EXHIBIT 10.9
APAC TELESERVICES, INC.
SECOND AMENDMENT AND WAIVER TO AMENDED AND RESTATED CREDIT AGREEMENT
This Second Amendment and Waiver to Amended and Restated Credit
Agreement (herein, the "AMENDMENT") is entered into as of March 29, 1999,
between APAC TeleServices, Inc., an Illinois corporation (the "BORROWER"), Banks
party to the Credit Agreement (as such term is defined below) and ▇▇▇▇▇▇ Trust
and Savings Bank, as a Bank and in its capacity as agent under the Credit
Agreement (the "AGENT").
PRELIMINARY STATEMENTS
A. The Borrower and the Banks entered into a certain Amended and
Restated Credit Agreement, dated as of September 8, 1998 (as amended, the
"CREDIT AGREEMENT"). All capitalized terms used herein without definition shall
have the same meanings herein as such terms have in the Credit Agreement.
B. The Borrower has requested that the Banks waive the Borrower's
current noncompliance with the Credit Agreement, amend certain covenants, and
make certain other amendments to the Credit Agreement, and the Banks party
hereto are willing to do so under the terms and conditions set forth in this
Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. WAIVERS.
(a) QUARTERLY INTERIM FINANCIALS. The Borrower is currently not in
compliance with Section 8.5(a) of the Credit Agreement by reason of the
Borrower's failure to deliver by no later than February 17, 1999 the financial
reports required under Section 8.5(a) of the Credit Agreement for the Borrower's
fiscal quarter ended on or about January 3, 1999. Such failure to comply with
Section 8.5(a) of the Credit Agreement is hereby waived to the extent, and only
to the extent, such Section required timely delivery by the Borrower of said
quarterly financial reports by February 17, 1999.
(b) ANNUAL PROJECTIONS. The Borrower is currently not in compliance
with Section 8.5(g) of the Credit Agreement by reason of the Borrower's failure
to deliver by no later than October 1, 1998 the annual projections required
under Section 8.5(g) of the Credit Agreement for the Borrower's fiscal year
ended on or about January 2, 2000. Such failure to comply with Section 8.5(g) of
the Credit Agreement is hereby waived to the extent, and only to the extent,
such Section required timely delivery by the Borrower of said annual projections
by October 1, 1998.
(c) TOTAL DEBT RATIO. As of January 3, 1999, the Borrower was not in
compliance with Section 8.22 of the Credit Agreement by reason of the Borrower's
failure to maintain the Total
Debt Ratio at or below the amount specified in such Section. Such failure to
comply with Section 8.22 of the Credit Agreement as of January 3, 1999 is hereby
waived.
(d) NET WORTH. As of January 3, 1999, the Borrower was not in
compliance with Section 8.23 of the Credit Agreement by reason of the Borrower's
failure to maintain the Minimum Required Amount specified in such Section. Such
failure to comply with Section 8.23 of the Credit Agreement as of January 3,
1999 is hereby waived.
(e) FIXED CHARGE COVERAGE. As of January 3, 1999, the Borrower was not
in compliance with Section 8.24 of the Credit Agreement by reason of the
Borrower's failure to maintain the ratio specified in such Section at not less
than 1.50 to 1.0. Such failure to comply with Section 8.24 of the Credit
Agreement as of January 3, 1999 is hereby waived.
(f) MINIMUM EARNINGS. As of January 3, 1999, the Borrower was not in
compliance with Section 8.25 of the Credit Agreement by reason of the Borrower's
failure to maintain its Adjusted EBITDA for the four fiscal quarters of the
Borrower then ending in an amount not less than $65,000,000. Such failure to
comply with Section 8.25 of the Credit Agreement as of January 3, 1999 is hereby
waived.
(g) EFFECTIVENESS. None of the waivers made in this Section 1 shall
become effective unless and until the conditions precedent set forth in Section
4 hereof have been satisfied.
SECTION 2. REVOLVING CREDIT COMMITMENTS.
Upon the execution of this amendment by the Borrower, the Agent and the
Required Banks, the Revolving Credit Commitments shall be divided into
$40,000,000 in Available Revolving Credit Commitments and $35,000,000 in Standby
Revolving Credit Commitments, subject to activation under Section 2.4 of the
Credit Agreement as amended hereby. Accordingly, the amount of each Bank's
Revolving Credit Commitment set forth opposite its name on its signature page to
the Credit Agreement (or on an assignment agreement pursuant to Section 12.12 of
the Credit Agreement, as the case may be) shall be supplemented so as to reflect
such Bank's Available Revolving Credit Commitment and its Standby Revolving
Credit Commitment as follows:
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AMOUNT OF AVAILABLE AMOUNT OF STANDBY
AMOUNT OF REVOLVING REVOLVING CREDIT REVOLVING CREDIT
BANK CREDIT COMMITMENT COMMITMENT COMMITMENT
▇▇▇▇▇▇ Trust and Savings Bank $10,000,000.00 $5,333,333.33 $4,666,666.67
Bank of Montreal $10,000,000.00 $5,333,333.33 $4,666,666.67
Bank of America National Trust and $10,000,000.00 $5,333,333.33 $4,666,666.67
Savings Association
LaSalle National Bank $10,000,000.00 $5,333,333.33 $4,666,666.67
The Northern Trust Company $5,000,000.00 $2,666,666.67 $2,333,333.33
Firstar Bank Milwaukee, N.A. $6,666,666.67 $3,555,555.56 $3,111,111.11
Mercantile Bank National Association $6,666,666.67 $3,555,555.56 $3,111,111.11
The Fuji Bank, Limited $5,000,000.00 $2,666,666.67 $2,333,333.33
The Bank of Nova Scotia $5,000,000.00 $2,666,666.67 $2,333,333.33
U.S. Bank National Association $6,666,666.67 $3,555,555.55 $3,111,111.11
Total $ 75,000,000.00 $ 40,000,000.00 $ 35,000,000.00
============== ============== ==============
SECTION 3. AMENDMENTS
Upon the execution of this Amendment by the Borrower, the Guarantors,
the Agent and the Required Banks, the Credit Agreement shall be and hereby is
amended as follows:
(a) The second sentence of Section 1.1 of the Credit Agreement shall be
amended and restated in its entirety to read as follows:
"The sum of the aggregate principal amount of Revolving Loans,
Swing Loans and L/C Obligations at any time outstanding shall
not exceed the Available Revolving Credit Commitments in
effect at such time."
