Exhibit 10.42
FOURTH AMENDMENT TO CREDIT AGREEMENT
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This FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as of
the 20th day of August, 2001 by and among CECO GROUP, INC., CECO FILTERS,
INC., AIR PURATOR CORPORATION, NEW XXXXX CO., INC., THE XXXX & XXXX
MANUFACTURING COMPANY, KBD/TECHNIC, INC. and CECO ABATEMENT SYSTEMS, 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
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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, by Second Amendment to Credit Agreement dated as of
November 10, 2000 and by Third Amendment to Credit Agreement dated as of March
30, 2001 (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
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herein shall have the meanings assigned to them in the Credit Agreement.
2. Amendments to Credit Agreement. The Credit Agreement is hereby amended
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as follows:
(a) The definition of "Revolving Credit Commitment" as presently set
forth in Section 1.1 of the Credit Agreement shall be deleted and shall be
replaced with the following:
"Revolving Credit Commitment": means $8,000,000, as reduced from time
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to time pursuant to Section 2.9.
(b) The definition of "Termination Date" as presently set forth in
Section 1.1 of the Credit Agreement shall be deleted and shall be replaced with
the following:
"Termination Date": April 1, 2003
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(c) 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
Eurodollar Loans Base Rate Loans
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Revolving Loans 4.50% 3.00%
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Term Loan A 4.50% 3.00%
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Term Loan B 5.00% 3.50%
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(d) The provisions of paragraph 2(k) of the Third Amendment to Credit
Agreement, which modifies Section 2.6(b) of the Credit Agreement, is hereby
modified by adding the following at the end of paragraph 2(k):
and such additional amounts, up to $4,000,000 (not including the
$1,000,000), (i) that the Borrowers or Guarantors receive as net
proceeds of the Equity Contribution and (ii) any amounts in excess of
$6,500,000 EBITDA for the twelve months ending December 31, 2001, also
will be used as a prepayment of the Term Loans. The sum total of the
$1,000,000 prepayment and the aforementioned items (i) and (ii) will
not exceed $5,000,000.
(e) Section 2.10 of the Credit Agreement shall be modified by adding
the following at the end thereof.
(g) Life Insurance. No later than September 30, 2001, Borrowers shall
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obtain the maximum amount of the cash value of the Life Insurance as
will not cause the Life Insurance policy to be canceled or create
substantial adverse income tax consequences for Borrowers and shall
pay to Agent, for the ratable benefit of the Banks, an amount equal to
the cash value of the Life Insurance so obtained as a prepayment of
the principal of the Term Loan B. Such payment shall be applied in the
inverse order of maturity. Borrowers shall disclose to the Banks, in
detail reasonably acceptable to the Banks, any substantial adverse
income tax consequences to Borrowers which reduce the amount of cash
value taken from the Life Insurance and paid to the Agent.
(f) Section 5.2 of the Credit Agreement is hereby amended by inserting
the following new subsection (g):
(g) Beginning on Monday of the second week after the week in
which the Fourth Amendment to Credit Agreement is dated and
continuing on Monday of each week thereafter, for the balance of
the term of the Credit Agreement, rolling twelve (12) week,
weekly cash flow projections for the Borrowers, for the weeks
which begin with the Monday of the week following the date each
such projection is due. Beginning with the second such projection
which is due, and continuing on each Monday thereafter, for the
balance of the term of the Credit Agreement, a comparison of
actual cash
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flow of the Borrowers to projected cash flow of the Borrowers for
the week which ended on the Friday of the week before such
comparison is due. The projections and comparisons shall all be
in form and content reasonably acceptable to the Banks.
Notwithstanding any provision to the contrary contained in this
Agreement, the Borrowers' failure to deliver any of the items
required by this subsection (g) subject to a cure period of three
(3) business days after the required notice, shall constitute an
Event of Default.
(g) Section 5.6 of the Credit Agreement is hereby amended by inserting
the following new subsection (d):
(d) Provide to the Banks, on or before August 31, 2001, a list of
the equipment of Borrowers which includes the following
information: (i) the location of each piece of equipment; (ii)
the serial number of each piece of equipment which has a serial
number; (iii) a description of each piece of equipment; and (iv)
the date each piece of equipment was placed in service by one of
the Borrowers, to the extent known; thereafter, permit appraisers
selected as provided below access to the Borrowers property, as
the appraisers deem reasonably necessary, to perform appraisals
for the Banks; and pay the reasonable costs of such appraisals.
