EXHIBIT 10.1
FOURTH AMENDMENT
THIS FOURTH AMENDMENT dated as of March 9, 2004 (this "Amendment")
amends the Third Amended and Restated Credit Agreement dated as of May 8, 2002
(as previously amended, the "Credit Agreement") among Synagro Technologies,
Inc. (the "Company"), various financial institutions (the "Banks") and Bank of
America, N.A., as administrative agent (in such capacity, the "Administrative
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 Administrative Agent have
entered into the Credit Agreement; and
WHEREAS, the parties hereto desire to amend the Credit Agreement as
more fully set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1 Amendments. Subject to the satisfaction of the conditions
precedent set forth in Section 3, the Credit Agreement is amended as follows:
1.1 Amendments to Definitions.
(a) The definition of "Adjusted EBITDA" is amended by (i) deleting the
word "and" at the end of clause (b), (ii) redesignating clause "(c)" thereof as
clause "(e)" and (iii) inserting the following new clauses (c) and (d) in
appropriate sequence:
"(c) to the extent deducted in calculating Consolidated Net
Income for such period, up to $4,125,000 in charges taken during the
fourth Fiscal Quarter of 2003 relating to severance and relocation
costs, insurance claims and property taxes, the contemplated
relocation of the compost facility currently located in Riverside,
California and allowances for accounts receivable, as such charges are
more fully described on Schedule 1.1B, shall be added to EBITDA;
(d) to the extent deducted in calculating Consolidated Net
Income for such period, the first $1,200,000 of other charges, if any,
taken during the first two Fiscal Quarters of 2004 relating to the
terminated contract between Providence Soils, LLC and NBC/RIRRC shall
be added to EBITDA; and".
(b) The definition of "Capital Expenditures" is amended in its
entirety to read as follows:
"Capital Expenditures means all expenditures which, in
accordance with GAAP, would be required to be capitalized and shown on
the consolidated balance sheet of the Company, but excluding
expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (i) from insurance
proceeds (or other similar recoveries) paid on account of the loss of
or damage to the assets being
replaced or restored, (ii) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced
or (iii) with Non-Recourse Debt."
1.2 Deletion of Section 9.16. Section 9.16 (which was added by the
Third Amendment to the Credit Agreement) is deleted in its entirety.
1.3 Deletion of Section 10.1.10. Section 10.1.10 (which was added by
the Third Amendment to the Credit Agreement) is deleted in its entirety and the
existing Section 10.1.11 is renumbered Section 10.1.10.
1.4 Amendment to Section 10.6.3. The chart set forth in Section 10.6.3
is amended in its entirety to read as follows:
Computation Period Ending Total Leverage Ratio
12/31/03 through 6/30/04 4.50 to 1.0
9/30/04 through 12/31/04 4.25 to 1.0
3/31/05 through 12/31/05 4.00 to 1.0
Thereafter 3.50 to 1.0.
1.5 Amendment to Section 10.6.5. The first parenthetical phrase
contained in Section 10.6.5 is amended in its entirety to read as follows:
"(excluding amounts, if any, paid to consummate acquisitions permitted by
Section 10.11(c) which constitute Capital Expenditures)".
1.6 Amendments to Schedules. Schedule 1.1B hereto is added to the
Credit Agreement as new Schedule 1.1B thereto and Schedules 10.7(c) and 10.9 of
the Credit Agreement are replaced with Schedules 10.7(c) and 10.9 hereto,
respectively.
SECTION 2 Consents.
2.1 Consent to Terra Acquisition. The Required Banks agree that,
notwithstanding anything to the contrary contained in Section 10.11 of the
Credit Agreement but subject to compliance with Section 10.13 of the Credit
Agreement, the Company may purchase all of the outstanding capital stock of
Terra Holding Company and Terra Renewal Services, Inc. for aggregate
consideration (including earn-out payments) not to exceed $35,000,000.
