EXHIBIT 10.50
SEVENTH AMENDMENT TO CREDIT AGREEMENT
This SEVENTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made
as of the 13th day of November, 2002 by and among CECO GROUP, INC., CECO
FILTERS, INC., AIR PURATOR CORPORATION, NEW XXXXX CO., INC., THE XXXX & XXXX
MANUFACTURING COMPANY, KBD/TECHNIC, INC. and CECO ABATEMENT SYSTEMS, INC. (the
"Borrowers"), and PNC BANK, NATIONAL ASSOCIATION ("PNC"), individually and as
agent for itself and the other banks (collectively, the "Banks") which from time
to time are parties to the hereinafter defined Credit Agreement (in such
capacity, the "Agent").
BACKGROUND
A. The Agent, the Banks and the Borrowers are parties to a Credit
Agreement dated as of December 7, 1999 ("Credit Agreement") as amended by
Amendment to Credit Agreement, dated as of March 28, 2000, by Second Amendment
to Credit Agreement dated as of November 10, 2000, by Third Amendment to Credit
Agreement dated as of March 30, 2001, by Fourth Amendment to Credit Agreement
dated as of August 20, 2001, by Fifth Amendment to Credit Agreement dated as of
March 27, 2002 and by Sixth Amendment to Credit Agreement dated as of May 14,
2002 (as amended, the "Amended Credit Agreement").
B. The Borrowers have requested and the Agent and the Banks have
agreed to further amend the Amended Credit Agreement on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for good and
valuable consideration, the legality and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
1. Definitions. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in the Credit Agreement.
2. Amendments to Credit Agreement. The Credit Agreement is hereby
amended as follows:
(a) The definitions of "Termination Date" as set forth in Section 1.1
of the Credit Agreement and as revised in the Fourth Amendment to Credit
Agreement shall be deleted and shall be replaced with the following:
"Termination Date". January 1, 2004
(b) Beginning at the end of the fiscal quarter ending September 30,
2002, Section 6.1(a) Leverage Ratio of the Credit Agreement, as previously
modified in paragraph 2(m) of the Third Amendment to Credit Agreement, paragraph
2(h) of the Fourth Amendment to Credit Agreement,
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paragraph 2(a) of the Fifth Amendment to Credit Agreement and paragraph 2(a) of
the Sixth Amendment to Credit Agreement, shall be abated in its entirety through
the end of the fiscal quarter ending December 31, 2003, and shall be modified as
follows during the term of such abatement:
(a) Leverage Ratio. Permit the Leverage Ratio, as of the end of
the fiscal quarter ending on the dates specified below, for the
prior four consecutive fiscal quarters, to equal or exceed the
amount set forth opposite such period:
LEVERAGE RATIO MUST NOT
LAST DAY OF FISCAL QUARTER BE GREATER THAN
-------------------------- -----------------------
September 30, 2002 through
March 31, 2003 4.20 to 1
June 30, 2003 3.50 to 1
September 30, 2003 through
December 31, 2003 3.20 to 1
provided, however, the abatement of Section 6.1(a) Leverage Ratio
of the Credit Agreement shall cease and such section shall
continue as provided in the Credit Agreement for the four
consecutive fiscal quarter period ending on March 31, 2004 and
for each four consecutive fiscal quarter period ending
thereafter.
(c) Beginning with the fiscal quarter ending September 30, 2002,
Section 6.1(b) of the Credit Agreement, as previously modified in paragraph 2(n)
of the Third Amendment to Credit Agreement, paragraph 2(i) of the Fourth
Amendment to Credit Agreement and paragraph 2(b) of the Sixth Amendment to
Credit Agreement, shall be modified as follows:
(b) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage
Ratio: (i) for the four consecutive fiscal quarter period ending
on September 30, 2002, to be less than .60 to 1; (ii) for the one
fiscal quarter period ending December 31, 2002, to be less than
.9 to 1; (iii) for the two consecutive fiscal quarter period
ending March 31, 2003, to be less than .9 to 1; (iv) for the
three consecutive fiscal quarter period ending June 30, 2003, to
be less than 1 to 1; and (v) for the four consecutive fiscal
quarter period ending September 30, 2003, and for each four
consecutive calendar quarter period ending on each December 31,
March 31, June 30 and September 30 thereafter, to be less than 1
to 1;
(d) Beginning with the fiscal quarter ending September 30, 2002,
Section 6.1(c) Interest Coverage Ratio of the Credit Agreement, as previously
modified in paragraph 2(o) of the Third Amendment to Credit Agreement, paragraph
2(j) of the Fourth Amendment to Credit Agreement, paragraph 2(b) of the Fifth
Amendment to Credit Agreement and paragraph 2(c) of the Sixth Amendment to
Credit Agreement, shall be abated in its entirety through December 31, 2003, and
shall be modified as follows:
(c) Interest Coverage Ratio. Permit the Interest Coverage Ratio,
as of the end of each four consecutive fiscal quarter period
ending on the dates specified below, to be less than the amount
set forth opposite such period:
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Interest Coverage Ratio
Last Day of Fiscal Quarter Must Not Be Less Than
-------------------------- ------------------------
September 30, 2002 1.1 to 1
December 31, 2002 1.2 to 1
March 31, 2003 1.7 to 1
June 30, 2003 1.9 to 1
September 30,2003 through
December 31, 2003 2.1 to 1
provided, however, the abatement of Section 6.1(c) Interest
Coverage Ratio of the Credit Agreement shall cease for the four
consecutive fiscal quarter period ending on March 31, 2004 and
for each four consecutive fiscal quarter period ending
thereafter, and such section shall continue as provided in the
Credit Agreement immediately before the effective date of this
Amendment, except that the words "equal or exceed" in the fifth
line of Section 6.1(c) shall be changed to "be less than".