(b) The first sentence of Section 1.2(a) of the Credit Agreement and
the first sentence of Section 1.8(a) of the Credit Agreement shall in each case
be amended by striking the term "Revolving Credit Commitments" wherever
appearing therein and substituting therefor the term "Available Revolving Credit
Commitments".
(c) Section 1.11(b)(ii) of the Credit Agreement shall be amended and
restated in its entirety to read as follows:
"(ii) If the Borrower or any Subsidiary shall at any time or
from time to time make or agree to make a Disposition or shall
suffer an Event of Loss resulting in Net Cash Proceeds in
excess of $2,000,000 on a cumulative basis in any fiscal year
of the Borrower, then (x) the Borrower shall promptly notify
the Agent of
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such proposed Disposition or Event of Loss (including the
amount of the estimated Net Cash Proceeds to be received by
the Borrower or such Subsidiary in respect thereof) and (y)
promptly upon, and in no event later than the Business Day
after, receipt by the Borrower or the Subsidiary of the Net
Cash Proceeds of such Disposition or Event of Loss, the
Borrower shall prepay the Term Loans in an aggregate amount
equal to 100% of the amount of such excess of the Net Cash
Proceeds over such $2,000,000 cumulative amount; PROVIDED
THAT, in the case of any prepayment required under this
Section 1.11(b)(ii) of a Eurodollar Loan (whether in whole or
in part) and so long as no Event of Default has occurred or is
continuing, (A) the Borrower may defer the making of any such
prepayment which is not in excess of $1,000,000 until the last
day of the Interest Period applicable to such Eurodollar Loan
at the time of such receipt by the Borrower or the Subsidiary
of the Net Cash Proceeds of such Disposition or Event of Loss
and (B) with respect to any such prepayment which is greater
than $1,000,000, (1) in lieu of making such prepayment to the
Agent and so long as the Cash Management Bank is at such time
a Bank under this Agreement, the Borrower may remit to the
Cash Management Bank an amount equal to such required
prepayment, which remittance shall be held by the Cash
Management Bank as an agent of the Agent and the Banks and
subsequently remitted by the Cash Management Bank to the Agent
by no later than the earlier of (x) the first Business Day
immediately following the occurrence of a Default or Event of
Default and (y) 1:00 p.m. (Chicago time) on the last Business
Day of the earliest maturing Interest Period applicable to a
Eurodollar Loan at the time of such receipt by the Borrower or
the Subsidiary of the Net Cash Proceeds of such Disposition or
Event of Loss (the Borrower further agreeing to notify the
Agent in writing of the amount of such remittance to the Agent
specified in (y) above at least 4 Business Days before the
date of such remittance to the Agent), (2) the Agent shall
apply the proceeds of such remittance in reduction of such
Eurodollar Loan and (3) if such Eurodollar Loan so reduced is
a Revolving Loan then the Borrower shall, on the last day of
the immediately succeeding Interest Period applicable to a
Eurodollar Loan which is a Term Loan, be deemed to have
requested a Borrowing of Revolving Loans in an amount equal to
such required prepayment and the proceeds of such Borrowing
shall be applied to reduce such Term Loan. Each such
prepayment of a Term Loan shall be applied to the remaining
installments of the Term Notes in the inverse order of
maturity. The Borrower acknowledges that its performance
hereunder shall not limit the rights and remedies of the Banks
for any breach of Section 8.10 hereof."
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(d) Section 1.14(a) of the Credit Agreement shall be amended and
restated in its entirety to read as follows:
"SECTION 1.14. REVOLVING CREDIT COMMITMENT
TERMINATIONS. (a) OPTIONAL REVOLVING CREDIT TERMINATIONS. The
Borrower shall have the right at any time and from time to
time, upon three (3) Business Days' prior written notice to
the Agent, to terminate the Available or Standby Revolving
Credit Commitments without premium or penalty and in whole or
in part, any partial termination to be (i) in an amount not
less than $10,000,000 and which is an integral multiple of
$5,000,000 and (ii) allocated ratably among the Banks in
proportion to their respective Revolver Percentages, provided
that (x) the Available Revolving Credit Commitments may not be
reduced to an amount less than the sum of the aggregate
principal amount of Revolving Loans, Swing Loans and L/C
Obligations then outstanding, (y) any reduction of the
Available Revolving Credit Commitments to an amount less than
the Swing Line Commitment or L/C Commitment shall
automatically reduce the Swing Line Commitment or L/C
Commitment, as the case may be, to such amount as well and (z)
before any termination of the Available Revolving Credit
Commitments, in part or in whole, all Standby Revolving Credit
Commitments must have been terminated. The Agent shall give
prompt notice to each Bank of any such termination of the
Revolving Credit Commitments."
