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EXHIBIT 10.11
[Execution Copy]
AMENDMENT NO. 3 AND CONSENT
dated as of September 6, 1996
to
LOAN AND SECURITY AGREEMENT
dated as of March 31, 1995
THIS AMENDMENT NO. 3 AND CONSENT dated as of September 6, 1996 is made
between PROSOURCE SERVICES CORPORATION, a Delaware corporation (PROSOURCE),
BROMAR SERVICES, INC., a Delaware corporation (BROMAR), and PROSOURCE
DISTRIBUTION SERVICES LIMITED, a Canadian corporation (PROSOURCE CANADA and
together with ProSource and BroMar, the BORROWERS), the financial institutions
party from time to time to the Loan Agreement referred to below (the LENDERS),
NATIONSBANK, N.A. (SOUTH) (successor by merger to NationsBank of Georgia,
N.A.), a national banking association (NATIONSBANK). THE FIRST NATIONAL BANK OF
BOSTON, a national banking association (BANK OF BOSTON), and FLEET CAPITAL
CORPORATION (successor by merger to Shawmut Capital Corporation), a Rhode
Island corporation (FLEET), as co-agents (each in that capacity a CO-AGENT and
collectively the CO-AGENTS) and NATIONSBANK, N.A. (SOUTH), as administrative
agent for the Lenders (in that capacity, together with any successors in that
capacity, the ADMINISTRATIVE AGENT).
Preliminary Statements
The Borrowers, the Lenders, the Co-Agents and the Administrative Agent
are parties to a Loan and Security Agreement dated as of March 31, 1995, as
amended by Amendment No. 1 dated as of December 29, 1995 and Amendment No. 2
and Waiver dated as of March 28, 1996 (as so amended and as otherwise
heretofore amended, the LOAN AGREEMENT; terms defined therein and not otherwise
defined herein being used herein as therein defined).
The Borrowers have requested certain modifications to the provisions of
the Loan Agreement. The Lenders and the Administrative Agent have agreed to
such requests, upon and subject to all the terms, conditions and provisions of
this Amendment.
NOW, THEREFORE, in consideration of the Loan Agreement, the Loans made
by the Lenders and outstanding thereunder, the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Amendments to Loan Agreement. The Loan Agreement is hereby
amended, subject to the provisions of Section 3 hereof, by
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(a) setting forth as at the end of such Fiscal Quarter a
reasonably detailed schedule of charges to the Acquisition Reserve and
the Restructuring Reserve recorded during such Fiscal Quarter and the
calculations required to establish whether or not the Borrowers were in
compliance with the requirements of SECTIONS 12.1, 12.2, 12.5, 12.10,
12.11 AND 12.16;
(d) amending Section 12.1 Financial Ratios by amending
subsections (a) thereof in its entirety to read as follows:
[SECTION 12.1. Financial Ratios. Permit:]
(a) Consolidated Minimum Net Worth. Consolidated Net Worth (i)
on and as of the Effective Date to be less than $48,000,000, (ii) at
any time during Fiscal Year 1995 to be less than the greater of
$43,000,000 or actual Consolidated Net Worth as of the Effective Date
minus $5,000,000, or (iii) at any time during any Fiscal Year indicated
below to be less than the actual Consolidated Net Worth as of the last
day of the preceding Fiscal Year minus the amount shown opposite such
Fiscal Year:
FISCAL YEAR PERMITTED DECREASE
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1996 The amount, not to exceed the sum of
$5,000,000 and up to $16,800,000, as such
amount may be adjusted pursuant to Section
11.1(e) hereof (being the after-tax impact
of the sum of maximum Restructuring
Charges and Asset Impairment Charges,
which tax impact will be determined based
on the Borrowers' effective tax rate for
the period in which such charges are
recorded or reserves are established, all
in accordance with GAAP)
1997 and thereafter $4,000,000
PROVIDED, that as of the last day of Fiscal Year 1997 and of each
succeeding Fiscal Year, Consolidated Net Worth shall be at least $1.00
greater than Consolidated Net Worth as of the last day of the
immediately preceding Fiscal Year.
