EXHIBIT 10.1
COMFORT SYSTEMS USA, INC.
FOURTH AMENDMENT TO CREDIT AGREEMENT
This FOURTH AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated as
of November 13, 2000 (the "EFFECTIVE DATE") and entered into by and among
COMFORT SYSTEMS USA, INC., a Delaware corporation (the "COMPANY"), the other
Credit Support Parties (as defined in Section 4 hereof), the Subsidiaries of the
Company listed on the signature pages hereto as Guarantors (together with each
other Person who subsequently becomes a Guarantor, collectively the
"GUARANTORS"), the banks and other financial institutions listed on the
signature pages hereto under the caption "BANKS" (together with each other
Person who becomes a Bank, collectively the "BANKS"), BANK ONE, TEXAS, N.A.,
individually as a bank ("BOT") and as administrative agent for the other Banks
(in such capacity together with any other Person who becomes the administrative
agent, the "ADMINISTRATIVE AGENT"), BANKERS TRUST COMPANY, individually as a
Bank ("BTCO") and as syndication agent for the other Banks (in such capacity
together with any other Person who becomes the syndication agent, the
"SYNDICATION AGENT"), BANK OF AMERICA, N.A. (formerly known as NationsBank,
N.A.), individually as a Bank ("BOFA") and as documentation agent for the other
Banks (in such capacity together with any other Person who becomes the
documentation agent, the "DOCUMENTATION AGENT"; and together with the
Administrative Agent and the Syndication Agent, the "AGENTS"), and CREDIT
LYONNAIS NEW YORK BRANCH, individually as a Bank and Co-Agent, NATIONAL CITY
BANK, individually as a Bank and as Co-Agent, and THE BANK OF NOVA SCOTIA,
individually as a Bank and as Co-Agent (collectively, the "CO-AGENTS"), and is
made with reference to that certain Third Amended and Restated Credit Agreement
dated as of December 14, 1998, by and among the Company, the Guarantors, the
Banks, the Agents and the Co-Agents, as amended by that certain First Amendment
dated as of January 14, 1999, that certain Second Amendment dated as of August
18, 1999, and that certain Third Amendment dated as of August 11, 2000 (as so
amended, the "CREDIT AGREEMENT"), and to other Loan Documents. Capitalized terms
used herein without definition shall have the same meanings herein as set forth
in the Credit Agreement, as amended hereby (the "AMENDED CREDIT AGREEMENT").
RECITALS
WHEREAS, the Company, the Guarantors and the Banks desire to amend the
Credit Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENT TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 1.1: DEFINITIONS.
The definition of "Account" is added to Section 1.1 of the Credit
Agreement in proper alphabetical order to read as follows:
""ACCOUNT" has the meaning stated in the Texas Uniform Commercial
Code."
The definition of "ASSET SALES" in Section 1.1 of the Credit
Agreement is hereby amended by deleting the reference to "$500,000" contained
therein and substituting "$1,000,000.00" therefor.
The definition of "Borrowing Base" is added to Section 1.1 of the
Credit Agreement in proper alphabetical order to read as follows:
""BORROWING BASE" means as to the Company and its Guarantors on a
consolidated basis at any time, an amount equal to the product of
(a) eighty percent (80%), times (b) the Eligible Accounts
Receivable; PROVIDED that in the absence of a Borrowing Base
Certificate, the Administrative Agent shall determine the Borrowing
Base from time to time in its reasonable discretion, taking into
account all information reasonably available to it, and the
Borrowing Base from time to time so determined shall be the
Borrowing Base for all purposes of this Agreement until a Borrowing
Base Certificate is furnished to and accepted by the Administrative
Agent."
The definition of "Borrowing Base Certificate" is added to Section
1.1 of the Credit Agreement in proper alphabetical order to read as follows:
""BORROWING BASE CERTIFICATE" means, as of any date, a certificate
as to the Borrowing Base as of such date in the form of Exhibit
7.1(i)."
The definition of "EBITDA" in Section 1.1 of the Credit Agreement is
hereby deleted in its entirety and the following is substituted therefor:
""EBITDA" means, for any period, the consolidated pre-tax income for
such period, plus the aggregate amount which was deducted for such
period in determining such consolidated, pre-tax income in respect
of Interest Expense (including amortization of debt discount,
imputed interest and capitalized interest), depreciation and
amortization, provided, the calculations of EBITDA after the
acquisition of assets or entities permitted under Section 8.5(d)
shall include pro forma adjustments consistent with the regulations
and practices of the United States Securities and Exchange
Commission (whether or not applicable) to account for such acquired
entity's historical EBITDA for the relevant period or similar
adjustments in the case of an
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asset acquisition. For fiscal year 2000, (and only for fiscal year
2000) the actual amount of pre-tax restructuring charges incurred by
the Company during fiscal year 2000 (but in no event in excess of
$27,500,000.00 in the aggregate) may be added back in determining
EBITDA, PROVIDED that such pre-tax restructuring charges may be
added back to the extent, and only to the extent, that such pre-tax
restructuring charges were deducted in calculating EBITDA."
