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Exhibit 4(b)
FIRST AMENDMENT TO CREDIT AGREEMENT
AND
OTHER LOAN DOCUMENTS
THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND OTHER LOAN DOCUMENTS (the
"Amendment"), dated as of July 17, 2000 (the "Effective Date"), is among MPW
Industrial Services Group, Inc., Aquatech Environmental, Inc., Pentagon
Technologies Group, Inc., each of the other Subsidiaries of MPW Group listed on
the Schedule of Subsidiary Borrowers attached hereto, the Lenders listed on the
signature pages of this Amendment, Bank One, NA, as Administrative Agent and LC
Issuer, and National City Bank, as Documentation Agent.
Background Information
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A. Borrowers, Lenders, Administrative Agent, LC Issuer and
Documentation Agent entered into a certain Credit Agreement, dated as of October
20, 1999 (the "Agreement").
B. Lenders have extended a revolving line of credit loan (the
"Revolving Loan") to Borrowers in the maximum principal amount of $100 million
pursuant to the Agreement.
C. The Revolving Credit Loan is secured by a security interest in, lien
on and pledge of all of Borrowers' personal property pursuant to a Pledge and
Security Agreement, dated as of October 20, 1999 (the "Security Agreement").
D. MPW Group has advised Administrative Agent of its desire to enter
into a Recapitalization Agreement (the "Recapitalization Agreement") with
certain investment partnerships affiliated with Xxxxxx X. Xxxxx & Co.
Incorporated ("BCP") whereby one of the Borrowers, Pentagon Technologies Group,
Inc. ("PTG"), will be merged with and into a newly formed subsidiary of BCP (the
"Merger"), with PTG as the surviving corporation (PTG and the surviving
corporation are hereinafter referred to as "Pentagon"). Pursuant to the
Recapitalization Agreement and upon the consummation of the Merger, Pentagon's
issued and outstanding shares of Common Stock, which are currently owned by MPW
Management Services Corp., a subsidiary of MPW Group ("MSC"), will be converted
into shares of New Series A Preferred Stock and New Common Stock of Pentagon
(the "New Shares"). Immediately upon the consummation of the Merger, Pentagon
will redeem certain of the New Shares held by MSC (the "Redemption", and,
collectively with the Merger and the transactions contemplated by the
Recapitalization Agreement, the "Sale"), and after consummation of the Sale, MSC
will own 6,696.14 shares of New Series A Preferred Stock and 297,606.09 shares
of the New Common Stock of Pentagon (the "Retained Shares").
E. MPW Group has requested the consent of Lenders to the Sale.
F. Lenders are willing to consent to the Sale, which requires that (i)
Pentagon be released from its obligations under the Agreement, the Security
Agreement and the other Loan Documents, and (ii) the Agreement, the Security
Agreement and the other Loan Documents be amended and otherwise modified, upon
and subject to the terms and conditions set forth herein.
G. In connection with the Sale, Borrowers incurred an extraordinary
loss of $5,712,000 (the "Loss"), as shown in its quarterly financial statements
for the fiscal quarter ended March 31,
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2000 (the "Third Quarter 2000"). In calculating Consolidated EBIT in accordance
with the terms of the Agreement, Consolidated Interest Expense and expense for
taxes paid or accrued are added to Consolidated Net Income, but extraordinary
gains are not deducted from, and extraordinary losses are not added back to,
Consolidated Net Income. Borrowers have requested that the Loss be added back
when calculating Consolidated EBIT, and Lenders are willing to consent to such
request, upon and subject to the terms and conditions set forth herein.
H. MPW Group has caused to be formed two new Subsidiaries, MPW
Industrial Services of Indiana, LLC, an Indiana limited liability company
("MPW-IN"), and MPW Industrial Cleaning Corp., an Ohio corporation ("Cleaning
Corp." and together with MPW-IN, the "New Borrowers"). Section 2.24 of the
Agreement provides that additional Subsidiaries of the Borrowers shall become
Borrowers under the Agreement, the Facility LC Applications, the Notes and the
other Loan Documents. The New Borrowers are executing this Amendment in
accordance with the requirements of the Agreement to become a Borrower under the
Agreement, the Facility LC Applications, the Notes and the other Loan Documents
in order to induce the Banks to make additional Advances and Loans to the
Borrowers and Bank One to issue additional Facility LCs and as consideration for
Advances and Loans previously made and Facility LCs previously issued.
