1
EXHIBIT 10.36
AMENDMENT NO. 2
THIS AMENDMENT NO. 2 (this "Amendment") dated as of February 2, 1999,
to the Credit Agreement referenced below, is by and among RAILWORKS CORPORATION,
a Delaware corporation, the subsidiaries identified herein, the lenders
identified herein, and NATIONSBANK, N.A., as Administrative Agent. Terms used
but not otherwise defined shall have the meanings provided in the Credit
Agreement.
WITNESSETH
WHEREAS, a $75 million credit facility has been extended to RAILWORKS
CORPORATION, a Delaware corporation (the "Borrower"), pursuant to the terms of
that Credit Agreement dated as of August 4, 1998 (as amended and modified, the
"Credit Agreement") among the Borrower, the Guarantors and Lenders identified
therein, and NationsBank, N.A., as Administrative Agent;
WHEREAS, the Borrower has requested certain modifications to the Credit
Agreement which require the consent of the Required Lenders;
WHEREAS, the Required Lenders have agreed to the requested
modifications on the terms and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. The Credit Agreement is amended in the following respects:
1.1 In Section 1.1, the following definitions are amended
or added to read as follows:
"Amendment Date" means February 2, 1999 (being the date of
Amendment No. 2).
"Bridge Credit Agreement" means that certain Credit Agreement
dated as of February 2, 1999 by and among the Borrower, the Guarantors,
the lenders party thereto and NationsBank, N.A., as Administrative
Agent, as amended, modified, extended or renewed.
"Bridge Repayment Date" means the date on which all loans and
obligations under the Bridge Credit Agreement are paid in full.
"Consolidated EBITDA" means for any period for the
Consolidated Group, the sum of Consolidated Net Income plus
Consolidated Interest Expense plus all provisions for any Federal,
state or other domestic and foreign income taxes plus depreciation and
amortization minus, to the extent not deducted in determining
Consolidated Net Income, earn-out payments made in connection with the
Permitted Acquisitions, in each case on a consolidated basis determined
in accordance with GAAP applied on a consistent basis, but excluding
for purposes hereof extraordinary gains and losses and related tax
effects thereon.
2
"Consolidated Fixed Charges" means for any period for the
Consolidated Group, the sum of the principal amount of Consolidated
Interest Expense (excluding the amortization of debt discount and
premium) plus the greater of (i) (A) from the Amendment Date until the
Bridge Repayment Date, ten percent (10%) of the sum of Obligations
outstanding hereunder plus loans outstanding under the Bridge Credit
Agreement, in each case on the date of determination and (B) subsequent
to the Bridge Repayment Date, twenty percent (20%) of Obligations
outstanding hereunder on the date of determination, or (ii) Two Million
Dollars ($2,000,000), in each case on a consolidated basis determined
in accordance with GAAP applied on an consistent basis. Except as
otherwise expressly provided, the applicable period shall be for the
four consecutive fiscal quarters ending as of the date of
determination.
"Consolidated Senior Debt" means Consolidated Funded Debt less
Subordinated Debt of the Consolidated Group on a consolidated basis as
determined in accordance with GAAP.
"Consolidated Senior Leverage Ratio" means, as of the last day
of any fiscal quarter, the ratio of Consolidated Senior Debt on such
day to Consolidated EBITDA for the period of four consecutive fiscal
quarters ending as of such day.
"Debt Transaction" means, with respect to any member of the
Consolidated Group, any sale, issuance or placement of Subordinated
Debt permitted by Section 8.1.
"Intercreditor Agreement" means that certain Intercreditor
Agreement dated as of the date hereof by and among NationsBank, N.A.,
as Administrative Agent under the Bridge Credit Agreement, NationsBank,
N.A., as Administrative Agent under this Credit Agreement, and the
Credit Parties, as amended or modified from time to time, in
substantially the form of Exhibit A attached hereto.
"Permitted Acquisitions" means the acquisition by the Borrower
or any of its Subsidiaries of the following entities: (a) Gantrex
Group, (b) FCM Rail, LTD, (c) Walpar Inc., (d) Midwest Railroad
Construction and (e) F&V Metro Contracting Corp. and Affiliates.
1.2 The definition of "Credit Documents" in Section 1.1
shall be amended to include the "Intercreditor Agreement".
1.3 In the definition of "Permitted Liens" in Section 1.1,
clauses (xv) and (xvi) are renumbered as clauses (xvi) and (xvii), and a new
clause (xv) is added to read as follows:
(xv) Liens in favor of the administrative agent and lenders
under the Bridge Credit Agreement securing the loans and obligations
owing under the Bridge Credit Agreement on a pari passu basis with the
loans and obligations owing under this Credit Agreement, but only to
the extent (A) such Liens are on the same collateral as to which the
Lenders also have a lien and (B) such Liens are subject to the
Intercreditor Agreement.