(e) Beginning on the effective date of this Amendment, Section 5.6
(d)(iii) of the Credit Agreement is modified to provide that Agent may require
semi-annual collateral audits, instead of annual collateral audits for the
balance of the term of the Amended Credit Agreement.
3. Term Loan Payments.
(a) The outstanding principal balance of Term Loan A on the date
hereof is $8,900,000. The payment schedule for Term Loan A set forth in Section
2.6(b) of the Credit Agreement is revised as follows. Beginning with the
principal payment due on November 30, 2002, and continuing with the quarterly
payments due each February 28, May 31, August 31, and November 30 thereafter,
through the principal payment due August 31, 2004, the principal payments shall
be $523,530.00 per quarter. The final principal payment due November 30, 2004
shall be $4,711,760.00. All principal and interest payments with respect to Term
Loan A shall be for the ratable benefit of the Banks.
(b) The outstanding principal balance of Term Loan B on the date
hereof is $1,900,199.50. On the date hereof, as a condition of this Amendment,
Borrowers shall pay to Agent, for the ratable benefit of the Banks, $1,000,000
of the principal balance of Term Loan B. Unless otherwise paid in full prior to
February 28, 2005, the remaining principal balance of Term Loan B, together with
all interest and other amounts due on Term Loan B, shall be paid on February 28,
2005, and Term Loan B shall be terminated. All principal and interest payments
with respect to Term Loan B shall be for the ratable benefit of the Banks.
4. Interest Rates.
Annex I to the Credit Agreement, as modified by paragraph 2(f) of
the Third Amendment to Credit Agreement and paragraph 2(c) of the Fourth
Amendment to Credit Agreement and paragraph 4 of the Sixth Amendment to Credit
Agreement, is hereby further modified as provided below. Beginning on the
effective date of this Amendment, the Ongoing Margins are as follows:
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(a) With respect to Term Loan A, effective on the effective date
of this Amendment, the Ongoing Margins are:
APPLICABLE MARGIN FOR APPLICABLE MARGIN FOR
LEVERAGE RATIO EURODOLLAR LOANS BASE RATE LOANS
--------------------- --------------------- ---------------------
More than 3:00 to 1 6.50% 5.00%
Between 2.50 to 1 and
3.00 to 1 5.50% 4.00%
Less than 2:50 to 1 4.50% 3.00%
(b) With respect to the Revolving Credit Loan, effective on the
effective date of this Amendment, the Ongoing Margins are:
APPLICABLE MARGIN FOR BASE RATE
LEVERAGE RATIO LOANS
------------------------------- -------------------------------
More than 3:00 to 1 5.00%
Between 2.50 to 1 and 3.00 to 1 4.00%
Less than 2:50 to 1 3.00%
(c) With respect to Term Loan B, effective on the effective date
of this Amendment, the Ongoing Margins are:
APPLICABLE MARGIN FOR BASE RATE
LEVERAGE RATIO LOANS
------------------------------- -------------------------------
More than 3:00 to 1 5.50%
Between 2.50 to 1 and 3.00 to 1 4.50%
Less than 2:50 to 1 3.50%
5. Amendment Fee. Borrowers shall pay to the Agent, for the ratable
benefit of the Banks, an Amendment Fee in the amount of $60,000 upon execution
of this Amendment.
6. Amendment to the Loan Documents. All references to the Credit
Agreement in the Loan Documents and in any documents executed in connection
therewith shall be deemed to refer to the Credit Agreement as amended by this
Amendment and all prior amendments to the Credit Agreement.
