EXHIBIT 10.49
SIXTH AMENDMENT TO CREDIT AGREEMENT
This SIXTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as
of the 14th day of May, 2002 by and among CECO GROUP, INC., CECO FILTERS, INC.,
AIR PURATOR CORPORATION, NEW BUSCH CO., INC., THE KIRK & BLUM 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 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 and by Fifth Amendment to Credit Agreement dated as of March 27, 2002
(as amended, the "Credit Agreement").
B. The Borrowers have requested and the Agent and the Banks have
agreed to amend the 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) Section 6.1(a) Leverage Ratio of the Credit Agreement as it
presently exists shall be abated in its entirety through June 30, 2002, and
shall be modified as follows:
(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:
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LEVERAGE RATIO MUST NOT
LAST DAY OF FISCAL QUARTER BE GREATER THAN
-------------------------- -----------------------
March 31, 2002 3.40 to 1
June 30, 2002 3.40 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 September 30, 2002
and for each four consecutive fiscal quarter period ending
thereafter.
(b) Section 6.1(b) of the Credit Agreement shall be abated in its
entirety as it presently exists through June 30, 2002 and shall be modified as
follows:
(b) Fixed Charge Coverage Ratio. Permit the Fixed Charge 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 date:
FIXED CHARGE RATIO TO
LAST DAY OF FISCAL QUARTER BE GREATER THAN
-------------------------- ---------------------
March 31, 2002 .70 to 1
June 30, 2002 .70 to 1
provided, however, , the abatement of Section 6.1(b) Fixed Charge
Coverage Ratio of the Credit Agreement shall cease and such
section shall continue as provided in the Credit Agreement
immediately before the effective date of this Amendment beginning
for the four consecutive fiscal quarter period ending on
September 30, 2002 and for each four consecutive fiscal quarter
period ending thereafter.
(c) Section 6.1(c) Interest Coverage Ratio of the Credit Agreement
shall be abated in its entirety as it presently exists through June 30, 2002 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:
INTEREST COVERAGE RATIO
LAST DAY OF FISCAL QUARTER MUST NOT BE LESS THAN
-------------------------- ------------------------
March 31, 2002 1.25 to 1
June 30, 2002 1.25 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 September 30, 2002
and for each four consecutive fiscal quarter period ending
thereafter, and such section shall continue as provided in the
Credit Agreement
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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".
3. Additional Covenants. The Credit Agreement and any other
Applicable Loan Document shall be amended to include the following additional
covenants and the Borrowers' failure to comply with such additional covenants
shall constitute an immediate Event of Default without any required notice or
cure period, notwithstanding any provision to the contrary contained in the
Credit Agreement or any other Loan Document:
(a) Borrowers shall make no payments of principal or interest on
any Subordinated Debt after the effective date of this Amendment.
(b) Borrowers shall make no Bonus Pool payments after the
effective date of this Amendment.
4. Interest Rates.
(a) Effective at the end of the current Interest Period, any
portion of the Revolving Credit Loan which is currently a Eurodollar Loan and
Term Loan B will be converted to Base Rate Loans and Borrowers will have no
further right to request a Eurodollar Loan with respect to any tranche of the
Revolving Credit Loan or to convert Term Loan B or any tranche of the Revolving
Credit Loan to a Eurodollar Loan pursuant to Section 2.18 of the Credit
Agreement or any other provisions of the Credit Agreement. Term Loan A may
continue as a Eurodollar Loan pursuant to the Credit Agreement, except that if
Term Loan A is ever converted to a Base Rate Loan under the Credit Agreement,
Borrowers shall have no further right to convert Term Loan A to a Eurodollar
Loan pursuant to Section 2.18 of the Credit Agreement or any other provision of
the Credit Agreement
(b) 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, is hereby further modified as provided below.