1.4 Section 7.1(d) is amended to read as follows:
(d) Borrowing Base Certificate. Within 30 days after the
end of each calendar month, a statement of the Borrowing Base and its
components as of the end of such calendar month, in form
2
3
and content satisfactory to the Administrative Agent and certified by
the chief financial officer of the Borrower to be true and correct as
of the date thereof (the "Borrowing Base Certificate").
1.5 Section 7.9(a) (Consolidated Leverage Ratio) is amended to
read as follows:
(a) Consolidated Leverage Ratio. As of the end of each
fiscal quarter ending during the respective periods set forth below,
the Consolidated Leverage Ratio shall not be greater than the ratio set
forth opposite such period:
Closing Date through June 30, 1999 3.0:1.0
July 1, 1999 and thereafter 2.5:1.0
provided that, notwithstanding the foregoing, on the
date of and subsequent to any Debt Transaction of at least
$25,000,000, the Consolidated Leverage Ratio shall not be
greater than 4.0:1.0.
1.6 Section 7.9(c) (Consolidated Net Worth) is amended to read
as follows:
(c) Consolidated Net Worth. As of the end of each fiscal
quarter, Consolidated Net Worth shall be not less than the sum of
$95,000,000 plus on the last day of each fiscal quarter to occur after
the Closing Date, seventy-five percent (75%) of Consolidated Net Income
for the fiscal quarter (but not less than zero), such increases to be
cumulative, plus one hundred percent (100%) of any increases in
Consolidated Net Worth resulting from Equity Transactions occurring
after the Closing Date.
1.7 Section 7.9(d) (Consolidated Fixed Charge Coverage Ratio)
is amended to read as follows:
(d) Consolidated Fixed Charge Coverage Ratio. As of the
end of each fiscal quarter ending during the respective periods set
forth below, the Consolidated Fixed Charge Coverage Ratio shall not be
less than the ratio set forth opposite such period:
Closing Date to the date of any 1.75:1.0
Debt Transaction of at least $25,000,000
On or subsequent to the date of any 1.50:1.0
Debt Transaction of at least $25,000,000
1.8 A new clause (f) is added to Section 7.9 to read as
follows:
(f) Consolidated Senior Leverage Ratio. As of the end of
each fiscal quarter, beginning with the fiscal quarter ending the
earlier of (i) on June 30, 1999 or (ii) on or subsequent to the date of
any Debt Transaction of at least $25,000,000, the Consolidated Senior
Leverage Ratio shall not be greater than 2.5:1.0.
1.9 Clause (f) of Section 8.1 is amended to read as follows:
3
4
(f) Subordinated Debt of the Borrower, provided that (i)
the Borrower shall demonstrate it will be in compliance with the
financial covenants in Section 7.9 after giving effect thereto on a Pro
Forma Basis, (ii) no Default or Event of Default shall exist after
giving effect thereto, and (iii) the net proceeds therefrom shall be
applied first to repay the term loan and other obligations under the
Bridge Credit Agreement;
1.10 Clause (h) of Section 8.1 is amended to read as follows:
(h) other unsecured Indebtedness of any of the Credit
Parties of up to $2,500,000 in the aggregate at any time outstanding;
1.11 Clauses (h) and (i) of Section 8.1 are renumbered as
clauses (k) and (l), and new clauses (h), (i) and (j) are is added to read as
follows:
(h) other senior secured Indebtedness of the Credit
Parties in an aggregate principal amount of up to $25 million incurred
pursuant to the Bridge Credit Agreement;
(i) purchase money Indebtedness (including Capital Lease
Obligations) assumed in connection with the Permitted Acquisitions in
an aggregate principal amount not to exceed $12,000,000 at any time
outstanding;
(j) seller financing obligations incurred in connection
with the Permitted Acquisitions in an aggregate principal amount not to
exceed $9,000,000 at any time outstanding;
1.12 Section 8.10 is amended to read as follows:
8.10 No Further Negative Pledges.
Except with respect to (i) prohibitions against other
encumbrances on specific Property encumbered to secure payment of
particular Indebtedness (which Indebtedness relates solely to such
specific Property, and improvements and accretions thereto, and is
otherwise permitted hereby) and (ii) the Bridge Credit Agreement, no
member of the Consolidated Group will enter into, assume or become
subject to any agreement prohibiting or otherwise restricting the
creation or assumption of any Lien upon its properties or assets,
whether now owned or hereafter acquired, or requiring the grant of any
security for such obligation if security is given for some other
obligation.
1.13 A new Section 8.11 is added to read as follows:
8.11 Amendment or Modification of Bridge Credit Agreement.
Amend or modify (or consent to, permit or acquiesce
to the amendment or modification of) any of the terms of the Bridge
Credit Agreement without the consent of the Required Lenders hereunder,
unless such amendment or modification conforms to an amendment or
modification under this Agreement.
