EXHIBIT 10.26
AMENDMENT NO. 2 TO CREDIT AGREEMENT
This Amendment No. 2 to Credit Agreement, dated as of December 20,
2002 (this "Amendment"), is entered into by and between Comfort Systems USA,
Inc., a Delaware corporation ("Borrower"), the other Credit Parties, and General
Electric Capital Corporation ("GE Capital"), as Agent ("Agent") for the Lenders
(as defined in the Credit Agreement referred to below) and as a Lender, and the
other Lenders party to the Credit Agreement.
RECITALS
WHEREAS, Borrower, Agent and GE Capital, as a Lender, are parties to that
certain Credit Agreement, dated as of October 11, 2002 (as amended by Amendment
No. 1 to Credit Agreement, dated as of December 10, 2002, and as the same may be
further amended, restated, supplemented or otherwise amended from time to time
hereafter, the "Credit Agreement"), by and among Borrower, the other Credit
Parties signatory thereto, Agent and Lenders;
WHEREAS, Borrower is desirous of obtaining a $20,000,000 increase in the
Revolving Loan Commitment from $40,000,000 to $60,000,000 and has requested a
corresponding increase in the Commitments from $55,000,000 to $75,000,000. Agent
and GE Capital, as a Lender, are agreeable to the foregoing; provided, that, the
$20,000,000 increase in the Revolving Loan Commitment is provided through the
provision of an $8,000,000 portion of the Revolving Loan by each of BANK OF
TEXAS, NA ("Bank of Texas") and REGIONS BANK ("Regions Bank" and; together with
Bank of Texas, the "New Lenders") and a $4,000,000 increase in portion of the
Revolving Loan by GE Capital;
WHEREAS, GE Capital, as a Lender, is agreeable to reducing its Term Loan
Commitment to $11,000,000 and its outstanding Term Loan to $11,000,000, with
each of the New Lenders having a Term Loan Commitment of $2,000,000 and having
an outstanding Term Loan of $2,000,000, and to increasing its Revolving Loan
Commitment to $44,000,000;
WHEREAS, each of the New Lenders is agreeable to becoming a Lender with a
Revolving Loan Commitment of $8,000,000, and a Term Loan Commitment of
$2,000,000, and an outstanding Term Loan of $2,000,000 (and in connection
therewith paying to GE Capital, as a Lender, $2,000,000 in order to
correspondingly reduce GE Capital's outstanding Term Loan) and is otherwise
agreeable to the foregoing;
WHEREAS, Borrower, Credit Parties, Agent and Lenders are each desirous of
entering into an amendment to the Credit Agreement, as and to the extent set
forth in this Amendment and subject to the terms and conditions set forth
herein; and
WHEREAS, this document shall constitute a Loan Document and these Recitals
shall be construed as part of this Amendment;
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, Borrower, Credit
Parties, Agent and Lenders each hereby agree as follows:
1. Definitions. Except to the extent otherwise specified herein,
capitalized terms used in this Amendment shall have the same meanings ascribed
to them in the Credit Agreement and Annex A thereto.
2. Amendments. The Credit Agreement is amended as follows:
2.1 Annex A to the Credit Agreement is amended by deleting the
following definitions in their entirety and replacing them with the following:
"'Commitments' means (a) as to any Lender, the aggregate of such
Lender's Revolving Loan Commitment and Term Loan Commitment as set
forth on Annex B to the Agreement or in the most recent Assignment
Agreement executed by such Lender and (b) as to all Lenders, the
aggregate of all Lenders' Revolving Loan Commitments and Term Loan
Commitments, which aggregate commitment shall be Seventy-Five
Million Dollars ($75,000,000) (comprised of aggregate Revolving Loan
Commitments of $60,000,000 and Term Loan Commitments of
$15,000,000), as such Commitments may be reduced, amortized or
adjusted from time to time in accordance with the Agreement.
'L/C Issuer' means any Lender or a Subsidiary thereof or a bank or
other legally authorized Person selected by or acceptable to Agent,
in its sole discretion, in such Person's capacity as an issuer of
Letters of Credit hereunder.
'Requisite Lenders' means Lenders having (a) more than 70% of the
Commitments of all Lenders, or (b) if the Commitments have been
terminated, more than 70% of the aggregate outstanding amount of the
Loans; provided, further, that in addition to the foregoing 70%
requirement, if there shall be more than one Lender, "Requisite
Lenders" shall at all times require at least two Lenders.