7. Ratification of the Loan Documents. Notwithstanding anything to
the contrary herein contained or any claims of the parties to the contrary, the
Agent, the Banks and the Borrowers agree that the Loan Documents and each of the
documents executed in connection therewith are in full force and effect and each
such document shall remain in full force and effect, as further amended by this
Amendment, and each of the Borrowers hereby ratifies and confirms its
obligations thereunder.
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8. Representations and Warranties.
(a) Each Borrower hereby certifies that (i) the representations
and warranties of such Borrower in the Credit Agreement as previously amended
and as amended herein, are true and correct in all material respects as of the
date hereof, as if made on the date hereof, provided that, for purposes of this
Amendment, only: (x) the representations and warranties made in Section 3.1(a)
and (b) and 3.21 of the Amended Credit Agreement shall relate to the most recent
financial statements of the type referred to therein which have been given by
the Borrowers to the Banks (but the foregoing shall not be a waiver of any
Default or Event of Default based on any representation or warranty made by the
Borrowers in the Credit Agreement or any amendment thereof, prior to this
Amendment, being untrue at the time made, or for any breach of any covenant
contained in the Credit Agreement, as amended prior to the date of this
Amendment); (y) the representations and warranties made in Section 3.1(c) of the
Amended Credit Agreement shall be made as of the date of this Amendment and not
as of the Closing Date; and (z) the representations and warranties made in
Section 3.2 of the Amended Credit Agreement shall refer to Material Adverse
Effect since the last audited consolidated financial statements of the Borrowers
provided to the Banks by the Borrowers, instead of since September 30, 1999 (but
the foregoing shall not be a waiver of any Default or Event of Default based on
any representation or warranty made by the Borrowers in the Credit Agreement or
any amendment thereof, prior to this Amendment, being untrue at the time made,
or for any breach of any covenant contained in the Credit Agreement, as amended
prior to the date of this Amendment); and (ii) no Event of Default and no event
which could become an Event of Default with the passage of time or the giving of
notice, or both, under the Credit Agreement or the other Loan Documents exists
on the date hereof.
(b) Each Borrower further represents that it has all the
requisite power and authority to enter into and to perform its obligations under
this Amendment, and that the execution, delivery and performance of this
Amendment have been duly authorized by all requisite action and will not violate
or constitute a default under any provision of any applicable law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect or of the Articles of Incorporation or by-laws of such
Borrower, or of any indenture, note, loan or credit agreement, license or any
other agreement, lease or instrument to which such Borrower is a party or by
which such Borrower or any of its properties are bound.
(c) Each Borrower also further represents that its obligation to
repay the Loans, together with all interest accrued thereon, is absolute and
unconditional, and there exists no right of set off or recoupment, counterclaim
or defense of any nature whatsoever to payment of the Loans, and each Borrower
further represents that the Agents and Banks have fully performed all of their
respective obligations under the Loan Documents through the date of this
Amendment.
(d) Each Borrower also further represents that there have been
no changes to the Articles of Incorporation, by-laws or other organizational
documents of each such Borrower since the most recent date true and correct
copies thereof were delivered to the Agent.
9. Conditions Precedent. The effectiveness of the amendments set
forth herein are subject to the fulfillment, to the satisfaction of the Agent
and its counsel, of the following conditions precedent:
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(a) The Borrowers shall have delivered to the Agent the
following, all of which shall be in form and substance satisfactory to the Agent
and shall be duly completed and executed:
(i) This Amendment and the consents of the Guarantor and
the Subordinated Creditors as attached hereto;
(ii) The Amendment to Pledge Agreement which adds 30 million
new shares of the common stock of CECO Filters, Inc. to the
collateral securing the Loans and all documents provided for
therein; and
(iii) Such additional documents, certificates and
information as the Agent may require pursuant to the terms hereof
or otherwise reasonably request.
(b) All conditions precedent to the Amendment to Pledge
Agreement are full filled.
(c) The $1,000,000 payment on Term Loan B as provided in
paragraph 3(b) above has been delivered to Agent.
(d) After giving effect to the amendments contained herein, the
representations and warranties set forth in the Amended Credit Agreement shall
be true and correct on and as of the date hereof.
(e) After giving effect to the amendments contained herein, no
Event of Default hereunder, and no event which, with the passage of time or the
giving of notice, or both, would become such an Event of Default shall have
occurred and be continuing as of the date hereof.
(f) The Borrowers shall have paid the Amendment Fee as provided
in paragraph 4 above and the reasonable fees and disbursements of the Agent's
counsel incurred in connection with this Amendment.