(e) Section 2.4 of the Credit Agreement shall be amended and restated
in its entirety to read as follows:
"SECTION 2.4. ACTIVATION OF STANDBY REVOLVING CREDIT
COMMITMENTS. On any Business Day prior to the Revolving Credit
Termination Date, the Borrower may, upon five (5) Business
Days' prior written notice to the Agent and upon satisfaction
of the conditions set forth below, activate all or any part
(but if in part, then in a minimum amount of $5,000,000 and in
integral multiples of $5,000,000) of the Standby Revolving
Credit Commitments then in effect. Such portion of the Standby
Revolving Credit Commitments shall thereupon become part of
the Available Revolving Credit Commitments, and the Available
Revolving Credit Commitment of each Bank shall increase by its
Revolver Percentage of the Standby Revolving Credit
Commitments so activated. Any portion of the Standby Revolving
Credit Commitments so activated may not be later inactivated
to again form part of the Standby Revolving Credit
Commitments. Each such activation of the Standby Revolving
Credit Commitments shall be subject to satisfaction of the
following conditions in each
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case as of the date such activation is to be
effective: (i) no Default or Event of Default shall occur or
be continuing, (ii) after giving effect to such activation,
the Available Revolving Credit Commitments do not exceed the
Revolving Credit Commitments, (iii) the Agent shall have
received an acknowledgment of such activation in form and
substance satisfactory to it executed by the Borrower and each
Guarantor, (iv) EBITDA for the then four most recently
completed fiscal quarters of the Borrower is greater than
$75,000,000 (PROVIDED THAT if EBITDA for the then four most
recently completed fiscal quarters of the Borrower is less
than $75,000,000 but greater than $60,000,000, the Borrower
may only request that up to $15,000,000 of the aggregate
Standby Revolving Credit Commitments be activated), (v) the
Agent shall have received the compliance certificate required
by Section 8.5 for the last of such fiscal quarters in the
form of Exhibit F to this Agreement (except that such
certificate shall also contain a statement to the effect that
as of date of such certificate, to the best of the signing
officer's knowledge and belief, there has been no material
adverse change in the condition (financial or otherwise) or
business prospects of the Borrower or any Subsidiary since the
last of such fiscal quarters) and such other evidence as the
Agent shall reasonably require to confirm the EBITDA amount
for such period required by the immediately preceding clause
(iv), and (vi) the Agent and Lenders shall have received the
quarterly interim financial statements required by Section
8.5(a) hereof for the then most recently completed fiscal
quarter of the Borrower (whether or not delivery of such
financial statements are yet due under such Section 8.5(a))."
(f) The following definitions appearing in Section 5.1 of the Credit
Agreement shall be amended and restated in their entirety to read as follows,
and the following definitions not already appearing in such Section 5.1 shall be
added thereto as follows:
"ADJUSTED EBITDA" shall have the same meaning as
EBITDA.
"APPLICABLE MARGIN" means, with respect to Loans,
Reimbursement Obligations, and the Revolving Credit Commitment
fees and letter of credit fees payable under Section 2.1
hereof, from the date of this Agreement through the first
Pricing Date the rate per annum specified below:
Applicable Margin for Revolving Loans
which are Base Rate Loans and
Reimbursement Obligations: 1.000%
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Applicable Margin for Revolving Loans
which are Eurodollar Loans and letter of
credit fee: 2.500%
Applicable Margin for Term Loans which
are Eurodollar Loans 3.000%
Applicable Margin for Term Loans which
are Base Rate Loans 1.500%
Applicable Margin for Revolving Credit
commitment fee: 0.500%
;PROVIDED that, the Applicable Margin (other than the
Applicable Margin for Term Loans, which shall not adjust as
hereinafter set forth) shall be subject to quarterly
adjustments on the first Pricing Date, and thereafter from one
Pricing Date to the next, so that the Applicable Margin means
a rate per annum determined in accordance with the following
schedule:
APPLICABLE
APPLICABLE MARGIN FOR
MARGIN FOR REVOLVING
REVOLVING LOANS WHICH
LOANS WHICH ARE APPLICABLE
ARE BASE RATE EURODOLLAR MARGIN FOR
LOANS AND LOANS AND, REVOLVING
TOTAL DEBT RATIO FOR REIMBURSEMENT LETTER OF CREDIT
SUCH PRICING OBLIGATIONS CREDIT FEE COMMITMENT
DATE SHALL BE: SHALL BE: FEE SHALL BE:
Greater than or equal 0.75% 2.250% 0.50%
to 2.5 to 1.0
Less than 2.5 to 1.0, 0.50% 2.000% 0.40%
but greater than or
equal to 2.0 to 1.0
Less than 2.0 to 1.0, 0.25% 1.750% 0.35%
but greater than or
equal to 1.50 to 1.0
Less than 1.50 to 1.0 0.00% 1.500% 0.30%
For purposes hereof, the term "PRICING DATE" means, for each
fiscal quarter of the Borrower (commencing with the first
fiscal
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quarter ending on or after January 2, 2000 for which the Agent
and Banks have timely received the financial statements and
related compliance certificate (and in the case of the fourth
quarter financial statements, the annual audit report)
required by Section 8.5 hereof if on the date of such receipt,