2.2 Consent to Addition of New Term Loan Facility. The Banks that are
parties to this Amendment consent to the addition of a new term loan facility
(the "New Term Loan Facility") after the date hereof providing for the making
of new term loans (the "New Term Loans") to the Company by various financial
institutions (the "New Term Lenders"), which may include one or more of the
existing Banks, in an aggregate amount not exceeding $75,000,000; provided that
the proceeds of the New Term Loans shall be used exclusively to prepay the
existing Term Loans, all accrued and unpaid interest thereon and all other
amounts payable in connection therewith (including breakage costs) until all
such amounts are paid in full, with the remainder of such proceeds to be used
exclusively to prepay Revolving Loans. The New Term
Loans will have an amortization schedule (a copy of which shall be distributed
by the Administrative Agent to all Banks promptly after the making of the New
Term Loans), and will bear interest at rates per annum, agreed to among the
Company, the New Term Lenders and the Administrative Agent. The New Term
Lenders will receive funding fees in the amounts agreed to among the Company,
the New Term Lenders and the Administrative Agent, and otherwise shall have all
of the rights and obligations allocated to the holders of the "Term Loans"
under the Credit Agreement. If and to the extent that any existing Bank that
has an existing Term Loan is a New Term Lender, then rather than receiving
payment in full of its existing Term Loan and funding the full amount of its
New Term Loan, such Bank's existing Term Loan (or the relevant portion thereof)
shall automatically become a New Term Loan on the date of the effectiveness of
the New Term Loan Facility and (a) only the amount of such Bank's existing Term
Loan that is in excess of such Bank's New Term Loan shall be remitted by the
Company to the Administrative Agent for the account of such Bank, or (b) the
amount of such Bank's New Term Loan that is in excess of such Bank's existing
Term Loan shall be remitted by such Bank to the Administrative Agent for the
account of the Company, as the case may be, on the date of the effectiveness of
the New Term Loan Facility; provided that, solely for purposes of Section 8.4
of the Credit Agreement, the entire amount of such Bank's existing Term Loan
shall be deemed to have been paid on the date of the effectiveness of the New
Term Loan Facility.
SECTION 3 Effectiveness. The amendments set forth in Section 1 and the
consents set forth in Section 2 shall become effective on the date on which the
Administrative Agent has received (a) counterparts of this Amendment executed
by the Company and the Required Banks (or, in the case of the consent set forth
in Section 2.2, Banks having an aggregate Total Percentage equal to or greater
than 66 2/3%), (b) a Confirmation, substantially in the form of Exhibit A,
signed by the Company and each Guarantor and (c) a fee for each Bank that, on
or prior to 5:00 p.m. on March 8, 2004, executes and delivers a counterpart of
this Amendment to the Administrative Agent, such fee to be in an amount equal
to 0.075% of the sum of such Bank's Revolving Commitment and the principal
amount of such Bank's Term Loan.
SECTION 4 Representations and Warranties. The Company represents and
warrants to the Administrative Agent and the Banks that, after giving effect to
the effectiveness hereof, (a) each warranty set forth in Section 9 of the
Credit Agreement (other than Section 9.8) 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 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 New York 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 Administrative Agent and their respective successors
and assigns, and shall inure to the benefit of the Company, the Banks and the
Administrative Agent and the respective successors and assigns of the Banks and
the Administrative Agent.
Delivered as of the day and year first above written.
SYNAGRO TECHNOLOGIES, INC.
By__________________________________
Title_______________________________
BANK OF AMERICA, N.A.,
as Administrative Agent
By__________________________________
Title_______________________________
BANK OF AMERICA, N.A., as a Bank
By__________________________________
Title_______________________________
CAPITAL FARM CREDIT
By__________________________________
Title_______________________________
COBANK, ACB, as a Bank
By__________________________________
Title_______________________________
GENERAL ELECTRIC CAPITAL CORPORATION
By__________________________________
Title_______________________________
LASALLE BANK NATIONAL ASSOCIATION
By__________________________________
Title_______________________________
CREDIT LYONNAIS NEW YORK BRANCH
By__________________________________
Title_______________________________
ARK II CLO 2001-1, LIMITED
By: Patriarch Partners II, LLC,
its Collateral Manager
By__________________________________
Name________________________________
Title: Manager
COLUMBIA FLOATING RATE LIMITED
By__________________________________
Title_______________________________
SRF 2000 LLC
By__________________________________
Title_______________________________
DENALI CAPITAL CLO I, LTD.
