EXHIBIT 10.7.1
THIRD AMENDMENT AND WAIVER
THIS THIRD AMENDMENT AND WAIVER dated as of March 30, 1999 (this
"Amendment") amends the Credit Agreement dated as of October 7, 1998 (as
previously amended, the "Credit Agreement") among Synagro Technologies, Inc.
(the "Company"), various financial institutions (the "Banks") and Bank of
America National Trust and Savings Association, as Agent (in such capacity, the
"Agent"). Terms defined in the Credit Agreement are, unless otherwise defined
herein or the context otherwise requires, used herein as defined therein.
WHEREAS, the Company, the Banks and the Agent have entered
into the Credit Agreement; and
WHEREAS, the parties hereto desire to amend the Credit Agreement in
certain respects as more fully set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1 AMENDMENTS. Effective on (and subject to the occurrence of) the
Amendment Effective Date (as defined below), the Credit Agreement shall be
amended as set forth below:
1.1 AMENDMENT TO DEFINITION. The definition of "Interest Coverage
Computation Period" in Section 1.1 is amended in its entirety to read as
follows:
INTEREST COVERAGE COMPUTATION PERIOD means each of the following
periods: (a) the period of four consecutive months ending January 31,
1999; (b) the period of five consecutive months ending February 28, 1999;
(c) the period of six consecutive months ending March 31, 1999; (d) the
period of seven consecutive months April 30, 1999; (e) the period of eight
consecutive months ending May 31, 1999; (f) the period of nine consecutive
months ending June 30, 1999; (g) the period of ten consecutive months
ending July 31, 1999; (h) the period of eleven consecutive months ending
August 31, 1999; (i) the period of twelve consecutive months ending
September 30, 1999; (j) the period of twelve consecutive months ending
October 31, 1999; (k) the period of twelve consecutive months ending
November 30, 1999; (l) the period of twelve consecutive months ending
December 31, 1999; and (m) each period of four consecutive Fiscal Quarters
ending on the last day of a Fiscal Quarter on or after March 31, 2000.
1.2 AMENDMENT OF SECTION 10.6.1. Section 10.6.1 is amended by (i) deleting
the amount "$30,700,000" in clause (a) and substituting "$32,000,000" therefor;
(ii) deleting the date "December 31, 1998" in clause (b) and substituting "March
31, 1999" therefor; and (iii) deleting the words "the Effective Date" in clause
(c) and substituting "January 31, 1999" therefor.
1.3 AMENDMENT OF SECTION 10.6.2. Section 10.6.2 is amended by deleting the
chart therein and substituting the following chart therefor:
INTEREST COVERAGE
COMPUTATION INTEREST
PERIOD ENDING: COVERAGE RATIO
----------------------------------------------------------
1/31/99 1.30 to 1.0
2/28/99 1.00 to 1.0
3/31/99 0.65 to 1.0
4/30/99 1.15 to 1.0
5/31/99 1.25 to 1.0
6/30/99 1.50 to 1.0
7/31/99, 8/31/99 & 9/30/99 1.60 to 1.0
10/31/99, 11/30/99 & 12/31/99 1.85 to 1.0
3/31/00 and thereafter 2.10 to 1.0.
1.4 AMENDMENT OF SECTION 10.6.3. Section 10.6.3 is amended by deleting the
chart therein and substituting the following chart therefor:
COMPUTATION FUNDED DEBT TO
PERIOD ENDING: EBITDA RATIO
------------- ------------
3/30/99 through 6/30/99 4.25 to 1.0
9/30/99 4.00 to 1.0
12/31/99 and thereafter 3.75 to 1.0.
1.5 AMENDMENT OF SECTION 10.6.4. Section 10.6.4 is amended by deleting the
chart therein and substituting the following chart therefor:
SENIOR FUNDED
COMPUTATION DEBT TO
PERIOD ENDING: EBITDA RATIO
------------- ------------
9/30/98 through 6/30/99 3.50 to 1.0
9/30/99 and thereafter 3.25 to 1.0.
1.6 AMENDMENT OF PRICING SCHEDULE. Schedule 1.1 to the Credit Agreement is
amended to read in its entirety as set forth on Schedule 1.1 to this Amendment.
1.7 AMENDMENT OF COMPLIANCE CERTIFICATES. Exhibits B-1 and B-2 to the
Credit Agreement are amended to read in their entirety as set forth on Exhibits
B-1 and B-2 to this Amendment.
