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EXHIBIT 10.39
FOURTH AMENDMENT
This Fourth Amendment (this "Amendment") is entered into as of
this 25th day of February, 1999 among Waterlink, Inc. (the "Company"), Bank of
America National Trust and Savings Association, as Agent (the "Agent"), and the
financial institutions from time to time party thereto (the "Banks"). Unless
otherwise specified herein, capitalized terms used in this Amendment shall have
the meanings ascribed to them by the Agreement (as defined below).
RECITALS
WHEREAS, the Company, the Agent and the Banks are party to
that certain Amended and Restated Credit Agreement, dated as of June 27, 1997
and as amended and restated as of May 19, 1998 (as amended, supplemented,
restated or otherwise modified from time to time, the "Agreement");
WHEREAS, the Company, the Agent and the Banks wish to enter
into certain amendments to the Agreement, each as more fully set forth herein;
NOW THEREFORE, in consideration of the mutual execution hereof
and other good and valuable consideration, the parties hereto agree as follows:
SECTION 1. Amendments.
(a) Section 1.01 of the Agreement is hereby amended by
inserting the following new definitions in appropriate alphabetical
order:
"Bioclear Debt" shall mean the Indebtedness described
in Annex A to the Fourth Amendment.
"Fourth Amendment " shall mean the Fourth Amendment
to this Agreement, dated as of February 22, 1999.
"Specified Disposition" shall mean each and any of
the following: (i) the sale by the Company of the real
property and improvements owned by Mass Transfer Systems, Inc.
located at 000 Xxxxxxx Xxxx, Xxxx Xxxxx, XX, (ii) the sale by
the Company of that certain Convertible Subordinated Note Due
2001 of Aquatec Water Systems Incorporated, a California
corporation ("Aquatec") in the initial principal amount of
$700,000 and maturing on Xxxxx 00, 0000, (xxx) the sale by the
Company of (A) that certain Convertible Subordinated Note Due
2001 of Aquatec in the initial principal amount of $700,000
and maturing on May 15, 2001, and (B) an option to acquire all
the outstanding capital stock of Aquatec and the rights
pursuant to that certain Stock Option Agreement among the
Company and the shareholders of Aquatec dated March 24, 1998
and (iv) the sale by the Company of 100% of the capital stock
or all or substantially all of the assets of Bioclear
Technology, ULC ("Bioclear Assets").
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(b) The definition of "EBITDA" appearing in Section 1.01 of
the Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:
"EBITDA" means, for any period, for the Company and
its Subsidiaries on a consolidated basis, determined in
accordance with GAAP, the sum of, without duplication, (a) the
net income (or net loss) for such period; provided, however,
that for any fiscal quarter ending on or prior to September
30, 1998, an amount equal to only 50% of other income not from
operations for such period shall be included in net income (or
net loss) as determined pursuant to this clause (a), plus (b)
all amounts treated as expenses for depreciation and interest
and the amortization of intangibles of any kind to the extent
included in the determination of such net income (or loss),
plus (c) all accrued taxes on or measured by income to the
extent included in the determination of such net income (or
loss); provided, however, that net income (or loss) shall be
computed for these purposes without giving effect to
extraordinary losses or extraordinary gains, plus (d) with
respect to any business acquired during the period of
determination, an amount equal to the sum of (x) the total
compensation paid to each management equity holder of such
acquired business during the twelve month period immediately
preceding the date such business was acquired less the base
compensation paid to each such Person during such twelve month
period plus (y) the aggregate amount of management fees paid
to management equity holders or Affiliates thereof during such
twelve month period to the extent that such management fee is
no longer required to be paid after the date of such
acquisition plus (z) the net income of such acquired business
during such period (plus, to the extent deducted in
determining such net income, interest expense, income tax
expense, depreciation and amortization of such acquired
business) in accordance with Article 11 of Regulation S-X of
the SEC; and provided further, that for the purpose of
computations under Sections 8.16, 8.17 and 8.18 for any
