EXHIBIT 10.88
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as of
June 1, 2007, by and between STARTEK, INC. a Delaware corporation and STARTEK
USA, INC., a Colorado corporation (individually and collectively, “Borrower”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).
RECITALS
WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and
conditions of that certain Credit Agreement between Borrower and Bank dated as
of June 30, 2003, as amended from time to time (“Credit Agreement”).
WHEREAS, Bank and Borrower have agreed to certain changes in the terms and
conditions set forth in the Credit Agreement and have agreed to amend the Credit
Agreement to reflect said changes.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree that the Credit Agreement
shall be amended as follows:
1. Section 1.1(a) is hereby amended by deleting “June 30, 2007” as the last day
on which Bank will make advances under the Line of Credit, and by substituting
for said date “June 30, 2009,” with such change to be effective upon the
execution and delivery to Bank of a promissory note dated as of June 1, 2007
(which promissory note shall replace and be deemed the Line of Credit Note
defined in and made pursuant to the Credit Agreement) and all other contracts,
instruments and documents required by Bank to evidence such change.
2. Section 4.8 is hereby deleted in its entirety, and the following substituted
therefor:
” SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower with a claim in excess of
$3,000,000.00.”
3. Section 4.9 (a) and (b) is hereby deleted in its entirety, and the following
substituted therefor:
"(a) Tangible Net Worth measured at the end of each fiscal year, with “Tangible
Net Worth” defined as the aggregate of total stockholders’ equity plus
subordinated debt less any intangible assets, not at any time less than
$95,000,000.00 through December 31, 2006 and shall increase (but never decrease)
at each subsequent fiscal quarter end by an amount equal to 25% of net income
(but only if positive) for each fiscal quarter then ended.
(b) Borrower will generate minimum net profit after taxes not less than $1.00 on
a rolling four-quarter basis, determined as of each fiscal quarter end. Borrower
will not generate a net loss in two consecutive quarters. For the purposes of
the foregoing two covenants described in 4.9 (b), in calculating net profit
after taxes, and determining whether a net loss was generated, Borrower may add
back up to $5,000,000 in non-recurring non-cash charges and up to $5,000,000 in
non-recurring cash charges incurred by Borrower during the fiscal year ending
December 31, 2007. Borrower will not generate a net loss for the single fiscal
quarter ending March 31, 2008

 

 

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4. The following is hereby added to the Credit Agreement as Section 4.11:
“4.11. LIQUIDITY. Borrower shall maintain unencumbered liquid assets (defined as
cash, cash equivalents and/or publicly traded/quoted marketable securities
acceptable to Bank in its sole discretion) with an aggregate fair market value
not at any time less than Ten Million Dollars ($10,000,000.00) determined at
each fiscal quarter end.”
5. Section 6.1 is hereby deleted in its entirety, and the following substituted
therefor:
“SECTION 6.1. The occurrence of any of the following shall constitute an “Event
of Default” under this Agreement:
(a) Borrower shall fail to pay when due any principal, interest, fees or other
amounts payable under any of the Loan Documents.
(b) Any financial statement or certificate furnished to Bank in connection with,
or any representation or warranty made by Borrower or any other party under this
Agreement or any other Loan Document shall prove to be incorrect, false or
misleading in any material respect when furnished or made.
(c) Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein or in any other Loan Document
(other than those referred to in subsections (a) and (b) above), and with
respect to any such default which by its nature can be cured, such default shall
continue for a period of twenty (20) days from its occurrence.
(d) Any default in the payment or performance of any obligation, or any defined
event of default, under the terms of any contract or instrument (other than any
of the Loan Documents) pursuant to which Borrower, StarTek USA, Inc., StarTek
Canada Services, Ltd. (collectively, the “StarTek Affiliates”), has incurred any
debt or other liability to any person or entity, including Bank.
(e) The filing of a notice of judgment lien against Borrower; or the recording
of any abstract of judgment against Borrower in any country in which Borrower
has an interest in real property; or the service of a notice of levy and/or writ
of attachment or execution, or other like process, against the assets of
Borrower; or the entry of a judgment against Borrower; provided, however, that
this Section 6.1(e) shall apply if and only if satisfaction of such judgment
lien, abstract of judgment, levy, writ, other like process, or judgment would
have a material adverse effect on the financial condition or operation of
Borrower.
(f) Borrower shall become insolvent, or shall suffer or consent to or apply for
the appointment of a receiver, trustee, custodian or liquidator of itself or any
of its property, or shall generally fail to pay its debts as they become due, or
shall make a general assignment for the benefit of creditors; Borrower shall
file a voluntary petition in bankruptcy, or seeking reorganization, in order to
effect a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time (“Bankruptcy Code”), or under any state or federal
law granting relief to debtors, whether now or hereafter in effect; or any
involuntary petition or proceeding pursuant to the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors is filed or commenced against Borrower, or Borrower shall
file an answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition; or Borrower shall be adjudicated a
bankrupt, or an order for relief shall be entered against Borrower by any court
of competent jurisdiction under the Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or other relief for
debtors.

