Exhibit 10.1

 

LOGO [g9430394303c.jpg]

 

JPMorgan Chase Bank, N. A.

 

April 8, 2005

 

Matrix Service Company

Attn: Michael J. Hall, Chief Executive Officer

10701 East Ute Street

Tulsa, OK 74116

 

All Other Loan Parties Under the Credit

Agreement Described Below

 

  Re: Credit Agreement dated as of March 7, 2003 among Matrix Service Company,
as “Borrower,” the Lenders described therein, and J. P. Morgan Chase Bank, N.A.
(successor by merger to Bank One, N.A. (Main Office, Chicago)), as a Lender, LC
Issuer, and as Agent for the Lenders, and others, as amended (as amended, the
“Credit Agreement”)

 

Gentlemen:

 

This is in regard to the above-referenced Credit Agreement. Capitalized terms
not defined in this letter have the same meanings as in the Credit Agreement.

 

Borrower has advised the Agent (i) about certain aspects of Borrower’s projected
quarter-end financial results (for the fiscal quarter ending February 28, 2005)
that will cause Borrower to breach certain financial covenants in Section 6.27
of the Credit Agreement and that reflect financial performance below Borrower’s
previous projections and (ii) that Borrower failed to make the payment due March
7, 2005 in the amount of $1,905,853.00 due under the Hake Group Acquisition
Documents, and has entered into certain amendments to certain of the Hake Group
Acquisition Documents that address such payment (the “Particular Facts”). As a
result of the Particular Facts, Borrower has also breached Section 6.1(i) with
respect to the fiscal year that ended May 31, 2004, Section 6.4, Section 6.19,
and Section 7.4 of the Credit Agreement, which in turn has caused Borrower to
breach Section 7.15 of the Credit Agreement. Due to the circumstances described
above in this paragraph, at this time there exist an “Unmatured Default” and
certain “Defaults” under the Credit Agreement (such Unmatured Default and
Defaults being referred to herein as the “Specified Default”). Among other
things, the Specified Default would prevent Borrower from meeting the conditions
set forth in Section 4.2 of the Credit Agreement necessary for Borrower to
receive any Credit Extension and could, under certain circumstances, ripen into
a Default under the Credit Agreement.

 

Member FDIC

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To the extent it is affected by the Specified Default, Borrower has requested
that the Required Lenders waive the requirements of Section 4.2(i) of the Credit
Agreement, which provides that no Credit Extension shall be made unless there
exists no Unmatured Default and no Default, and that the Required Lenders waive
certain other requirements and provisions of the Credit Agreement and the other
Loan Documents.

 

This is to advise that, upon execution and delivery of this waiver letter and
amendment by the Loan Parties, the Agent and Lenders constituting the Required
Lenders, the Lenders shall have agreed to waive (the “Waiver”) all rights and
remedies under the Credit Agreement and the other Loan Documents arising from
the Specified Default, from the date hereof through the end of the Business Day
on June 15, 2005 (such date and time the “Waiver Termination Date”), provided
that the Waiver shall not be effective until Borrower has paid all currently
invoiced legal fees of Agent and Lenders and all currently invoiced fees of
Capstone Corporate Recovery, LLC. The Waiver is limited to the Specified Default
only and shall not waive such condition as it may relate to any other Unmatured
Default or Default.

 

By executing and delivering this letter, Borrower, Agent and the undersigned
Required Lenders hereby agree as follows:

 

(i) as long as the Waiver is in effect and not withdrawn as provided in
subparagraph (ii) below, and provided all conditions of such Revolving Loans set
forth in the Credit Agreement are met (except as specifically waived hereby),
the Lenders agree to make Revolving Loans to the Borrower or participate in
Facility LCs in accordance with the provisions of Section 2.19 of the Credit
Agreement (Facility LCs not to exceed $15,000,000.00 in the aggregate at any one
time) from time to time prior to the Waiver Termination Date, in amounts so that
at any one time the aggregate amount of all Revolving Loans and Facility LCs
shall not exceed the lesser of:

 

(A) an amount equal to 75% of the Borrowing Base (provided that this amount
shall be increased to 80% after the full and final closing and funding, under
terms and subject to documentation acceptable to Required Lenders, of either a
subordinated loan to Borrower or an offering of junior securities by Borrower in
an amount acceptable to Required Lenders),

 

(B) $32,000,000.00 (provided that this amount shall be $35,000,000.00 after the
full and final closing and funding, under terms and subject to documentation
acceptable to Required Lenders, of either a subordinated loan to Borrower or an
offering of junior securities by Borrower in an amount acceptable to Required
Lenders), or

 

(C) the Aggregate Revolving Loan Commitment; and

 

(ii) the Waiver shall be withdrawn without any further action required on the
part of the Agent or any of the Lenders, and be of no force or effect, if any
one of the following occurs:

 

(a) any Unmatured Default or Default occurs or exists other than the Specified
Default,

 

