THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT ("Amendment") is made and entered
into effective as of the 1st day of March, 1998 (the "Effective Date"), by
and among MATRIX SERVICE COMPANY, a Delaware corporation (hereinafter
referred to as "Matrix"), MATRIX SERVICE, INC., an Oklahoma corporation
(hereinafter to as "MSI"), MIDWEST INDUSTRIAL CONTRACTORS, INC., a Delaware
corporation (hereinafter referred to as "MIC"), MATRIX SERVICE MID-
CONTINENT, INC., an Oklahoma corporation (hereinafter referred to as
"MSM"), PETROTANK EQUIPMENT, INC., an Oklahoma corporation (hereinafter
referred to as "PEI"), TANK SUPPLY INC., an Oklahoma corporation
(hereinafter referred to as "TSI"), SAN LUIS TANK PIPING CONSTRUCTION CO.,
INC., a Delaware corporation (hereinafter referred to as "SLT"), COLT
CONSTRUCTION CO., INC., a Delaware corporation (hereinafter referred to as
"CCC"), MIDWEST INTERNATIONAL, INC., a Delaware corporation (hereinafter
referred to as "MII"), GEORGIA STEEL ACQUISITION CORPORATION, an Oklahoma
corporation (hereinafter referred to as "GSAC"), GEORGIA STEEL FABRICATORS,
INC., a Georgia corporation (hereinafter referred to as "GSF"), BROWN STEEL
CONTRACTORS, INC., a Georgia corporation (hereinafter referred to as
"BSC"), WEST COAST INDUSTRIAL COATINGS, INC., a California corporation
(hereinafter referred to as "WCI"), MIDWEST SERVICE COMPANY, a Delaware
corporation (hereinafter referred to as "MSC"), HEATH ENGINEERING, LTD., an
Ontario corporation (hereinafter referred to as "HEL"), HEATH (TANK
MAINTENANCE) ENGINEERING, LTD., a United Kingdom corporation (hereinafter
referred to as "HTM"), MAYFLOWER VAPOR SEAL CORPORATION, an Oklahoma
corporation (hereinafter referred to as ("MVS"), GENERAL SERVICE
CORPORATION, a Delaware corporation (hereinafter referred to as "GSC"),
MAINSERVE-ALLENTECH, INC., a Delaware corporation (hereinafter referred to
as "MA"), MAINTENANCE SERVICES, INC., a Delaware corporation (hereinafter
referred to as "MSERV"), and BANK ONE, OKLAHOMA, N.A., successor in
interest to LIBERTY BANK AND TRUST COMPANY OF TULSA, NATIONAL ASSOCIATION
(hereinafter referred to as the "Bank"). Matrix, MSI, MIC, MSM, PEI, TSI,
SLT, CCC, MII, GSAC, GSF, BSC, WCI, MSC, HEL, HTM, MVS, GSC, MA and MSERV
are hereinafter collectively referred to as the "Borrowers" and
individually as a "Borrower."
RECITALS
A. The Bank and the Borrowers are parties to that certain Credit Agreement
dated August 30, 1994, as amended by that certain First Amendment to Credit
Agreement dated June 19, 1997 (the "First Amendment"), as further amended
by that certain Second Amendment to Credit Agreement dated September 15,
1997 (the same as further amended, supplemented or otherwise modified from
time to time, being hereinafter referred to as the "Credit Agreement"),
pursuant to which the Bank has established in favor of the Borrowers, on
the terms and conditions set forth therein, (i) a revolving credit facility
in the principal amount not to exceed $15,000,000.00, (ii) a term loan
facility in the original principal amount not to exceed $5,000,000.00, and
(iii) a term acquisition facility in the original principal amount not to
exceed $5,000,000.00.
B. The Borrowers have requested that the Bank: (i) continue the Revolving
Credit Facility in the increased principal amount of $20,000,000.00, reduce
the rate of interest applicable to outstanding Advances thereunder, and
limit the maximum amount of the Bank's obligation to issue Letters of
Credit under the Revolving Credit Facility, (ii) rearrange, consolidate,
extend and increase the Term Loan Facility and the Acquisition Loan
Facility under a single term loan facility, as hereinafter described, (iii)
modify the definition of the term "Eligible Accounts," and (iv) modify
certain financial covenants regarding minimum tangible net worth and
minimum net working capital.