The definition of "Eligible Accounts Receivable" is added to Section
1.1 of the Credit Agreement in proper alphabetical order to read as follows:
""ELIGIBLE ACCOUNTS RECEIVABLE" means at any time an amount equal to
the aggregate net invoice or ledger amount (net of any reserves) due
on all trade Accounts of the Company and the Guarantors for goods
sold or leased or services rendered upon which Borrower's and
Guarantors' rights to receive payment are absolute and not
contingent upon the fulfillment of any condition whatsoever;
PROVIDED, however, that Eligible Accounts Receivable shall include
any retainage due to the Company and the Guarantors with respect to
jobs in progress."
The definition of "Margin" in Section 1.1 of the Credit Agreement is
hereby amended by deleting the grid contained in the definition of "Margin" and
substituting the following therefor:
TOTAL FUNDED EURODOLLAR RATE ALTERNATE BASE
DEBT/EBITDA RATIO ADVANCE RATE ADVANCE
------------------------- --------------- --------------
$ 4.00 3.500 % 2.000 %
$ 3.50 but less than 4.00 3.000 % 1.750 %
$ 3.00 but less than 3.50 2.750 % 1.500 %
$ 2.50 but less than 3.00 2.500 % 1.250 %
less than 2.50 2.250 % 1.000 %
The definition of "Total Commitment" in Section 1.1 of the Credit
Agreement is hereby deleted in its entirety and the following substituted
therefor:
""TOTAL COMMITMENT" means the sum of the Commitments for each Bank
totaling a maximum of $280,000,000.00 for all Banks."
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1.2 AMENDMENT TO SECTION 2.1: THE LOANS.
Section 2.1 of the Credit Agreement is hereby deleted in its
entirety and the following substituted therefor:
"THE LOANS" Subject to the terms and conditions hereof, each Bank
severally agrees at any time and from time to time on and after the Effective
Date and prior to the Maturity Date, to make and maintain a loan or loans
(together with any Advances under a Letter of Credit described in Article III, a
"LOAN" and collectively, the "LOANS") to the Company not to exceed at any time
outstanding the maximum amount of its Commitment, which Loans (i) shall, at the
option of the Company, be made and maintained pursuant to one or more Advances
comprised of Alternate Base Rate Advances or Eurodollar Rate Advances; PROVIDED
that, except as otherwise specifically provided herein, all Advances made
simultaneously under the Loan shall be of the same Type, (ii) in the case of
Eurodollar Rate Advances, shall be made in the minimum amount of $1,000,000.00
and integral multiples of $100,000.00 and, in the case of Alternate Base Rate
Advances, in the minimum amount of $100,000.00 and integral multiples thereof,
or, in either case, in the remaining balance of the lesser of (w) the Total
Commitment, and (x) the Borrowing Base, (iii) may be repaid and, so long as no
Default or Event of Default exists hereunder, reborrowed, at the option of the
Company in accordance with the provisions hereof, and (iv) shall not, in the
aggregate at any time outstanding and together with all Letter of Credit
Obligations, exceed the lesser of (y) the Total Commitment, and (z) the
Borrowing Base."
1.3 AMENDMENT TO SECTION 2.7(B): LOANS AND LETTER OF CREDIT OBLIGATIONS
IN EXCESS OF TOTAL COMMITMENT.
Section 2.7(b) of the Credit Agreement is hereby deleted in its
entirety and the following substituted therefor:
"(b) LOANS AND LETTER OF CREDIT OBLIGATIONS IN EXCESS OF TOTAL
COMMITMENT. The Company shall repay Loans on any day on which
the aggregate outstanding principal amount of the Loans
together with the outstanding Letter of Credit Obligations
exceeds the lesser of (i) the Total Commitment, and (ii) the
Borrowing Base, in the amount of such excess."
