Exhibit 10.41
THIRD AMENDMENT TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as
of the 30th day of March, 2001, and effective as of December 31, 2000, with
respect to Sections 2(b), (c), (d), (m), (n) and (o) hereof, by and among CECO
GROUP, INC., CECO FILTERS, INC., AIR PURATOR CORPORATION, NEW XXXXX CO., INC.,
THE XXXX & XXXX MANUFACTURING COMPANY and KBD/TECHNIC, INC. (the "Borrowers"),
and PNC BANK, NATIONAL ASSOCIATION ("PNC"), individually and as agent for itself
and the other banks (collectively, the "Banks") which from time to time are
parties to the hereinafter defined Credit Agreement (in such capacity, the
"Agent").
BACKGROUND
A. The Agent, the Banks and the Borrowers are parties to a Credit
Agreement dated as of December 7, 1999 as amended by Amendment to Credit
Agreement, dated as of March 28, 2000 and by Second Amendment to Credit
Agreement dated as of November 10, 2000 (as amended, the "Credit Agreement").
B. The Borrowers have requested and the Agent and the Banks have agreed
to amend the Credit Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for good and
valuable consideration, the legality and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
1. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Credit Agreement.
2. Amendments to Credit Agreement. The Credit Agreement is hereby
amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended by
inserting the following new definition:
"Equity Contribution": shall mean the infusion and continued
maintenance of capital in the Borrowers in the form of equity or
subordinated debt in a minimum amount of Four Million and 00/100
Dollars ($4,000,000), in a form satisfactory to the Agent and the
Banks in their sole discretion, by CECO.
(b) The definition of EBITDA as presently set forth in the Credit
Agreement shall be deleted and shall be replaced by the following:
"EBITDA": For any period, net income (or loss) of a Person for such
period, plus the amount of income taxes, interest expense,
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reasonable expenses arising out of the preparation, negotiation,
execution and delivery of the Acquisition Documents and the Loan
Documents, depreciation and amortization deducted from earnings in
determining net income (or loss) of such Person excluding all
investment income of such Person occurring on or after January 1,
2001, all as determined on a consolidated basis in accordance with
GAAP.
(c) The definition of "Fixed Charge Coverage Ratio" as presently set
forth in the Credit Agreement shall be amended to include the following at the
end of the existing definition:
Provided, however, calculation of the Fixed Charge Coverage Ratio
shall not include the Term Loan Prepayments.
(d) The definition of "Leverage Ratio" as presently set forth in the
Credit Agreement shall be deleted and shall be replaced with the following:
"Leverage Ratio": At the date of determination, the ratio of
Consolidated Debt of CECO (but (i) excluding that certain debt of
CECO for funds borrowed to purchase the Peerless Stock, if the
market value of the Peerless Stock then owned by CECO exceeds the
amount of such debt), and (ii) further excluding the Subordinated
Debt; and (iii) further excluding the cash value of life insurance
loans) to (EBITDA), each determined for CECO on a consolidated basis
and calculated as of the end of the fiscal quarter ending on or
immediately preceding such date.
(e) The definition of "Revolving Credit Commitment" as presently set
forth in the Credit Agreement shall be deleted and shall be replaced with the
following:
"Revolving Credit Commitment": means $9,000,000, as reduced from
time to time pursuant to Section 2.9.
(f) Annex I to the Credit Agreement shall be deleted and shall be
replaced with the following:
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Loans Applicable Margin for Applicable Margin for Base
Eurodollar Loans Rate Loans
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Revolving Loans 3.50% 2.00%
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Term Loan A 3.50% 2.00%
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Term Loan B 4.00% 2.50%
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provided, however, upon the occurrence and continuation of the
Equity Infusion, Annex I to the Credit Agreement shall be as
follows:
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Loans Applicable Margin for Applicable Margin for Base
Eurodollar Loans Rate Loans
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Revolving Loans 3.00% 1.50%
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Term Loan A 3.00% 1.50%
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Term Loan B 3.50% 2.00%
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(g) Section 2.4(b) shall be amended to provide that the Letter of
Credit Fee shall be changed from one percent (1%) to (1.5%).
