EXHIBIT 10.38(c)
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THIRD AMENDMENT AGREEMENT
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AGREEMENT, dated as of May 27, 1999, among XXXXXX SERVICE GROUP, INC., a
New Jersey corporation, XXXXXX INTERNATIONAL, INC., a Maryland corporation, the
"Subsidiaries" signatory hereto, 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 Amended and Restated Credit Agreement dated as of
November 7, 1997, between Xxxxxx Service Group, Inc. and General Electric
Capital Corporation (as amended, modified or supplemented from time to time, the
"Credit Agreement").
B. Borrower, among other things, has made the following Permitted
Acquisition:
(i) Borrower acquired the assets of Argos Adriatic Corporation (the "Argos
Acquisition") pursuant to the Asset Purchase Agreement dated February 28, 1998
(the "Argos Asset Purchase Agreement") among Xxxxxx Telecom, Inc., Argos
Adriatic Corporation ("Argos"), Xxxxxx Xxxxxxxx and Xxxxx Xxxxxxxx (the
"Shareholders"). Under the terms of the Argos Asset Purchase Agreement, the
Shareholders agreed to refrain from certain activities and Borrower agreed to
pay the Shareholders an amount based on the future performance of Argos, as more
fully set forth in the Argos Asset Purchase Agreement. In connection with the
execution and delivery of the Argos Asset Purchase Agreement, the Shareholders
entered into separate Employment Agreements with Borrower dated February 21,
1998 (the "Argos Employment Agreements"). Pursuant to the Settlement Agreement
dated March 31, 1999, between Borrower and the Shareholders (the "Argos
Settlement Agreement"), Borrower and one of the Shareholders agreed to terminate
their employment relationship, accelerate certain payments and extinguish
certain obligations under the Argos Asset Purchase Agreement and the Argos
Employment Agreements, and Borrower agreed to pay the Shareholder the amount of
$1,471,000 (the "Argos Settlement Amount").
(ii) Borrower acquired the assets of Xxxxxxx Computer Service (the "Xxxxxxx
Acquisition") pursuant to the Asset Purchase Agreement dated March 31, 1998 (the
"Xxxxxxx Asset Purchase Agreement") between Xxxxxx Telecom, Inc. and Vassills
"Xxxx" Chaimanis ("Xx. Xxxxxxxxx"), a principal of Xxxxxxx Computer Service
("Xxxxxxx"). Under the terms of the Xxxxxxx Asset Purchase Agreement, Xx.
Xxxxxxxxx agreed to refrain from certain activities and Borrower agreed to pay
Xx. Xxxxxxxxx an amount based on the future performance of Xxxxxxx, as more
fully set forth in the Xxxxxxx Asset Purchase Agreement. In connection with the
execution and delivery of the Xxxxxxx Asset Purchase Agreement, Xx. Xxxxxxxxx
and Borrower entered into the Employment Agreement with Borrower dated March 31,
1998 (the "Xxxxxxx Employment Agreement"). Pursuant to the Settlement Agreement
dated January 29, 1999, between Borrower and Xx. Xxxxxxxxx (the "Xxxxxxx
Settlement Agreement"), Borrower and Xx. Xxxxxxxxx agreed to terminate their
employment relationship, accelerate certain payments and extinguish certain
obligations under the Xxxxxxx Asset Purchase Agreement and the Xxxxxxx
Employment Agreement, and Borrower agreed to pay Xx. Xxxxxxxxx the amount of
$1,250,000 (the "Xxxxxxx Settlement Amount").
(iii) Borrower acquired all of the issued and outstanding shares of capital
stock of Corporate Information Systems, Inc. ("CIS") pursuant to the Stock
Purchase Agreement dated August 11, 1997 (the "CIS Stock Purchase Agreement")
between Xxxxxx Telecom, Inc. and Xxxx X. Xxxxxxxxx ("Xx. Xxxxxxxxx"). Under the
terms of the CIS Stock Purchase Agreement, Xx. Xxxxxxxxx agreed to refrain from
certain activities and borrower agreed to pay Xx. Xxxxxxxxx amounts based on the
future performance of CIS, as more fully set forth in the CIS Stock Purchase
Agreement. In connection with the execution and delivery of the CIS Stock
Purchase Agreement, Xx. Xxxxxxxxx entered into the Employment Agreement with
Borrower dated August 11, 1997 (the "CIS Employment Agreements"). Pursuant to
Settlement Agreement dated March 5, 1999, between each of Xx. Xxxxxxxxx and
Borrower (the "CIS Settlement Agreement"), Xx. Xxxxxxxxx and Borrower agreed to
terminate their employment relationship, accelerate certain
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payments and extinguish certain obligations under the CIS Stock Purchase
Agreement and the CIS Employment Agreements and Borrower agreed to pay Xx.
Xxxxxxxxx the amount of $1,415,000 (the "CIS Settlement Amount").