SECTION 2 WAIVER. The Required Banks hereby waive any Event of Default or
Unmatured Event of Default under Section 10.6.1 or 10.6.2 of the Credit
Agreement for any period prior to March 31, 1999.
SECTION 3 REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Agent and the Banks that, after giving effect to the
effectiveness hereof, (a) each warranty set forth in Section 9 (excluding
Sections 9.6 and 9.8) of the Credit Agreement is true and correct as of the date
of the execution and delivery of this Amendment by the Company, with the same
effect as if made on such date, and (b) no Event of Default or Unmatured Event
of Default exists.
SECTION 4 EFFECTIVENESS. The amendments set forth in SECTION 1 above shall
become effective on such date (the "AMENDMENT EFFECTIVE DATE") when the Agent
shall have received (a) counterparts of this Amendment executed by the Company
and the Required Banks, (b) copies, certified by the Secretary or an Assistant
Secretary of the Company, as to resolutions of the Board of Directors of the
Company authorizing the execution and delivery by the Company of this Amendment
and the performance by the Company of its obligations under the Credit Agreement
as amended hereby, (c) an opinion of counsel to the Company in form and
substance satisfactory to the Agent and (d) a confirmation in the form of
ATTACHMENT A hereto signed by the Company and each Guarantor.
SECTION 5 MISCELLANEOUS.
5.1 CONTINUING EFFECTIVENESS, ETC. As herein amended, the Credit Agreement
shall remain in full force and effect and is hereby ratified and confirmed in
all respects. After the effectiveness of this Amendment, all references in the
Credit Agreement and the other Loan Documents to "Credit Agreement" or similar
terms shall refer to the Credit Agreement as amended hereby.
5.2 COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same Amendment.
5.3 GOVERNING LAW. This Amendment shall be a contract made
under and governed by the laws of the State of
Illinois applicable to contracts made and to be performed entirely within
such state.
5.4 SUCCESSORS AND ASSIGNS. This Amendment shall be binding upon the
Company, the Banks and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Company, the Banks and the Agent and the
respective successors and assigns of the Banks and the Agent.
Delivered at Chicago, Illinois, as of the day and year first above
written.
SYNAGRO TECHNOLOGIES, INC.
By
Title
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By
Title
BANK OF AMERICA NATIONAL TRUST AND
SAVING ASSOCIATION, as Issuing Bank
and as a Bank
By
Title
UNION BANK OF CALIFORNIA, N.A., as
a Bank
By
Title
SCHEDULE 1.1
PRICING SCHEDULE
AS AMENDED
(Effective April 1, 1999)
The Base Rate Margin, the Eurodollar Margin, the Non-Use Fee Rate and the
LC Fee Rate for Financial Letters of Credit and Non-Financial Letters of Credit,
respectively, shall be determined in accordance with the table below and the
other provisions of this SCHEDULE 1.1.
XXXXX Xxxxx Xxxxx Xxxxx Xxxxx
X II III IV V
Rate for
Non-Use Fee 0.350% 0.350% 0.400% 0.450% 0.500%
Eurodollar Margin 1.750% 2.000% 2.250% 2.500% 2.750%
Base Rate Margin 0 0.125% 0.125% 0.250% 0.375%
LC Rate for
Non-Financial
Letters of Credit 0.875% 1.000% 1.125% 1.250% 1.375%
LC Rate for
Financial Letters
of Credit 1.750% 2.000% 2.250% 2.500% 2.750%
------------------- ---------- ----------- ---------- ----------- ----------
LEVEL I applies when the Funded Debt to EBITDA Ratio is less than 2.0 to
1.
LEVEL II applies when the Funded Debt to EBITDA Ratio is equal to or
greater than 2.0 to 1 but less than 2.5 to 1.
LEVEL III applies when the Funded Debt to EBITDA Ratio is equal to or
greater than 2.5 to 1 but less than 3.0 to 1.
LEVEL IV applies when the Funded Debt to EBITDA Ratio is equal to or
greater than 3.0 to 1 but less than 3.5 to 1.
LEVEL V applies when the Funded Debt to EBITDA Ratio is equal to or
greater than 3.5 to 1.
This Pricing Schedule shall be effective on April 1, 1999 (replacing the
existing Pricing Schedule on such date) and on such date the applicable Level
shall be Level V. The applicable
Level shall be adjusted, to the extent applicable, 45 days (or, in the case of
the last Fiscal Quarter of any Fiscal Year, 90 days) after the end of each
Fiscal Quarter beginning with the Fiscal Quarter ending June 30, 1999, based on
the Funded Debt to EBITDA Ratio as of the last day of such Fiscal Quarter;
PROVIDED that if the Company fails to deliver the financial statements required
by SECTION 10.1.1 or 10.1.2, as applicable, and the related certificate required
by SECTION 10.1.3 by the 45th day (or, if applicable, the 90th day) after any
Fiscal Quarter, Level V shall apply until such financial statements are
delivered.