Beginning on the effective date of this Amendment, the Ongoing Margins are as
follows:
(1) With respect to Term Loan A, effective on the effective
date of this Amendment, the Ongoing Margins are:
(i) Through September 30, 2002:
APPLICABLE MARGIN FOR APPLICABLE MARGIN FOR
LEVERAGE RATIO EURODOLLAR LOANS BASE RATE LOANS
------------------- --------------------- --------------------
More than 2:00 to 1 4.50% 3.00%
Less than 2:00 to 1 4.25% 2.75%
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(ii) Beginning October 1, 2002:
APPLICABLE MARGIN FOR APPLICABLE MARGIN FOR
LEVERAGE RATIO EURODOLLAR LOANS BASE RATE LOANS
------------------- --------------------- --------------------
More than 2:00 to 1 6.50% 5.00%
Less than 2:00 to 1 6.25% 4.75%
(2) With respect to the Revolving Credit Loan, effective on the
effective date of this Amendment with respect to any tranche of the Revolving
Credit Loan which is a Base Rate Loan on the effective date of this Amendment,
and effective on the conversion date as provided in paragraph 4(a) above, with
respect to any Revolving Credit Loan which is a Eurodollar Loan on the effective
date of this Amendment, the Ongoing Margins are:
(i) Through September 30, 2002:
APPLICABLE MARGIN FOR BASE RATE
LEVERAGE RATIO LOANS
------------------- -------------------------------
More than 2:00 to 1 3.00%
Less than 2:00 to 1 2.75%
(ii) Beginning October 1, 2002:
APPLICABLE MARGIN FOR BASE RATE
LEVERAGE RATIO LOANS
------------------- -------------------------------
More than 2:00 to 1 5.00%
Less than 2:00 to 1 4.75%
(2) With respect to Term Loan B, effective on the conversion date as
provided in paragraph 4(a) above, the Ongoing Margins are:
(i) Through September 30, 2002:
APPLICABLE MARGIN FOR BASE RATE
LEVERAGE RATIO LOANS
------------------- -------------------------------
More than 2:00 to 1 3.50%
Less than 2:00 to 1 3.25%
(ii) Beginning October 1, 2002:
APPLICABLE MARGIN FOR BASE RATE
LEVERAGE RATIO LOANS
------------------- -------------------------------
More than 2:00 to 1 5.50%
Less than 2:00 to 1 5.25%
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5. Sale of Assets. The provisions of Section 2.10 (c) and Section
6.5 of the Credit Agreement notwithstanding, Borrowers are permitted to sell the
assets described on Exhibit A-6 attached hereto and by this reference
incorporated herein, without payment of any of the proceeds of such sale to the
Banks and Agent, as agent for the Banks, will release any security interest
which it has in such assets. This authorization of sale of assets shall not be
deemed to be a waiver of the provisions of Section 2.10 (c) or Section 6.5 of
the Credit Agreement or any other provision of the Loan Documents which
prohibits or restricts sale of any other assets of Borrowers.
6. Amendment Fee. Borrowers shall pay to the Agent, for the ratable
benefit of the Banks, an Amendment Fee in the amount of $40,000 upon execution
of this Amendment and an Amendment Fee of $60,000, due and payable on September
30, 2002; provided however if all of the Loans, together with all interest and
other amounts due under the Credit Agreement are paid in full prior to September
30, 2002, the Amendment Fee due on September 30, 2002, shall be waived:
7. 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.
8. 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.
9. Representations and Warranties.
(a) Each Borrower hereby certifies that (i) the representations
and warranties of such Borrower in the Credit Agreement 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
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 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 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
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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.
10. 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:
(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; and
(ii) Such additional documents, certificates and information
as the Agent may require pursuant to the terms hereof or
otherwise reasonably request.
(b) After giving effect to the amendments contained herein, the
representations and warranties set forth in the Credit Agreement shall be true
and correct on and as of the date hereof.
(c) 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.
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(d) The Borrowers shall have paid the Amendment Fee as provided
in paragraph 6 above and the reasonable fees and disbursements of the Agent's
counsel incurred in connection with this Amendment.
11. 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
Credit Agreement or any other Loan Document or constitute a waiver of any of the
Agent's or the Banks' other rights or remedies.
12. 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 Credit Agreement and 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.
13. 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 March 31, 2002 (the "effective date") and for all purposes the
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/ Marshall J. Morris
----------------------
Name: Marshall J. Morris
Title: CFO
CECO FILTERS, INC.