C. The Bank has agreed to the foregoing, subject to the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and subject to the terms and conditions set forth herein, the
parties agree to amend the Credit Agreement, effective as of the date
hereof, as follows:
1. TERMS DEFINED IN THE CREDIT AGREEMENT.
A. Definitions Incorporated by Reference. Capitalized terms used herein
and not otherwise defined have the respective meanings assigned to them in
the Credit Agreement.
B. Definitions Used Only in This Amendment. For purposes of this Amendment
only, the following terms have the meanings indicated below:
Replacement Revolving Note. "Replacement Revolving Note" shall mean the
promissory note to be executed and delivered by the Borrowers, in
substantially the form attached hereto as Exhibit "A-2."
Replacement Term Note. "Replacement Term Note" shall mean the promissory
note to be executed and delivered by the Borrowers, in substantially the
form attached hereto as Exhibit "B-2."
The parties agree that, from and after the Effective Date, unless the
context otherwise requires: (i) all references to the "Revolving Note" and
the "Term Note" appearing in the Credit Agreement or any other Loan
Documents shall mean and refer to the Replacement Revolving Note and the
Replacement Term Note, respectively, together with any and all renewals,
extensions or replacements thereof, amendments or modifications thereto or
substitutions therefore, and (ii) the term "Loan Documents" shall include
the Replacement Revolving Note and the Replacement Term Note.
C. New Definition. As of the Effective Date, the following definition of
the term "Bonded Account" is hereby added to Subsection 1.2 of the Credit
Agreement:
Bonded Account. "Bonded Account" shall mean any Account that is subject
to, arises under or earned pursuant to a bonded construction contract, and
is thereby subject to a bonded lien.
D. Amended Definitions. The definitions of the following terms appearing
in Subsection 1.2 of the Credit Agreement are hereby amended, as of the
Effective Date, to read as follows:
Credit Facilities. "Credit Facilities" shall mean, collectively, the
Revolving Credit Facility and the Term Loan Facility, and "Credit Facility"
shall mean either one of the Credit Facilities.
Eligible Accounts. The definition of the term "Eligible Accounts" is
hereby amended by adding the following provision to the end of that
definition:
(xiii) The amount by which all Bonded Accounts exceed eighteen percent
(18%) of the net Eligible Accounts.
Notes. "Notes" shall mean collectively, the Revolving Note and the Term
Note, and "Note" shall mean either one of the Notes.
Revolving Commitment. "Revolving Commitment" shall mean, as of any
determination date, the lesser of (i) Twenty Million and No/100 Dollars
($20,000,000.00), and (ii) the Borrowing Base in effect on such
determination date.
E. Deleted Definitions. As of the Effective Date, the definitions of the
terms "Acquisition Loan Facility" and "Acquisition Note" are hereby deleted
from paragraph 1.2 of the Credit Agreement.
2. AMENDMENTS TO THE REVOLVING LOAN FACILITY. The Bank agrees, as of the
Effective Date, to increase the maximum aggregate amount available under
the Revolving Loan Facility from Fifteen Million and No/100 Dollars
($15,000,000.00) to Twenty Million and No/100 Dollars ($20,000,000.00), and
in that regard has amended the definition of the term "Revolving
Commitment". The Bank further agrees to reduce the rate of interest
applicable to the unpaid principal amount of all Advances from time to time
outstanding under the Revolving Note and limit the maximum amount of the
Bank's obligation to issue Letters of Credit under the Revolving Credit
Facility. In order to effectuate the reduction in the applicable interest
rate, Subsections 2.7.1(a) and 2.7.1(b) of the Credit Agreement, governing
interest rates under the Revolving Note, are hereby deleted and replaced in
their entirety by the following:
2.7.1(a) Advances included within the Prime Tranche shall bear interest at
a fluctuating rate per annum equal to the Prime Rate minus one and one-
quarter percent (1-1/4%).
2.7.1(b) Advances included within each LIBOR Tranche shall bear interest at
a rate per annum equal to the sum of the LIBOR Rate applicable to such
LIBOR Tranche plus one and one-eighth percent (1-1/8%).
In order to limit the maximum amount of the Bank's obligation to issue
Letters of Credit under the Revolving Credit Facility, the following
Subsection 2.4.7 is hereby added to the Credit Agreement:
2.4.7 Maximum Amount of Outstanding Letters of Credit. Notwithstanding any
provision of this Agreement, the maximum aggregate amount outstanding at
any time under all Letters of Credit issued by the Bank hereunder shall not
exceed Seven Million Five Hundred Thousand and No/100 Dollars
($7,500,000.00).
