EXHIBIT 10.2
AMENDMENT NO. 5, LIMITED WAIVER AND LIMITED CONSENT
This Amendment No. 5, Limited Waiver and Limited Consent, dated as of
November 12, 2003 (this "Amendment"), is entered into by and among Comfort
Systems USA, Inc., a Delaware corporation ("Borrower"), the other Credit
Parties, General Electric Capital Corporation ("GE Capital"), as Agent ("Agent")
for the Lenders (as defined in the Credit Agreement referred to below) and as a
Lender, and the other Lenders party to the Credit Agreement.
RECITALS
WHEREAS, Borrower, the other Credit Parties, Agent and Lenders are
parties to that certain Credit Agreement, dated as of October 11, 2002, as
amended by Amendment No. 1 to Credit Agreement, dated as of December 10, 2002,
Amendment No. 2 to Credit Agreement, dated as of December 20, 2002, Amendment
No. 3 to Credit Agreement, dated as of March 31, 2003 and Amendment No. 4 to
Credit Agreement, dated as of October 20, 2003 (as so amended to date and as the
same may be further amended, restated, supplemented or otherwise modified from
time to time hereafter, the "Credit Agreement"). Capitalized terms used and not
otherwise defined herein shall have the meanings ascribed thereto in the Credit
Agreement and Annex A thereof;
WHEREAS, the Borrower is in breach of Credit Agreement's Minimum EBITDA
covenant for the period ended September 30, 2003;
WHEREAS, the Borrower is desirous of resetting its financial covenants
under the Credit Agreement on a monthly basis through and including December,
2004;
WHEREAS, Agent and Lenders are willing to grant a waiver of the Event
of Default arising solely from the Borrower's breach of the Credit Agreement's
Minimum EBITDA covenant for the period ended September 30, 2003, subject to the
terms and conditions set forth herein and to reset the financial covenants set
forth in, and required to be set by Borrower under, the Credit Agreement on a
monthly basis through December 2004, all as and to the extent set forth herein
and subject to the terms and conditions set forth herein;
WHEREAS, Borrower has notified Agent and Lenders that the Borrower
desires to consummate the sale of all of the capital Stock of Standard Heating
and Air Conditioning, Inc. ("Standard Heating") held by Borrower to Xxx Xxxx or
a Person owned, beneficially and of record, and controlled by Xxx Xxxx (the
"Standard Heating Stock Sale");
WHEREAS, Borrower has requested that Agent and Lenders consent to the
Standard Heating Stock Sale, and Agent and Lenders are willing to do so
pursuant, and subject, to the terms and conditions set forth in this Amendment;
and
WHEREAS, these Recitals shall be construed as part of this Amendment;
NOW THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for good and valuable consideration, the
receipt and sufficiency of
which are hereby acknowledged by the parties, Borrower, Credit Parties, Agent
and Lenders hereby agree as follows:
1. Definitions. Except to the extent otherwise specified herein,
capitalized terms used in this Amendment shall have the same meanings ascribed
to them in the Credit Agreement and Annex A thereto.
2. Limited Waiver.
2.1. Notwithstanding the provisions of Section 4.2 of the Credit
Agreement, Agent and Lenders hereby waive the requirement that Borrower and its
Subsidiaries on a consolidated basis shall have had, at the end of the period
ending September 30, 2003, EBITDA for the 12-month period then ended of not less
than $17,840,000, as well as any Event of Default that may arise solely based
upon the failure to be in compliance with such minimum EBITDA covenant at the
end of the period ending September 30, 2003.
2.2. The execution, delivery and effect of the foregoing waiver shall
be limited precisely as written and shall not be deemed (except for the specific
limited waiver contained in Section 2.1) to (a) be a waiver of any term or
condition of the Credit Agreement or any other Loan Document or (b) prejudice
any right, power or remedy which Agent or any Lender now has or may have in the
future under or in connection with the Credit Agreement or any other Loan
Document.
