EXHIBIT 10.38(k)
ELEVENTH AMENDMENT AGREEMENT
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AGREEMENT, dated October 31, 1996, to be effective as of September 30,
1996, among XXXXXX SERVICE GROUP, INC., a New Jersey corporation, XXXXXX
INTERNATIONAL, INC., a Maryland corporation, XXXXXX SERVICE GROUP CANADA, LTD.,
a Canadian corporation, and GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation.
BACKGROUND
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A. Capitalized terms not otherwise defined shall have the meanings
ascribed to them in the Credit Agreement dated as of May 31, 1994, between
Xxxxxx Service Group, Inc. and General Electric Capital Corporation (as amended,
modified or supplemented from time to time, the "Credit Agreement").
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B. The Borrower has requested that the Lender modify certain of the terms
and conditions of the Loan Documents.
C. The Lender has agreed to the Borrower's requests subject to the terms
and conditions of this Agreement.
AGREEMENT
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In consideration of the Background, which is incorporated by reference, the
parties, intending to be legally bound, agree as follows:
1. Modifications. All the terms and provisions of the Credit
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Agreement and the other Loan Documents shall remain in full force and effect
except as follows:
(a) Section 3.01(b) of the Credit Agreement is deleted and
the following is substituted therefor:
(b) Interest Rate The Borrower shall be obligated
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to pay interest to the Lender on the outstanding balance of the
Revolving Loan at an annual floating rate equal to (i) three hundred
basis points (3.00%) above the Index Rate commencing on the Closing
Date and continuing through October 31, 1996, (ii) two hundred fifty
basis points (2.50%) above the Index Rate commencing on the later to
occur of (x) November 1, 1996, and (y) the date on which all parties
to the Eleventh Amendment Agreement dated October 31, 1996 between the
Borrower and the Lender have signed such Agreement, and ending on the
last day of the month of the first Determination Date subsequent to
December 31, 1996, and (iii)
commencing on the first day of the first month after the first
Determination Date subsequent to December 31, 1996, the Index Rate
plus the Applicable Margin.
(b) The third sentence of Section 3.03 of the Credit Agreement
is deleted and the following is substituted therefor:
For purposes of computing interest, all payments (including cash
sweeps) consisting of cash, wire or electronic transfers in
immediately available funds, shall be deemed received by the
Lender one Business Day after deposit in the Collection Account
and notice to the Lender of such deposit.
(c) Section 3.08 of the Credit Agreement is deleted and the
following is substituted therefor:
3.08 Eligible Accounts and Eligible Inventory.
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(a) Based on the most recent Roll Forward Borrowing Base Certificate
or Borrowing Base Certificate delivered by the Borrower to the Lender and on
other information available to the Lender, the Lender shall determine in its
reasonable discretion which Accounts shall be deemed to be "Eligible Accounts"
for purposes of determining the amounts, if any, to be advanced to the Borrower.
In determining whether a particular account constitutes an Eligible Account, the
Lender does not intend to include any such Account which does not meet the
criteria set forth under the definition of Eligible Accounts on Schedule "1.01"
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hereof.
(b) Based on the most recent Roll Forward Borrowing Base Certificate
or Borrowing Base Certificate delivered by the Borrower to the Lender and other
information available to the Lender, the Lender shall determine in its
reasonable discretion which Inventory shall be deemed to be "Eligible Inventory"
for purposes of determining the amount, if any, to be advanced to the Borrower.
In determining whether any particular Inventory constitutes Eligible Inventory,
the Lender does not intend to include Inventory which does not meet the criteria
set forth under the definition of Eligible Inventory on Schedule "1.01" hereof.