(h) Section 2.1(a)(y)(ii) shall be amended to change plus to minus.
(i) Section 2.1(a)(y)(iii) shall be deleted.
(j) The requirement set forth in Section 2.5(a) of the Credit
Agreement that the Borrowers pay to each Bank, through the Agent, a Commitment
Fee shall be abated until the occurrence of the Equity Contribution or 1-02-02
whichever is sooner, at which time, Section 2.5(a) of the Credit Agreement shall
be in full force and effect.
(k) Section 2.6(b) of the Credit Agreement shall be modified to
include the following at the end of the existing Section 2.6(b):
In addition to the payments required on the Term Loans by this
Section 2.6, the Borrowers shall make the following payments to
be applied to the principal balances of the Term Loans:
(a) $500,000 on or before June 30, 2001;
(b) $500,000 on or before September 30, 2001; and,
(c) $1,000,000 on or before December 31, 2001. (The foregoing
payments shall be referred to as the "Term Loan Prepayments".)
(l) In addition to the inspections and audits provided for in
Section 5.6 of the Credit Agreement, the Agent and Banks may request, not more
than once a year, an appraisal of the Collateral.
(m) Section 6.1(a) Leverage Ratio of the Credit Agreement shall be
abated as it presently exists through January 1, 2002 and shall be modified as
follows:
(a) Leverage Ratio. Permit the Leverage Ratio, as of the end of any
fiscal quarter ending during the period specified below, for the
prior four consecutive fiscal quarters, to equal or exceed the
amount set forth opposite such period:
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Leverage Ratio To Be
Last Day of Fiscal Quarter During Period Less Than
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December 31, 2000 through March 30, 2001 5.50 to 1
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March 31, 2001 through June 29, 2001 6.30 to 1
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June 30, 2001 through September 29, 2001 5.50 to 1
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September 30, 2001 through December 30, 2001 4.60 to 1
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December 31, 2001 3.10 to 1
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provided, however, the abatement of Section 6.1(a) Leverage Ratio of
the Credit Agreement shall cease and such section shall continue as
provided in the Credit Agreement immediately before the effective
date of this Amendment on January 2, 2002.
(n) Section 6.1(b) of the Credit Agreement shall be abated in its
entirety as it presently exists through January 1, 2002 and shall be modified as
follows:
(b) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
Ratio, as of the end of each fiscal quarter ending during the period
specified below, to be less than the amount set forth opposite such
period:
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Fixed Charge Ratio To
Last Day of Fiscal Quarter During Period Be Less Than
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December 31, 2000 through March 30, 2001 .90 to 1
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March 31, 2001 through June 29, 2001 .80 to 1
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June 30, 2001 through September 29, 2001 .80 to 1
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September 30, 2001 through December 30, 2001 .90 to 1
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December 31, 2001 1.00 to 1
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provided, however, , the abatement of Section 6.1(b) Fixed Charge
Coverage Ratio of the Credit Agreement shall cease and such section
shall continue as provided in the Credit Agreement immediately
before the effective date of this Amendment on January 2, 2002
(o) Section 6.1(c) Interest Coverage Ratio of the Credit Agreement
shall be abated in its entirety as it presently exists through January 1, 2002
and shall be modified as follows:
(b) Interest Coverage Ratio. Permit the Interest Coverage Ratio, as
of the end of each fiscal quarter ending during the period specified
below, to be less than the amount set forth opposite such period:
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Interest Coverage Ratio
Last Day of Fiscal Quarter During Period To Be Less Than
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December 31, 2000 through March 30, 2001 1.40 to 1
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March 31, 2001 through June 29, 2001 1.10 to 1
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June 30, 2001 through September 29, 2001 1.25 to 1
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September 30, 2001 through December 30, 2001 1.60 to 1
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December 31, 2001 2.20 to 1
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provided, however, the abatement of Section 6.1(c) Interest Coverage
Ratio of the Credit Agreement shall cease and such section shall
continue as provided in the Credit Agreement immediately before the
effective date of this Amendment on January 2, 2002.