3. Consent to Standard Heating Stock Sale. Agent and Lenders hereby
consent to the Standard Heating Stock Sale, notwithstanding the provisions of
Section 3.7 of the Credit Agreement which prohibit the sale or transfer by any
Credit Party of any of its properties or other assets, including Stock of any of
its Subsidiaries other than sales or dispositions that satisfy certain
conditions set forth in the Credit Agreement; provided, however, that the
aggregate purchase price paid to the Borrower in the Standard Heating Stock Sale
shall be at least $730,000, with at least $450,000 of the purchase price to be
paid in cash on the closing date of the Standard Heating Stock Sale; provided,
further, that Borrower shall apply such $450,000 received by Borrower in cash in
payment of the Term Loan in the inverse order of maturity of the Scheduled
Installments; and, provided, further, that all agreements and other documents
necessary or desirable to complete the Standard Heating Stock Sale shall have
been provided to the Agent for its review and all such agreements and other
documents shall be in form and substance reasonably satisfactory to Agent. In
addition, the terms and conditions of any Instrument constituting part of the
consideration paid to Borrower in the Standard Heating Stock Sale (each, a
"Standard Heating Stock Sale Note") shall be acceptable to Agent, in its
discretion, and each such Standard Heating Stock Sale Note shall be pledged to
Agent as additional Collateral for the benefit of itself and Lenders, shall be
delivered to Agent, on behalf of itself and Lenders, and shall be duly endorsed
and accompanied by duly executed instruments of transfer in form and substance
satisfactory to Agent. In furtherance of the foregoing, Agent shall receive the
original of each and every Standard Heating Stock Sale Note, duly endorsed and
accompanied by duly executed instruments of transfer and all other instruments
and documents necessary or desirable to evidence the pledge of the Standard
Heating Stock Sale Note to the Agent, for its benefit and the benefit of
Lenders. The Agent and the Lenders agree to release the
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security interests in the Standard Heating Stock upon the closing of the
Standard Heating Stock Sale in compliance with the provisions of this Section 3.
4. Amendment. The Credit Agreement is amended as follows:
4.1. Section 4.2 of the Credit Agreement is amended by deleting the
chart and replacing it with the following:
"Period EBITDA
------------------ -----------
December 31, 2002 $23,639,000
January 31, 2003 $21,983,000
February 28, 2003 $22,745,000
March 31, 2003 $19,190,000
April 30, 2003 $18,010,000
May 31, 2003 $16,985,000
June 30, 2003 $16,420,000
July 31, 2003 $16,420,000
August 30, 2003 $16,420,000
September 30, 2003 $17,840,000
October 31, 2003 $14,146,000
November 30, 2003 $14,892,000
December 31, 2003 $16,775,000
January 31, 2004 $17,609,000
February 29, 2004 $18,355,000
March 31, 2004 $19,811,000
April 30, 2004 $20,127,000
May 31, 2004 $20,631,000
June 30, 2004 $19,821,000
July 31, 2004 $18,451,000
August 30, 2004 $17,644,000
September 30, 2004 $20,210,000
October 31, 2004 $20,210,000
November 30, 2004 $20,210,000
December 31, 2004 $21,232,000
March 31, 2005 and each Fiscal Quarter thereafter $31,000,000"
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4.2. Section 4.3 of the Credit Agreement is amended by deleting it in
its entirety and replacing it with the following:
"Minimum Fixed Charge Coverage Ratio.
Borrower and its Subsidiaries shall have on a consolidated basis at the
end of each period set forth below, a Fixed Charge Coverage Ratio for the
12-month period then ended of not less than the following:
2.30 to 1.0 for the Fiscal Quarter ending September 30, 2002;
2.30 to 1.0 for the Fiscal Quarter ending December 31, 2002;
2.30 to 1.0 for the month ending January 31, 2003;
2.30 to 1.0 for the month ending February 28, 2003;
2.50 to 1.0 for the month ending March 31, 2003;
2.50 to 1.0 for the month ending April 30, 2003;
2.50 to 1.0 for the month ending May 31, 2003;
2.50 to 1.0 for the month ending June 30, 2003;
2.50 to 1.0 for the month ending July 31, 2003;
2.50 to 1.0 for the month ending August 31, 2003;
2.60 to 1.0 for the month ending September 30, 2003;
2.25 to 1.0 for the month ending October 31, 2003;
2.25 to 1.0 for the month ending November 30, 2003;
2.25 to 1.0 for the month ending December 31, 2003
2.25 to 1.0 for the month ending January 31, 2004;
2.25 to 1.0 for the month ending February 29, 2004;
2.25 to 1.0 for the month ending March 31, 2004;
2.25 to 1.0 for the month ending April 30, 2004;
2.25 to 1.0 for the month ending May 31, 2004;
2.25 to 1.0 for the month ending June 30, 2004;
2.25 to 1.0 for the month ending July 31, 2004;
2.25 to 1.0 for the month ending August 31, 2004;
2.25 to 1.0 for the month ending September 30, 2004;
2.25 to 1.0 for the month ending October 31, 2004;
2.25 to 1.0 for the month ending November 30, 2004;
2.25 to 1.0 for the month ending December 31, 2004; and
2.25 to 1.0 for March 31, 2005 and each Fiscal Quarter ending
thereafter."