4
5
1.14 Clause (i) of Section 9.1(c) is amended to read as
follows:
(i) Default in the due performance or observance of any
term, covenant or agreement contained in Section 7.3(a), 7.9, 7.11,
7.13 to 8.1 through 8.11, inclusive; or
1.15 Clause (j) of Section 9.1 is renumbered as clause
(k), and a new clause (j) is added to read as follows:
(j) The occurrence of an Event of Default under the
Bridge Credit Agreement; or
1.16 The address for all notices and other communications to
the Borrower and the Guarantors as set forth in Section 11.1 is amended to read
as follows:
Railworks Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
2. Notwithstanding any provision to the contrary in the Credit
Agreement, from the Amendment Date until the Bridge Repayment Date, (A) the
Applicable Percentage for Base Rate Loans shall be 1.25%, (B) the Applicable
Percentage for Eurodollar Loans shall be 2.50%, (C) the Applicable Percentage
for the Letter of Credit Fee shall be 2.50% and (D) the Applicable Percentage
for the Commitment Fee shall be 0.500%.
3. Notwithstanding the terms of Section 8.4 of the Credit
Agreement, other than the Permitted Acquisitions, no member of the Consolidated
Group shall make any Acquisition prior to the Bridge Repayment Date without the
prior written consent of the Required Lenders. Subsequent to the Bridge
Repayment Date, members of the Consolidated Group may make Acquisitions
permitted by Section 8.4 of the Credit Agreement; provided that all Acquisitions
prior to the Bridge Repayment Date shall not be considered when calculating the
dollar limit on cash consideration payable in respect of Acquisitions under
Section 8.4(b).
4. By execution of this Amendment, the Required Lenders authorize
and direct the Administrative Agent, on behalf of the Lenders under the Credit
Agreement, to enter into the Intercreditor Agreement.
5. This Amendment shall be effective upon satisfaction of the
following conditions:
(a) execution of this Amendment by the Credit Parties and
the Required Lenders; and
5
6
(b) receipt by the Administrative Agent of legal opinions
of counsel to the Credit Parties relating to this Amendment.
6. The Credit Parties hereby affirm (i) the representations and
warranties set out in Section 6 of the Credit Agreement are true and correct as
of the date hereof (except those which expressly relate to an earlier period)
and (ii) no Default or Event of Default presently exists.
7. Except as modified hereby, all of the terms and provisions of
the Credit Agreement (including Schedules and Exhibits) shall remain in full
force and effect.
8. The Borrower agrees to pay all reasonable costs and expenses
of the Administrative Agent in connection with the preparation, execution and
delivery of this Amendment, including without limitation the reasonable fees and
expenses of Xxxxx & Xxx Xxxxx, PLLC.
9. This Amendment may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original and it
shall not be necessary in making proof of this Amendment to produce or account
for more than one such counterpart.
10. This Amendment shall be deemed to be a contract made under,
and for all purposes shall be construed in accordance with the laws of the State
of New York.
6
7
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date first above
written.
BORROWER: RAILWORKS CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
GUARANTORS: ALPHA-KEYSTONE ENGINEERING, INC.,
a Pennsylvania corporation
ANNEX RAILROAD BUILDERS, INC.,
an Indiana corporation
XXXXXXXX HOLDINGS INC.,
a Delaware corporation
COMTRAK CONSTRUCTION, INC.,
a Georgia corporation
XXXXXX BROTHERS, INC.,
a Washington corporation
CPI CONCRETE PRODUCTS INCORPORATED,
a Tennessee corporation
H.P. XXXXXXXX INC.,
a Pennsylvania corporation
XXXXXXX RAILROAD BUILDERS, INC.,
a Pennsylvania corporation
X.X. XXXXXXXX & COMPANY, INC.,
a New York corporation
MERIT RAILROAD CONTRACTORS, INC.,
a Missouri corporation
MIDWEST CONSTRUCTION SERVICES, INC.,
an Indiana corporation
MINNESOTA RAILROAD SERVICE, INC.,
a Tennessee corporation
NEW ENGLAND RAILROAD CONSTRUCTION CO., INC.,
a Connecticut corporation
NORTHERN RAIL SERVICE AND SUPPLY COMPANY, INC.,
a Michigan corporation
R. & M. B. RAIL CO., INC.,
an Indiana corporation
RAILCORP, INC.,
an Ohio corporation
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President of each
of the foregoing Guarantors
7
8
RAILROAD SERVICE, INC.,
a Nevada corporation
RAILROAD SPECIALTIES, INC.,
an Indiana corporation
SOUTHERN INDIANA WOOD PRESERVING CO., INC.,
an Indiana corporation
U.S. TRACKWORKS, INC.,
a Michigan corporation
U.S. RAILWAY SUPPLY, INC.,
an Indiana corporation
WM. X. XXXXX CONSTRUCTION CO., INC.,
a Texas corporation
WM. X. XXXXX RERAILING SERVICES, INC.,
a Texas corporation
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President of each
of the foregoing Guarantors
LENDERS: NATIONSBANK, N.A.,
individually in its capacity as a Lender and in
its capacity as Administrative Agent
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
CRESTAR BANK
By:
------------------------------------------
Name:
Title:
SUMMIT BANK
By:
------------------------------------------
Name:
Title:
8
