses
incurred by the Administrative Agent in connection with the
NCOP/NCOG Subordination Agreement, the Additional Subfacility
Security and Pledge Agreement, the Special Suretyship Agreement
and the transactions contemplated thereby, amendments thereto
and enforcement thereof."
y. Sharing of Collections. Section 11.18 of the Current Credit
Agreement (Sharing of Collections) is amended by replacing the word
"Obligations" throughout said Section with the phrase, "Loans and obligations in
respect of Letters of Credit".
z. Notice of Borrowing. Exhibit B to the Current Credit Agreement
(Notice of Borrowing) is amended in its entirety to read as set forth on Exhibit
B hereto.
aa. Notice of Prepayment. Exhibit C to the Current Credit Agreement
(Notice of Prepayment) is amended in its entirety to read as set forth on
Exhibit C hereto.
bb. LIBOR Rate Election. Exhibit D to the Current Credit Agreement
(LIBOR Rate Election) is amended in its entirety to read as set forth on Exhibit
D hereto.
cc. Amended and Restated Security Agreement. Exhibit E to the
Current Credit Agreement (Amended and Restated Security Agreement) is amended in
its entirety to read as set forth on Exhibit E hereto.
dd. Assignment and Acceptance Agreement. Exhibit L to the Current
Credit Agreement (Assignment and Acceptance Agreement) is amended in its
entirety to read as set forth on Exhibit L hereto.
ee. Schedule 1.1. Schedule 1.1 (Commitments of Lenders) to the
Current Credit Agreement is amended in its entirety to read as set forth on
Schedule 1.1 hereto.
ff. Schedule 5.16. Schedule 5.16 (Excluded Subsidiaries) to the
Current Credit Agreement is amended in its entirety to read as set forth on
Schedule 5.16 hereto.
gg. Schedule 10.1. A new Schedule 10.1 (Non-Surety Entities/NCOP
Non-Recourse Debt) in the form attached hereto as Schedule 10.1 is added to the
Current Credit Agreement.
-17-
2. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Lenders as follows:
a. Credit Agreement. Each of the representations and warranties
contained in the Credit Agreement is accurate on and as of the date hereof.
b. No Defaults. As of the date hereof, no Default or Event of
Default exists.
3. CONTINUING EFFECTIVENESS OF CREDIT AGREEMENT AND OTHER LOAN
DOCUMENTS. In the case of the Credit Agreement, subject to the amendments
provided herein and, in the case of other Loan Documents, subject to the
amendments referred to on Annex I hereto, the Credit Agreement and each other
Loan Document remains in full force and effect and is hereby ratified.
4. EFFECTIVENESS. This Amendment shall be effective when each of the
conditions specified on Annex I hereto is satisfied (or, with the consent of the
Administrative Agent, provision is made for such satisfaction promptly after
closing), so long as such conditions are satisfied no later than March 31, 2001.
5. COUNTERPARTS. This Fifth Amendment may be executed in any number of
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one instrument.
[Signatures begin on next page.]
-18-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
NCO GROUP, INC.
By:___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
as President
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
MELLON BANK, N.A.,
for itself and as Administrative Agent
and as Collateral Agent
By:___________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
PNC BANK, NATIONAL ASSOCIATION
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
BANK OF AMERICA, N.A.
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
FIRST UNION NATIONAL BANK
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
SUNTRUST BANK
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
UNION BANK OF CALIFORNIA, N.A.
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
NATIONAL CITY BANK OF PENNSYLVANIA
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
SUMMIT BANK
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
PROVIDENT BANK OF MARYLAND
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
MANUFACTURERS AND TRADERS TRUST
COMPANY
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
FLEET NATIONAL BANK
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
CITIZENS BANK OF MASSACHUSETTS
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
CHEVY CHASE BANK, F.S.B.
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
IBM CREDIT CORPORATION
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
BANK AUSTRIA CREDITANSTALDT
CORPORATE FINANCE, INC.
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
FIRSTAR BANK, N.A.
By:___________________________________
Name:
Title:
[Signature Page to Fifth Amendment
to NCO Credit Agreement and Other Loan Documents]
ANNEX I
CONDITIONS TO EFFECTIVENESS
a. Execution of Amendment. Each of the Requisite Lenders, the Administrative
Agent, the Borrower and the Collateral Agent shall have executed a counterpart
to the preceding Fifth Amendment.
b. Guarantor Acknowledgement and Modification. Each of the Guarantors shall have
executed a counterpart to the Acknowledgement and Modification to Loan
Documents.
c. Special Suretyship Agreement. Post-Merger NCOP, its Subsidiaries (other than
the Non-Surety Entities) and the Administrative Agent shall have duly executed a
Special Suretyship Agreement.
d. NCOP/NCOG Subordination Agreement. The Borrower, in its capacity as a
creditor of Post-Merger NCOP, Post-Merger NCOP and the Collateral Agent shall
have duly executed a NCOP/NCOG Subordination Agreement.
e. Additional Subfacility Security and Pledge Agreement. Post-Merger NCOP, each
of its Subsidiaries (other than the Non-Surety Entities) and the Collateral
Agent shall have duly executed and delivered an Additional Subfacility Security
and Pledge Agreement as to the Additional Subfacility Security, Post-Merger NCOP
and such Subsidiaries shall have delivered such UCC-1 financing statements in
proper form for recording and related documentation as are reasonably
satisfactory to the Collateral Agent.