EXHIBIT B-1
SYNAGRO TECHNOLOGIES, INC.
FINANCIAL COMPLIANCE CERTIFICATE
FOR PERIOD ENDED _____________ (the "COMPUTATION DATE")
To: Bank of America National Trust
and Savings Association, as Agent
Reference is made to Section 10.1.4(a) of the Credit Agreement dated as of
October 7, 1998 (as amended or otherwise modified from time to time, the "CREDIT
AGREEMENT") among Synagro Technologies, Inc. (the "COMPANY"), various financial
institutions and Bank of America National Trust and Savings Association, as
Agent for the Banks. Capitalized terms used but not otherwise defined herein are
used as defined in the Credit Agreement.
The Company hereby certifies and warrants to you that the following is a
true and correct computations of the Minimum Interest Coverage ratio set forth
in Section 10.6.2 of the Credit Agreement:
10.6.2 MINIMUM INTEREST
COVERAGE
Consolidated Net Income $___________
Plus: Interest Expense $___________
taxes $___________
amortization $___________
Earnings before interest, $_________(x)
taxes and amortization
Interest Expense __________(y)
Ratio of (x) to (y) ____ to ____
Minimum Required
1/31/99 1.30 to 1.0
2/28/99 1.00 to 1.0
3/31/99 0.65 to 1.0
4/30/99 1.15 to 1.0
5/31/99 1.25 to 1.0
6/30/99 1.50 to 1.0
7/31/99, 8/31/99 & 9/30/99 1.60 to 1.0
10/31/99, 11/30/99 & 12/31/99 1.85 to 1.0
3/31/00 and thereafter: 2.10 to 1.0
======================================== =================== ===================
The Company further certifies to you that no Event of Default or Unmatured
Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed
and delivered by its duly authorized officer this ____ day of _________, ____.
SYNAGRO TECHNOLOGIES, INC.
By_________________________
Title______________________
EXHIBIT B-2
SYNAGRO TECHNOLOGIES, INC.
FINANCIAL COMPLIANCE CERTIFICATE
FOR PERIOD ENDED _____________ (the "COMPUTATION DATE")
To: Bank of America National Trust
and Savings Association, as Agent
Reference is made to Section 10.1.4(b) of the Credit Agreement dated as of
October 7, 1998 (as amended or otherwise modified from time to time, the "CREDIT
AGREEMENT") among Synagro Technologies, Inc. (the "COMPANY"), various financial
institutions and Bank of America National Trust and Savings Association, as
Agent for the Banks. Capitalized terms used but not otherwise defined herein are
used as defined in the Credit Agreement.
The Company hereby certifies and warrants to you that the following are
true and correct computations of the financial ratios and restrictions set forth
in Section 10.6 of the Credit Agreement:
10.6.1 MINIMUM NET WORTH
Initial minimum: $32,000,000
Plus: 75% of the sum of
Consolidated Net
Income for each
Fiscal Quarter
(excluding any Fiscal
Quarter in which there
is a loss) from and
after January 31,
1999 to the Computation
Date $___________
Plus: 100% of net proceeds of
any equity issued by
the Company or any of
its Subsidiaries after
January 31, 1999 $___________
Total (Minimum Required) $___________
Actual Net Worth $___________
10.6.2 MINIMUM INTEREST
COVERAGE
Consolidated Net Income $___________
Plus: Interest Expense $___________
taxes $___________
amortization $___________
Earnings before interest, $_________(x)
taxes and amortization
Interest Expense __________(y)
Ratio of (x) to (y) ____ to ____
Minimum Required
1/31/99 1.30 to 1.0
2/28/99 1.00 to 1.0
3/31/99 0.65 to 1.0
4/30/99 1.15 to 1.0
5/31/99 1.25 to 1.0
6/30/99 1.50 to 1.0
7/31/99, 8/31/99 & 9/30/99 1.60 to 1.0
10/31/99, 11/30/99 & 12/31/99 1.85 to 1.0
3/31/00 and thereafter: 2.10 to 1.0
10.6.3 FUNDED DEBT TO EBITDA
RATIO
Funded Debt $_________(x)
Consolidated1/ Net Income $___________
-
Plus: Interest Expense $___________
Income tax expense $___________
Depreciation and
amortization $___________
Plus: Add-back2/ $___________
Total3/ $_________(a)
--------
1/Excluding Recyc, Inc.