By: Denali Capital LLC, Managing
Member of DC Funding Partners LLC,
Portfolio Manager for Denali
Capital CLO I, Ltd.
By__________________________________
Title_______________________________
DENALI CAPITAL CLO II, LTD.
By: Denali Capital LLC, Managing
Member of DC Funding Partners LLC,
Portfolio Manager for Denali
Capital CLO II, Ltd.
By__________________________________
Title_______________________________
DENALI CAPITAL CLO III, LTD.
By: Denali Capital LLC, Managing
Member of DC Funding Partners LLC,
Portfolio Manager for Denali
Capital CLO III, Ltd.
By__________________________________
Title_______________________________
RACE POINT CLO LIMITED
By: Sankaty Advisors, LLC as
Collateral Manager
By__________________________________
Title_______________________________
RACE POINT II CLO LIMITED
By: Sankaty Advisors, LLC as
Collateral Manager
By__________________________________
Title_______________________________
GREAT POINT CLO 1999-1, LTD.
By__________________________________
Title_______________________________
Castle Hill I - Mincs Ltd.
By: Sankaty Advisors, LLC as
Collateral Manager
By__________________________________
Title_______________________________
Castle Hill II - Mincs Ltd.
By: Sankaty Advisors, LLC as
Collateral Manager
By__________________________________
Title_______________________________
OLYMPIC FUNDING TRUST, SERIES 1999-1
By__________________________________
Title_______________________________
MUIRFIELD TRADING LLC
By__________________________________
Title_______________________________
KZH WATERSIDE LLC
By__________________________________
Title_______________________________
WHITNEY PRIVATE DEBT FUND L.P.
By__________________________________
Title_______________________________
BRYN MAWR CLO, LTD.
By: Deerfield Capital Management, LLC
as its Collateral Manager
By__________________________________
Title_______________________________
ROSEMONT CLO, LTD.
By: Deerfield Capital Management, LLC
as its Collateral Manager
By__________________________________
Title_______________________________
SEQUILS-CUMBERLAND I, LTD.
By: Deerfield Capital Management, LLC
as Collateral Manager
By__________________________________
Title_______________________________
HARBOUR TOWN FUNDING LLC
By__________________________________
Title_______________________________
FOREST CREEK CLO LIMITED
By: Deerfield Capital Management LLC
as its Collateral Manager
By__________________________________
Title_______________________________
FARM CREDIT BANK OF TEXAS
By__________________________________
Title_______________________________
CASTLE HILL III CLO LTD.
By__________________________________
Title_______________________________
EXHIBIT A
FORM OF CONFIRMATION
Dated as of March 9, 2004
To: Bank of America, N.A., individually and as Administrative Agent, and
the other financial institutions party to the Credit Agreement
referred to below
Please refer to (a) the Third Amended and Restated Credit Agreement
dated as of May 8, 2002 (as amended, the "Credit Agreement") among Synagro
Technologies, Inc., various financial institutions (the "Banks") and Bank of
America, N.A., as administrative agent (the "Administrative Agent"); (b) the
other Loan Documents (as defined in the Credit Agreement), including the
Guaranty and the Restated Security Agreement; and (c) the Fourth Amendment
dated as of the date hereof to the Credit Agreement (the "Fourth Amendment").
Each of the undersigned hereby confirms to the Administrative Agent
and the Banks that, after giving effect to the Fourth Amendment and the
transactions contemplated thereby, each Loan Document to which such undersigned
is a party continues in full force and effect and is the legal, valid and
binding obligation of such undersigned, enforceable against such undersigned in
accordance with its terms.
SYNAGRO TECHNOLOGIES, INC.
By:___________________________
Name Printed:_________________
Title:________________________
SYNAGRO WEST, INC.
SYNAGRO OF CALIFORNIA, INC. (formerly known
as Pima Gro Systems, Inc.)
SYNAGRO COMPOSTING COMPANY OF
CALIFORNIA, INC. (formerly known as Recyc, Inc.)
SYNAGRO MIDWEST, INC.
SYNAGRO OF MICHIGAN, INC. (formerly known as
National Resource Recovery, Inc.)