▇. ▇▇▇▇ Searches. The Borrower shall have delivered lien searches with respect
to Post-Merger NCOP and its subsidiaries, acceptable to the Administrative
Agent.
g. NCOP/NCOG Credit Agreement Documentation. The Borrower shall have delivered a
copy of the executed NCOP/NCOG Note, the NCOP/NCOG Credit Agreement and related
documentation, which shall be in form and substance satisfactory to the Majority
Lenders (their satisfaction to be evidenced by their execution of the Fifth
Amendment).
h. The Merger. The Merger shall have been consummated.
i. Reorganization of Creditrust. A copy of the Plan of Reorganization of
Creditrust, Inc. shall have been delivered to the Lenders. The Plan of
Reorganization shall have been consummated for purposes of the financing,
without prejudice to the rights of Post-Merger NCOP under ss.1127(b) and similar
sections of the Bankruptcy Code and, in connection therewith, the Bankruptcy
Court shall have approved the financing arrangements under the NCOP/NCOG Credit
Agreement.
j. Forms U-1. A Form U-1 for each Lender indicating that the Loans do not
violate Regulation U of the Board of Governors of the Federal Reserve System.
k. Capitalization of Post-Merger NCOP. The capitalization of Post-Merger NCOP
shall be reasonably satisfactory to the Majority Lenders, their execution of the
Fifth Amendment to be evidence of their satisfaction.
l. Delivery of Stock and Note. The Borrower shall have delivered to the
Collateral Agent pursuant to the Security Agreement the original NCOP/NCOG Note
and stock certificate of Post-Merger NCOP held by the Borrower, along with the
related note and stock powers.
m. Incumbency Certificate, Resolutions, Etc. The Borrower shall have delivered
to the Administrative Agent an incumbency certificate as to each of the
Borrower, each Guarantor, Post-Merger NCOP and each of its Subsidiaries (other
than the Non-Surety Entities), resolutions of the governing body of each such
entity and, to the extent not previously delivered, copies of the organizational
documents of each such entity.
n. Good Standing Certificates. The Borrower shall have delivered good standing
certificates issued as of a recent date by the Secretary of State of each
jurisdiction in which the entities referred to in the preceding paragraph (m) is
formed.
o. Servicing Agreement. The Borrower shall have delivered a copy of the
Servicing Agreement.
p. Financial Statements for Creditrust. The Borrower shall have delivered to the
Lenders copies of all available financial statements for Creditrust, Inc. and
projections relating to Post-Merger NCOP for the period commencing on the
Amendment Effective Date and ending on the Maturity Date.
q. No Material Adverse Change. There shall have been no material adverse change
that has occurred and is continuing since delivery of the most recent financial
statements in the business, operations or condition (financial or otherwise) in
the Borrower and Guarantors taken as a whole or in Creditrust, Inc. and its
Subsidiaries, taken as a whole.
r. Disbursement Account. The Disbursement Account shall have been opened.
s. Opinions. The Administrative Agent shall have received (a) an opinion of
counsel to the Borrower and Guarantors as to the Fifth Amendment and the other
documents entered into in connection therewith and (b) an opinion of counsel to
Post-Merger NCOP as to the Additional Subfacility Security and Pledge Agreement,
the NCOP/NCOG Subordination Agreement, the Special Suretyship Agreement and such
other matters as the Administrative Agent shall deem appropriate.
t. No Default; Truth of Representations. There shall exist no Default or Event
of Default under the Current Credit Agreement prior to the Merger and related
transactions and, after giving effect to the Fifth Amendment, after the Merger
and related transactions. The representations and warranties made by the
Obligors in the Loan Documents shall be true and correct in all material
respects prior to the Merger and related transactions and, after giving effect
to the Fifth Amendment, after the Merger and related transactions.
u. Fees. The Borrower shall have paid to each Lender the remaining portion of
the Amendment Fee payable in connection with this Amendment, which fee is equal
to one quarter of one percent (1/4 of 1%) of each Lender's RC Commitment, (half
of which amount was paid at the time that the Third Amendment to Credit
Agreement and Commitment for Subfacility Amendment to Credit Agreement, dated
December 15, 2000, was signed and half of which amount is payable on or before
the Amendment Effective Date).
v. Expenses. The Borrower shall have paid the expenses of the Administrative
Agent, including without limitation, the reasonable fees of its counsel, Drinker
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP.
w. Other Information. The Administrative Agent shall have received such other
documentation and information as it shall reasonably request.
SCHEDULE 1.1
COMMITMENT OF LENDERS
SUBFACILITY
LENDER RC COMMITMENT COMMITMENT %
------ ------------- ----------- ------
Mellon Bank, N.A. $50,000,000 $7,142,885 14.29
Bank of America, N.A. $35,000,000 $5,000,000 10.00
First Union National Bank $35,000,000 $5,000,000 10.00
PNC Bank, N.A. $35,000,000 $5,000,000 10.00
Union Bank of California $25,000,000 $3,571,425 7.14
IBM Credit Corporation $25,000,000 $3,571,425 7.14
SunTrust Bank $25,000,000 $3,571,425 7.14
Bank Austria Creditanstaldt
Corporate Finance, Inc. $20,000,000 $2,857,140 5.71
Fleet National Bank $20,000,000 $2,857,140 5.71
Citizens Bank of
Massachusetts $15,000,000 $2,142,855 4.29
Firstar Bank $15,000,000 $2,142,855 4.29
National City Bank $15,000,000 $2,142,855 4.29
Manufacturers and
Traders Trust Company $10,000,000 $1,428,570 2.86
Provident Bank of Maryland $10,000,000 $1,428,570 2.86
Summit Bank $10,000,000 $1,428,570 2.86
Chevy Chase Bank $5,000,000 $714,285 1.43
TOTAL $350,000,000 $50,000,000 100.00