no Default or Event of Default shall occur or be continuing),
the date on which the Agent is in receipt of the Borrower's
financial statements required for such fiscal quarter (and in
the case of the fourth quarter, the annual audit report
required for the corresponding fiscal year) by Section 8.5(a)
or (d) hereof, as the case may be. The Applicable Margin shall
be established on each Pricing Date based on the Total Debt
Ratio as of the close of the then most recently completed
fiscal quarter and the Applicable Margin established on a
Pricing Date shall remain in effect until such next Pricing
Date. If the Borrower has not delivered its financial
statements by the date such financial statements (and, in the
case of the fourth quarter financial statements, annual audit
report) are required to be delivered under Section 8.5(a) or
(d) hereof, until such financial statements (and, if
appropriate, audit report) are delivered, the Applicable
Margin shall be the highest Applicable Margin (I.E., the Total
Debt Ratio shall be deemed to be greater than 2.5 to 1.0). If
the Borrower subsequently delivers such financial statements
before the next Pricing Date, the Applicable Margin
established by such late delivered financial statements shall
take effect from the date of their delivery until such next
Pricing Date. In all other circumstances, the Applicable
Margin established by such financial statements shall be in
effect from the Pricing Date that occurs immediately after the
end of the Borrower's fiscal quarter covered by such financial
statements until the next Pricing Date. Each determination of
the Applicable Margin made by the Agent in accordance with the
foregoing shall be conclusive and binding on the Borrower and
the Banks if reasonably determined."
"AVAILABLE REVOLVING CREDIT COMMITMENTS" means the
aggregate principal amount of Revolving Loans, Swing Loans and
L/C Obligations at any given time that are permitted to be
outstanding hereunder. Initially, the Available Revolving
Credit Commitments are $40,000,000, subject to increase
pursuant to Section 2.4 hereof and voluntary reduction
pursuant to Section 1.14 hereof.
"CASH MANAGEMENT BANK" means any Bank designated in
writing by the Borrower to the Agent as the principal provider
of cash management services to the Borrower.
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"DISPOSITION" means the sale, lease, conveyance or
other disposition of Property, other than (i) sales or other
dispositions permitted by Section 8.10(e) hereof or to the
extent the Property so sold is promptly replaced by Property
of like type with equal or greater utility and value and (ii)
sales or other dispositions expressly permitted under Section
8.10(a) or 8.10(b) hereof.
"EBITDA" means, with reference to any period, Net
Income for such period plus the sum (without duplication) of
all amounts deducted in arriving at such Net Income amount in
respect of (v) Interest Expense for such period, (w) federal,
state and local income taxes for such period, (x) depreciation
of fixed assets and amortization of intangible assets
(including, without limitation, goodwill, deferred expenses
and organization costs) for such period, (y) up to $1,000,000
of non-cash losses realized on the sale of Paragren and
attributable to the discontinuance of its operations and (z)
the following non-recurring, non-cash charges to the extent
incurred in the Borrower's fiscal quarter ended January 3,
1999: (i) a write-off reflecting a revision for software
impairment aggregating (before taxes) approximately
$1,472,000; (ii) a write-off of impairment of long-lived
assets associated with the ITI Marketing Acquisition
aggregating (before taxes) not more than $69,700,000 and (iii)
up to $10,106,000 of losses realized on the sale of Paragren
and attributable to the discontinuance of its operations.
"PARAGREN" means Paragren Technologies, Inc.
"SECOND AMENDMENT EFFECTIVE DATE" means April 1,
1999.
"STANDBY REVOLVING CREDIT COMMITMENTS" means, as of
the date hereof, $35,000,000, which represents that portion of
the Revolving Credit Commitments initially unavailable for
borrowing but which may become Available Revolving Credit
Commitments pursuant to Section 2.4 hereof and thereafter
$35,000,000 less such amounts, if any, which have become
Available Revolving Credit Commitments pursuant to Section 2.4
hereof or terminated pursuant to Section 1.14 hereof.
(g) (i) The definition of "INDEBTEDNESS FOR BORROWED MONEY" shall be
amended by inserting "(other than trade accounts payable and deferred
compensation arrangements with officers and employees, in each case arising in
the ordinary course of business)" immediately at the end thereof and (ii) the
definition of "PERMITTED SHAREHOLDER REDEMPTIONS" appearing in Section 5.1 of
the Credit Agreement shall be deleted in its entirety (it being understood and
agreed that any Permitted Shareholder Redemptions prior to the Second Amendment
Effective Date shall not be deemed a violation of the Credit Agreement).
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(h) Section 8.5(g) of the Credit Agreement shall be amended by striking
the phrase "within ninety (90) days prior to the end of each fiscal year of the
Borrower" appearing therein and substituting therefor the phrase "within thirty
(30) days prior to the end of each fiscal year the Borrower".