1.4 AMENDMENT TO SECTION 3.1(A): LETTERS OF CREDIT.
Section 3.1(a) of the Credit Agreement is hereby deleted in its
entirety and the following substituted therefor:
"(a) Subject to and upon the terms and conditions herein set forth,
the Issuing Bank agrees that it will, at any time and from time to
time on or after the Effective Date and prior to the Maturity Date,
following its receipt of a Letter of Credit Request and Application
for Letter of Credit, issue for the account of the Company
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and in support of the obligations of the Company or any of its
Subsidiaries, one or more standby and/or commercial letters of
credit (the "LETTERS OF CREDIT") payable on a sight basis, up to a
maximum amount outstanding at any one time for all Letters of Credit
of $10,000,000.00; PROVIDED that the Issuing Bank shall not issue
any Letter of Credit if at the time of such issuance: (i) Letter of
Credit Obligations shall be greater than an amount which, when added
to the sum of all Advances then outstanding plus Letter of Credit
Obligations, would exceed the lesser of (x) the Total Commitment,
and (y) the Borrowing Base; or (ii) the expiry date or, in the case
of any Letter of Credit containing an expiry date that is extendable
at the option of the Issuing Bank, the initial expiry date, of such
Letter of Credit is a date that is later than the Maturity Date."
1.5 AMENDMENT TO SECTION 4.1: FEES.
Section 4.1(a) of the Credit Agreement is hereby amended by deleting
the grid contained in Section 4.1(a) and substituting the following therefor:
"FUNDED DEBT/EBITDA COMMITMENT FEE RATE
-------------------------------------------------------
greater than or equal to $4.00x 0.500%
greater than or equal to $3.50x and less than 4.00x 0.500%
greater than or equal to $3.00x and less than 3.50x 0.500%
greater than or equal to $2.50x and less than 3.00x 0.500%
greater than or equal to less than 2.50x 0.375%"
1.6 ADDITION OF SECTION 7.1(H): ADDITIONAL REPORTING REQUIREMENTS.
Section 7.1 of the Credit Agreement is hereby amended by
adding the following as subsection 7.1(h):
"(h) As soon as available, and in any event within thirty (30) days
after the end of each calendar month, the consolidated balance sheet
of the Company and its Subsidiaries as of the end of such month and
the related consolidated statements of income for such period, along
with summaries of the accounts receivable and accounts payable
balances as of the end of such month, all of which shall be
certified by the treasurer, chief financial officer, or chief
executive officer of the Company as fairly presenting in all
material respects, the financial position of the Company and its
Subsidiaries as of the end of such month in accordance with GAAP. In
addition to the foregoing, the Company shall also provide at such
time a schedule and
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explanation of the top fifteen (15) jobs in progress for which
projections indicate a negative deviation from the original
anticipated margins, which report shall include the amount of
underbillings for each such job."
1.7 ADDITION OF SECTION 7.1(I): BORROWING BASE CERTIFICATE.
Section 7.1 of the Credit Agreement is hereby amended by adding the
following as subsection 7.1(i):
"(i) Within thirty (30) days after the end of each calendar month, a
completed Borrowing Base Certificate calculating and certifying the
Borrowing Base as of the last day of such calendar month, signed by
an officer and the secretary of the company and in the form attached
hereto as Exhibit 7.1(i)."
1.8 ADDITION OF SECTION 7.10: ADDITIONAL COLLATERAL.
Article VII of the Credit Agreement is hereby amended by adding the
following as Section 7.10:
"SECTION 7.10 ADDITIONAL COLLATERAL. The Company hereby agrees that
on or before December 15, 2000, the Company and the Guarantors shall
take, or cause to be taken all such actions, execute and deliver or
cause to be executed and delivered all such agreements, documents
and instruments, and make or cause to be made all such filings and
recordings that may be necessary or, in the opinion of the Agents,
desirable in order to create in favor of the Administrative Agent,
for the benefit of the Banks, a valid (and upon such filing and
recording) perfected First Priority security interest in all
furniture, fixtures, machinery and equipment, (including, without
limitation, leasehold improvements, computers, telecommunications
equipment and vehicles) owned by the Company and the Guarantors as
security for the Obligations, which furniture, fixtures, machinery
and equipment shall be included in the definition of Collateral as
such term is used in the Credit Agreement. Such actions shall
include, without limitation, the following:
(i) Execution by the Company and delivery to the
Administrative Agent of an Amended and Restated Company Security
Agreement and Amended and Restated Subsidiary Security Agreements
granting a Lien on such furniture, fixtures, machinery and equipment
as security for the Obligations, which Amended and Restated Company
Security Agreement and Amended and Restated Subsidiary Security
Agreements shall be included in the definition of Collateral
Documents as such term is used in the Credit Agreement;