Provisions
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NOW, THEREFORE, in consideration of their mutual agreements hereunder
and under the Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Borrowers and
Administrative Agent, on behalf of Lenders, Documentation Agent and LC Issuer,
hereby agree as follows:
1. Capitalized Terms. Except as otherwise defined herein, the
capitalized terms used herein shall have the same meanings as set forth in the
Agreement.
2. Amendment and Modification of the Agreement, the Security Agreement
and other Loan Documents. On the Effective Date:
(a) Pentagon shall cease to be a party to the Agreement, the
Notes, the Security Agreement and all other Loan Documents, and the
Agreement, the Notes, the Security Agreement and all other Loan
Documents are hereby amended to delete Pentagon as a party thereto.
(b) Pentagon shall be released from all obligations, including
payment obligations, imposed upon it as a "Borrower" under the
Agreement, the Notes, the Security Agreement and all other Loan
Documents.
(c) The limitation on Capital Expenditures by the Borrowers
and their Subsidiaries set forth in the Agreement with respect to
fiscal year 2000 shall be increased from $12, 000,000 to $15,000,000,
and Section 6.16 of the Agreement shall be amended in its entirety to
provide as follows:
"6.16. Capital Expenditures. Each Borrower will not,
nor will it permit any Subsidiary to, expend, or be committed
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to expend, in excess of the following amounts for Capital
Expenditures during any one fiscal year in the aggregate for
the Borrowers and their Subsidiaries: (i) $15,000,000 during
fiscal years 2000 and 2001; and (ii) $17,500,000 during any
fiscal year thereafter. "
(d) All schedules to the Loan Documents listing the Subsidiary
Borrowers are hereby amended to refer to the Schedule of Subsidiary
Borrowers attached hereto and incorporated herein by reference and all
such schedules to the Agreement are hereby deleted in their entirety
and replaced with the Schedule of Subsidiary Borrowers attached hereto.
(e) All references in the Agreement to Schedule 1 (relating to
Subsidiaries and Other Investments) are hereby amended to refer to
Schedule 1 attached hereto and incorporated herein by reference and
such Schedule 1 to the Agreement is hereby deleted in its entirety and
replaced with the Schedule 1 attached hereto.
(f) All references in the Security Agreement to Exhibit A are
hereby amended to refer to Exhibit A attached hereto and incorporated
herein by reference and such Exhibit A to the Security Agreement is
hereby deleted in its entirety and replaced with the Exhibit A attached
hereto.
(g) Exhibit F to the Security Agreement shall be supplemented
by the Supplement to Exhibit F attached hereto and incorporated herein
by reference, which supplement adds offices in which financing
statements have been filed with respect to the New Borrowers.
(h) In accordance with Section 2.24 of the Agreement, each of
the New Borrowers, by their signatures below, shall become a Borrower
under the Agreement, the Facility LC Applications, the Notes and the
other Loan Documents with the same force and effect as if originally
named therein as a Borrower, and each of the new Borrowers hereby (i)
agrees to all the terms and provisions of the Agreement, the Facility
LC Applications, the Notes and the other Loan Documents applicable to
it as a Borrower thereunder, and (ii) represents and warrants that the
representations and warranties made by it as a Borrower thereunder are
true and correct on and as of the date hereof. Each reference to a
"Borrower" in this Amendment, the Agreement, the Facility LC
Applications, the Notes and the other Loan Documents shall be deemed to
include each New Borrower. The Agreement, the Facility LC Applications,
the Notes and the other Loan Documents are hereby incorporated herein
by reference. The execution and delivery of this Amendment shall have
the same effect as a Supplement in the form of Exhibit F attached to
the Agreement signed by the New Borrowers. This Amendment, or a
photocopy hereof (which shall be as effective as a manually signed
counterpart of this Amendment) shall be attached to each Note as an
allonge.