(i) Section 8.5 of the Credit Agreement shall be further amended by
adding the following additional sentence immediately at the end thereof:
"Without limiting the generality of the foregoing,
the Borrower shall furnish to the Agent and the Banks as soon
as available, and in any event within 15 Business Days after
the close of each monthly accounting period of the Borrower, a
copy of (i) an accounts receivable aging report for the
Borrower and its Subsidiaries as of the last day of such
period, (ii) a report of material customer deposits, contras,
prepayments and other material offsets against accounts
receivable of the Borrower and its Subsidiaries as of the last
day of such period, (iii) a computation of EBITDA for the
fiscal year-to-date and (iv) a consolidated statement of
income of the Borrower and its Subsidiaries for the fiscal
month and for the fiscal year-to-date period then ended,
showing in comparative form the figures from the business plan
submitted pursuant to Section 8.5(g) hereof for the
corresponding date and period in such fiscal year, and also
showing (commencing with the income statement for the first
monthly accounting period of the Borrower's fiscal year 2000)
in comparative form the figures for the corresponding date and
period in the previous fiscal year. All of the foregoing
financial information shall be in reasonable detail and
prepared by the Borrower in accordance with sound accounting
practice (not necessarily GAAP) and certified to by the
Borrower's chief financial officer, or another officer of the
Borrower reasonably acceptable to the Agent."
(j) Section 8.7(h) of the Credit Agreement shall be amended and
restated in its entirety to read as follows:
"(h) unsecured Subordinated Debt not otherwise
permitted by this Section provided the Net Cash Proceeds of
such Subordinated Debt are applied in reduction of the Term
Notes as would be required by Section 1.11(b)(iv) in the case
of any private placement or public offering of debt securities
by the Borrower."
(k) Section 8.9 of the Credit Agreement shall be amended by adding the
following sentence immediately at the end thereof:
"Notwithstanding anything in this Section to the
contrary, after March 31, 1999, the Borrower shall not, nor
shall it permit
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any Subsidiary to, make any Acquisition (it being understood
and agreed that (i) the mere formation of a new Subsidiary in
compliance with Section 8.17 hereof and (ii) the mere change
in name of the Borrower or any Subsidiary do not constitute an
Acquisition)."
(l) Section 8.10 of the Credit Agreement shall be amended by inserting
the following sentence immediately at the end thereof:
"Notwithstanding anything in this Section to the
contrary, after March 31, 1999, the Borrower shall not, nor
shall it permit any Subsidiary to, be a party to any merger or
consolidation to effect any Acquisition (it being understood
and agreed that (i) the mere formation of a new Subsidiary in
compliance with Section 8.17 hereof and (ii) the mere change
in name of the Borrower or any Subsidiary do not constitute an
Acquisition)."
(m) Section 8.11 of the Credit Agreement shall be amended by inserting
the following sentence immediately at the end thereof:
"Notwithstanding anything in this Section or Section
8.10 above to the contrary, this Section shall neither apply
to, nor operate to prevent, the Borrower from selling its
capital stock in Paragren and such Section 8.10 shall neither
apply to, nor operate to prevent, Paragren from selling its
assets, if (i) such stock or asset sale is in a bona fide
transaction at arm's length to a party which is not an
Affiliate of the Borrower for a consideration which the Board
of Directors of the Borrower in good faith has deemed
adequate, (ii) the proceeds of such sale are applied in
reduction of the Term Notes as required by Section 1.11(b)(ii)
hereof and (iii) at the time of such sale and immediately
after giving effect thereto, no Default or Event of Default
shall occur or be continuing."
(n) Section 8.12 of the Credit Agreement shall be amended and restated
in its entirety to read as follows:
"SECTION 8.12. DIVIDENDS AND CERTAIN OTHER RESTRICTED
PAYMENT. The Borrower shall not, nor shall it permit any
Subsidiary to, (i) declare or pay any dividends on or make any
other distributions in respect of any class or series of its
capital stock (other than dividends payable solely in its
capital stock) or (ii) directly or indirectly purchase, redeem
or otherwise acquire or retire any of its capital stock or
(iii) prepay any Indebtedness for Borrowed Money aggregating
in excess of $500,000 (other than the prepayment of the Loans
and L/C Obligations in accordance with Section 1.11 hereof);
PROVIDED, HOWEVER, that the foregoing
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shall not apply to nor operate to prevent (i) redemptions by
the Borrower of its common capital stock (collectively,
"SHAREHOLDER REDEMPTIONS" and individually a "SHAREHOLDER
REDEMPTION") if (x) the Agent and Banks have received the
audit report and accompanying financial statements and
compliance certificate required by Section 8.5 hereof for the
Borrower's fiscal year ending on or about January 3, 2000 and
(y) at the time each such Shareholder Redemption is made and
immediately after giving effect thereto, (1) the aggregate
amount of Shareholder Redemptions made in each fiscal year
does not exceed $5,000,000 for such year, (2) the aggregate
amount of all Shareholder Redemptions made on and after
January 1, 1999, on a cumulative basis, does not exceed
$10,0000,000 and (z) no Default or Event of Default shall
occur or be continuing and (ii) dividends paid to the Borrower
by Wholly-owned Subsidiaries of the Borrower."