(b) Borrower does not, on a weekly basis on or before the end of the Business
Day on Wednesday of each week, provide to Agent a report in a form and covering
such topics as are reasonably acceptable to Agent, describing the status of
Borrower’s efforts to both (1) obtain new funding in the form of both
subordinated debt or equity and a replacement senior credit facility and (2)
other alternatives,

 

Member FDIC

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(c) Borrower does not, on a weekly basis on or before the end of the Business
Day on Wednesday of each week, provide to Agent a written 13-week cash flow
projection covering the immediately subsequent thirteen (13) weeks, in a form
acceptable to Agent, or

 

(d) Borrower does not, on a weekly basis on or before the end of the last
Business Day of each week, provide to Agent a Borrowing Base Certificate for
Borrower on a consolidated basis, dated as of the last Business Day of the
immediately preceding week (provided this shall not limit, affect or modify any
of the obligations of Borrower described in Section 6.1(xi) of the Credit
Agreement).

 

By executing and delivering this waiver letter and amendment, Borrower, Agent
and the undersigned Required Lenders further agree as follows:

 

1. Borrower shall pay to Agent, on or before the earlier of (A) the Facility
Termination Date, (B) March 31, 2006 or (C) any payment in full of the Term Loan
(for purposes of clarity, “Term Loan” does not include Term Loan B) (such
earlier date the “Fee Due Date”), a fee in the amount set forth below that Agent
will apply ratably among the Lenders, which fee is and shall be considered a
part of and included within the Obligations. The applicable amount of the fee
will be as follows:

 

  (i) if the Fee Due Date occurs prior to May 11, 2005, $166,667,00;

 

  (ii) if the Fee Due Date occurs on or after May 11 but before June 11, 2005,
$333,333.00;

 

  (iii) if the Fee Due Date occurs on or after June 11, 2005 but before July 11,
2005, $500,000.00;

 

  (iv) if the Fee Due Date occurs on or after July 11, 2005 but before August
11, 2005, $666,667.00;

 

  (v) if the Fee Due Date occurs on or after August 11, 2005 but before
September 11, 2005, $833,333.00; and

 

  (v) if the Fee Due Date occurs on or after September 11, 2005, $1,000,000.00.

 

2. As to the Specified Default, any applicable requirement for notice in Section
7.3(ii) of the Credit Agreement is hereby deemed to be satisfied;

 

3. (a) effective as of the end of the Interest Period applicable thereto, all
Eurodollar Advances (including but not limited to the Term Loan (but excluding
Term Loan B, as to which the applicable interest rate is set forth in Section
2.1.4 of the Credit Agreement)) shall be converted into Floating Rate Advances
without any further action necessary on the part of Borrower, Agent or any
Lender, (b) effective as of the date of this letter and continuing until the
conversion thereof to Floating Rate Advances as provided in paragraph 3(a)
above, all Eurodollar Advances shall bear interest at a rate per annum equal to
.50% greater than otherwise provided in the Credit Agreement, (c)
notwithstanding anything to the contrary in the Credit Agreement, Borrower shall
have no further right to convert Floating Rate Advances to Eurodollar Advances,
and (d) the Pricing Schedule is hereby replaced with, and shall be, the
following:

 

Member FDIC

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PRICING SCHEDULE

 

Starting Date of Applicable

Margin, Continuing Until

Next Starting Date

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Applicable Margin

All Floating Rate

Advances Except

the Term Loan

(bps)

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Applicable

Margin

(Term Loan)

(bps)

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   Letters of
Credit Fee (bps)

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Commitment Fee

(bps)

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11-Apr-05

   150    175    425    62.5

1-May-05

   175    200    425    62.5

1-Jun-05

   200    225    425    62.5

1-Jul-05

   225    250    425    62.5

1-Aug-05

   275    300    425    62.5

1-Sep-05

   325    350    425    62.5

1-Oct-05

   375    400    425    62.5

1-Nov-05

   425    450    425    62.5

1-Dec-05

   475    500    425    62.5

1-Jan-06

   525    550    425    62.5

1-Feb-06

   575    600    425    62.5

1-Mar-06 and thereafter

   625    650    425    62.5

 

This waiver letter and amendment shall constitute a supplement and amendment to
the Credit Agreement. From and after the date hereof, references in the Credit
Agreement to “this Agreement” and like terms shall be deemed to be references to
the Credit Agreement as supplemented by this waiver, and as otherwise amended,
supplemented, restated or otherwise modified from time to time in accordance
with the Loan Documents. References in the other Loan Documents to the Credit
Agreement shall be deemed to be references to the Credit Agreement as
supplemented by this waiver letter and amendment and as further amended,
supplemented, restated or otherwise modified from time to time. This waiver
letter and amendment is a Loan Document executed pursuant to the Credit
Agreement and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Credit Agreement. The Credit Agreement as supplemented by this waiver letter and
amendment is ratified and confirmed in all respects, and all other Loan
Documents are hereby ratified and confirmed in all respects.