3. Extraordinary Loss. Lenders hereby consent to allowing the amount of
the Loss, to the extent deducted from revenues in determining Consolidated Net
Income, to be added back when calculating Consolidated EBIT in each case where
the financial results for the Third Quarter 2000
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are included in determining Consolidated EBIT for all purposes in accordance
with the terms of the Agreement.
4. Release of Security Interests, Liens and Pledges.
(a) Subject to the terms of subsection (b) below, all security
interests, liens and pledges granted by Pentagon with respect to its
property to Administrative Agent for the benefit of Lenders pursuant to
the Security Agreement shall be terminated and released on the
Effective Date, and promptly thereafter, at Borrower's cost,
Administrative Agent shall (i) prepare and file all necessary
terminations and releases of such security interests, liens and
pledges, including UCC termination statements, and (ii) deliver the
stock certificate evidencing Pentagon's issued and outstanding shares,
together with all stock powers, to Pentagon or Pentagon's designee.
(b) Notwithstanding the terms of subsection (a) above,
Administrative Agent shall retain a security interest in, lien on and
pledge of the Retained Shares, and the Retained Shares shall remain
subject to the Security Agreement.
5. Conditions to Lender's Obligations. The obligations of
Administrative Agent, on behalf of Lenders, to enter into this Amendment, and
for Lenders to be bound by the terms hereof, are subject to the satisfaction of
the following conditions precedent:
(a) Delivery of Documents. On or prior to the Effective Date,
Administrative Agent shall have received the following:
(i) a copy of the resolutions (in form and substance
satisfactory to Lender) of the board of directors of each
Borrower authorizing (A) the execution, delivery and
performance of this Amendment and all other documents in
connection herewith or therewith, as applicable, and (B) the
consummation of the transactions contemplated hereby and
thereby, certified by the secretary or an assistant secretary
(or other appropriate representative) of each Borrower. Each
such certificate shall state that the resolutions set forth
therein have not been amended, modified, revoked or rescinded
as of the date hereof;
(ii) a legal opinion, in form and substance
satisfactory to Administrative Agent, from Borrowers' legal
counsel;
(iii) stock certificate(s) evidencing the Retained
Shares, together with executed stock power(s);
(iv) all documents and instruments, including UCC
financing statements, with respect to the New Borrowers as
Administrative Agent, in its reasonable discretion, deems
necessary or desirable; and
(v) such other certificates, documents and other
items as Administrative Agent, in its reasonable discretion,
deems necessary or desirable.
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(b) Borrowers shall pay, or cause to be paid, to
Administrative Agent the net proceeds of the Sale, which proceeds shall
be applied to reduce the outstanding principal balance of the Revolving
Loan.
(c) Representations and Warranties. The representations and
warranties made by Borrowers in this Amendment shall be true and
correct in all material respects as of the date of this Amendment.
6. Exhibits and Schedules. Each Borrower confirms and warrants that the
information set forth in all schedules and exhibits to the Agreement, as
modified by Section 2 hereof, is true, accurate and complete as of the date
hereof.
7. Truth of Representations and Warranties; No Defaults. Each Borrower
hereby represents and warrants to Lenders and Administrative Agent that the
following are true and correct as of the date of this Amendment:
(a) the representations and warranties of each Borrower
contained in the Agreement are true and correct on and as of the date
of this Amendment as if made on and as of such date, unless stated to
relate to a specific earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier
date;
(b) all financial statements and information of Borrowers
provided to Administrative Agent and Lenders are true, accurate and
complete in all material respects as of the date of, and for the
periods covered by, such financial statements and information;
(c) neither this Amendment nor any other document, certificate
or written statement furnished to Administrative Agent and/or Lenders
or to special counsel to Administrative Agent by or on behalf of any
Borrower in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained
herein and therein not misleading;
(d) each Borrower has full power and authority (i) to execute,
deliver and perform this Amendment, and (ii) to incur the obligations
provided for herein and therein, all of which have been duly authorized
by all necessary and proper action by each Borrower;
(e) no consent, waiver or authorization of, or filing with,
any person, entity or governmental authority is required to be made or
obtained by any Borrower in connection with the execution, delivery,
performance, validity or enforceability of this Amendment;
(f) this Amendment constitutes the legal, valid and binding
obligation of Borrowers, enforceable against Borrowers in accordance
with its terms;
(g) no Unmatured Default nor Default has occurred and is
continuing; and
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(h) the execution and delivery by Borrowers of this Amendment
and the performance by Borrowers of this Amendment: (i) do not and will
not violate any law or regulation; (ii) do not and will not violate any
order, decree or judgment by which any Borrower is bound; (iii) do not
and will not violate or conflict with, result in a breach of or
constitute (with notice, lapse of time, or otherwise) a default under
any material agreement, mortgage, indenture or other contractual
obligation to which any Borrower is a party, or by which any Borrower's
properties are bound; or (iv) do not and will not result in the
creation or imposition of any lien upon any property or assets of any
Borrower.