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4.3. Section 4.4 of the Credit Agreement is amended by deleting it in
its entirety and replacing it with the following:
"Minimum Interest Coverage Ratio.
Borrower and its Subsidiaries on a consolidated basis shall have at the
end of each period set forth below, an Interest Coverage Ratio for the 12-month
period then ended of not less than 3.0 to 1.0:
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month ending September 30, 2002;
month ending October 31, 2002;
month ending November 30, 2002;
month ending December 31, 2002;
month ending January 31, 2003;
month ending February 28, 2003;
month ending March 31, 2003;
month ending April 30, 2003;
month ending May 31, 2003;
month ending June 30, 2003;
month ending July 31, 2003;
month ending August 31, 2003;
month ending September 30, 2003;
month ending October 31, 2003;
month ending November 30, 2003;
month ending December 31, 2003
month ending January 31, 2004;
month ending February 29, 2004;
month ending March 31, 2004;
month ending April 30, 2004;
month ending May 31, 2004;
month ending June 30, 2004;
month ending July 31, 2004;
month ending August 31, 2004;
month ending September 30, 2004;
month ending October 31, 2004;
month ending November 30, 2004;
month ending December 31, 2004; and
March 31, 2005 and each Fiscal Quarter ending thereafter."
4.4. Section 4.5 of the Credit Agreement is amended by deleting it in
its entirety and replacing it with the following:
"Maximum Leverage Ratio.
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Borrower and its Subsidiaries on a consolidated basis shall have, at
the end of each period set forth below, a Leverage Ratio as of the last day of
such period and for the 12-month period then ended of not more than the
following:
1.75 to 1.0 for the month ending December 31, 2002;
1.75 to 1.0 for the month ending January 31, 2003;
1.75 to 1.0 for the month ending February 28, 2003;
1.75 to 1.0 for the month ending March 31, 2003;
2.20 to 1.0 for the month ending April 30, 2003;
2.20 to 1.0 for the month ending May 31, 2003;
2.20 to 1.0 for the month ending June 30, 2003;
2.20 to 1.0 for the month ending July 31, 2003;
2.20 to 1.0 for the month ending August 31, 2003;
2.10 to 1.0 for the month ending September 30, 2003;
2.30 to 1.0 for the month ending October 31, 2003;
2.20 to 1.0 for the month ending November 30, 2003;
2.00 to 1.0 for the month ending December 31, 2003
1.80 to 1.0 for the month ending January 31, 2004;
1.80 to 1.0 for the month ending February 29, 2004;
1.80 to 1.0 for the month ending March 31, 2004;
1.80 to 1.0 for the month ending April 30, 2004;
1.80 to 1.0 for the month ending May 31, 2004;
1.80 to 1.0 for the month ending June 30, 2004;
1.80 to 1.0 for the month ending July 31, 2004;
1.80 to 1.0 for the month ending August 31, 2004;
1.80 to 1.0 for the month ending September 30, 2004;
1.80 to 1.0 for the month ending October 31, 2004;
1.50 to 1.0 for the month ending November 30, 2004;
1.50 to 1.0 for the month ending December 31, 2004; and
1.50 to 1.0 for March 31, 2005 and each Fiscal Quarter ending
thereafter."