3. AMENDMENTS TO TERM LOAN FACILITY. The Bank agrees to rearrange and
consolidate the Term Loan Facility and the Acquisition Loan Facility by:
(i) increasing the original principal amount available under the Term Loan
Facility from Five Million and No/100 Dollars ($5,000,000.00) to Ten
Million and No/100 Dollars ($10,000,000.00), (ii) reducing the rate of
interest applicable to the unpaid principal amount from time to time
outstanding under the Term Note, (iii) extending the final maturity of the
Term Note from August 31, 1999, to February 28, 2003, (iv) consolidating
the Advances currently outstanding under the Acquisition Note into the Term
Note, and (v) canceling the Acquisition Note and terminating the
Acquisition Loan Facility. In order to implement the foregoing, the Loan
Agreement is amended from and after the Effective Date as follows:
A. Modifications to Subsection 2.1.2. Subsection 2.1.2 of the Credit
Agreement, describing the Term Loan Facility, is hereby deleted and
replaced in its entirety by the following:
2.1.2 Term Loan Facility. The Bank agrees, at the Closing, to continue
that term loan facility designated as the "Term Loan Facility," and to
increase the maximum aggregate principal amount from Five Million and
No/100 Dollars ($5,000,000.00) to Ten Million and No/100 Dollars
($10,000,000.00). As of the Effective Date, the existing indebtedness
under the Term Loan Facility shall include all outstanding balances under
the Term Loan Facility and the Acquisition Loan Facility, as the same
existed immediately prior to the Effective Date, and the remaining
availability, if any, under the Term Loan Facility will be available to
reduce the outstanding balance under the Revolving Credit Facility. The
making of principal payments, including prepayments, on the Term Loan
Facility shall not restore the amount available for borrowing.
B. Modifications to Subsection 2.2.2. Subsection 2.2.2 of the Credit
Agreement, describing the use of Advances under the Term Loan Facility, is
hereby deleted and replaced in its entirety by the following:
2.2.2 Term Loan Facility. Advances under the Term Loan Facility shall be
used by the Borrowers to refinance existing indebtedness of the Borrowers
as well as to fund general corporate purposes.
C. Modifications to Subsections 2.7.2(d)(i) and 2.7.2(d)(ii). Subsections
2.7.2(d)(i) and 2.7.2(d)(ii) of the Credit Agreement, governing interest
rates under the variable rate option of the Term Note, are hereby deleted
and replaced in their entirety, respectively, by the following:
2.7.2(d)(i) Advances included within the Prime Tranche shall bear interest
at a fluctuating rate per annum equal to the Prime Rate minus one-half of
one percent (1/2 of 1%), adjusted as of the date of each change therein.
2.7.2(d)(ii) Advances included within a LIBOR Tranche shall bear interest
at a rate per annum equal to the sum of the LIBOR Rate applicable to such
LIBOR Tranche plus one and one-half percent (1-1/2%).
D. Modifications to Subsections 2.9.2(b)(i) and 2.9.2(b)(ii). By prior
amendment to the Credit Agreement Subsection 2.9.2(b)(i) should have been
deleted to remove the fixed rate repayment option from the Term Note. To
correct that omission, Subsection 2.9.2(b)(i) is hereby deleted in its
entirety. Subsection 2.9.2(b)(ii) of the Credit Agreement, governing the
variable rate repayment option under the Term Note, is hereby deleted,
renumbered as Subsection 2.9.2(b) and replaced in its entirety by the
following:
2.9.2(b) Repayment. Prior to maturity and on the first Business Day of each
month beginning April 1, 1998, the principal amount of the Term Note shall
be due and payable in sixty (60) consecutive monthly installments of One
Hundred Sixty-Six Thousand Six Hundred Sixty-Six and 67/100 Dollars
($166,666.67), together with all unpaid interest thereon calculated at the
variable rate of interest applicable from time to time under the Term Note.
E. Modifications to Subsection 2.9.2(c). Subsection 2.9.2(c) of the Credit
Agreement is hereby modified by deleting the phrase "August 31, 1999" and
replacing it with the phrase "February 28, 2003."