(e) amending Section 12.16 Limitations on Acquisition Reserves
in its entirety to read as follows:
SECTION 12.16 Limitation on Acquisition Reserve. The Acquisition
Reserve shall not exceed $20,000,000 as of the Effective Date, nor
$16,000,000 as of December 31, 1995 or any date thereafter, nor shall
the Acquisition Reserve reflect
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charges against it made during Fiscal Year 1996 of more than $10,000,000
nor during Fiscal Year 1997 of more than $5,000,000 plus unused permitted
charges against such reserve for Fiscal Year 1996.
(f) amending Article 12 by adding thereto a new Section 12.17
Limitations on Restructuring Reserve to read in its entirety as follows:
SECTION 12.17 Limitation on Restructuring Reserve. The Restructuring
Reserve shall not reflect charges against it made (a) during Fiscal Year
1996 of more than $2,700,000 or (b) during Fiscal Year 1997 of more than
$4,125,000 plus unused permitted charges against such reserve for Fiscal
Year 1996.
Section 2. Consent and Waiver. The Lenders hereby (a) consent to the
Borrowers' recording the Asset Impairment Charges and Restructuring Charges (of
up to $26,650,000 in total) in Fiscal Year 1996, and (b) waive any Default or
Event of Default that would otherwise result from such recording, PROVIDED that
on the date on which the action described in foregoing clause (a) is taken, and
after giving effect to this Amendment, no Default or Event of Default shall have
occurred and be continuing.
Section 3. Effectiveness of Amendment. Sections 1 and 2 of this
Amendment shall become effective as of December 31, 1995 upon receipt by the
Administrative Agent not later than September 10, 1996 of (a) at least ten
copies of this Amendment duly executed and delivered by each Borrower, the
Co-Agents and each Lender, and (b) a confirmation duly executed and delivered by
the Guarantor of its Unconditional Guaranty and the Pledge Agreement in the form
attached to this Amendment.
Section 4. Effect of Amendment. From and after the effectiveness of
this Amendment, all references in the Loan Agreement and in any other Loan
Document to "this Agreement," "the Loan Agreement," "hereunder," "hereof" and
words of like import referring to the Loan Agreement, shall mean and be
references to the Loan Agreement as amended by this Amendment. Except as
expressly amended hereby, the Loan Agreement and all terms, conditions and
provisions thereof remain in full force and effect and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Administrative Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
Section 5. Counterpart Execution; Governing Law.
(a) Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
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(b) Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of Georgia.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWERS:
PROSOURCE SERVICES CORPORATION
[Corporate Seal]
Attest: By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
By: /s/ Xxxx X. Xxxxxx xx Xxxxxxx Executive Vice President
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Xxxx X. Xxxxxx xx Xxxxxxx
Secretary
BROMAR SERVICES, INC.
[Corporate Seal]
Attest: By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
By: /s/ Xxxx X. Xxxxxx xx Xxxxxxx Executive Vice President
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Xxxx X. Xxxxxx xx Xxxxxxx
Secretary
PROSOURCE DISTRIBUTION SERVICES
LIMITED
[Corporate Seal]
Attest: By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
By: /s/ Xxxx X. Xxxxxx xx Xxxxxxx Executive Vice President
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Xxxx X. Xxxxxx xx Xxxxxxx
Secretary
(Signatures continued on following three pages)
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ADMINISTRATIVE AGENT:
NATIONSBANK, N.A. (SOUTH)
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Vice President
CO-AGENTS AND LENDERS:
NATIONSBANK, N.A. (SOUTH),
as a Lender and Co-Agent
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender and Co-Agent
By: /s/ X.X. Xxxxxxxxxx
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Name: X.X. Xxxxxxxxxx
Title: Division Executive
FLEET CAPITAL CORPORATION, as a Lender
and Co-Agent
By: /s/ Xxxx Xxxx
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Name: Xxxx Xxxx
Title: Senior Vice President
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THE BANK OF NOVA SCOTIA, as a Lender
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Relationship Manager
By:
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Name:
Title:
BANKAMERICA BUSINESS CREDIT, INC., as
a Lender
By: /s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxxx X. Xxxxxx
Title: Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Vice President
XXXXXX FINANCIAL, INC., as a Lender
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Assistant Vice President
SANWA BUSINESS CREDIT CORPORATION,
as a Lender
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Vice President
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NATIONAL CITY COMMERCIAL FINANCE,
INC., as a Lender
By: /s/ Xxx X. Xxxxx
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Name: Xxx X. Xxxxx
Title: Vice President
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