 

 

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(g) There shall exist or occur any event or condition which Bank in good faith
believes impairs, or is substantially likely to impair, the prospect of payment
or performance by Borrower of its obligations under any of the Loan Documents.
(h) The dissolution or liquidation of Borrower or any of its directors,
stockholders or members, shall take action seeking to effect the dissolution or
liquidation of Borrower.”
6. Except as specifically provided herein, all terms and conditions of the
Credit Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Credit Agreement shall have the same
meaning when used in this Amendment. This Amendment and the Credit Agreement
shall be read together, as one document.
7. Borrower hereby remakes all representations and warranties contained in the
Credit Agreement and reaffirms all covenants set forth therein, all as of the
date hereof (e.g., reference in Section 2.4 of the Credit Agreement to “the date
hereof” is deemed to refer to the date of this Amendment instead of the date of
the Credit Agreement). Borrower further certifies that as of the date of this
Amendment there exists no Event of Default as defined in the Credit Agreement,
nor any condition, act or event which with the giving of notice or the passage
of time or both would constitute any such Event of Default.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the day and year first written above.

 
STARTEK, INC.

By:   /s/ A L Jones
 
A. Laurence Jones (Larry),
President/Chief Executive Officer

By:   /s/ Sylvia A. Church
 
Sylvia A. Church,
Vice President, Controller

STARTEK USA, INC.

By:   /s/ A L Jones
 
A. Laurence Jones (Larry)
President/Chief Executive Officer

By:   /s/ Sylvia A. Church
 
Sylvia A. Church
Vice President/Controller

WELLS FARGO BANK,
NATIONAL ASSOCIATION

By:   /s/ Wendee Crowley
 
Wendee Crowley, Vice President

 

 

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      WELLS FARGO   REVOLVING LINE OF CREDIT NOTE       $10,000,000.00   Denver,
Colorado     June 1, 2007

FOR VALUE RECEIVED, the undersigned STARTEK, INC. and STARTEK USA, INC.
(“Borrower”) promises to pay to the order of WELLS FARGO BANK, NATIONAL
ASSOCIATION (“Bank”) at its office at Colorado RCBO, 1700 Lincoln Street, 8th
Floor, Denver, Colorado 80203, or at such other place as the holder hereof may
designate, in lawful money of the United States of America and in immediately
available funds, the principal sum of $10,000,000.00, or so much thereof as may
be advanced and be outstanding, with interest thereon, to be computed on each
advance from the date of its disbursement as set forth herein.
1. DEFINITIONS:
As used herein, the following terms shall have the meanings set forth after
each, and any other term defined in this Note shall have the meaning set forth
at the place defined:
1.1 “Business Day” means any day except a Saturday, Sunday or any other day on
which commercial banks in Colorado are authorized or required by law to close.
1.2 “Fixed Rate Term” means a period commencing on a Business Day and continuing
for 1, 2 or 3 months, as designated by Borrower, during which all or a portion
of the outstanding principal balance of this Note bears interest determined in
relation to LIBOR; provided however, that no Fixed Rate Term may be selected for
a principal amount less than $100,0000.00; and provided further, that no Fixed
Rate Term shall extend beyond the scheduled maturity date hereof. If any Fixed
Rate Term would end on a day which is not a Business Day, then such Fixed Rate
Term shall be extended to the next succeeding Business Day.
1.3 “LIBOR” means the rate per annum (rounded upward, if necessary, to the
nearest whole 1/8 of 1%) determined by dividing Base LIBOR by a percentage equal
to 100% less any LIBOR Reserve Percentage.
(a) “Base LIBOR” means the rate per annum for United States dollar deposits
quoted by Bank as the Inter-Bank Market Offered Rate, with the understanding
that such rate is quoted by Bank for the purpose of calculating effective rates
of interest for loans making reference thereto, on the first day of a Fixed Rate
Term for delivery of funds on said date for a period of time approximately equal
to the number of days in such Fixed Rate Term and in an amount approximately
equal to the principal amount to which such Fixed Rate Term applies. Borrower
understands and agrees that Bank may base its quotation of the Inter-Bank Market
Offered Rate upon such offers or other market indicators of the Inter-Bank
Market as Bank in its discretion deems appropriate including, but not limited
to, the rate offered for U.S. dollar deposits on the London Inter-Bank Market.
(b) “LIBOR Reserve Percentage” means the reserve percentage prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
“Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable Fixed Rate Term.
1.4 “Prime Rate” means at any time the rate of interest most recently announced
within Bank at its principal office as its Prime Rate, with the understanding
that the Prime Rate is one of Bank’s base rates and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.

