Exhibit 10.1

 

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                    JPMorgan Chase Bank, N.A.

 

Special Credits Group

1717 Main Street, 4th Floor

Dallas, Texas 75201

Tel (214) 290-2799

Fax (214) 290-2740

 

March 23, 2005

 

Matrix Service Company

Attn: George L. Austin, Vice President

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 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. Accordingly, at this time there exists an “Unmatured
Default” under the Credit Agreement (such Unmatured Default being referred to
herein as the “Specified Unmatured Default”). Among other things, the Specified
Unmatured 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.

 

To the extent it is affected by the Specified Unmatured 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 that the Required Lenders waive
other requirements of the Credit Agreement and the other Loan Documents.

 

This is to advise that, upon execution and delivery of this waiver letter by the
Loan Parties, the Agent and Lenders constituting the Required Lenders, the
Lenders shall have agreed to waive all rights and remedies under the Credit
Agreement and the other Loan Documents arising from the Specified Unmatured
Default, from the date hereof through the end of the Business Day on April 11,
2005 (such date and time the “Waiver Termination Date”), subject to the
following:

 

(i) this waiver shall not be effective until the following conditions are met:
(a) Agent’s receipt of a fee of $35,000 that Agent will apply ratably among the
Lenders, (b) Borrower has paid all currently invoiced legal fees of Agent and
Lenders related to the Loan and all currently invoiced fees of Capstone
Corporate Recovery, LLC, and (c) Borrower has retained an investment banker or
similar firm acceptable to Agent under a written agreement acceptable to Agent;

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(ii) notwithstanding anything to the contrary in the Credit Agreement, provided
all conditions therefor in the Credit Agreement (except as specifically waived
hereby) are met, 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 70% of the
Borrowing Base, (b) $29,000,000.00, or (c) the Aggregate Revolving Loan
Commitment;

 

(iii) this 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
Unmatured Default,

 

(b) Borrower does not, on a weekly basis on or before the end of the Business
Day on Thursday 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)
market and sell Borrower and all its Subsidiaries, or their assets,

 

(c) Borrower does not, on a weekly basis on or before the end of the Business
Day on Wednesday of each week starting Wednesday, March 23, 2005, provide to
Agent a written 13-week cash flow projection covering the immediately subsequent
thirteen (13) weeks, in a form acceptable to Agent,

 

(d) Borrower does not, on a weekly basis on or before the end of the last
Business Day of each week starting Friday, March 25, 2005, 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 affect
or modify any of the obligations of Borrower described in Section 6.1(xi) of the
Credit Agreement), or

 

(e) Borrower does not provide to Agent, on or before the end of the Business Day
on March 25, 2005, written evidence acceptable to Agent that Borrower has
retained a third-party corporate consulting firm acceptable to Agent under a
written engagement letter acceptable to Agent and that such consultant has
agreed in writing, as a part of such consultant’s written terms of engagement,
to provide deliverables to Borrower (that Borrower shall in turn provide to
Agent and the Lenders) that address subjects acceptable to Agent under deadlines
acceptable to Agent.

 

This waiver is limited to the Specified Unmatured Default only and shall not
waive such condition as it may relate to any other Unmatured Default or Default.

 

In consideration of the agreements of Borrower and Lenders set forth herein, the
last sentence of Section 2.1.1 of the Credit Agreement is hereby deleted and
shall be of no further force and effect.

 

This waiver letter shall constitute a supplement 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 as further amended, supplemented,
restated or otherwise modified from time to time. This waiver letter 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 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

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

/s/  George L. Austin

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    George L. Austin, Vice President

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

/s/  Hal E. Fudge

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WACHOVIA BANK, NATIONAL ASSOCIATION By:  

/s/  Patrick McGovern

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    Patrick McGovern, Senior Vice President

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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