business acquired during the period of determination
(including the Sutcliffe Acquisition), EBITDA for such period
shall be determined on a pro forma basis as if such
acquisition had occurred as of the beginning of such period;
and provided further, that:
(A) for all purposes, for any period which
includes the third fiscal quarter of the Company's
1998 fiscal year, there shall be excluded in
determining EBITDA any restructuring expense recorded
in the third fiscal quarter of the Company's 1998
fiscal year which serves to reduce net income of the
Company and/or its Subsidiaries in such fiscal
quarter, provided, however, that such restructuring
expense shall not be in excess of $1,493,750
($1,400,000 of which is hereinafter defined as the
"Special Charge") and for all purposes commencing
with the fiscal quarter ended June 30, 1998, for any
period which includes a fiscal quarter ending on or
prior to June 30, 2000, EBITDA shall be reduced by an
amount, if any, equal to the amount by which (I)
cumulative EBITDA reductions with respect to the
Special Charge as described on Annex A to the Second
Amendment exceeds (II) actual cumulative net cash
flow attributable to the Special Charge, it being
understood and agreed that the Company shall add a
line item to the Compliance Certificate for the
purpose of determining the calculations required by
this sentence;
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(B) for all purposes for any period which includes
the fourth fiscal quarter of the Company's 1998
fiscal year, there shall be excluded in determining
EBITDA any restructuring expense recorded in the
fourth fiscal quarter of the Company's 1998 fiscal
year (I) relating to Bioclear Technology, ULC (f/k/a
Bioclear Technologies, Inc.), a Nova Scotia unlimited
liability company, which serves to reduce net income
of the Company and/or its Subsidiaries in such fiscal
quarter, provided, however, that such restructuring
expense shall not be in excess of $17,300,000 and
(II) relating to the realignment of the Company,
provided, however, that such realignment expense
shall not be in excess of $2,700,000; and
(C) for all purposes for any period which includes a
fiscal quarter of the Company's 1999 fiscal year,
there shall be excluded in determining EBITDA any
realignment expense recorded in such fiscal quarter,
which serves to reduce net income of the Company
and/or its Subsidiaries in such fiscal quarter,
provided, however, that the aggregate amount of such
realignment expenses during such 1999 fiscal year
shall not exceed $1,300,000.
(C) The definition of "Net Proceeds" appearing in Section 1.01
of the Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:
"Net Proceeds" means proceeds in cash, checks or
other cash equivalent financial instruments (including Cash
Equivalents) as and when received by the Person making a
Disposition, net of: (a) the direct costs relating to such
Disposition (excluding amounts payable to the Company or any
Affiliate of the Company), (b) sale, use or other transaction
taxes paid or payable as a result thereof, (c) amounts
required to be applied to repay principal, interest and
prepayment premiums and penalties on Indebtedness secured by a
Lien on the asset which is the subject of such Disposition,
provided, however, that with respect to a Specified
Disposition of the Bioclear Assets, any such repayment shall
be applied pursuant to the terms of the intercreditor
agreement between the Royal Bank of Canada and the Agent which
provides, in part, that not more than 50% of the Net Proceeds
from the sale of the Bioclear Assets shall be utilized to
repay the Bioclear Debt, and (d) amounts related to the sale
of any demonstration plant the proceeds of which are utilized
by the Company for new demonstration plants and/or marketing
expenses.
(d) Section 8.01 of the Agreement is hereby amended by
deleting the period at the end of clause (l) and adding the following
thereto:
";and
(m) Liens on the assets of Bioclear Technology, ULC securing
its obligations with respect to the Bioclear Debt."
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(e) Section 8.02 of the Agreement is hereby amended by
deleting the period at the end of clause (c) and adding the following
thereto:
";and
(d) each Specified Disposition pursuant to documentation in
form and substance satisfactory to the Agent."
(f) Section 8.05 of the Agreement is hereby amended by
deleting the period at the end of clause (j) and adding the following
thereto:
";and
(k) the Bioclear Debt."