SYNAGRO OF WISCONSIN, INC. (formerly known as
A&J Cartage, Inc.)
SYNAGRO SOUTHWEST, INC.
SYNAGRO OF TEXAS - VITAL-CYCLE, INC.
SYNAGRO OF TEXAS - CDR, INC. (formerly known as
Synagro of Texas, Inc. and CDR Environmental,Inc.)
SYNAGRO SOUTHEAST, INC.
SYNAGRO OF NORTH CAROLINA - AMSCO, INC.
SYNAGRO OF FLORIDA - ANTI-POLLUTION, INC.
SYNAGRO OF NORTH CAROLINA - EWR, INC. (formerly
known as Synagro of North Carolina and
Environmental Waste Recycling, Inc.)
SYNAGRO OF FLORIDA - A&J, INC. (formerly known as
A&J Cartage Southwest, Inc.)
SYNAGRO NORTHEAST, INC.
SYNAGRO MID-ATLANTIC, INC. (formerly known as CDR
Mid-Atlantic, a division of CDR
Environmental, Inc.)
ORGANI-GRO, INC.
ST INTERCO, INC.
COMPOSTING CORPORATION OF AMERICA
NEW HAVEN RESIDUALS SYSTEMS, INC.
RESIDUAL TECHNOLOGIES SYSTEMS, INC.
FAIRHAVEN RESIDUAL SYSTEMS, INC.
NEW ENGLAND TREATMENT COMPANY, INC.
NETCO-CONNECTICUT, INC.
NETCO-WATERBURY SYSTEMS, INC.
NETCO-RESIDUALS MANAGEMENT SYSTEMS, INC.
SYNAGRO OF FLORIDA - XXXXX WATER, INC.
SYNAGRO OF FLORIDA - ECOSYSTEMS, INC.
SYNAGRO OF MINNESOTA - XXXXXXX INC.
PROVIDENCE SOILS, LLC
SYNAGRO - BALTIMORE, L.L.C.
SYNAGRO TEXAS, INC.
SYNAGRO DELAWARE, INC.
SYNAGRO DIGESTION, INC.
ENVIRONMENTAL PROTECTION & IMPROVEMENT COMPANY,INC.
SYNAGRO MIDWEST - ENVIROLAND, INC.
FUTURE-TECH ENVIRONMENTAL SERVICES, INC.
NYOFCO HOLDINGS, INC.
NEW YORK ORGANIC FERTILIZER COMPANY
RESIDUALS PROCESSING, INC.
SOARING VISTA PROPERTIES, INC.
SYNAGRO - WWT, INC.
SYNAGRO - WCWNJ, INC.
ATLANTA RESIDUALS COMPANY, LLC
EARTHWISE TRUCKING
EARTHWISE ORGANICS, INC.
By: ___________________________________
Name: _________________________________
Title: ________________________________
NETCO-RESIDUALS MANAGEMENT, LIMITED PARTNERSHIP
By: Netco-Residuals Management Systems, Inc.,
its General Partner
By: ___________________________________
Name: _________________________________
Title: ________________________________
RESIDUAL TECHNOLOGIES, LIMITED PARTNERSHIP
By: Residual Technologies Systems, Inc.,
its General Partner
By: ___________________________________
Name: _________________________________
Title: ________________________________
FAIRHAVEN RESIDUALS, LIMITED PARTNERSHIP
By: Fairhaven Residual Systems, Inc.,
its General Partner
By: ___________________________________
Name: _________________________________
Title: ________________________________
NETCO-WATERBURY, LIMITED PARTNERSHIP
By: Netco-Waterbury, Inc., its General Partner
By: ___________________________________
Name: _________________________________
Title: ________________________________
NEW HAVEN RESIDUALS, LIMITED PARTNERSHIP
By: New Haven Residuals Systems, Inc.,
its General Partner
By: ___________________________________
Name: _________________________________
Title: ________________________________
SCHEDULE 1.1B
CHARGES TAKEN DURING THE FOURTH FISCAL QUARTER 2003
SCHEDULE 10.7(c)
OTHER EXISTING SECURED DEBT
SCHEDULE 10.9
OPERATING LEASES