'Revolving Loan Commitment' means (a) as to any Lender, the
commitment of such Lender to make its Pro Rata Share of Revolving
Credit Advances or incur its Pro Rata Share of Letter of Credit
Obligations (including, in the case of the Swing Line Lender, its
commitment to make Swing Line Advances as a portion of its Revolving
Loan Commitment) as set forth on Annex B or in the most recent
Assignment Agreement, if any, executed by such Lender and (b) as to
all Lenders, the aggregate commitment of all Lenders to make the
Revolving Credit Advances (including, in the case of the Swing Line
Lender, Swing Line Advances) or incur Letter of Credit Obligations,
which aggregate commitment shall be Sixty Million Dollars
($60,000,000), as such amount may be adjusted, if at all, from time
to time in accordance with the Agreement."
2.2 Annex B to the Credit Agreement is hereby amended by deleting
existing Annex B in its entirety and replacing it with the new Annex B which is
attached hereto as Exhibit A.
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3. New Lenders. (a) Upon this Amendment becoming effective, Bank of
Texas and Regions Bank shall each automatically become a Lender under the Credit
Agreement, each with a Revolving Loan Commitment of $8,000,000, and a Term Loan
Commitment of $2,000,000, and each shall thereupon have all of the rights and
obligations of a Lender under the Credit Agreement and each of the other Loan
Documents.
(b) Concurrently with this Amendment becoming effective, Bank of
Texas and Regions Bank shall each pay to GE Capital, as a Lender, $2,000,000 in
cash by wire transfer of same day funds to the account designated by GE Capital.
4. Representations and Warranties of Borrower and Credit Parties.
Borrower and each Credit Party hereby represents and warrants that:
4.1 The execution, delivery and performance by it of this Amendment
has been duly authorized by all necessary corporate action, including, without
limitation, all necessary action by its Board of Directors and stockholders, and
that this Amendment is a legal, valid and binding obligation of it, enforceable
against it in accordance with its terms, except as the enforcement hereof may be
subject to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar law affecting creditors' rights generally or to general
principles of equity.
4.2 The execution, delivery and performance of this Amendment by and
of the New Notes (as such term is defined below) by Borrower does not, and will
not, contravene or conflict with any provision of (i) law, (ii) any judgment,
decree or order, or (iii) the certificate or articles of incorporation or
by-laws of such Credit Party, and does not, and will not, contravene or conflict
with, or cause any Lien to arise under, any provision of any agreement,
mortgage, lease, instrument or other document binding upon or otherwise
affecting Borrower, any other Credit Party or any of their respective
Subsidiaries or any property of Borrower, any other Credit Party or any of their
respective Subsidiaries.
4.3 All of the representations and warranties contained in the
Credit Agreement and each other Loan Document are true and correct in all
material respects on and as of the date hereof as if made on the date hereof. No
Default or Event of Default exists under the Credit Agreement or any other Loan
Document or will exist after or be triggered by the execution and delivery of
this Amendment or the New Notes or the consummation of the transactions
contemplated hereby. In addition, each Credit Party represents and warrants that
the Credit Agreement and each of the other Loan Documents remains in full force
and effect and each is hereby ratified and confirmed in all respects.
5. Conditions Precedent to Effectiveness. The effectiveness of each
of amendments set forth in Section 2 hereof is subject to the satisfaction of
each of the following conditions precedent in a manner acceptable to Agent:
5.1. Documentation. Borrower shall have delivered to Agent all of
the following, each duly executed and dated the date hereof, in form and
substance satisfactory to the Agent:
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(a) New Notes. (i) A replacement Revolving Note of Borrower in
favor of GE Capital (the "GE Capital Replacement Revolving
Note"), substantially in the form set forth as Exhibit B
hereto, delivered to the Agent for the Account of GE Capital,
as a Lender, in an amount equal to its Revolving Loan
Commitment of $44,000,000, (ii) a replacement Term Note of
Borrower in favor of GE Capital (the "GE Capital Replacement
Term Note"), substantially in the form set forth as Exhibit C
hereto, delivered to the Agent for the Account of GE Capital,
as a Lender, in an amount equal to its Term Loan Commitment of
$11,000,000, (iii) a Revolving Note of Borrower in favor of
Bank of Texas (the "Bank of Texas Revolving Note"),
substantially in the form set forth as Exhibit B hereto,
delivered to the Agent for the account of Bank of Texas, as a
Lender, in an amount equal to its Revolving Loan Commitment of
$8,000,000, (iv) a Term Note of Borrower in favor of Bank of
Texas (the "Bank of Texas Term Note"), substantially in the
form set forth as Exhibit C hereto, delivered to the Agent for
the account of Bank of Texas, as a Lender, in an amount equal
to its Term Loan Commitment of $2,000,000, (v) a Revolving
Note of Borrower in favor of Regions Bank (the "Regions Bank
Revolving Note"), substantially in the form set forth as
Exhibit B hereto, delivered to the Agent for the account of