(ii) Delivery to the Administrative Agent of (a) the results
of a recent search, by a Person satisfactory to the Agents, of all
jurisdictions where filings to
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perfect are material or a material portion of such furniture,
fixtures, machinery and equipment are located, together with copies
of all such filings disclosed by such search; and (b) UCC
termination statements duly executed by all applicable Persons for
filing in all applicable jurisdictions as may be necessary to
terminate any effective UCC financing statements or fixture filings
disclosed in such search and affecting such furniture, fixtures,
machinery and equipment (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding
pursuant to the terms of this Agreement);
(iii) Delivery to the Administrative Agent of UCC financing
statements duly executed by the Company and each applicable
Guarantor with respect to all such furniture, fixtures, machinery
and equipment of the Company or such Guarantor, for filing in all
jurisdictions as may be necessary or, in the opinion of the Agents,
desirable to perfect the security interests created in such
furniture, fixtures, machinery and equipment pursuant to the
Collateral Documents; and
(iv) If required by the Administrative Agent, delivery to the
Administrative Agent of an opinion of counsel (which counsel shall
be reasonably satisfactory to the Agents) under the laws of Texas
and such other jurisdictions as Agents may reasonably require, in
each case with respect to the creation and perfection of the
security interests in favor of the Administrative Agent on behalf of
the Banks in such furniture, fixtures, machinery and equipment and
such other matters governed by the laws of such jurisdiction
regarding such security interests as the Agents may reasonably
request, in each case in form and substance reasonably satisfactory
to Agents.
Notwithstanding the foregoing, the Company and the Guarantors shall
not be required to re-title or to otherwise indicate the
Administrative Agent's lien on behalf of the Banks on the
certificate of title of any titled vehicles until such time as the
Administrative Agent notifies the Company that such action is
required."
1.9 AMENDMENT TO SECTION 8.2: CONSOLIDATION, MERGER OR SALE OF ASSETS.
Section 8.2 of the Credit Agreement is hereby amended by (1)
deleting the word "and" immediately after clause (b) contained in such Section
8.2, and (2) deleting the period at the end of Section 8.2 and substituting the
following therefor:
", and (d) wind ups, liquidations, dissolutions, mergers or
consolidations with respect to the Subsidiaries listed on Exhibit
8.2(d) attached hereto and incorporated herein by reference and
Asset Sales with respect to the stock of such Subsidiaries and the
assets owned by such Subsidiaries as of the Amendment Effective Date
for the Fourth Amendment to Credit Agreement; PROVIDED that all
proceeds received from such transactions permitted by this Section
8.2(d) shall be applied to the Obligations
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then outstanding under the Loan Documents. No amendment,
modification, termination, waiver or consent shall be made with
respect to this Section 8.2 or with respect to the definition of
"Asset Sales" without the consent of Banks holding at least eighty
percent (80%) of the Advances outstanding under the Loans, or, if no
Advances are outstanding, Banks holding such percentage of the Total
Commitment (notwithstanding any reduction or termination of the
Total Commitment) or if there are no Advances or Commitments
outstanding, Banks holding such percentage of outstanding Letters of
Credit."
1.10 AMENDMENT TO SECTION 8.5: INVESTMENTS.
Section 8.5(d) of the Credit Agreement is hereby deleted in its
entirety and the following substituted therefor:
"(d) Provided that the Company has obtained the prior written
consent of the Majority Banks with respect thereto, Investments in
the stock, warrants, stock appreciation rights, other securities
and/or other assets of domestic entities engaged in the same general
type of business as the Company on the Effective Date, in which the
Company or one of its wholly owned Subsidiaries is the surviving
entity."
1.11 AMENDMENT TO SECTION 8.6: RESTRICTED PAYMENTS.
Section 8.6 of the Credit Agreement is hereby deleted in its
entirety and the following substituted therefor:
"The Company will not, without the prior written consent of the
Majority Banks, (i) pay any dividend or other distribution, direct
or indirect, on account of, or redeem, retire, purchase or guaranty
the value of or make any other acquisition, direct or indirect, of
any shares of any class of stock of the Company, or of any warrants,
rights or options to acquire any such shares, now or hereafter
outstanding, or (ii) make any Restricted Subordinated Debt Payments;
PROVIDED the Company may, to the extent, and only to the extent,
such payments are not otherwise prohibited pursuant to the terms of
this Agreement, make payments of regularly scheduled interest in
respect of any Subordinated Indebtedness, in accordance with the
terms of and to the extent required by, and subject to the
subordination provisions contained in, the documents establishing
and evidencing such Subordinated Indebtedness."