2/For the Computation Periods ending 9/30/98 and 12/31/98, $900,000; for the
Computation Period ending 3/31/99, $600,000; and for the Computation Period
ending 6/30/99, $300,000.
3/For the Computation Period ending 9/30/98, multiply the total by 1.33.
Recyc Net Income $___________
Plus4/: Interest Expense $___________
Income tax expense $___________
Depreciation and
amortization $___________
Total (Recyc EBITDA)5/ $_________ (b)
Lesser of (b) and $1,983,000 $_________ (c)
EBITDA6/ $_________ (y)
Ratio of (x) to (y) ____ to ____
Maximum allowed
3/30/99 thru 6/30/99: 4.25 to 1.0
9/30/99 4.00 to 1.0
12/31/99 and thereafter: 3.75 to 1.0
10.6.4 SENIOR FUNDED DEBT TO
EBITDA RATIO
Funded Debt
Minus: Debt described in $___________
Section 10.7(b) $___________
Total $_________(x)
Consolidated7/ Net Income $___________
-
Plus: Interest Expense $___________
Income tax expense $___________
Depreciation and
amortization $___________
Plus: Add-back8/ $___________
Total9/ $_________(a)
--------
4/To the extent deducted in determining Recyc Net Income.
5/For the two months ending 9/30/98, the five months ending 12/31/98, the eight
months ending 3/31/99, and the eleven months ending 6/30/99, multiply the total
by 6, 2.4, 1.5, and 1.09, respectively. 6/For the Computation Periods ending
9/30/98 and 12/31/98, the sum of (a) plus (c); for Computation Periods ending
thereafter, the sum of (a) plus (b). 7/Excluding Recyc, Inc. 8/For the
Computation Periods ending 9/30/98 and 12/31/98, $900,000; for the Computation
Period ending 3/31/99, $600,000; and for the Computation Period ending 6/30/99,
$300,000. 9/For the Computation Period ending 9/30/98, multiply the total by
1.33.
Recyc Net Income $___________
Plus10/: Interest Expense $___________
Income tax expense $___________
Depreciation and
amortization $___________
Total (Recyc EBITDA)11/ $_________ (b)
Lesser of (b) and $1,983,000 $_________ (c)
EBITDA12/ $_________ (y)
Ratio of (x) to (y) ____ to ____
Maximum allowed
9/30/98 thru 6/30/99: 3.50 to 1.0
9/30/99 and thereafter: 3.25 to 1.0
---------------------------------------- ------------------- -------------------
10.6.5 DEBT TO CAPITALIZATION
RATIO
---------------------------------------- ------------------- -------------------
Funded Debt $_________(x)
---------------------------------------- ------------------- -------------------
Sum of (x) PLUS Net Worth $_________(y)
---------------------------------------- ------------------- -------------------
Ratio of (x) to (y) ____ to ____
---------------------------------------- ------------------- -------------------
Maximum allowed
9/30/98 thru 12/31/98: 60%
3/31/99 thru 12/31/99: 55%
3/31/00 and thereafter: 50%
10.6.6 CAPITAL EXPENDITURES Aggregate amount of all Capital Expenditures made by
the Company and its Subsidiaries in the preceding
Fiscal Year $__________(x)
---------------------------------------- ------------------- -------------------
--------
10/To the extent deducted in determining Recyc Net Income.
11/For the two months ending 9/30/98, the five months ending 12/31/98, the eight
months ending 3/31/99, and the eleven months ending 6/30/99, multiply the total
by 6, 2.4, 1.5, and 1.09, respectively. 12/For the Computation Periods ending
9/30/98 and 12/31/98, the sum of (a) plus (c); for Computation Periods ending
thereafter, the sum of (a) plus (b).
---------------------------------------- ------------------- -------------------
Depreciation and amortization
of the Company and its
Subsidiaries in the preceding
Fiscal Year $_________(a)
---------------------------------------- ------------------- -------------------
Product of (a) TIMES 1.5 $__________(y)
---------------------------------------- ------------------- -------------------
Sum of (y) MINUS (x) (must be
equal to or greater than zero) $__________
======================================== =================== ===================
The Company further certifies to you that no Event of Default or Unmatured
Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed
and delivered by its duly authorized officer this ____ day of _________, ____.
SYNAGRO TECHNOLOGIES, INC.
By_________________________
Title______________________
