Exhibit 10.32
Mellon Corporate Financing
Mellon Gateway Center
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000-0000
(000) 000-0000 Office
(000) 000-0000 FAX
xxxxxxxx.xx@xxxxxx.xxx
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Xxxx X. Xxxxxxxx
Vice President
Mellon Bank, N.A.
September 24, 2001
Members of the NCO Bank Group
Re: SEVENTH AMENDMENT to the Fifth Amended and
Restated Credit Agreement, dated as of
December 31, 1999 as previously amended among
NCO Group, Inc. (the "Borrower"), Mellon Bank,
N.A. as Administrative Agent and the Lenders
referred to therein (the "Current Credit
Agreement")
Dear Lenders:
The Borrower has requested an amendment (this "Seventh Amendment") to the
Current Credit Agreement to permit treasury stock purchases.
Due to the recent price instability in the equity markets and the sharp decline
in its stock price (from $30/sh on 7/01/01 to $15/sh on 9/21/01), management at
the Borrower has requested that the bank group amend the Current Credit
Agreement to allow the Borrower to repurchase up to one million shares of its
common stock, subject to a maximum stock repurchase of $15MM, through 3/31/02.
Stock repurchases after 3/31/02 will require a separate approval.
The Borrower has advised the Administrative Agent that at current market prices
(approximately $15/sh) the proposed share repurchase would be at a multiple of
8.5x projected 2001 EPS and approximately 3.5x projected EBITDA.
In connection therewith, the Consolidated Fixed Charge Coverage Ratio(1) would
be amended to reflect the impact of any share repurchases. With the exception of
a change in the Consolidated Fixed Charge Coverage Ratio, there will be no
change in the current financial covenants, including the Consolidated Net Worth
Covenant.
Therefore, the following amendments shall be made to the Current Credit
Agreement:
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(1) The current definition reads as follows: "Consolidated Fixed Charge Coverage
Ratio" for any period, with respect to Adjusted Consolidated NCO Group, shall
mean the ratio of (i) Consolidated EBITDA minus Capital Expenditures for such
period to (ii) the sum for such period of (a) Consolidated Interest Expense, (b)
principal payments on Indebtedness and (c) Taxes, all as determined on a
consolidated basis in accordance with GAAP.
1. Section 6.6 (Dividends and Related Distributions) is amended by adding the
following phrase at the end thereof: "and (c) the Borrower may at any time
and from time to time through March 31, 2002 repurchase up to one million
shares of its common stock in the aggregate ("Share Repurchases") for an
aggregate purchase price not to exceed $15,000,000 so long as no Default
or Event of Default will exist at the time of any Share Repurchase or
result from the Share Xxxxxxxxxx".
0. The definition of "Consolidated Fixed Charge Coverage Ratio" in Section
10.1 (Certain Definitions) is amended in its entirety to read as follows:
"Consolidated Fixed Charge Coverage Ratio" with respect to
Adjusted Consolidated NCO Group, shall mean the ratio,
calculated as of the end of each fiscal quarter for the
12-month period then ended, of (1) Consolidated EBITDA minus
Capital Expenditures minus the amount of Share Repurchases for
such 12-month period to (2) the sum for such 12-month period
of (a) Consolidated Interest Expense, plus (b) scheduled
principal payments on Indebtedness plus (c) Taxes, all as
determined on a consolidated basis in accordance with GAAP.
The preceding amendments will be effective upon receipt by the Administrative
Agent of faxed or original counterpart signature pages from the Borrower and the
Majority Lenders, and acknowledgements by the Guarantors. Subject to the
modifications set forth herein (upon their effectiveness) the Credit Agreement
and each of the other Loan Documents is hereby ratified and confirmed.
Please return the executed signature page for your respective institutions to
the undersigned, via fax at (000) 000-0000, no later than 5:00PM, Tuesday
September 25, 2001.
As always, feel free to call me (000) 000-0000 or e-mail me
(xxxxxxxx.xx@xxxxxx.xxx) with any questions that you may have.
Sincerely,
MELLON BANK, as Administrative Agent, Issuer and Lender
By:____________________
Xxxx X. Xxxxxxxx, Vice President
Mellon Bank, X.X.
Xxxxxx Gateway Center
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000-0000
Agreed to by:
[NAME OF LENDER]
_______________________
Signature: ________________________
By: _____________________________
Title: ____________________________
BORROWER:
NCO GROUP, INC.
By:____________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President
Acknowledged by:
GUARANTORS:
NCO FINANCIAL SYSTEMS, INC.
NCO TELESERVICES, INC.
NCO HOLDINGS, INC.
NCO FUNDING, INC.
FCA FUNDING, INC.
ASSETCARE, INC.
JDR HOLDINGS, INC.
JDR RECOVERY CORPORATION
COMPASS INTERNATIONAL SERVICES CORPORATION
INTERNATIONAL ACCOUNT SYSTEMS, INC.
DELIVERY VERIFICATION SERVICE, INC.
COMPASS TELESERVICES, INC.
NCO BENEFIT SYSTEMS, INC.
By:____________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President of each of the above
entities on behalf of each of the
above entities
FINANCIAL COLLECTION AGENCIES, INC. (PUERTO RICO)
FCA LEASING, INC.
By:____________________________
Name: Xxxxxx Xxxxxxx
Title: Treasurer of each of the above entities
on behalf of each of the above entities