(o) Sections 8.22, 8.23, 8.24 and 8.25 of the Credit Agreement shall
each be amended and restated in their entirety to read as follows:
"SECTION 8.22. TOTAL DEBT RATIO. As of the last day
of each fiscal quarter of the Borrower ending on or about one
of the periods specified below, the Borrower shall not permit
the Total Debt Ratio as of the last day of such fiscal quarter
to be greater than or equal to the amount set forth below:
TOTAL DEBT RATIO SHALL
NOT BE GREATER THAN OR
FROM AND INCLUDING TO AND INCLUDING EQUAL TO
10/1/1999 6/30/2000 2.75 to 1.0
7/1/2000 6/30/2001 2.50 to 1.0
7/1/2001 6/30/2002 2.25 to 1.0
7/1/2002 6/30/2003 2.00 to 1.0
SECTION 8.23. NET WORTH. The Borrower shall, as of
the last day of each fiscal quarter of the Borrower, maintain
Net Worth of not less than the Minimum Required Amount. For
purposes hereof, the term "MINIMUM REQUIRED AMOUNT" shall mean
$35,000,000 through April 4, 1999 and shall increase (but
never decrease) as of April 5, 1999 and as of the last day of
each fiscal quarter of the Borrower thereafter by an amount
(if positive) equal to 80% of Net Income for the fiscal
quarter then ended.
SECTION 8.24. FIXED CHARGE COVERAGE RATIO. As of the
last day of each fiscal quarter of the Borrower, commencing
with
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the fiscal quarter of the Borrower ending on January 3, 2000,
the Borrower shall maintain a ratio of (a) EBITDA for the four
fiscal quarters of the Borrower then ended less Capital
Expenditures incurred during such period to (b) Fixed Charges
for the same four fiscal quarter period then ended, of not
less than 1.50 to 1.0.
SECTION 8.25. MINIMUM EBITDA. (a) QUARTERLY EBITDA.
As of the last day of each fiscal quarter of the Borrower
occurring during one of the periods below, the Borrower shall
maintain EBITDA for the respective period then ended at not
less than the amount set forth below:
FROM AND TO AND EBITDA SHALL
INCLUDING INCLUDING NOT BE LESS THAN
1/4/1999 4/4/1999 $ 6,000,000
1/4/1999 7/4/1999 $18,500,000
1/4/1999 10/3/1999 $33,500,000
1/4/1999 1/2/2000 $51,000,000
(b) ANNUAL EBITDA. As of the last day of each fiscal
quarter the Borrower (commencing with the fiscal quarter
ending on or about March 31, 2000), the Borrower shall
maintain EBITDA for the four fiscal quarters then ended at not
less than $62,500,000."
(p) Section 8 of the Credit Agreement shall be amended by adding new
Sections 8.28 and 8.29 thereto which shall be stated to read as follows:
"SECTION 8.28. CAPITAL EXPENDITURES. The Borrower
shall not permit Capital Expenditures for the Borrower and its
Subsidiaries (taken together) to exceed $15,000,000 during any
calendar year.
SECTION 8.29. COLLATERAL. By no later than June 1,
1999, the Borrower will, and will cause each Material
Subsidiary to, execute and deliver such instruments and do
such acts as may be requested by the Agent for the purpose of
mortgaging, pledging, assigning or otherwise encumbering in
favor of the Agent any Property of the Borrower or any
Subsidiary requested by the Agent, as collateral security for
the Obligations and the Hedging Liability. Such collateral
shall be granted under such documentation (including opinions
of counsel) and on such terms as are acceptable to the Agent;
PROVIDED, HOWEVER, that (i) until an Event of Default has
occurred and is continuing and thereafter until otherwise
required by the Required Banks or the Agent, Liens need
-13-
not be attached or perfected on (x) leasehold improvements,
office furniture and equipment, workstation, personal
computers, terminals and related peripheral equipment,
computer networking equipment and telecommunications equipment
(other than predictive dialers and related switches) and (y)
other equipment of the Borrower and each Material Subsidiary
thereof having a fair market value of less than $250,000 in
the aggregate and (ii) Liens need not be attached or perfected
on Property owned by the Borrower or any Material Subsidiary
which is subject to a Lien permitted under this Agreement in
favor of any third party (other than the Borrower or any of
its Affiliates) to the extent the granting of a security
interest or lien therein is prohibited by the agreement(s)
pursuant to which such Lien was created and such prohibition
has not been or is not waived or the consent of the applicable
party has not been or is not obtained."
(q) Sections 6.5, 6.6 and 6.20 of the Credit Agreement shall each be
amended and restated in their entirety to read as follows:
"SECTION 6.5. FINANCIAL REPORTS. The consolidated
balance sheet of the Borrower and its Subsidiaries as at
January 3, 1999, and the related consolidated statements of
income, retained earnings and cash flows of the Borrower and
its Subsidiaries for the fiscal year then ended, and
accompanying notes thereto, heretofore furnished to the Banks,
fairly present in all material respects the consolidated
financial condition of the Borrower and its Subsidiaries as at
said date and the consolidated results of their operations and
cash flows for the periods then ended in conformity with GAAP
applied on a consistent basis. Neither the Borrower nor any
Subsidiary has contingent liabilities which are material to it
other than as indicated on such financial statements or, with
respect to future periods, on the financial statements
furnished pursuant to Section 8.5 hereof.
SECTION 6.6. NO MATERIAL ADVERSE CHANGE. Since
January 3, 1999, there has been no change in the condition
(financial or otherwise) or business prospects of the Borrower
or any Subsidiary, none of which individually or in the
aggregate have been materially adverse.
SECTION 6.20. INTENTIONALLY DELETED."
(r) Exhibit G to the Credit Agreement shall be amended and restated in
its entirety to read as set forth on Annex I hereto.
-14-
SECTION 4. CONDITIONS PRECEDENT.