The Banks will attempt to minimize the costs of the equipment
appraisals to the extent reasonably possible without defeating
the Banks' purpose for obtaining such equipment appraisals. The
Banks will obtain bids from not less than four (4) real estate
appraisers to appraise all of the Borrowers' real estate except
for the Conshohocken, Pennsylvania property. The Banks will
provide the Borrowers with summaries of all of such bids. The
Banks shall engage the lowest acceptable bidder chosen by the
Banks. All appraisals hereunder shall be in form and content
reasonably acceptable to the Banks.
(h) The provision of paragraph 2(m) of the Third Amendment to Credit
Agreement, which modifies Section 6.1(a) Leverage Ratio of the Credit Agreement,
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is hereby modified as follows:
(m) Section 6.1(a) Leverage Ratio of the Credit Agreement shall be
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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
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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 Must Not Be
Last Day of Fiscal Quarter During Period Greater 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 6.70 to 1
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September 30, 2001 through December 30, 2001 5.50 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
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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.
(i) The provision of paragraph 2(n) of the Third Amendment to Credit
Agreement, which modifies Section 6.1(b) Fixed Charge Coverage Ratio of the
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Credit Agreement, is hereby modified as follows
(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
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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 Must Not Be
Last Day of Fiscal Quarter During Period Less Than
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December 31, 2000 through March 30, 2001 .84 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 .76 to 1
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September 30, 2001 through December 30, 2001 .80 to 1
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December 31, 2001 1.00 to 1
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provided, however, that the calculation of Fixed Charge Coverage Ratio
for September 30, 2001, shall be calculated on the basis of calendar
year 2001 to date, rather than on a rolling twelve month basis, and
further provided, however, that the abatement of Section 6.1(b) Fixed
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Charge Coverage Ratio of the Credit Agreement shall cease and such
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section shall continue as provided in the Credit Agreement immediately
before the effective date of this Amendment on January 2, 2002.
(j) The provision in paragraph 2(o) of the Third Amendment to Credit
Agreement, which modifies Section 6.1(c) Interest Coverage Ratio of the Credit
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Agreement, is hereby modified as follows:
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(o) Section 6.1(c) Interest Coverage Ratio of the Credit Agreement
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shall be abated in its entirety as it presently exists through January 1, 2002
and shall be modified as follows:
(c) Interest Coverage Ratio. Permit the Interest Coverage Ratio, as of
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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 Must
Last Day of Fiscal Quarter During Period Not 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 1.00 to 1
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September 30, 2001 through December 30, 2001 1.25 to 1
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December 31, 2001 2.20 to 1
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provided, however, that Interest Coverage Ratio for September 30,
2001, shall be calculated on the basis of calendar year 2001 to date,
rather than a rolling twelve month basis, and further provided,
however, the abatement of Section 6.1(c) Interest Coverage Ratio of
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the Credit Agreement shall cease on January 2, 2002, and such section
shall continue as provided in the Credit Agreement immediately before
the effective date of this Amendment, except that the words "equal or
exceed" in the fifth line of Section 6.1(c) shall be changed to "be
less than".
(k) Beginning on the date of the Fourth Amendment to Credit Agreement,
for the balance of the term of the Credit Agreement, the "Interest Period" with
respect to all Eurodollar Loans and conversions to Eurodollar Loans shall be for
a one month period and no Eurodollar Loan with a period of more than one month
which exists on the date of the Fourth Amendment to Credit Agreement may be
continued for a period of more than one month and requests by Borrowers for
borrowings, conversions or continuations of Eurodollar Loans for periods of more
than one month shall be treated as requests for borrowings, conversions or
continuations of Eurodollar Loans for a period of one month.
3. Additional Covenants. The Credit Agreement and any other Applicable Loan
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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 hereby represent to the Banks that their operations
located in Chicago, Illinois, will be performed by CECO Abatement Systems, Inc.,
a Delaware corporation which was formed on April 26, 2001, and which is wholly
owned Subsidiary of one of Borrowers. By executing this Fourth Amendment to
Credit Agreement, CECO Abatement Systems, Inc. agrees: (i) to become one of the
Borrowers under the Credit Agreement, as if it had originally executed the
Credit Agreement and the other Loan Documents; (ii) to be bound by the terms of
the Credit Agreement and the other Loan Documents; (iii) to complete the due
diligence worksheets provided
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by the Banks within fifteen (15) days after provided by the Banks; (iv) to keep
all of its assets free and clear of all liens and security interests except for
the liens and security interests given for the benefit of the Banks and
permitted liens under Section 6.3 of the Credit Agreement; and (v) within
fifteen (15) days after provided to it by the Banks, execute and deliver all
such mortgages, deeds of trust, security agreements, pledges, financing
statements and other collateral security documents as the Banks shall request,
from time to time.