 

Except as expressly provided hereby, all of the representations, warranties,
terms, covenants and conditions of the Credit Agreement and the other Loan
Documents shall remain unamended and unwaived and shall continue to be, and
shall remain, in full force and effect in accordance with their respective
terms, including express limitations therein relating to the date on which such
representations and warranties were made. The waiver and agreements set forth
herein shall be limited precisely as provided for herein, and shall not be
deemed to be a waiver of, amendment to, consent to or modification of any other
term or provision of the Credit Agreement or of any event, condition, or
transaction on the part of the Borrower or any other Person which would require
the consent of the Agent or any of the Lenders.

 

The Borrower and each Loan Party, for itself and on behalf of all its
predecessors, successors, assigns, agents, employees, representatives, officers,
directors, general partners, limited partners, joint shareholders,
beneficiaries, trustees, administrators, subsidiaries, affiliates, employees,
servants and attorneys (collectively the “Releasing Parties”), hereby releases
and forever discharges

 

Member FDIC

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Agent and each Lender and their respective successors, assigns, partners,
directors, officers, agents, attorneys, and employees from any and all claims,
demands, cross-actions, controversies, causes of action, damages, rights,
liabilities and obligations, at law or in equity whatsoever, known or unknown,
whether past, present or future, now held, owned or possessed by the Releasing
Parties, or any of them, or which the Releasing Parties or any of them may, as a
result of any actions or inactions occurring on or prior to the date hereof,
hereafter hold or claim to hold under common law or statutory right, arising,
directly or indirectly out of any Loan or any of the Loan Documents or any of
the documents, instruments or any other transactions relating thereto or the
transactions contemplated thereby. Borrower and each Loan Party understands and
agrees that this is a full, final and complete release and agrees that this
release may be pleaded as an absolute and final bar to any or all suit or suits
pending or which may hereafter be filed or prosecuted by any of the Releasing
Parties, or anyone claiming by, through or under any of the Releasing Parties,
in respect of any of the matters released hereby, and that no recovery on
account of the matters described herein may hereafter be had from anyone
whomsoever, and that the consideration given for this release is no admission of
liability.

 

Please indicate your approval of the terms and provisions hereof by executing
this letter in the space provided below.

 

This letter may be executed in any number of counterparts, all of which together
shall constitute a single instrument, and it shall not be necessary that any
counterpart be signed by all the parties hereto. A facsimile copy of this letter
and signatures thereon shall be considered for all purposes as originals.

 

Yours very truly, J. P. MORGAN CHASE BANK, N.A., as Agent By:  

/s/ Hal E. Fudge

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    Hal E. Fudge, First Vice President

 

Member FDIC

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ACCEPTED AND AGREED TO: Borrower: MATRIX SERVICE COMPANY By:  

/s/ Michael J. Hall

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    Michael J. Hall, Chief Executive Officer Loan Parties: MATRIX SERVICE INC.,
an Oklahoma corporation; MATRIX SERVICE INDUSTRIAL CONTRACTORS, INC. (formerly
known as MATRIX SERVICE MID-CONTINENT, INC.), an Oklahoma corporation; MATRIX
SERVICE, INC. CANADA, an Ontario, Canada corporation; HAKE GROUP, INC., a
Delaware corporation; BOGAN, INC. (including Fiberspec, a division), a
Pennsylvania corporation; MATRIX SERVICE SPECIALIZED TRANSPORT, INC. (formerly
known as FRANK W. HAKE, INC.), a Pennsylvania corporation; HOVER SYSTEMS, INC.,
a Pennsylvania corporation; I & S, INC., a Pennsylvania corporation; MCBISH
MANAGEMENT, INC., a Pennsylvania corporation; MECHANICAL CONSTRUCTION, INC., a
Delaware corporation; MID-ATLANTIC CONSTRUCTORS, INC., a Pennsylvania
corporation; TALBOT REALTY, INC., a Pennsylvania corporation; BISH INVESTMENTS,
INC., a Delaware corporation; I & S JOINT VENTURE, L.L.C., a Pennsylvania
limited liability company By:  

/s/ George L. Austin

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    George L. Austin, Vice President

 

Member FDIC

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Lenders: J. P. MORGAN CHASE BANK, N.A., as Agent By:  

/s/ Hal E. Fudge

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    Hal E. Fudge, First Vice President WACHOVIA BANK, NATIONAL ASSOCIATION By:  

/s/ Patrick McGovern

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    Patrick McGovern, Senior Vice President UMB BANK, N.A. By:  

/s/ Richard J. Lehrter

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    Richard J. Lehrter, Community Bank President

WELLS FARGO BANK, NA

(formerly known as Wells Fargo Bank Texas, NA)

By:  

/s/ Roger Fruendt

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    Roger Fruendt, Senior Vice President

INTERNATIONAL BANK OF COMMERCE, successor in interest to

LOCAL OKLAHOMA BANK,

an Oklahoma Banking Corporation

formerly known as LOCAL OKLAHOMA BANK, NA,

By:  

/s/ David G. Moore

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    David G. Moore, Senior Vice President

 

Member FDIC