Regions Bank, as a Lender, in an amount equal to its Revolving
Loan Commitment of $8,000,000 and (vi) a Term Note of Borrower
in favor of Regions Bank (the "Regions Bank Term Note" and
together with the GE Capital Replacement Revolving Note, the
GE Capital Replacement Term Note, the Bank of Texas Revolving
Note, the Bank of Texas Term Note and the Regions Bank
Revolving Note, the "New Notes"), substantially in the form
set forth as Exhibit C hereto, delivered to the Agent for the
account of Regions Bank, as a Lender, in an amount equal to
its Term Loan Commitment of $2,000,000. Upon receipt of the GE
Capital Replacement Term Note and the GE Capital Replacement
Revolving Note, GE Capital shall promptly thereafter return to
Borrower for cancellation the original Term Note payable to GE
Capital in the principal amount of $15,000,000 and the
original Revolving Note payable to GE Capital in the maximum
principal amount of $40,000,000;
(b) Amendment. Counterparts of this Amendment, duly executed by
the Borrower, each of the other Credit Parties, Agent and all
of the Lenders;
(c) Certificates. Certificates of the secretary or an assistant
secretary of Borrower and each of the other Credit Parties, as
appropriate, (i) certifying that the existing resolutions
adopted in connection with the Credit Agreement were validly
adopted, have not since their adoption been in any way
modified or rescinded and are in full force and effect on the
date hereof, (ii) certifying that the certificates of
incorporation, partnership, or limited liability company, as
appropriate, are in force as filed with the appropriate
governmental office in the appropriate jurisdiction of
incorporation, (iii) attaching a true and correct copy of the
bylaws as in force on the date hereof;
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(d) Opinion. An opinion of Bracewell & Patterson, LLP, counsel to
Borrower and the other Credit Parties, addressed to Agent and
Lenders, in substantially the form of Exhibit D hereto; and
(e) Opinion. An opinion of general counsel to Borrower and the
other Credit Parties, addressed to Agent and Lenders, in
substantially the form of Exhibit E hereto.
5.2. No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing or would result from the effectiveness of
this Amendment or the consummation of any of the transactions contemplated
thereby.
5.3. Outstanding Term Loan. Bank of Texas and Regions Bank shall
have each paid to GE Capital, as a Lender, $2,000,000 in cash by wire transfer
of same day funds to the account designated by GE Capital to fund their
respective Term Loan Commitments and to, in the aggregate, reduce GE Capital's
outstanding Term Loan to $11,000,000, which is GE Capital's new Term Loan
Commitment.
6. Reference to and Effect Upon the Credit Agreement and other Loan
Agreements.
6.1. Except as specifically amended in Section 2 above, the Credit
Agreement and each other Loan Document shall remain in full force and effect and
is hereby ratified and confirmed.
6.2. The execution, delivery and effect of this Amendment shall be
limited precisely as written and shall not be deemed to (i) be a consent to any
waiver of any term or condition, or to any amendment or modification of any term
or condition (except as specifically amended in Section 2 above), of the Credit
Agreement or any other Loan Document or (ii) prejudice any right, power or
remedy which the Agent or any Lender now has or may have in the future under or
in connection with the Credit Agreement or any other Loan Document. Each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or any other word or words of similar import shall mean and be a
reference to the Credit Agreement as amended hereby, and each reference in any
other Loan Document to the Credit Agreement or any word or words of similar
import shall be and mean a reference to the Credit Agreement as amended hereby.
7. Acknowledgment and Consent of Credit Parties. Each Credit Party
hereby consents to this Amendment and hereby confirms and agrees that (a) the
Guaranty and each other Loan Document to which it is a party is, and shall
continue to be, in full force and effect and is hereby ratified and confirmed in
all respects, and (b) the Collateral Documents to which such Credit Party is a
party and all of the Collateral described therein do, and shall continue to,
secure the payment of all of the Obligations.
8. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument. Delivery of an
executed counterpart
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of a signature page to this Amendment by telecopier shall be as effective as
delivery of a manually executed counterpart signature page to this Amendment.
9. Costs and Expenses. As provided in Section 1.3 of the Credit
Agreement, Borrower shall pay the fees, costs and expenses incurred by Agent in
connection with the preparation, execution and delivery of this Amendment
(including, without limitation, reasonable attorneys' fees).
10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF
LAW PROVISIONS) OF THE STATE OF NEW YORK.
11. Headings. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
[Signature Pages Follow]
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IN WITNESS WHEREOF, this Amendment has been duly executed as of the
date first written above.
BORROWER:
COMFORT SYSTEMS USA, INC.
By: /s/ J. Gordon Beittenmiller
----------------------------------------
Name: J. Gordon Beittenmiller
Title: Executive Vice President
CREDIT PARTIES:
ACI MECHANICAL, INC.