By: /s/ Marshall J. Morris
----------------------
Name: Marshall J. Morris
Title: CFO
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AIR PURATOR CORPORATION
By: /s/ Marshall J. Morris
----------------------
Name: Marshall J. Morris
Title: Secretary
NEW BUSCH CO., INC.
By: /s/ Marshall J. Morris
----------------------
Name: Marshall J. Morris
Title:
THE KIRK & BLUM MANUFACTURING COMPANY
By: /s/ Marshall J. Morris
----------------------
Name: Marshall J. Morris
Title: Treasurer
KBD/TECHNIC, INC.
By: /s/ Marshall J. Morris
----------------------
Name: Marshall J. Morris
Title: Treasurer
CECO ABATEMENT SYSTEMS, INC.
By: /s/ Marshall J. Morris
----------------------
Name: Marshall J. Morris
Title: Treasurer
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PNC BANK, NATIONAL ASSOCIATION, as
Agent and as a Bank
By: /s/ William C. Miles
--------------------
Name: William C. Miles
Title: Vice President
FIFTH THIRD BANK, as a Bank
By: /s/ David R. Alexander
----------------------
Name: David R. Alexander
Title: Assistant Vice President
BANK ONE, NA, as a Bank
By: /s/ Jeffrey C. Nicholson
------------------------
Name: Jeffrey C. Nicholson
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 Sixth 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/ Phillip DeZwirek
--------------------
Name: Phillip DeZwirek
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
Sixth 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/ Phillip DeZwirek
--------------------
Name: Phillip DeZwirek
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
Sixth 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.
ICS TRUSTEE SERVICES, LTD.
By:
------------------------------
Name:
Title
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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
Sixth 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.
HARVEY SANDLER
---------------------------------
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EXHIBIT A-6
Any and all rights Busch Martec possesses with regard to the name, Busch Martec
(the "Name");
All rights and obligations of Busch Martec with respect to the various
manufacturers that Busch Martec represents in connection with Busch Martec
acting as a manufacturer's representative and a distributor of a variety of
industrial air and fluid movement, control and treatment products (" the
Business") under the agreements set forth in Exhibit 1 attached hereto and made
a part hereof;
Busch Martec's customer lists associated with its role as a distributor or
connected to the Business, all as set forth on Exhibit 1;
the telephone number 412-487-7100;
all books, records, files, ledgers, drawings, specifications and manuals
relating to the Business or any of the Assets, all advertising materials
relating to the Business and all other information relating to the Business or
any of the Assets, regardless of the form in which such information appears;
The tangible assets set forth below.
1) Six metal desks, with chairs and chair pads
2) One wooden desk with chair and chair pad
3) Twenty 2 drawer metal file cabinets
4) Sixteen 4 drawer metal file cabinets
5) Eight 3 drawer metal file cabinets
6) Twelve metal book shelf units
7) Five table tops
8) Four tables
9) Eight metal chairs
10) Four office guest chairs
11) Sixteen office trash cans
12) Six cork bulletin boards
13) One combination cork/dry erase board
14) Two dry erase boards
15) Twelve upright metal cabinets
16) Ten 3-level "in-out" baskets
17) Twelve upright file holders
18) Eight sets of office tools (stapler, calculator, tape dispenser,
ruler, scissors)
19) One 3-hole punch
20) One electric typewriter
21) All Busch Martec manufacturer literature, letterhead, records, and
samples
22) All Busch Martec supplier and customer lists, quotes and sales
order files
23) Two Steelers PSLs (4 tickets each for five games/season to be
split with Busch International via annual random drawing)
24) Three Nokia cell phones
25) Trade show display booth placards related to Busch Martec (booth
can be borrowed at no charge, barring conflict with Busch International trade
show)
26) One conference room table with chairs (second floor of 904
Mt. Royal Blvd.)
27) One laser printer
28) Six computers with monitors, keyboards, mouses and power strips
29) Two framed fan prints
30) Twenty cubical partition sections
(collectively the "Assets").