3. Additional Covenants. The Credit Agreement and any other Applicable
Loan Document shall be amended to include the following additional covenants and
the Borrowers' failure to comply with such additional covenants shall constitute
an immediate Event of Default without any required notice or cure period,
notwithstanding any provision to the contrary contained in the Credit Agreement
or any other Loan Document:
(a) Borrowers shall make no payments of principal or interest on any
Subordinated Debt until the occurrence and continuation of the Equity
Contribution.
(b) Borrowers shall make no Bonus Pool payments until the occurrence
and continuation of the Equity Contribution.
(c) Any fee paid to CECO from any of the Borrowers and all
investments maintained in financial institutions or otherwise located in Canada
shall be deposited in an account with Bank One, NA, at its banking office
located in Toronto, Ontario, or a financial institution domiciled in the United
States, acceptable to the Agent and the Banks in their collective sole
discretion, which accounts and all amounts deposited therein shall be pledged to
the Agent for the ratable benefit of the Banks as additional Collateral under
terms and conditions acceptable to the Agent and the Banks in their sole
discretion.
(d) CECO shall pledge to the Agent, for the ratable benefit of the
Banks, all of its right, title and interest in and to the Taurus Brokerage
Account, which shall contain the Peerless Stock, as additional Collateral under
terms and conditions acceptable to the Agent and the Banks in their collective
sole discretion.
(e) CECO shall sell the Peerless Stock and the proceeds from such
sale shall be applied to the extent necessary to make the Term Loan Prepayments
as provided in Section 2(k) of this Amendment.
(f) CECO shall provide to the Agent and to each Bank a proforma
financial statement, prepared on a consolidated basis, containing its forecast
for compliance with the Financial Covenants of the Credit Agreement during each
fiscal quarter of 2001.
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(g) Borrowers shall:
(i) by April 30, 2001, complete and submit to Agent certain
Collateral Due Diligence Reports previously requested by Agent;
(ii) by April 30, 2001, execute and deliver fully executed
documents perfecting assignment of the accounts specified in
Sections 3(c) and (e) above and deliver the fully executed
Subordinated Creditor's Consent in the form attached hereto of ICS
Trustee Services, Ltd. and Xxxxxx Xxxxxxx;
(iii) within thirty days after requested by Agent deliver any
additional documents reasonably requested by Agent and Bank to
perfect any security interests in Collateral granted under the
Credit Agreement.
4. Amendment Fee. Borrowers shall pay to the Agent, for the ratable
benefit of the Banks, a fee in the amount of $25,000 upon execution of this
Agreement and an Amendment Fee of $150,000, due and payable on January 2, 2002;
provided however:
(a) that if the Equity Contribution is made on or before June 30,
2001, the Amendment Fee shall be deemed satisfied by the payment of $50,000 paid
simultaneously with the Equity Contribution;
(b) that if the Equity Contribution is made between July 1, 2001 and
September 30, 2001, the Amendment Fee shall be deemed satisfied by the payment
of $100,000 paid simultaneously with the Equity Contribution;
(c) that if the Equity Contribution is made between October 1, 2001
and December 31, 2001, the Amendment Fee shall be $150,000 and shall be paid
simultaneously with the Equity Contribution.
5. Cash Collateral Account. Borrowers shall establish an account at a
financial institution acceptable to the Agent and the Banks, in their sole
discretion, ("Cash Collateral Account") and shall deposit in such Cash
Collateral Account the amount of $50,000 on the last day of each calendar
quarter, commencing on June 30, 2001, up to the aggregate amount of $150,000.
The Cash Collateral Account and all funds deposited therein shall be pledged to
the Agent and the Banks under terms and conditions acceptable to them in their
sole discretion. Upon payment by the Borrowers of the Amendment Fee, if no Event
of Default has occurred and is continuing or would have occurred, but for the
giving of notice or the passage of time, the Agent and the Banks shall release
their interest in the Cash Collateral Account.
6. Consent to Extension of Bonus Pool Payments. The Agent and the
Banks, upon the request of Xxxxxxx X. Xxxx, Xxxxxxxx X. Xxxx and Xxxxx Xxxx,
shall consent to an extension of the Bonus Pool payments for a period of one (1)
year.
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7. Amendment to the Loan Documents. All references to the Credit
Agreement in the Loan Documents and in any documents executed in connection
therewith shall be deemed to refer to the Credit Agreement as amended by this
Amendment.