8. Reaffirmation of Liability. Each Borrower, excluding Pentagon,
hereby reaffirms its liability to Lender under the Agreement, Security
Agreement, the Notes, the other Loan Documents and all other agreements and
instruments executed by Borrowers for the benefit of Administrative Agent and
Lenders in connection with the Agreement (collectively, the "Bank Documents").
Without limiting the generality of the foregoing, and notwithstanding the
release of Pentagon from such obligations, each Borrower, excluding Pentagon,
reaffirms all of its payment obligations, including with respect to the
Revolving Loan under the Agreement and the Notes and with respect to the
Facility LCs. In addition, each Borrower, including Pentagon, agrees that
Administrative Agent, each Lender, LC Issuer and Documentation Agent have
performed all of their obligations under the Bank Documents and that none of
Administrative Agent, any Lender, LC Issuer or Documentation Agent is in default
under any obligation any of them has or ever did have to any Borrower under the
Bank Documents or any other agreement.
9. Effectiveness of Amendment. All of the terms, covenants and
conditions of, and the obligations of Borrowers under, the Bank Documents shall
remain in full force and effect as amended hereby.
10. Preservation of Existing Security Interests. Except with respect to
the release of the security interest, lien and pledge in certain property owned
by Pentagon as set forth in Section 4 hereof, each mortgage, security interest,
pledge, assignment, lien or other conveyance or encumbrance of any right, title,
or interest in any property of any kind delivered to Administrative Agent for
the benefit of Lenders at any time by any Borrower or any other Person in
connection with the Bank Documents or to secure the performance of the
obligations of Borrowers under the Bank Documents, including pursuant to the
Security Agreement, shall remain in full force and effect following the
execution of this Amendment.
11. Applicable Law. This Amendment shall be deemed to be a contract
made under the laws of the State of Ohio and for all purposes shall be construed
in accordance with the laws of such state.
12. Severability. Any provision of this Amendment that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability, without invalidating
the remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
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13. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. Amendments and Supplements. This Amendment may not be amended or
supplemented except by an instrument in writing executed by Borrowers and Agent.
15. Covenants to Survive, Binding Agreement. This Amendment shall be
binding upon and inure to the benefit of Borrowers, Lenders, Administrative
Agent, LC Issuer and Documentation Agent and their respective successors or
assigns; provided, however, that Borrowers may not assign or otherwise dispose
of any of its rights or obligations hereunder.
16. Entire Agreement. This Amendment embodies the entire agreement and
understanding among Borrowers and Administrative Agent, on behalf of Lenders,
relating to, and supersedes all prior agreements and understandings among
Borrowers and Administrative Agent and Lenders relating to, the subject matter
hereof.
17. Headings. The headings of the sections of this Amendment are for
convenience only and shall not affect the meaning or interpretation of this
Amendment.
18. Interpretation. This Amendment is to be deemed to have been
prepared jointly by the parties hereto, and any uncertainty or ambiguity
existing herein shall not be interpreted against any party but shall be
interpreted according to the rules for the interpretation of arm's length
agreements.