F. Modifications to Terminate the Acquisition Loan Facility. The parties
mutually agree as of the Effective Date to consolidate the Advances
currently outstanding under the Acquisition Note into the Term Note and
thereafter to cancel the Acquisition Note and terminate the Acquisition
Loan Facility. In order to implement the foregoing, and in addition to the
amendments to the Credit Agreement detailed above, the Credit Agreement is
further amended from and after the Effective Date as follows:
(i) Paragraph Deletions. The following paragraphs of the Credit Agreement
are deleted in their entirety: 2.1.3, 2.2.3, 2.6.4 (errantly referred to as
Subsection 2.3.4 in the First Amendment), 2.7.6, 2.8.4 and 2.9.3.
(ii) Reference Deletions. In addition to deleting the above listed
paragraphs, all references to the terms "Acquisition Loan Facility" and
"Acquisition Note" are deleted from any provision of the Credit Agreement
in which they appear, without otherwise modifying or amending such
provisions.
4. AMENDMENTS TO FINANCIAL COVENANTS.
A. Modifications to Subsection 7.11.1. As of the Effective Date,
Subsection 7.11.1 of the Credit Agreement is hereby deleted in its entirety
and replaced with the following:
7.11.1 Tangible Net Worth. The Borrowers will not permit their
consolidated tangible net worth (determined in accordance with GAAP) to be
less than an amount equal to the sum of $42,500,000.00 plus fifty percent
(50%) of the Borrowers' cumulative net income after tax (beginning with the
fiscal year ending May 31, 1998), exclusive of the Borrowers losses and/or
one hundred percent (100%) of the proceeds of any public offering of the
stock of any of the Borrowers.
B. Modifications to Subsection 7.11.2. As of the Effective Date,
Subsection 7.11.2 is hereby modified and amended to delete the dollar
amount state as "$18,000,000.00" and replace that dollar amount with the
dollar amount stated as "$20,000,000.00."
5. CONDITIONS. The amendments to the Credit Agreement set forth in this
Amendment shall be effective from and after the Effective Date, but subject
to the Borrowers satisfaction of each of the following conditions
precedent:
A. Amendment and Notes. The Borrowers shall have duly and validly
authorized, executed and delivered to the Bank: (i) this Amendment, (ii)
the Replacement Revolving Note and (iii) the Replacement Term Note.
B. Resolutions. With respect to each of the Borrowers, the Bank shall
have received a true and correct copy of the resolutions adopted by its
Board of Directors duly authorizing the borrowings contemplated hereunder
and the execution, delivery and performance of this Amendment.
C. Other Matters. The Borrowers shall have provided the Bank with such
reports, information, financial statements, and other documents as the Bank
has reasonably requested to evidence the Borrowers' compliance with the
terms and conditions of this Amendment and the Credit Agreement.
D. Legal Matters. All legal matters incident to this Amendment and the
Credit Facilities shall be satisfactory to the Bank and its counsel.
E. No Defaults. There shall not have occurred and be continuing any
Default or Event of Default.
6. REPRESENTATIONS AND WARRANTIES. All representations and warranties of
the Borrowers contained in Section 5 of the Credit Agreement are hereby
remade and restated as the date hereof and shall survive the execution and
delivery of this Amendment. The Borrowers further represent and warrant to
the Bank that:
A. Authority. The Borrowers have all corporate power and authority and
have been duly authorized to execute, deliver and perform its obligations
under this Amendment and the Credit Agreement.
B. Binding Obligations; Enforceability. This Amendment, the Credit
Agreement (as amended by this Amendment), and each of the Notes are valid
and legally binding obligations of the Borrowers, enforceable in accordance
with their respective terms, except as limited by applicable bankruptcy,
insolvency or other laws affecting the enforcement of creditors rights
generally.