1.12 AMENDMENT TO SECTION 8.10: FUNDED SENIOR DEBT TO EBITDA RATIO.
Section 8.10 of the Credit Agreement is deleted in its entirety and
the following is substituted therefor:
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"The Company will not, as of the last day of any fiscal quarter,
permit the ratio of its total Funded Senior Debt on such day to
EBITDA for the four consecutive fiscal quarters then ended to exceed
the amounts set forth below:
DATE(S) RATIO
-------- -----
09/30/00 3.20x
12/31/00 3.70x
03/31/01 3.75x
06/30/01 3.55x
09/30/01 3.10x
For purposes of calculating the ratio in this Section 8.10, the
calculation of Funded Senior Debt after the acquisition of assets or
entities permitted under this Agreement shall include adjustments to
account for the total Funded Senior Debt of or applicable to such
acquired assets or entities during the relevant period."
1.13 AMENDMENT TO SECTION 8.11: TOTAL FUNDED DEBT TO EBITDA RATIO.
Section 8.11 of the Credit Agreement is deleted in its entirety and
the following is substituted therefor:
"The Company will not, as of the last day of any fiscal quarter,
permit the ratio of (i) its Total Funded Debt on such day to (ii)
EBITDA for the four consecutive fiscal quarters then ended to exceed
the amounts set forth below:
DATE(S) RATIO
-------- -----
09/30/00 3.85x
12/31/00 4.50x
03/31/01 4.60x
06/30/01 4.35x
09/30/01 3.80x
For purposes of calculating the ratio in this Section 8.11, the
calculation of Total Funded Debt after the acquisition of assets or
entities permitted under this Agreement
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shall include adjustments to account for the Total Funded Debt of or
applicable to such acquired assets or entities during the relevant
period."
1.14 AMENDMENT TO SECTION 8.13: CAPITAL EXPENDITURES.
Section 8.13 of the Credit Agreement is hereby amended by adding the
following provision at the end of such section:
"Notwithstanding anything contained in this Agreement to the
contrary, for the fiscal year 2001 the Company will not permit total
consolidated capital expenditures (including Capitalized Lease
Obligations but exclusive of (a) Investments permitted under SECTION
8.5(D), and (b) consolidated capital expenditures with respect to
casualty loss replacements) to be greater than the lesser of (i)
$22,000,000.00, and (ii) two percent (2.00%) of gross revenues (pro
forma gross revenues with respect to permitted acquisitions) for
fiscal year 2001."
1.15 AMENDMENT TO SECTION 8.14: INTEREST COVERAGE RATIO.
Section 8.14 of the Credit Agreement is deleted in its entirety and
the following is substituted therefor:
"The Company will not, as of the last day of any fiscal quarter,
permit the ratio of EBITDA for the four consecutive fiscal quarters
then ended to cash Interest Expense for such period to be less than
the amounts set forth below:
DATE(S) RATIO
-------- -----
09/30/00 3.10x
12/31/00 2.35x
03/31/01 2.15x
06/30/01 2.25x
09/30/01 2.50x"
1.16 AMENDMENT OF SECTION 8.15: MINIMUM EBITDA.
Section 8.15 of the Credit Agreement is deleted in its entirety and
the following is substituted therefor:
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"The Company will not, as of the last day of any fiscal quarter
specified in the table below, permit its EBITDA for the three (3)
months then ended to be less than the amounts set forth below:
DATE(S) QUARTERLY EBITDA
-------- ----------------
09/30/00 $15,750,000.00
12/31/00 $15,300,000.00
03/31/01 $13,800,000.00
06/30/01 $17,400,000.00
09/30/01 $22,450,000.00"
1.17 ADDITION OF EXHIBIT 7.1(I): FORM OF BORROWING BASE CERTIFICATE.
The Credit Agreement is hereby amended by adding Exhibit 7.1(i)
attached hereto as Exhibit 7.1(i) to the Credit Agreement.
1.18 ADDITION OF EXHIBIT 8.2(D): EXCEPTED SUBSIDIARIES.
The Credit Agreement is hereby amended by adding Exhibit 8.2(d)
attached hereto as Exhibit 8.2(d) to the Credit Agreement.