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5. Conditions Precedent to Effectiveness. The effectiveness of this
Amendment is subject to the satisfaction of each of the following conditions
precedent in a manner acceptable to Agent:
5.1. Agent's receipt of counterparts of this Amendment, duly executed
by the Borrower, each of the other Credit Parties, Agent and Lenders.
5.2. No Default or Event of Default shall have occurred and be
continuing, other than the Event of Default waived in Section 2.1 of this
Amendment.
5.3. After giving effect to this Amendment, each of the representations
and warranties set forth in the Credit Agreement and the other Loan Documents is
true and correct in all material respects.
5.4. Agent shall have received any and all such other certificates,
instruments and documents as Agent or any Lender may request.
6. Reference to and Effect Upon the Credit Agreement and other Loan
Agreements.
6.1. Except for the specific limited waiver provided for in Section
2.1, the specific consent provided for in Section 3 above and the specific
amendments set forth in Section 4 above, the Credit Agreement, the Notes and
each other Loan Document shall remain in full force and effect and each is
hereby ratified and confirmed.
6.2. The execution, delivery and effect of this Amendment shall be
limited precisely as written and shall not be deemed to (i) be a consent to any
waiver of any term or condition (except for the specific consent in Section 3
above and the limited waiver in Section 2 above), or to any amendment or
modification of any term or condition (except as specifically consented to,
waived by or amended in Sections 3, 2 and 4, respectively, above), of the Credit
Agreement or any other Loan Document or (ii) prejudice any right, power or
remedy which the Agent or any Lender now has or may have in the future under or
in connection with the Credit Agreement, the Notes or any other Loan Document.
6.3. Each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or any other word or words of similar import
shall mean and be a reference to the Credit Agreement as modified hereby, and
each reference in any other Loan Document to the Credit Agreement or any word or
words of similar import shall be and mean a reference to the Credit Agreement as
modified hereby.
6.4. Nothing contained herein nor in any other communication between or
among Agent, any Lender, Borrower or any other Credit Party shall be deemed to
constitute or be construed as (i) a waiver or release of any of Agent's or any
Lender's rights or remedies against Borrower, any other Credit Party or any
other party to the Loan Documents or pursuant to applicable law, (ii) a course
of dealing obligating Agent or any Lender to provide any accommodations,
financial or otherwise, to Borrower or any other Credit Party either now or at
any future time or (iii) a commitment or any agreement to make a commitment with
respect to
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any possible waiver or other modification of the terms provided in the Credit
Agreement or any other Loan Document.
7. General Release. In consideration of, among other things, the
accommodations set forth in this Amendment, the Borrower and each of the other
Credit Parties hereby waives, releases, remises and forever discharges Agent,
each Lender and each other Indemnitee from any and all actions, causes of
action, suits or other claims of any kind or character, known or unknown, which
any Credit Party ever had, now has or might hereafter have against Agent, any
Lender or any other Indemnitee which relate, directly or indirectly, to any acts
or omissions of Agent, any Lender or any other Indemnitee on or prior to the
date hereof.
8. Acknowledgment and Consent of Credit Parties. Each Credit Party
hereby consents to this Amendment and hereby confirms and agrees that (a) each
of the Guaranties and each other Loan Document to which it is a party is, and
shall continue to be, in full force and effect and is hereby ratified and
confirmed in all respects, and (b) the Collateral Documents to which such Credit
Party is a party and all of the Collateral described therein do, and shall
continue to, secure the payment of all of the Obligations.
9. 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. Delivery of an
executed counterpart of a signature page to this Amendment by telecopier shall
be as effective as delivery of a manually executed counterpart signature page to
this Amendment.
10. Costs and Expenses. As provided in the Credit Agreement, Borrower
shall pay the fees, costs and expenses of Agent in connection with the
preparation, execution and delivery of this Amendment (including, without
limitation, attorneys' fees).
11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF
LAW PROVISIONS) OF THE STATE OF
NEW YORK.
12. 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 purpose.
[Signature Pages Follow]
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the
date first written above.
BORROWER:
COMFORT SYSTEMS USA, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
LIMITED WAIVER: ISG CREDIT AGREEMENT
CREDIT PARTIES:
ACI MECHANICAL, INC.
ACI MECHANICAL USA, INC.