C. No Conflicts. The execution, delivery and performance of this
Amendment and the Credit Agreement (as amended by this Amendment) by the
Borrowers do not and will not (a) conflict with, result in a breach of the
terms, conditions or provisions of, constitute a default under, or result
in any violation of the Borrowers Certificates of Incorporation, as
amended, or Bylaws, or any agreement, instrument, undertaking, judgment,
decree, order, writ, injunction, statute, law, rule or regulation to which
any of the Borrowers is subject or by which the assets of any of the
Borrowers are bound or affected, (b) result in the creation or imposition
of any lien, charge or encumbrance on, or security interest in, any
property now or hereafter owned by the Borrowers, pursuant to the
provisions of any mortgage, indenture, security agreement, contract,
undertaking or other agreement to which any of the Borrowers is a party,
other than the obligations of the Borrowers in favor of the Bank created by
the Loan Documents, or (c) require any authorization, consent, license,
approval or authorization of, or other action by, notice or declaration to,
registration with, any court or any administrative or governmental body
(domestic or foreign), or, to the extent any such consent or other action
may be required, it has been validly procured or duly taken.
7. MISCELLANEOUS.
A. Effect of Amendment. Except as expressly modified and amended by this
Amendment, all other terms of the Credit Agreement shall continue in full
force and effect in accordance with their original stated terms and are
hereby reaffirmed in every respect as of the date hereof. To the extent
that the terms of this Amendment are inconsistent with the terms of the
Credit Agreement, this Amendment shall control and the Credit Agreement
shall be amended, modified or supplemented so as to give full effect to the
transactions contemplated by this Amendment.
B. Descriptive Headings. The descriptive headings of the several
paragraphs of this Amendment are inserted for convenience only and shall
not be used in the construction or the content of this Amendment.
C. Reimbursement of Expenses. The Borrowers agree to pay all reasonable
out-of-pocket expenses, exclusive of attorneys fees, incurred by the Bank
in connection with the preparation of this Amendment.
D. Reaffirmation of Security Agreements. By signing below, the Borrowers
hereby ratify and reaffirm the Security Agreements and agree that the
Security Agreements shall continue in full force and effect in accordance
with their terms as security for payment and performance of all
Indebtedness arising under or in connection with the Credit Agreement (as
amended hereby). All references to the term "Indebtedness" contained in
the Credit Agreement, the Security Agreements and other Loan Documents
shall hereafter be deemed to include all liabilities, obligations and
indebtedness of the Borrowers to the Bank arising out of or relating to
this Amendment, and shall also secure any amounts now or hereafter due and
payable by Matrix to the Bank under that certain ISDA Master Agreement
dated as of February 1, 1998 between Matrix and the Bank, or otherwise.
IN WITNESS WHEREOF, the Borrowers and the Bank have caused this Agreement
to be duly executed in multiple counterparts, each of which shall be
considered an original, effective the date and year first above written.
MATRIX SERVICE COMPANY,
a Delaware corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
_________________________
Title: Secretary
MATRIX SERVICE, INC.,
an Oklahoma corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
_________________________
Title: Secretary
MIDWEST INDUSTRIAL CONTRACTORS, INC.,
a Delaware corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
MATRIX SERVICE MID-CONTINENT, INC.,
an Oklahoma corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
PETROTANK EQUIPMENT, INC.,
an Oklahoma corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
TANK SUPPLY, INC.,
an Oklahoma corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
SAN LUIS TANK PIPING CONSTRUCTION CO., INC.,
a Delaware corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
COLT CONSTRUCTION CO., INC.,
a Delaware corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
MIDWEST INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
GEORGIA STEEL ACQUISITION CORPORATION,
an Oklahoma corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
GEORGIA STEEL FABRICATORS, INC.,
a Georgia corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
BROWN STEEL CONTRACTORS, INC.,
a Georgia corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
WEST COAST INDUSTRIAL COATINGS, INC.,
a California corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
MIDWEST SERVICE COMPANY,
a Delaware corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
HEATH ENGINEERING, LTD.,
an Ontario corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
HEATH (TANK MAINTENANCE) ENGINEERING, LTD.,
an United Kingdom corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
MAYFLOWER VAPOR SEAL CORPORATION,
an Oklahoma corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
GENERAL SERVICE CORPORATION,
a Delaware corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
MAINSERVE-ALLENTECH, INC.,
a Delaware corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
MAINTENANCE SERVICES, INC.,
a Delaware corporation
By: /s/ C. William Lee
_________________________
Name: C. William Lee
Title: Secretary
BANK ONE, OKLAHOMA, N.A.
By: /s/ Mark A. Poole
________________________________
Name: Mark A. Poole
Title: Senior Vice President
EXHIBITS
Exhibit "A-2" - Form of Replacement Revolving Note
Exhibit "B-2"- Form of Replacement Term Note