SECTION 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the prior or
concurrent satisfaction of all of the following conditions precedent (the date
of satisfaction of such conditions being referred to herein as the "AMENDMENT
EFFECTIVE DATE"):
A. On or before the Amendment Effective Date, the Company shall deliver to
the Banks (or to the Agents for the Banks) the following, each, unless otherwise
noted, dated the Amendment Effective Date:
1. A certificate of the secretary or an assistant secretary of the
Company and of the Guarantors certifying: (i) that the resolutions of the Board
of Directors of the Company and of the Guarantors approving and authorizing the
execution, delivery, and performance of the Amended Credit Agreement and
amendments thereto delivered on the Effective Date, are in full force and effect
and have not been amended, supplemented or otherwise modified since December 14,
1998 and (ii) the signature and incumbency of the officers of each of the
Company and of the Guarantors who are authorized to sign on behalf of the
Company or such Guarantor.
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2. Counterparts of this Amendment executed by the Majority Banks and
each of the other parties hereto.
3. Payment to each of the Banks approving this Amendment, subject to
Majority Bank approval, of an amendment fee equal to twenty one hundredths of
one percent (0.20%) of such Bank's Commitment and payment to BOT as
administrative agent of any other fees agreed upon in writing by the Company and
BOT.
B. On or before the Amendment Effective Date, all corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by the Agents, acting on behalf of the Banks, and their counsel shall
be satisfactory in form and substance to the Agents and such counsel, and the
Agents and such counsel shall have received all such counterpart originals or
certified copies of such documents as the Agents may reasonably request.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, the Company and each Guarantor
party hereto represents and warrants to each Bank that the following statements
are true, correct and complete as to itself:
A. CORPORATE POWER AND AUTHORITY. The Company and each Guarantor party
hereto has all requisite corporate power and authority to enter into this
Amendment and to carry out the transactions contemplated hereby and the Company
and each Guarantor party hereto has all requisite corporate power and authority
to carry out the transactions contemplated by, and perform its obligations
under, the Amended Credit Agreement.
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Credit Agreement have been duly
authorized by all necessary corporate action on the part of the Company and each
Guarantor party hereto, as the case may be.
C. NO CONFLICT. The execution and delivery by the Company and each
Guarantor party hereto of this Amendment and the performance by the Company and
each Guarantor of this Amendment and the performance by the Company of the
Amended Credit Agreement do not and will not (i) violate any provision of any
law or any governmental rule or regulation applicable to the Company or any of
its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of the
Company or any of its Subsidiaries or any order, judgment or decree of any court
or other agency of government binding on the Company or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any material agreement (other than
failure to pay the notes evidencing the Subordinated Debt in accordance with
this Amendment) to which the Company or any of its Subsidiaries is a party or by
which it is bound or to which it is subject, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries (other than any Liens created under
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any of the Loan Documents in favor of the Agents on behalf of the Banks), or
(iv) require any approval of stockholders or any approval or consent of any
Person under any material agreement to which the Company or any of its
Subsidiaries is a party or by which it is bound or to which it is subject.
D. GOVERNMENTAL CONSENTS. The execution and delivery by the Company and
each Guarantor party hereto of this Amendment and the performance by the Company
and each Guarantor of this Amendment and the performance by the Company and each
Guarantor of the Amended Credit Agreement do not and will not require any
registration with, consent or approval of, or notice to, or other action to,
with or by, any federal, state or other governmental authority or regulatory
body.
E. BINDING OBLIGATION. This Amendment has been duly executed and delivered
by the Company and each Guarantor party hereto and this Amendment and the
Amended Credit Agreement are the legally valid and binding obligations of the
Company and each Guarantor, enforceable against the Company and each Guarantor
in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM AMENDED CREDIT
AGREEMENT. The representations and warranties contained in Article VI of the
Amended Credit Agreement are and will be true, correct and complete in all
material respects on and as of the Amendment Effective Date to the same extent
as though made on and as of that date, except (i) to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date, and (ii) to the extent such representations and warranties
relate to a default of any Subordinated Debt resulting from a failure to pay the
notes evidencing such Subordinated Debt in accordance with this amendment
resulting from the Company not being in Financial Compliance.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would, after giving effect to this Amendment, constitute an Event of
Default or a Default.
SECTION 4. ACKNOWLEDGMENT AND CONSENT
The Company is a party to certain Collateral Documents pursuant to which
the Company has created Liens in favor of the Agents on certain Collateral to
secure the Obligations. Each of the Guarantors party hereto is a party to
certain Collateral Documents and the Guaranty, pursuant to which each such
Guarantor has (i) guarantied the Obligations and (ii) created Liens in favor of
the Administrative Agent on certain Collateral to secure the Guaranteed
Obligations of such Guarantor under the Guaranty. The Guarantors party hereto
are collectively referred to herein as the "CREDIT SUPPORT PARTIES", and the
Collateral Documents and the Guaranty are collectively referred to herein as the
"CREDIT SUPPORT DOCUMENTS".