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(d) The following is added after the definition of "Agreement"
contained in Schedule "1.01" of the Credit Agreement:
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"Applicable Margin" means the rate per annum set forth
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under the relevant column heading below corresponding to the
Borrower's attainment of the following:
Fixed Charge Interest Applicable
Tangible Net Worth Coverage Ratio Coverage Ratio Margin
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(i) Greater than or equal Greater than Greater than 2.40%
to $11,500,000 or equal to or equal to
1.3 to 1.0 1.5 to 1.0
(ii) Greater than or equal Greater than Greater than 2.30%
to $13,500,000 or equal to or equal to
1.3 to 1.0 1.5 to 1.0
(iii) Greater than or Greater than Greater than 2.15%
equal to $15,000,000 or equal to or equal to
1.3 to 1.0 1.5 to 1.0
(iv) Greater than or Greater than Greater than 2.00%
equal to $17,000,000 or equal to or equal to
1.3 to 1.0 1.5 to 1.0
Notwithstanding the foregoing, if, as at a Determination Date, the Fixed Charge
Coverage Ratio is less than 1.3 to 1.0 or the Interest Coverage Ratio is less
than 1.5 to 1.0, the Applicable Margin shall be 2.50%. For purposes of the
foregoing, any change in the Applicable Margin based on the Borrower's
attainment of all of the financial tests listed across from (i), (ii), (iii) or
(iv) above shall be effective for all purposes on and after the first day of the
first month after the Determination Date and such Applicable Margin may change
based on the results of the Borrower as at each succeeding Determination Date.
(For purposes of illustration only, if, as at a Determination Date, the Borrower
attained Tangible Net Worth of $13,750,000, a Fixed Charge Coverage Ratio of
1.35 to 1.0 and an Interest Coverage Ratio of 1.75 to 1.0, the Applicable Margin
would be 2.30%).
(e) The definition of "Borrowing Base", contained in Schedule
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"1.01" of the Credit Agreement, is deleted and the following is substituted
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therefor:
"Borrowing Base" means on any date of determination
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thereof, an amount equal to the sum of (A) eighty-five percent (85%)
of Eligible Accounts, (B) seventy-five percent (75%) of Eligible
Pending Accounts Receivable and Fixed Contract Accounts Receivable (up
to the maximum amount of $10,000,000 in the aggregate), and (C) forty
percent (40%) of Eligible Inventory (valued on a first in, first out
basis) (up to the maximum amount of $2,000,000 in the aggregate).
(f) The definition of "Collateral Monitoring Fee", contained in
Schedule "1.01" of the Credit Agreement, is deleted and the following is
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substituted therefor:
"Collateral Monitoring Fee" means the amount of $24,000 per
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year payable on the Closing Date and on each anniversary thereof,
which shall be deemed earned in full on the date when the same is due
and payable and shall not be subject to rebate or proration upon
termination of this Agreement for any reason.
(g) The definition of "Commitment Termination Date" contained
in Schedule "1.01" of the Credit Agreement, is deleted and the
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following is substituted therefor:
"Commitment Termination Date" means the earlier to occur of
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(i) July 1, 1998 and (ii) the date on which the Lender's obligation to
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make, and the Borrower's right to receive, Advances under this
Agreement shall terminate under Section 7.01 hereof.
(h) The following is added after the definition of "Default
Rate" contained in Schedule "1.01" of the Credit Agreement:
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"Determination Date" means the date of delivery by the
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Borrower to the Lender a copy of the report of the Borrower on Form
10-Q or 10-K, as the case may be, as required under Paragraph A(iv) of
Schedule "6.01(b)" of the Credit Agreement.
(i) The following is added after the definition of "Eligible
Accounts" contained in Schedule "1.01" of the Credit Agreement:
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"Eligible Inventory" means the finished goods Inventory of
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the Borrower, as recorded at the lower of standard cost or market in
the accounting records of the Borrower, located at the Premises which
(i) for each of the Premises, has a value in excess of the aggregate
of $50,000, (ii) for each of the Premises described in the preceding
clause (i), the Lender shall have received a Lessor's Agreement, duly
executed and notarized by the parties thereto, in form and content
acceptable to the Lender, (iii) is in conformity in all respect with
the representations and warranties contained in the Security
Agreement, (iii) is in first class conditions and salable throughout
normal trade channels, (iv) is owned by the Borrower and subject to no
lien, security interest, charge or other encumbrance whatsoever,
except those in favor of the allocable to a contract with a
Governmental Authority, (v) is not produced or processed in violation
of or otherwise subject to the Fair Labor Standards Act or any similar
federal or state law, (vi) is not subject to an adjustment, positive
or negative, attributable to material price differences that result
when standard costs and actual costs differ, (vii) is not subject to
consignment or in possession under a similar arrangement, (viii) is
located on premises owned or operated by the Borrower, (ix) is not
covered by a negotiable document of title unless such document and
evidence of acceptable insurance covering such inventory has been
delivered to the Lender, (x) does not consist of display items,
packing and shipping materials or goods which have been returned by
the buyer, (xi) is of a type held for sale in the ordinary course of
the borrower's business, (xii) is not of a class or condition which
the Lender, in its sole and absolute discretion, has deemed ineligible
for advance and has notified the Borrower for such ineligibility, and
(xiii) is not manufactured for a specific customer (i.e., private
label or otherwise).