ARC COMFORT SYSTEMS USA, INC.
ACCURATE AIR SYSTEMS, L.P., by
Atlas-Accurate Holdings, L.L.C.,
as General Partner
ACCU-TEMP GP, INC.
ACCU-TEMP LP, INC.
ACCU-TEMP LLC,
by Accu-Temp GP, Inc., as acting member
AIR SOLUTIONS USA, INC.
AIR TEMP, INC.
ATLAS-ACCURATE HOLDINGS, L.L.C.,
by XX00 Xxxxxxxxxxx Corp.,
as acting member
ATLAS AIR CONDITIONING
COMPANY, L.P., by Atlas-Accurate
Holdings, L.L.C., as general partner
XXXXXXXXX'X MECHANICAL CONTRACTORS, INC.
BCM CONTROLS CORPORATION
CALIFORNIA COMFORT SYSTEMS USA, INC.
CEL, INC.
CENTRAL MECHANICAL, INC.
CLIMATE CONTROL, INC.
LIMITED WAIVER: ISG CREDIT AGREEMENT
COMFORT SYSTEMS USA (ARKANSAS), INC.
COMFORT SYSTEMS USA (BALTIMORE), INC.
COMFORT SYSTEMS USA (BOWLING GREEN), INC.
COMFORT SYSTEMS USA (BRISTOL), INC.
COMFORT SYSTEMS USA (CLEVELAND), INC.
COMFORT SYSTEMS USA (FLORIDA), INC.
COMFORT SYSTEMS USA G.P., INC.
COMFORT SYSTEMS US (HARTFORD), INC.
COMFORT SYSTEMS USA (INTERMOUNTAIN), INC.
COMFORT SYSTEMS USA (SYRACUSE), INC.
COMFORT SYSTEMS USA (TEXAS), L.P.,
by Comfort Systems USA G.P., Inc.,
as general partner
COMFORT SYSTEMS USA (TWIN CITIES), INC.
COMFORT SYSTEMS USA (WESTERN MICHIGAN), INC.
CS44 ACQUISITION CORP.
CS53 ACQUISITION CORP.
DESIGN MECHANICAL INCORPORATED
EASTERN HEATING & COOLING, INC.
LIMITED WAIVER: ISG CREDIT AGREEMENT
ESS ENGINEERING, INC.
GULFSIDE MECHANICAL, INC.
H & M MECHANICAL, INC.
HELM CORPORATION
XXXX MECHANICAL CORPORATION
INDUSTRIAL COOLING INC.
J & J MECHANICAL, INC.
XXXXX AIR CONDITIONING ENTERPRISE INC.
XXXXXX HEATING, INC.
MECHANICAL SERVICE GROUP, INC.
MECHANICAL TECHNICAL
SERVICES, L.P., by Atlas-Accurate
Holdings, L.L.C., as general partner
MJ MECHANICAL SERVICES, INC.
XXXX MECHANICAL CONTRACTORS, INC.
NORTH AMERICAN MECHANICAL, INC.
QUALITY AIR HEATING & COOLING, INC.
S&K AIR CONDITIONING CO., INC.
S. I. XXXXXXX COMPANY, INC.
X.X. XXXXXXXX COMPANY, INC.
SA ASSOCIATES, INC.
SEASONAIR, INC.
XXXXXX PLUMBING & HEATING, INC.
LIMITED WAIVER: ISG CREDIT AGREEMENT
STANDARD HEATING & AIR CONDITIONING COMPANY
TARGET CONSTRUCTION, INC.
TEMP-RIGHT SERVICE, INC.
THE CAPITAL REFRIGERATION COMPANY
TRI-CITY MECHANICAL, INC.
UNITED ENVIRONMENTAL
SERVICES, L.P., by Atlas-Accurate Holdings, L.L.C.,
as general partner
WESTERN BUILDING SERVICES, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
LIMITED WAIVER: ISG CREDIT AGREEMENT
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and a Lender
By:
-------------------------------------------
Its Duly Authorized Signatory
LIMITED WAIVER: ISG CREDIT AGREEMENT
BANK OF TEXAS, NA, as a Lender
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
LIMITED WAIVER: ISG CREDIT AGREEMENT