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Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement, the Collateral Documents and the
Guaranty and this Amendment and consents to the further amendment of the Credit
Agreement effected pursuant to this Amendment. Each Credit Support Party hereby
confirms that each Credit Support Document to which it is a party or otherwise
bound and all Collateral encumbered thereby will continue to guaranty or secure,
as the case may be, to the fullest extent possible the payment and performance
of all "Obligations," "Guarantied Obligations" and "Secured Obligations," as the
case may be (in each case as such terms are defined in the applicable Credit
Support Document), including without limitation the payment and performance of
all such "Obligations," "Guarantied Obligations" or "Secured Obligations," as
the case may be, in respect of the Obligations of the Company now or hereafter
existing under or in respect of the Amended Credit Agreement and the Notes.
Each Credit Support Party acknowledges and agrees that any of the Credit
Support Documents to which it is a party or otherwise bound shall continue in
full force and effect and that all of its obligations thereunder shall be valid
and enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. Each Credit Support Party represents and
warrants that all representations and warranties contained in the Amended Credit
Agreement and the other Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Amendment Effective Date to the same extent as though made on and as
of that date, except (i) to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date, and (ii)
to the extent such representations and warranties relate to a default of any
Subordinated Debt resulting from a failure to pay the notes evidencing such
Subordinated Debt in accordance with this amendment resulting from the Company
not being in Financial Compliance.
Each Credit Support Party acknowledges and agrees that (i) notwithstanding
the conditions to effectiveness set forth in this Amendment, such Credit Support
Party is not required by the terms of the Credit Agreement or any other Loan
Document to consent to the amendments to the Credit Agreement effected pursuant
to this Amendment and (ii) nothing in the Amended Credit Agreement, this
Amendment or any other Loan Document shall be deemed to require the consent of
such Credit Support Party to any future amendments to the Amended Credit
Agreement.
14
SECTION 5. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE AMENDED CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
(i) On and after the Amendment Effective Date, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Credit Agreement, and each reference
in the other Loan Documents to the "Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement shall
mean and be a reference to the Amended Credit Agreement.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of any
Agent or any Bank under, the Credit Agreement or any of the other Loan
Documents.
B. FEES AND EXPENSES. Company acknowledges that all reasonable costs, fees
and expenses as described in Section 12.4 of the Credit Agreement incurred by
the Agents and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of the Company.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS; EFFECTIVENESS. 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 an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment (other than the provisions of Section 1, which
shall become effective upon the satisfaction of each of the conditions set forth
in Section 2) shall become effective upon
15
the execution of a counterpart hereof by the Company, the Credit Support
Parties, the Guarantors and the Majority Banks and receipt by the Company and
the Agents of written or telephonic notification of such execution and
authorization of delivery of such counterpart.
[Remainder of page intentionally left blank]
16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
COMPANY:
COMFORT SYSTEMS USA, INC.
By:
---------------------------------
J. Xxxxxx Xxxxxxxxxxxxx
Senior Vice President and
Chief Financial Officer
17
CREDIT SUPPORT PARTIES AND GUARANTORS:
XXXXX MECHANICAL SERVICES, INC.
ACCURATE AIR SYSTEMS, INC.
AIR POWER SYSTEMS, INC.
ALLSTATE MECHANICAL, INC.
ATLAS AIR CONDITIONING COMPANY
ATLAS COMFORT SERVICES USA, INC.
XXXXXXXXX'X MECHANICAL CONTRACTORS, INC.
BCM CONTROLS CORPORATION
CEL, INC.
CONTRACT SERVICE, INC.
DESIGN MECHANICAL INCORPORATED
DYNASTAR, INC.
EASTERN HEATING & COOLING, INC.
EASTERN REFRIGERATION CO., INC.
EDS, INC.
F&G MECHANICAL CORPORATION
XXXX XXXXX MECHANICAL CONTRACTORS, INC.
FREEWAY HEATING & AIR CONDITIONING, INC.
GMS AIR CONDITIONING, INC.
HELM CORPORATION
HILLCREST SHEET METAL, INC.
XXXXX AIR CONDITIONING ENTERPRISES, INC.
XXXXXXX SERVICE, INC.
XXXXXXXX SERVICE, INC.
XXXXXX ELECTRIC CO., INC.
XXXXXXX MECHANICAL CORPORATION
XXXXXX HEATING, INC.
MEADOWLANDS FIRE PROTECTION CORP.
MECHANICAL SERVICE GROUP, INC.
MJ MECHANICAL SERVICES, INC.
XXXXX & BLACK MECHANICAL, INC.