 

 

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2. INTEREST:
2.1 Interest. The outstanding principal balance of this Note shall bear interest
(computed on the basis of a 360-day year, actual days elapsed) either (a) at a
fluctuating rate per annum 1.00000% below the Prime Rate in effect from time to
time, or (b) at a fixed rate per annum determined by Bank to be 1.500000% above
LIBOR in effect on the first day of the applicable Fixed Rate Term. When
interest is determined in relation to the Prime Rate, each change in the rate of
interest hereunder shall become effective on the date each Prime Rate change is
announced within Bank. With respect to each LIBOR selection hereunder, Bank is
hereby authorized to note the date, principal amount, interest rate and Fixed
Rate Term applicable thereto and any payments made thereon on Bank’s books and
records (either manually or by electronic entry) and/or on any schedule attached
to this Note, which notations shall be prima facie evidence of the accuracy of
the information noted.
2.2 Selection of Interest Rate Options. At any time any portion of this Note
bears interest determined in relation to LIBOR, it may be continued by Borrower
at the end of the Fixed Rate Term applicable thereto so that all or a portion
thereof bears interest determined in relation to the Prime Rate or to LIBOR for
a new Fixed Rate Term designated by Borrower. At any time any portion of this
Note bears interest determined in relation to the Prime Rate, Borrower may
convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower. At such time as
Borrower requests an advance hereunder or wishes to select a LIBOR option for
all or a portion of the outstanding principal balance hereof, and at the end of
each Fixed Rate Term, Borrower shall give Bank notice specifying: (a) the
interest rate option selected by Borrower; (b) the principal amount subject
thereto; and (c) for each LIBOR selection, the length of the applicable Fixed
Rate Term. Any such notice may be given by telephone (or such other electronic
method as Bank may permit) so long as, with respect to each LIBOR selection,
(i) if requested by Bank, Borrower provides to Bank written confirmation thereof
not later than 3 Business Days after such notice is given, and (ii) such notice
is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate Term, or
at a later time during any Business Day if Bank, at its sole option but without
obligation to do so, accepts Borrower’s notice and quotes a fixed rate to
Borrower. If Borrower does not immediately accept a fixed rate when quoted by
Bank, the quoted rate shall expire and any subsequent LIBOR request from
Borrower shall be subject to a redetermination by Bank of the applicable fixed
rate. If no specific designation of interest is made at the time any advance is
requested hereunder or at the end of any Fixed Rate Term, Borrower shall be
deemed to have made a Prime Rate interest selection for such advance or the
principal amount to which such Fixed Rate Term applied.
2.3 Taxes and Regulatory Costs. Borrower shall pay to Bank immediately upon
demand, in addition to any other amounts due or to become due hereunder, any and
all (a) withholdings, interest equalization taxes, stamp taxes or other taxes
(except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any manner to LIBOR, and (b) future,
supplemental, emergency or other changes in the LIBOR Reserve Percentage,
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are
not included in the calculation of LIBOR. In determining which of the foregoing
are attributable to any LIBOR option available to Borrower hereunder, any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.
2.4 Payment of Interest. Interest accrued on this Note shall be payable on the
last day of each month, commencing June 30, 2007.
2.5 Default Interest. From and after the maturity date of this Note, or such
earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to 4% above the rate of
interest from time to time applicable to this Note.