The waivers contemplated under Section 1 hereof shall not become
effective unless and until all of the following conditions have been satisfied:
(a) The Borrower, the Guarantors, the Agent and the Required
Banks shall have executed and delivered this Amendment.
(b) The Agent shall have received (i) the financial reports
required under Section 8.5(a) for the period ending January 3, 1999 and
(ii) the financial reports required under Section 8.5(d) for the same
period except that such reports need not be accompanied by an opinion
from a firm of independent public accountants.
(c) The Agent shall have received copies executed or
certified (as may be appropriate) of all legal documents or proceedings
taken in connection with the execution and delivery hereof and the
other instruments and documents contemplated hereby;
(d) All legal matters incident to the execution and delivery
hereby and of the other instruments and documents contemplated hereby
shall be satisfactory to the Required Banks, the Agent and their
respective counsel.
SECTION 5. REPRESENTATIONS.
In order to induce the Required Banks to execute and deliver this
Amendment, the Borrower hereby represents to each Bank that as of the date
hereof, after giving effect to this Amendment, the representations and
warranties set forth in Section 6 of the Credit Agreement are and shall be and
remain true and correct (except that the representations contained in Section
6.5 shall be deemed to refer to the financial statements of the Borrower
delivered to the Agent pursuant to Section 4(b) hereof) and, after giving effect
to this Amendment, (i) the Borrower is in full compliance with all of the terms
and conditions of the Credit Agreement and (ii) no Default or Event of Default
has occurred and is continuing under the Credit Agreement.
SECTION 6. MISCELLANEOUS.
(a) The Borrower has heretofore executed and delivered to the Agent and
the Banks certain Collateral Documents and the Borrower hereby acknowledges and
agrees that, notwithstanding the execution and delivery of this Amendment, the
Collateral Documents remain in full force and effect and the rights and remedies
of the Agent and the Banks thereunder, the obligations of the Borrower
thereunder and the liens and security interests created and provided for
thereunder remain in full force and effect and shall not be affected, impaired
or discharged hereby. Nothing herein contained shall in any manner affect or
impair the priority of the liens and security interests created and provided for
by the Collateral Documents as to the indebtedness which would be secured
thereby prior to giving effect to this Amendment.
-15-
(b) Except as specifically amended herein or waived hereby, the Credit
Agreement shall continue in full force and effect in accordance with its
original terms. Reference to this specific Amendment need not be made in the
Credit Agreement, the Notes, or any other instrument or document executed in
connection therewith, or in any certificate, letter or communication issued or
made pursuant to or with respect to the Credit Agreement, any reference in any
of such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.
(c) By executing this Amendment in the place provided for that purpose
below, each Guarantor hereby consents to the Amendment to the Credit Agreement
as set forth herein and confirms that its obligations under its Guaranty remain
in full force and effect. Each Guarantor further agrees that the consent of such
Guarantor to any further amendments to the Credit Agreement shall not be
required as a result of this consent having been obtained.
(d) The Borrower agrees to pay on demand all reasonable costs and
expenses of or incurred by the Agent in connection with the negotiation,
preparation, execution and delivery of this Amendment.
(e) This Amendment may be executed in any number of counterparts, and
by the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
[SIGNATURE PAGES TO FOLLOW]
-16-
Dated as of March 29, 1999.
APAC TELESERVICES, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Accepted and agreed to as of the date and year last above written.
▇▇▇▇▇▇ TRUST AND SAVINGS BANK, in its
individual capacity as a Bank and as Agent
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
BANK OF MONTREAL, in its individual capacity
as a Bank and as Syndication Agent
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-▇▇-
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
LASALLE NATIONAL BANK
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
THE NORTHERN TRUST COMPANY
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
FIRSTAR BANK MILWAUKEE, N.A.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
MERCANTILE BANK NATIONAL ASSOCIATION
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
THE FUJI BANK, LIMITED
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
THE BANK OF NOVA SCOTIA
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
U.S. BANK NATIONAL ASSOCIATION
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
-18-
GUARANTORS' CONSENT
The undersigned have heretofore executed and delivered to the
Guaranteed Creditors (as defined in the Guaranty) a Guaranty Agreement dated May
20, 1998 (the "GUARANTY") and hereby consent to the Amendment to the Credit
Agreement as set forth above and confirms that their Guaranty and all of the
undersigned's obligations thereunder remain in full force and effect. The
undersigned further agree that the consent of the undersigned to any further
amendments to the Credit Agreement shall not be required as a result of this
consent having been obtained, except to the extent, if any, required by the
Guaranty referred to above.
PARAGREN TECHNOLOGIES, INC.
By
Name
--------------------------------------
Title
-------------------------------------
APAC TELESERVICES OF TEXAS, L.P.
By: APAC TELESERVICES GENERAL
PARTNER, INC., its General Partner
By
--------------------------------------
Name
----------------------------------
Title
---------------------------------
APAC TELESERVICES GENERAL PARTNER,
INC.
By
Name
--------------------------------------
Title
-------------------------------------
ITI HOLDINGS, INC.
By
Name
--------------------------------------
Title
-------------------------------------
-19-
ITI MARKETING SERVICES, INC.
By
Name
--------------------------------------
Title
-------------------------------------
APAC TELESERVICES, L.L.C.