10. No Waiver. Except as expressly provided herein, this Amendment
does not and shall not be deemed to constitute a waiver by the Agent or the
Banks of any Event of Default, or of any event which with the passage of time or
the giving of notice or both would constitute an Event of Default, nor does it
obligate the Agent or the Banks to agree to any further modifications to the
Amended Credit Agreement or any other Loan Document or constitute a waiver of
any of the Agent's or the Banks' other rights or remedies.
11. Waiver and Release. The Borrowers each on behalf of themselves,
their agents, employees, officers, directors, successors and assigns, do hereby
waive and release Agent and Banks, their agents, employees, officers, directors,
affiliates, parents, successors and assigns, from any claims arising from or
related to administration of the Amended Credit Agreement and the Loan Document
and any course of dealing among the parties not in compliance with those
agreements from the inception of the Credit Agreement whether known or unknown
through the date of execution and delivery of this Amendment.
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12. Effective Date. The parties hereto agree that the provisions of
paragraphs 2, 3 and 4 of this Amendment shall for all purposes be deemed to be
effective as of September 30, 2002 (the "effective date") and for all purposes
the Amended Credit Agreement shall be deemed to have been amended as of such
date to reflect the amendments to the Credit Agreement set forth in such
paragraphs, even though this Amendment is executed after such date.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
CECO GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: CFO
CECO FILTERS, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: CFO
AIR PURATOR CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: President
NEW XXXXX CO., INC.
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Treasurer
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THE XXXX & XXXX MANUFACTURING
COMPANY
By: /s/ Xxxxx X. Xxxx
-----------------
Name: Xxxxx X. Xxxx
Title: President
KBD/TECHNIC, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Treasurer
CECO ABATEMENT SYSTEMS, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Treasurer
PNC BANK, NATIONAL ASSOCIATION, as
Agent and as a Bank
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
FIFTH THIRD BANK, as a Bank
By: /s/ Xxxxx Xxxxxx
----------------
Name: Xxxxx Xxxxxx
Title: Vice President
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BANK ONE, NA, as a Bank
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: First Vice President
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GUARANTOR'S CONSENT
By Corporate Guaranty, dated December 7, 2000 (the "Guaranty"), the
undersigned (the "Guarantor") guaranteed to the Agent and the Banks, subject to
the terms and conditions set forth therein, the prompt payment and performance
of all of the Obligations (as defined therein). The Guarantor consents to the
Borrowers' execution of the foregoing Seventh Amendment to Credit Agreement. The
Guarantor hereby acknowledges and agrees that the Guaranty remains unaltered and
in full force and effect and is hereby ratified and confirmed in all respects.
CECO ENVIRONMENTAL CORP.
By: /s/ Xxxxxxx XxXxxxxx
--------------------
Name: Xxxxxxx XxXxxxxx
Title: Chairman
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SUBORDINATED CREDITOR'S CONSENT
The undersigned (the "Subordinated Creditor") is a party to the
Subordination Agreement with the Agent and the Banks and other subordinated
creditors, dated December 7, 2000 (the "Subordination Agreement"). The
Subordinated Creditor consents to the Borrowers' execution of the foregoing
Seventh Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees that the Subordination Agreement remains unaltered and
in full force and effect and is hereby ratified and confirmed in all respects.
GREEN DIAMOND OIL CORP.
By: /s/ Xxxxxxx XxXxxxxx
--------------------
Name: Xxxxxxx XxXxxxxx
Title President
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SUBORDINATED CREDITOR'S CONSENT
The undersigned (the "Subordinated Creditor") is a party to the
Subordination Agreement with the Agent and the Banks and other subordinated
creditors, dated December 7, 2000 (the "Subordination Agreement"). The
Subordinated Creditor consents to the Borrowers' execution of the foregoing
Seventh Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees the Subordination Agreement remains unaltered and in
full force and effect and is hereby ratified and confirmed in all respects.
For and on behalf of
ICS TRUSTEE SERVICES LIMITED
By: /s/ Eliza X. X. Xx
-------------------
Name: Eliza X. X. Xx
Title: Authorised Signing Officer
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SUBORDINATED CREDITOR'S CONSENT
The undersigned (the "Subordinated Creditor") is a party to the
Subordination Agreement with the Agent and the Banks and other subordinated
creditors, dated December 7, 2000 (the "Subordination Agreement"). The
Subordinated Creditor consents to the Borrowers' execution of the foregoing
Seventh Amendment to Credit Agreement. The Subordinated Creditor hereby
acknowledges and agrees that the Subordination Agreement remains unaltered and
in full force and effect and is hereby ratified and confirmed in all respects.
XXXXXX XXXXXXX
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