8. Ratification of the Loan Documents. Notwithstanding anything to the
contrary herein contained or any claims of the parties to the contrary, the
Agent, the Banks and the Borrowers agree that the Loan Documents and each of the
documents executed in connection therewith are in full force and effect and each
such document shall remain in full force and effect, as further amended by this
Amendment, and each of the Borrowers hereby ratifies and confirms its
obligations thereunder.
9. Representations and Warranties.
(a) Each Borrower hereby certifies that (i) the representations and
warranties of such Borrower in the Credit Agreement as amended herein are true
and correct in all material respects as of the date hereof, as if made on the
date hereof and (ii) no Event of Default and no event which could become an
Event of Default with the passage of time or the giving of notice, or both,
under the Credit Agreement or the other Loan Documents exists on the effective
date hereof.
(b) Each Borrower further represents that it has all the requisite
power and authority to enter into and to perform its obligations under this
Amendment, and that the execution, delivery and performance of this Amendment
have been duly authorized by all requisite action and will not violate or
constitute a default under any provision of any applicable law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect or of the Articles of Incorporation or by-laws of such
Borrower, or of any indenture, note, loan or credit agreement, license or any
other agreement, lease or instrument to which such Borrower is a party or by
which such Borrower or any of its properties are bound.
(c) Each Borrower also further represents that its obligation to
repay the Loans, together with all interest accrued thereon, is absolute and
unconditional, and there exists no right of set off or recoupment, counterclaim
or defense of any nature whatsoever to payment of the Loans, and each Borrower
further represents that the Agents and Banks have fully performed all of their
respective obligations under the Loan Documents through the date of this
Amendment.
(d) Each Borrower also further represents that there have been no
changes to the Articles of Incorporation, by-laws or other organizational
documents of each such Borrower since the most recent date true and correct
copies thereof were delivered to the Agent.
10. Conditions Precedent. The effectiveness of the amendments set forth
herein is subject to the fulfillment, to the satisfaction of the Agent and its
counsel, of the following conditions precedent:
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(a) The Borrowers shall have delivered to the Agent the following,
all of which shall be in form and substance satisfactory to the Agent and shall
be duly completed and executed:
(i) This Amendment and the consent of the Guarantor and the
consent of Green Diamond Oil Corp. as attached hereto; and
(ii) Such additional documents, certificates and information as
the Agent may require pursuant to the terms hereof or otherwise
reasonably request.
(b) After giving effect to the amendments contained herein, the
representations and warranties set forth in the Credit Agreement shall be true
and correct on and as of the date hereof.
(c) After giving effect to the amendments contained herein, no Event
of Default hereunder, and no event which, with the passage of time or the giving
of notice, or both, would become such an Event of Default shall have occurred
and be continuing as of the date hereof.
(d) The Borrowers shall have paid the reasonable fees and
disbursements of the Agent's counsel incurred in connection with this Amendment.
11. No Waiver. Except as expressly provided herein, this Amendment does
not and shall not be deemed to constitute a waiver by the Agent or the Banks of
any Event of Default, or of any event which with the passage of time or the
giving of notice or both would constitute an Event of Default, nor does it
obligate the Agent or the Banks to agree to any further modifications to the
Credit Agreement or any other Loan Document or constitute a waiver of any of the
Agent's or the Banks' other rights or remedies.
12. Waiver and Release. The Borrowers each on behalf of themselves,
their agents, employees, officers, directors, successors and assigns, do hereby
waive and release Agent and Banks, their agents, employees, officers, directors,
affiliates, parents, successors and assigns, from any claims arising from or
related to administration of the Credit Agreement and Loan Document and any
course of dealing among the parties not in compliance with those agreements from
the inception of the Credit Agreement whether known or unknown through the date
of execution and delivery of this Amendment.