By: APAC TELESERVICES, INC., its Manager
By
--------------------------------------
Name
------------------------------------
Title
-----------------------------------
-20-
ANNEX I
EXHIBIT G
COMPLIANCE CERTIFICATE FOR
APAC TELESERVICES, INC.
This Compliance Certificate is furnished to ▇▇▇▇▇▇ Trust and Savings
Bank, as Agent (the "AGENT") pursuant to that certain Amended and Restated
Credit Agreement dated as of September 8, 1998, among APAC TeleServices, Inc.
(the "BORROWER"), ▇▇▇▇▇▇ Trust and Savings Bank, as Agent, and the Banks party
thereto (as amended, the "CREDIT AGREEMENT"). Unless otherwise defined herein,
the terms used in this Compliance Certificate have the meanings ascribed thereto
in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _____________________________________
of the Borrower;
2. I have reviewed the terms of the Credit Agreement and I
have made, or have caused to be made under my supervision, a detailed
review of the transactions and conditions of the Borrower and its
Subsidiaries during the accounting period covered by the attached
financial statements;
3. The examinations described in paragraph 2 did not disclose,
and I have no knowledge of, the existence of any condition or the
occurrence of any event which constitutes a Default or Event of Default
during or at the end of the accounting period covered by the attached
financial statements or as of the date of this Certificate, except as
set forth below; and
4. The Attachment hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain
covenants of the Credit Agreement, all of which data and computations
are, to the best of my knowledge, true, complete and correct and have
been made in accordance with the relevant Sections of the Credit
Agreement.
Described below are the exceptions, if any, to paragraph 3 by listing,
in detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
The foregoing certifications, together with the computations set forth
in the Attachment hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _________ day of
__________________ 19___.
APAC TELESERVICES, INC.
By
-------------------------------------------
-------------------------,-----------------
(Name) (Title)
-2-
ATTACHMENT TO COMPLIANCE CERTIFICATE
FOR
APAC TELESERVICES, INC.
Compliance Calculations for Amended and Restated Credit Agreement
Dated as of September 8, 1998
Calculations as of _____________, 19___
-------------------------------------------------------------------------------
A. TOTAL DEBT RATIO (SECTION 8.22 OF THE AGREEMENT)
1. Total Funded Debt (as defined) $_______________
A1
2. Net Income (as defined) for the four fiscal quarters $_______________
then ended A2
3. Interest Expense (as defined) for the same period $_______________
A3
4. Federal, state and local income taxes for the same $_______________
period A4
5. Deprecation of fixed assets for the same period $_______________
A5
6. Amortization for the same period $_______________
A6
7. Add Lines A2-A6 (EBITDA) $_______________
A7
8. Ratio of Line A1 to A7 _____ : 1.0
9. Line A8 Ratio must be less than or equal to:
Total Debt Ratio Shall
From and Including To and Including Not Be Greater Than:
------------------ ---------------- -------------------
10/1/1999 6/30/2000 2.75 to 1.0
7/1/2000 6/30/2001 2.50 to 1.0
7/1/2001 6/30/2002 2.25 to 1.0
7/1/2002 6/30/2003 2.00 to 1.0
10. Is Borrower in Compliance? (Circle Yes or No) Yes / No
B. NET WORTH (SECTION 8.23 OF THE AGREEMENT)
1. Shareholders' Equity $____________
minus
(i) Notes from Officers and Employees ($__________)
(ii) Write-up of Assets
($__________)
Net Worth
$___________
B1
2. Net Income (Line A2) $___________
B2
3. Line B2 x .80 $___________
B3
4. Add Line B3 + $35,000,000 $___________
B4
5. Line B1 must be greater than or equal to Line B4
6. Is Borrower in Compliance? (Circle Yes or No) Yes / No
C. FIXED CHARGE COVERAGE RATIO (SECTION 8.24 OF THE AGREEMENT)
1. EBITDA (Line A7) $_______________
C1
2. Capital Expenditures (as defined) for the same period $_______________
C2
3. Subtract Line C2 from C1 $_______________
C3
4. Principal payments due in the next 12 months $_______________
C4
5. Annualized Interest Expense (as defined) for the same period $_______________
C5
6. Add Lines C4+C5 $_______________
C6
-2-
7. Ratio of Line C3 to Line C6 _____ : 1.0
8. Line C7 ratio must be greater than or equal to: 1.50 : 1.0
9. Is Borrower in Compliance? (Circle Yes or No) Yes/No
D. EBITDA (SECTION 8.25 OF THE AGREEMENT)
1. EBITDA (Line A7) $__________
D1
2. Line D1 must be greater than or equal to:
EBITDA Shall
From and Including To and Including Relevant Period Not Be Less Than:
------------------ ---------------- --------------- -----------------
1/4/1999 4/4/1999 One Quarter $ 6,000,000
1/4/1999 7/4/1999 Two Quarters $18,500,000
1/4/1999 10/1/1999 Three Quarters $33,500,000
1/4/1999 1/2/2000 Four Quarters $51,000,000
1/3/2000 6/30/2003 Four Quarter Roll $62,500,000
3. Is Borrower in Compliance? (Circle Yes or No) Yes / No
E. CAPITAL EXPENDITURES (SECTION 8.28 OF THE AGREEMENT)
1. Capital Expenditures (as defined) for fiscal year-to-date $__________
E1
2. Line E1 must not exceed: $15,000,000
3. Is Borrower in Compliance? (Circle Yes or No) Yes / No
-3-