(g) Section 8.19 of the Agreement is hereby amended by
deleting the period at the end of such section and adding the following
thereto:
";provided, however, that: (A) for any period which
includes the third fiscal quarter of the Company's 1998 fiscal
year, there shall be excluded in determining operating income
any restructuring expense recorded in the third fiscal quarter
of the Company's 1998 fiscal year which serves to reduce net
income of the Company and/or its Subsidiaries in such fiscal
quarter, provided, however, that such restructuring expense
shall not be in excess of $1,493,750; (B) for any period which
includes the fourth fiscal quarter of the Company's 1998
fiscal year, there shall be excluded in determining operating
income any restructuring expense recorded in the fourth fiscal
quarter of the Company's 1998 fiscal year (I) relating to
Bioclear Technology, ULC (f/ka/ Bioclear Technologies, Inc.),
a Nova Scotia unlimited liability company, which serves to
reduce operating income of the Company and/or its Subsidiaries
in such fiscal quarter, provided, however, that such
restructuring expense shall not be in excess of $17,300,000
and (II) relating to the realignment of the Company, provided,
however, that such realignment expense shall not be in excess
of $2,700,000; and (c) for any period which includes a fiscal
quarter of the Company's 1999 fiscal year, there shall be
excluded in determining operating income any realignment
expense recorded in such fiscal quarter, which serves to
reduce operating income of the Company and/or its Subsidiaries
in such fiscal quarter, provided, however, that the aggregate
amount of such realignment expenses during such 1999 fiscal
year shall not exceed $1,300,000."
SECTION 2. Consent. Notwithstanding Sections 2.09(c), 8.04,
8.05, 8.06 and 8.11(b) of the Agreement, the Company shall be permitted to amend
the documentation relating to the Subordinated Debt held by Xxxxxxx Xxxxxxxx in
the manner described on Annex B hereto and all documentation in connection
therewith shall be satisfactory to the Agent.
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SECTION 3. Bioclear Asset Sale. In connection with the sale of
the assets of Bioclear Technology ULC (f/k/a Bioclear Technology, Inc.) (the
"Bioclear Disposition") consented to in Section 2(b) of the Third Amendment, the
Banks hereby authorize the Agent to review and approve the terms and conditions
of (x) the Bioclear Disposition and (y) the repayment of the Bioclear Debt
(including any related amortization schedule) to the extent such Indebtedness is
not paid from the proceeds of the Bioclear Disposition.
SECTION 4. Reference to and Effect Upon the Agreement.
(a) Except as specifically amended above, the Agreement shall
remain in full force and effect and is hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of the
Bank under the Agreement, nor constitute a waiver of any provision of the
Agreement, except as specifically set forth herein. Upon the effectiveness of
this Amendment, each reference in the Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of similar import shall mean and be a
reference to the Agreement as amended hereby.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
SECTION 6. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purposes.
SECTION 7. Counterparts. This Amendment may be executed in any
number of counterparts, each of which when so executed shall be deemed an
original but all such counterparts shall constitute one and the same instrument.
SECTION 8. Effectiveness. This Amendment shall become
effective as of the date first written above upon the delivery of executed
signature pages for this Amendment signed by the Company and the Majority Banks.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment by
its duly authorized officer as of the date first written above.
WATERLINK, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Title: Chief Financial Officer
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By: /s/ Xxxxxxxx Xxxx
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Title: Agency Officer
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
Individually as a Bank
By: /s/ Xxxxxxx Xxxxxxxx
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Title: Senior Vice President
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COMERICA BANK
By: /s/ Xxxxxx Xxxxxxx
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Title: Account Officer
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[TO FOURTH AMENDMENT]
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THE FIFTH THIRD BANK OF COLUMBUS
By: /s/ Xxxxxxx X. Xxxxxx
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Title: Vice President
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XXXXXX TRUST AND SAVINGS BANK
By: /s/ Xxxxx Xxxxxxxx
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Title: Vice President
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PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxx
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Title: Vice President
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UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Title: Vice President
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[TO FOURTH AMENDMENT]
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