19. WAIVER OF JURY TRIAL. EACH BORROWER, ADMINISTRATIVE AGENT,
DOCUMENTATION AGENT, LC ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
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IN WITNESS WHEREOF, the parties hereto have made this Amendment
effective as of the day and year first above written.
Pentagon Technologies Group, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, Vice President and
Chief Financial Officer
BORROWERS:
MPW Industrial Services Group, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, Vice President and
Chief Financial Officer
Aquatech Environmental, Inc.
By: /s/ Xxxxx X. Xxxxxxxxxx
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Xxxxx X. Xxxxxxxxxx, Vice President
and Treasurer
Each of the Other Borrowers Listed
on the Schedule of Subsidiary Borrowers
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, Vice President and
Chief Financial Officer
[Signatures of Lenders, Administrative Agent, LC Issuer and Documentation Agent
Continued on Following Pages]
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BANK ONE, NA,
as a Lender and as Administrative
Agent and LC Issuer
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Zaksheksy
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Title: Vice President
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NATIONAL CITY BANK,
as a Lender and as Documentation
Agent
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
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Title: Vice President
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LASALLE BANK NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
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Title: Commercial Banking Officer
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SUNTRUST BANK,
(fka SunTrust Bank, Central
Florida, N.A.)
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: Vice President
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SCHEDULE OF SUBSIDIARY BORROWERS
MPW Industrial Services, Inc.
MPW Management Services Corp.
MPW Filtration Management Services Corp.
MPW Industrial Water Services, Inc.
MPW Container Management Corp.
MPW Container Management Corp. of Michigan
ESI International, Inc.
ESI-North Limited
Xxxxxxxx Enterprises, Inc.
MPW Industrial Services of Indiana, LLC
MPW Industrial Cleaning Corp.
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CONSENT AND AGREEMENT OF GUARANTORS
Each of the undersigned, MPW Industrial Services, Ltd. and MPW
Industrial, Sociedad de Responsibilidad Limitada de Capital Variable (the
"Guarantors"), being a guarantor pursuant to the Subsidiary Guaranty dated as of
October 20, 1999 in favor of Lenders (the "Guaranty") whereby each of Guarantors
has guaranteed the payment and performance of the Borrowers' obligations and
indebtedness owed to Lenders, joins in the execution of this Amendment and
hereby consents and agrees to the terms, conditions, execution and performance
of the this Amendment. Each of Guarantors has read and understands all terms and
provisions of the Guaranty, the Bank Documents and this Amendment, and agrees
that all of the terms, covenants and conditions of, and the obligations of each
of Guarantors under, the Guaranty shall continue in full force and effect and be
binding upon Guarantors.
Each of Guarantors represents and warrants that all representations and
warranties contained in the Guaranty are true, correct and complete in all
material respects on and as of the date hereof to the same extent as though made
on and as of this date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
Each of Guarantors hereby reaffirms its liability to Lenders under the
Guaranty and all other agreements and instruments executed by each of Guarantors
for the benefit of Lenders in connection therewith. Each of Guarantors agrees
that Administrative Agent, each Lender, LC Issuer and Documentation Agent have
performed all of their obligations under the Bank Documents and that none of
Administrative Agent, any Lender, LC Issuer or Documentation Agent is in default
under any obligation any of them has or ever did have to either of Guarantors
under the Guaranty or the other Bank Documents or any other agreement.
Each of Guarantors acknowledges and agrees that (i) notwithstanding the
conditions to effectiveness set forth in this Amendment, each of Guarantors is
not required by the terms of the Guaranty or any other Bank Document to consent
to the terms of this Amendment, and (ii) nothing in the Guaranty, this Amendment
or any other Bank Document shall require, or be deemed to require, the consent
of either of Guarantors to any future amendments to any Bank Document.
GUARANTOR: GUARANTOR:
MPW Industrial Services, Ltd. MPW Industrial, Sociedad de
Responsibilidad Limitada de Capital
Variable
By: /s/ Xxxxxx X. Xxxxxxx
--------------------- By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx ---------------------
-------------------- Name: Xxxxxx X. Xxxxxxx
Title: Vice President -------------------
------------------ Title: Vice President
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