 

 

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3. BORROWING AND REPAYMENT:
3.1 Borrowing and Repayment. Borrower may from time to time during the term of
this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note
and of the Credit Agreement between Borrower and Bank defined below; provided
however, that the total outstanding borrowings under this Note shall not at any
time exceed the principal amount stated above. The unpaid principal balance of
this obligation at any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon by or for
Borrower, which balance may be endorsed hereon from time to time by the holder.
The outstanding principal balance of this Note shall be due and payable in full
on June 30, 2009.
3.2 Advances. Advances hereunder, to the total amount of the principal sum
available hereunder, may be made by the holder at the oral or written request of
(a) A. Laurence Jones (“Larry”) or Sylvia Church, any one acting alone, who are
authorized to request advances and direct the disposition of any advances until
written notice of the revocation of such authority is received by the holder at
the office designated above, or (b) any person, with respect to advances
deposited to the credit of any deposit account of Borrower, which advances, when
so deposited, shall be conclusively presumed to have been made to or for the
benefit of Borrower regardless of the fact that persons other than those
authorized to request advances may have authority to draw against such account.
The holder shall have no obligation to determine whether any person requesting
an advance is or has been authorized by Borrower.
3.3 Application of Payments. Each payment made on this Note shall be credited
first, to any interest then due and second, to the outstanding principal balance
hereof. All payments credited to principal shall be applied first, to the
outstanding principal balance of this Note which bears interest determined in
relation to the Prime Rate, if any, and second, to the outstanding principal
balance of this Note which bears interest determined in relation to LIBOR, with
such payments applied to the oldest Fixed Rate Term first.
4. PREPAYMENT:
4.1 Prime Rate. Borrower may prepay principal on any portion of this Note which
bears interest determined in relation to the Prime Rate at any time, in any
amount and without penalty.
4.2 LIBOR. Borrower may prepay principal on any portion of this Note which bears
interest determined in relation to LIBOR at any time and in the minimum amount
of $100,000.00; provided however, that if the outstanding principal balance of
such portion of this Note is less than said amount, the minimum prepayment
amount shall be the entire outstanding principal balance thereof. In
consideration of Bank providing this prepayment option to Borrower, or if any
such portion of this Note shall become due and payable at any time prior to the
last day of the Fixed Rate Term applicable thereto by acceleration or otherwise,
Borrower shall pay to Bank immediately upon demand a fee which is the sum of the
discounted monthly differences for each month from the month of prepayment
through the month in which such Fixed Rate Term matures, calculated as follows
for each such month:
(a) Determine the amount of interest which would have accrued each month on the
amount prepaid at the interest rate applicable to such amount had it remained
outstanding until the last day of the Fixed Rate Term applicable thereto.
(b) Subtract from the amount determined in (a) above the amount of interest
which would have accrued for the same month on the amount prepaid for the
remaining term of such Fixed Rate Term at LIBOR in effect on the date of
prepayment for new loans made for such term and in a principal amount equal to
the amount prepaid.
(c) If the result obtained in (b) for any month is greater than zero, discount
that difference by LIBOR used in (b) above.

 

 

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Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate of the
prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay
any prepayment fee when due, the amount of such prepayment fee shall thereafter
bear interest until paid at a rate per annum 2.000% above the Prime Rate in
effect from time to time (computed on the basis of a 360-day year, actual days
elapsed).
5. EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions of that
certain Credit Agreement between Borrower and Bank dated as of June 30, 2003, as
amended from time to time (the “Credit Agreement”). Any default in the payment
or performance of any obligation under this Note, or any defined event of
default under the Credit Agreement, shall constitute an “Event of Default” under
this Note.
6. MISCELLANEOUS:
6.1 Remedies. Upon the occurrence of any Event of Default, the holder of this
Note, at the holder’s option, may declare all sums of principal and interest
outstanding hereunder to be immediately due and payable without presentment,
demand, notice of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by Borrower, and the obligation, if
any, of the holder to extend any further credit hereunder shall immediately
cease and terminate. Borrower shall pay to the holder immediately upon demand
the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys’ fees (to include outside counsel fees and all
allocated costs of the holder’s in-house counsel), expended or incurred by the
holder in connection with the enforcement of the holder’s rights and/or the
collection of any amounts which become due to the holder under this Note, and
the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower or any other person or entity.
6.2 Obligations Joint and Several. Should more than one person or entity sign
this Note as a Borrower, the obligations of each such Borrower shall be joint
and several.
6.3 Governing Law. This Note shall be governed by and construed in accordance
with the laws of the State of Colorado.

 

 

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IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first
written above.

STARTEK, INC.

By:   A L Jones
 
Title: President & CEO

By:   Silvia A. Church
 
Title: Vice President & Controller

STARTEK USA, INC.

By:   A L Jones
 
Title: President & CEO

By:   Silvia A. Church
 
Title: Vice President & Controller