ARC COMFORT SYSTEMS USA, INC.
ACCURATE AIR SYSTEMS, L.P., by
Atlas-Accurate Holdings, L.L.C.,
as General Partner
ACCU-TEMP GP, INC.
ACCU-TEMP LP, INC.
ACCU-TEMP LLC,
by Accu-Temp GP, Inc., as acting member
AIR SOLUTIONS USA, INC.
AIR TEMP, INC.
ATLAS-ACCURATE HOLDINGS, L.L.C.,
by CS53 Acquisition Corp.,
as acting member
ATLAS AIR CONDITIONING COMPANY, L.P.,
by Atlas-Accurate Holdings, L.L.C.,
as general partner
BATCHELOR'S MECHANICAL CONTRACTORS, INC.
BCM CONTROLS CORPORATION
CARSON BROTHERS, INC.
CEL, INC.
CENTRAL MECHANICAL, INC.
COMFORT SYSTEMS USA (ARKANSAS), INC.
COMFORT SYSTEMS USA (BALTIMORE), INC.
COMFORT SYSTEMS USA (BOWLING GREEN), INC.
COMFORT SYSTEMS USA (BRISTOL), INC.
COMFORT SYSTEMS USA (CLEVELAND), INC.
COMFORT SYSTEMS USA (FLORIDA), INC.
COMFORT SYSTEMS USA G.P., INC.
COMFORT SYSTEMS US (HARTFORD), INC.
COMFORT SYSTEMS USA (INTERMOUNTAIN), INC.
COMFORT SYSTEMS USA NATIONAL SERVICE
ORGANIZATION, INC.
COMFORT SYSTEMS USA (OREGON), INC.
COMFORT SYSTEMS USA (SOUTH BOSTON), INC.
COMFORT SYSTEMS USA (SYRACUSE), INC.
COMFORT SYSTEMS USA (TEXAS), L.P.,
by Comfort Systems USA G.P., Inc.,
as general partner
COMFORT SYSTEMS USA (TWIN CITIES), INC.
COMFORT SYSTEMS USA (WESTERN
MICHIGAN), INC.
CS44 ACQUISITION CORP.
CS53 ACQUISITION CORP.
DESIGN MECHANICAL INCORPORATED
EASTERN HEATING & COOLING, INC.
ESS ENGINEERING, INC.
GULFSIDE MECHANICAL, INC.
H & M MECHANICAL, INC.
HELM CORPORATION
HELM CORPORATION SAN DIEGO
HESS MECHANICAL CORPORATION
INDUSTRIAL COOLING INC.
J & J MECHANICAL, INC.
JAMES AIR CONDITIONING ENTERPRISE INC.
MARTIN HEATING, INC.
MECHANICAL SERVICE GROUP, INC.
MECHANICAL TECHNICAL SERVICES, L.P.,
by Atlas-Accurate Holdings, L.L.C.,
as general partner
MJ MECHANICAL SERVICES, INC.
NEEL MECHANICAL CONTRACTORS, INC.
NORTH AMERICAN MECHANICAL, INC.
OK SHEET METAL AND AIR CONDITIONING, INC.
QUALITY AIR HEATING & COOLING, INC.
S&K AIR CONDITIONING CO., INC.
S. I. GOLDMAN COMPANY, INC.
S.M. LAWRENCE COMPANY, INC.
SA ASSOCIATES, INC.
SALMON & ALDER, LLC,
by SA Associates, Inc.,
as acting member
SEASONAIR, INC.
SHEREN PLUMBING & HEATING, INC.
STANDARD HEATING & AIR CONDITIONING
COMPANY
SUPERIOR MECHANICAL SYSTEMS, INC.
TARGET CONSTRUCTION, INC.
TEMP-RIGHT SERVICE, INC.
THE CAPITAL REFRIGERATION COMPANY
TRI-CITY MECHANICAL, INC.
UNITED ENVIRONMENTAL SERVICES, L.P.,
by Atlas-Accurate Holdings, L.L.C.,
as general partner
WEATHER ENGINEERING, INC.
WESTERN BUILDING SERVICES, INC.
By: /s/ J. Gordon Beittenmiller
---------------------------------
Name: J. Gordon Beittenmiller
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and a Lender
By: /s/ Justin Staadecker
---------------------------------
Its Duly Authorized Signatory
BANK OF TEXAS, NA, as a Lender
By: /s/ H. Gale Smith, Jr.
----------------------------------
Name: H. Gale Smith, Jr.
Title: Senior Vice President
REGIONS BANK, as a Lender
By: /s/ Mark Burr
----------------------------------
Name: Mark Burr
Title: Vice President Corporate Banking