13. Effective Date. The parties hereto agree that subsections (b), (c),
(d), (m), (n) and (o) of Section 2 hereof shall for all purposes be deemed to be
effective as of December 31, 2000 and for all purposes the Credit Agreement
shall be deemed to have been amended as of such date to reflect the amendments
to the Credit Agreement set forth in such subsections.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
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CECO GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxxx X. Xxxxxx
Title: CFO
CECO FILTERS, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxxx X. Xxxxxx
Title: Secretary
AIR PURATOR CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxxx X. Xxxxxx
Title: Secretary
NEW XXXXX CO., INC.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: Treasurer
THE XXXX & XXXX MANUFACTURING COMPANY
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: President
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KBD/TECHNIC, INC.
By: /s/
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Name:
Title: Treasurer
PNC BANK, NATIONAL ASSOCIATION, as
Agent and as a Bank
By: /s/ Xxxxxxx Xxxxx
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Title: Vice President
FIFTH THIRD BANK, as a Bank
By: /s/ Xxxxx Xxxxxxxxx
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Title: Assistant Vice President
BANK ONE, NA, as a Bank
By: /s/ Xxxxxxx Xxxxxxxx
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Title: Vice President
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GUARANTOR'S CONSENT
By Corporate Guaranty, dated December 7, 2000 (the "Guaranty"), the
undersigned (the "Guarantor") guaranteed to the Agent and the Banks, subject to
the terms and conditions set forth therein, the prompt payment and performance
of all of the Obligations (as defined therein). The Guarantor consents to the
Borrowers' execution of the foregoing Third Amendment to Credit Agreement. The
Guarantor hereby acknowledges and agrees that the Guaranty remains unaltered and
in full force and effect and is hereby ratified and confirmed in all respects.
CECO ENVIRONMENTAL CORP.
By: /s/ Xxxxxxxx X. Xxxxxx
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Title:
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SUBORDINATED CREDITOR'S CONSENT
The undersigned (the "Subordinated Creditor") is a party to the
Subordination Agreement with the Agent and the Banks and other subordinated
creditors, dated December 7, 2000 (the "Subordination Agreement"), the
Subordinated Creditor consents to the Borrowers' execution of the foregoing
Third Amendment to Credit Agreement. The Subordinated Creditor agrees that
Section 3(a) of the foregoing Third Amendment to Credit Agreement applies to it
and that such Subordinated Creditor is bound thereby. The Subordinated Creditor
hereby acknowledges and agrees that, except as provided in Section 3(a) of the
foregoing Third Amendment to Credit Agreement, the Subordination Agreement
remains unaltered and in full force and effect and is hereby ratified and
confirmed in all respects.
GREEN DIAMOND OIL CORP.
By: /s/ Xxxxxxx XxXxxxxx
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Title President
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SUBORDINATED CREDITOR'S CONSENT
The undersigned (the "Subordinated Creditor") is a party to the
Subordination Agreement with the Agent and the Banks and other subordinated
creditors, dated December 7, 2000 (the "Subordination Agreement"), the
Subordinated Creditor consents to the Borrowers' execution of the foregoing
Third Amendment to Credit Agreement. The Subordinated Creditor agrees that
Section 3(a) of the foregoing Third Amendment to Credit Agreement applies to it
and that such Subordinated Creditor is bound thereby. The Subordinated Creditor
hereby acknowledges and agrees that, except as provided in Section 3(a) of the
foregoing Third Amendment to Credit Agreement, the Subordination Agreement
remains unaltered and in full force and effect and is hereby ratified and
confirmed in all respects.
ICS TRUSTEE SERVICES, LTD.
By:
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Title
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SUBORDINATED CREDITOR'S CONSENT
The undersigned (the "Subordinated Creditor") is a party to the
Subordination Agreement with the Agent and the Banks and other subordinated
creditors, dated December 7, 2000 (the "Subordination Agreement"), the
Subordinated Creditor consents to the Borrowers' execution of the foregoing
Third Amendment to Credit Agreement. The Subordinated Creditor agrees that
Section 3(a) of the foregoing Third Amendment to Credit Agreement applies to it
and that such Subordinated Creditor is bound thereby. The Subordinated Creditor
hereby acknowledges and agrees that, except as provided in Section 3(a) of the
foregoing Third Amendment to Credit Agreement, the Subordination Agreement
remains unaltered and in full force and effect and is hereby ratified and
confirmed in all respects.
XXXXXX XXXXXXX
By:
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Title
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