C. The Borrower has requested that the Lender consent to payment of the
Xxxxxxx Settlement Amount, the Argos Settlement Amount and the CIS Settlement
Amount and allow the amount of the Xxxxxxx Settlement Amount, the Argos
Settlement Amount and the CIS Settlement Amount to be included within the amount
of the Acquisition Loan Advance made by Lender to Borrower in connection with,
respectively, the Xxxxxxx Acquisition, the Argos Settlement Amount and the CIS
Settlement Amount and modify the amortization schedule of such respective
Acquisition Loan Advance to include the Xxxxxxx Settlement Amount, the Argos
Settlement Amount and the CIS Settlement Amount.
D. The Lender has agreed to the Borrower's request 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 Agreement and
the other Loan Documents shall remain in full force and effect except as
follows:
(a) Notwithstanding the foregoing, Lender hereby consents to Borrower's
payment of the Xxxxxxx Settlement Amount, the Argos Settlement Amount and the
CIS Settlement Amount and agrees that (a) the Xxxxxxx Settlement Amount shall be
added to the amount of the Acquisition Loan Advance extended by Lender in
connection with the Xxxxxxx Acquisition, (b) the Argos Settlement Amount shall
be added to the amount of the Acquisition Loan Advance extended by Lender in
connection with the Argos Acquisition and (c) the CIS Settlement Amount shall be
added to the amount of the Acquisition Loan Advance extended by Lender in
connection with the CIS Acquisition, such that as of the date of this Agreement,
(x) the amount outstanding under the Acquisition Loan Advance in respect of the
Xxxxxxx Acquisition (including the Xxxxxxx Settlement Amount) is $6,896,328, (y)
the amount outstanding under the Acquisition Loan Advance in respect of the
Argos Acquisition (including the Argos Settlement Amount is $4,695,073), and (z)
the amount outstanding under the Acquisition Loan Advance in respect of the CIS
Acquisition (including the CIS Settlement Amount) is $1,415,000, and Borrower
shall repay the principal amounts thereof as follows:
Payment Date Amount
Xxxxxxx Acquisition Argos Acquisition CIS Acquisition
(a) The first day of each Fiscal $ 284,192 $ 197,765 $ 50,536
Quarter commencing July 1, 1999,
through and including Xxxxx 0, 0000
(x) July 1, 2002 $3,486,024 $2,321,893 $808,568
(b) The definition of "Borrowing Base" contained in Annex A to the Credit
Agreement is deleted and the following is substituted therefor:
"Borrowing Base" means on any date of determination thereof, an amount
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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 $15,000,000
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)."
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2. Conditions Precedent. The Lender's obligations under this Agreement are
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contingent upon the Lender's receipt of the following, all in form, scope and
content acceptable to the Lender in its sole discretion:
(a) Amendment Agreement. This Agreement duly executed by the parties
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hereto; and
(b) Other. Such other agreements and instruments as the Lender shall
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require.
3. Reaffirmation By Borrower. The Borrower acknowledges and agrees, and
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reaffirms, that it is legally, validly and enforceably indebted to the Lender
under the Notes 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 Notes 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. The Borrower represents that except
as set forth in the Credit Agreement, there are not pending or to the Borrower's
knowledge threatened, legal proceedings to which the Borrower or any 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 any of the
Guarantors to conduct its business. The Borrower acknowledges and represents
that the resolutions of the Borrower dated on or about November 7, 1997, 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 that
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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 Obligations, as modified
herein.
5. Reaffirmation of Collateral. The Borrower and each of the Guarantors
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reaffirms the liens, security interests and pledges granted pursuant to the Loan
Documents to secure the obligations of each thereunder.
6. Other Representations By Borrower and Guarantors. The Borrower and
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each Guarantor 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 each Guarantor in accordance with the terms thereof. The Borrower
and each Guarantor represents and confirms that as of the date hereof, each has
no claim or defense (and the Borrower and each Guarantor hereby waives 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 Loans and the remedies provided for under the Loan Documents.
7. No Waiver By Lender. The Borrower and each Guarantor acknowledges that
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(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 above written.
Borrower:
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XXXXXX SERVICE GROUP, INC.
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxx
Title: SeniorVice President - Finance
Parent:
XXXXXX INTERNATIONAL, INC.
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President - Finance
Subsidiaries:
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XXXXXX TECHNOLOGY SOLUTIONS, INC.
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President and Chief
Financial Officer
XXXXXX TELECOM, INC.
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President and Chief
Financial Officer
XXXXXX SERVICES, INC.
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President and Chief
Financial Officer
XXXXXX UTILITY SERVICE, INC.
By /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxxx
Title: Senior Vice President and Chief
Financial Officer
Lender:
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GENERAL ELECTRIC CAPITAL CORPORATION
By /s/ Xxxxxx Xxxxxxxxx
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Name: Xxxxxx Xxxxxxxxx
Title: Duly Authorized Signatory
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