2. Conditions Precedent. The Lender's obligations under this
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Agreement are contingent upon the Lender's receipt of the following,
all in form, scope and content acceptable to the Lender in its sole
discretion:
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(a) Amendment Agreement. This Agreement duly executed by
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the parties hereto; and
(b) Other. Such other agreements and instruments as the
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Lender shall require.
3. Reaffirmation By Borrower. The Borrower acknowledges and
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agrees, and reaffirms, that it is legally, validly and enforceably indebted to
the Lender under the Revolving Note without defense, counterclaim or offset, and
that it is legally, validly and enforceably liable to the Lender for all costs
and expenses of collection and attorneys' fees related to or in any way arising
out of this Agreement, the Credit Agreement, the Revolving Note and the other
Loan Documents. The Borrower hereby restates and agrees to be bound by all
covenants contained in the Credit Agreement and the other Loan Documents and
hereby reaffirms that all of the representations and warranties contained in the
Credit Agreement remain true and correct in all material respects except as
disclosed in connection with the execution and delivery of the First Amendment
Agreement dated December 14, 1994 (the "First Amendment Agreement"). The
Borrower represents that except as set forth in the Credit Agreement and the
First Amendment Agreement, there are not pending or to the Borrower's knowledge
threatened, legal proceedings to which the Borrower or either of the Guarantors
is a party, or which materially or adversely affect the transactions
contemplated by this Agreement or the ability of the Borrower or either of the
Guarantors to conduct its business. The Borrower acknowledges and represents
that the resolutions of the Borrower dated May 25, 1994, remain in full force
and effect and have not been amended, modified, rescinded or otherwise
abrogated.
4. Reaffirmation by Guarantors. Each of the Guarantors acknowledges
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that each is legally and validly indebted to the Lender under the Guaranty of
each without defense, counterclaim or offset. Each of the Guarantors affirms
that the Guaranty of each remains in full force and effect and acknowledges that
the Guaranty of each encompasses, without limitation, the amount of the Maximum
Revolving Loan, as modified herein.
5. Other Representations By Borrower and Guarantors. The Borrower
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and the Guarantors each represents and confirms that (a) no Default or Event of
Default has occurred and is continuing and the Lender has not given its consent
to or waived any Default or Event of Default and (b) the Credit Agreement and
the other Loan Documents are in full force and effect and enforceable against
the Borrower and Guarantors in accordance with the terms thereof. The Borrower
and the Guarantors each represent and confirm that as of the date hereof, each
has no claim or defense (and the Borrower and the Guarantors each hereby waive
every claim and defense) against the Lender arising out of or relating to the
Credit Agreement and the other Loan Documents or the making, administration or
enforcement of the Revolving Loan and the remedies provided for under the Loan
Documents.
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6. No Waiver By Lender. The Borrower and the Guarantors each
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acknowledges that (a) by the execution by each of this Agreement, the Lender is
not waiving any Default, whether now existing or hereafter occurring, disclosed
or undisclosed, by the Borrower under the Loan Documents and (b) the Lender
reserves all rights and remedies available to it under the Loan Documents and
otherwise.
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The parties have executed this Agreement as of the date first written
above.
XXXXXX SERVICE GROUP, INC.
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer
XXXXXX INTERNATIONAL, INC.
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer
XXXXXX SERVICE GROUP CANADA, LTD.
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By /s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
Title: Duly Authorized Signatory
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