NORTH JERSEY MECHANICAL CONTRACTORS, INC.
OK SHEET METAL & AIR CONDITIONING, INC.
QUALITY AIR HEATING & COOLING, INC.
00
XXX XXXXXXXXXXX XXXX.
XXXXX XXXX MECHANICAL, INC.
SALMON & ALDER, INC.
SEASONAIR, INC.
S&K AIR CONDITIONING CO., INC.
X.X. XXXXXXXX COMPANY, INC.
STANDARD HEATING & AIR CONDITIONING
COMPANY
TECH HEATING AND AIR CONDITIONING, INC.
TECH MECHANICAL, INC.
TEMP-RIGHT SERVICE, INC.
TRI-CITY MECHANICAL, INC.
XXXXXX SERVICE CO.
XXXXXX-J-XXXXXX, INC.
WESTERN BUILDING SERVICES, INC.
By:
-----------------------------------
J. Xxxxxx Xxxxxxxxxxxxx
Vice President
19
AMOUNT OF COMMITMENT: ADMINISTRATIVE AGENT/BANK:
$42,000,000.00 BANK ONE, TEXAS, N.A.,
AS ADMINISTRATIVE AGENT AND INDIVIDUALLY
AS A BANK
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
20
AMOUNT OF COMMITMENT: SYNDICATION AGENT/BANK:
$32,666,667.00 BANKERS TRUST COMPANY,
AS SYNDICATION AGENT AND INDIVIDUALLY AS A
BANK
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
21
AMOUNT OF COMMITMENT: DOCUMENTATION AGENT/BANK:
$39,666,667.00 BANK OF AMERICA, N.A. (FORMERLY KNOWN AS
NATIONSBANK, N.A.), AS DOCUMENTATION AGENT
AND INDIVIDUALLY, AS A BANK
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
22
AMOUNT OF COMMITMENT: CO-AGENT/BANK:
$23,333,333.00 CREDIT LYONNAIS NEW YORK BRANCH,
AS CO-AGENT AND INDIVIDUALLY, AS A BANK
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
23
AMOUNT OF COMMITMENT: CO-AGENT/BANK:
$23,333,333.00 NATIONAL CITY BANK,
AS CO-AGENT AND INDIVIDUALLY, AS A BANK
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
24
AMOUNT OF COMMITMENT: CO-AGENT/BANK:
$23,333,333.00 THE BANK OF NOVA SCOTIA, AS CO-AGENT AND
INDIVIDUALLY, AS A BANK
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
25
AMOUNT OF COMMITMENT: BANK:
$18,666,667.00 UNION BANK OF CALIFORNIA, N.A.
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
26
AMOUNT OF COMMITMENT: BANK:
$14,000,000.00 COMERICA BANK
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
27
AMOUNT OF COMMITMENT: BANK:
$4,666,667.00 BANK POLSKA, KASA OPIEKI S.A., PEKOA S.A.
GROUP, NEW YORK BRANCH
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
28
AMOUNT OF COMMITMENT: BANK:
$28,000,000.00 FIRSTAR BANK, NATIONAL ASSOCIATION
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
29
AMOUNT OF COMMITMENT: BANK:
$18,666,667.00 LASALLE BANK NATIONAL ASSOCIATION
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
30
AMOUNT OF COMMITMENT: BANK:
$11,666,667.00 GENERAL ELECTRIC CAPITAL
CORPORATION
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
31
EXHIBIT 7.1(i)
BORROWING BASE CERTIFICATE
The undersigned hereby certifies that the undersigned is the
___________________ of COMFORT SYSTEMS USA, INC., a Delaware corporation (the
"COMPANY"), and that such officer is authorized to execute this Borrowing Base
Certificate on behalf of the Company pursuant to the Third Amended and Restated
Credit Agreement dated as of December 14, 1998 (as it may be amended,
supplemented or restated from time to time, the "AGREEMENT"), by and among the
Company, BANK ONE, TEXAS, N.A., as Agent, and the other parties thereto. The
undersigned further certifies, represents and warrants that to the knowledge of
such officer, after due inquiry, that SCHEDULE 1 attached hereto has been duly
completed and is true and correct in all respects.
Dated ________________________, 200__.
COMFORT SYSTEMS USA, INC.
By:
---------------------------------
Name:
------------------------------
Title:
-----------------------------
SCHEDULE 1 TO EXHIBIT 7.1(I)
BORROWING BASE CALCULATION
As of _________________, 200___ :
Eligible Accounts Receivable $
-----------
x 80% equals
Borrowing Base $
===========