(b) Upon request by the Banks, the Borrowers, and each of them, shall
execute and deliver any documents required by the Banks to perfect their liens
and security interests under the Credit Agreement and the other Loan Documents,
including, but not limited to, real estate mortgages or deeds of trust and
security agreements and financing statements under the Uniform Commercial Code.
4. Amendment Fees. The Borrowers shall pay to the Agent, for the ratable
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benefit of the Banks, upon the date of this Amendment, a fee of twenty-five
thousand dollars ($25,000). In addition, the provisions of paragraphs 4 and 5 of
the Third Amendment to Credit Agreement for the payment of the one hundred fifty
thousand dollar ($150,000) Amendment Fee are amended to provide that: (i) on the
date of this Amendment, the amount of fifty thousand dollars ($50,000) currently
in the Cash Collateral Account at Fifth Third Bank shall be paid to Agent, for
the ratable benefit of the Banks; and (ii) immediately upon payment by the
Borrowers of the fifty thousand dollars ($50,000) deposits, if any, required to
be made to the Cash Collateral Account at Fifth Third Bank on (A) the earlier of
(i) the date of the Equity Contribution or (ii)September 30, 2001, and (B) if
the Equity Contribution was not made prior to September 30, 2001, the earlier of
(i) the date of the Equity Contribution or (ii) December 31, 2001, as provided
in paragraph 5 of the Third Amendment to Credit Agreement, those deposits shall
be paid to Agent, for the ratable benefit of the Banks. Such deposits and
payments shall satisfy all payments due under paragraph 4 of the Credit
Agreement. In all other respects the provisions of paragraphs 4 and 5 of the
Third Amendment to Credit Agreement shall remain in effect.
5. Amendment to the Loan Documents. All references to the Credit Agreement
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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.
6. Ratification of the Loan Documents. Notwithstanding anything to the
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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.
7. Representations and Warranties.
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(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, provided that, for purposes of this Amendment, only: (x) the
representations and warranties made in Section 3.1(a) and (b) and 3.21
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of the Credit Agreement shall relate to the most recent financial statements of
the type referred to therein which have been given by the Borrowers to the Banks
(but the foregoing shall not be a waiver of any Default or Event of Default
based on any representation or warranty made by the Borrowers in the Credit
Agreement or any amendment thereof, prior to this Amendment, being untrue at the
time made, or for any breach of any covenant contained in the Credit Agreement,
as amended prior to the date of this Amendment); (y) the representations and
warranties made in Section 3.1(c) of the Credit Agreement shall be made as of
the date of this Amendment and not as of the Closing Date; and (z) the
representations and warranties made in Section 3.2 of the Credit Agreement shall
refer to Material Adverse Effect since the last audited consolidated financial
statements of the Borrowers provided to the Banks by the Borrowers, instead of
since September 30, 1999 (but the foregoing shall not be a waiver of any Default
or Event of Default based on any representation or warranty made by the
Borrowers in the Credit Agreement or any amendment thereof, prior to this
Amendment, being untrue at the time made, or for any breach of any covenant
contained in the Credit Agreement, as amended prior to the date of this
Amendment); 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.
8. Conditions Precedent. The effectiveness of the amendments set forth
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herein is subject to the fulfillment, to the satisfaction of the Agent and its
counsel, of the following conditions precedent:
(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
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(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.
9. No Waiver. Except as expressly provided herein, this Amendment does not
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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.
10. Waiver and Release. The Borrowers each on behalf of themselves, their
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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.
11. Effective Date. The parties hereto agree that subsections (h), (i) and
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(j) of Section 2 hereof shall for all purposes be deemed to be effective as of
June 30, 2001 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.
CECO GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: CEO & President
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CECO FILTERS, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxxx X. Xxxxxx
Title: Treasurer
AIR PURATOR CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxxx X. Xxxxxx
Title: Treasurer
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
KBD/TECHNIC, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxxx Xxxxxx
Title: Treasurer
CECO ABATEMENT SYSTEMS, INC.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: President
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PNC BANK, NATIONAL ASSOCIATION, as
Agent and as a Bank
By: /s/ Xxxxxxx x. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President
FIFTH THIRD BANK, as a Bank
By: /s/ Xxxxx X. Xxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxx
Title: Assistant Vice President
BANK ONE, NA, as a Bank
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
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 Fourth 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/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
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
Fourth Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees that 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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Name: Xxxxxxx XxXxxxxx
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
Fourth Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees that 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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Name:
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
Fourth Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees that the Subordination Agreement remains unaltered and
in full force and effect and is hereby ratified and confirmed in all respects.
XXXXXX XXXXXXX
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