EXHIBIT 10.4
THIRD AMENDMENT TO CREDIT AGREEMENT
This Third Amendment to Credit Agreement (“Third Amendment”) is made as of this
12th day of July, 2010, by and among Borrowers (as defined below), which are
listed on attached Schedule 1, the Lenders (as defined below) signatory hereto
and Comerica Bank, as Agent for the Lenders (in such capacity, the “Agent”).
RECITALS
A. PMFG, Inc. (“Holdings”), Peerless Mfg. Co. (the “Company”), PMC Acquisition,
Inc. (“PMC Acquisition”), and, following the execution and delivery by any other
Subsidiary (as defined in the Credit Agreement), and acceptance by the Agent,
from time to time, of a Credit Agreement Joinder Agreement from such Subsidiary,
collectively with the Company, PMC Acquisition and each such Subsidiary, the
“Borrowers” and each individually, a “Borrower”) are party to that certain
Revolving Credit and Term Loan Agreement dated April 30, 2008, with the
financial institutions from time to time signatory thereto (individually a
“Lender,” and any and all such financial institutions collectively the
“Lenders”) and Agent (as amended or otherwise modified from time to time, the
“Credit Agreement”).
B. Borrowers have requested that Agent and the Lenders make certain amendments
to the Credit Agreement as set forth herein and Agent and the Lenders are
willing to do so, but only on the terms and conditions set forth in this Third
Amendment.
NOW, THEREFORE, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, Borrowers, Agent and the Lenders agree as follows:
1. Section 8.6 of the Credit Agreement is amended and restated as follows:
Article 8 of the Credit Agreement is amended as follows:
“8.6 Limitation on Capital Expenditures. Make or commit to make (by way of the
acquisition of securities of a Person or otherwise) any expenditure in respect
of the purchase or other acquisition of fixed or capital assets (excluding any
such asset acquired in connection with normal replacement and maintenance
programs properly charged to current operations) except for (a) Reinvestments of
Net Proceeds from Asset Sales, Insurance Proceeds or Condemnation Proceeds to
the extent permitted under Section 4.8 hereof, (b) Capital Expenditures not to
exceed $1,500,000 in the aggregate to replace and upgrade the equipment and
other assets of Nitram and its Subsidiaries, (c) Capital Expenditures made
solely from the Net Cash Proceeds from the sale of the property located at 2819
Walnut Hill Lane, Dallas, Texas 75229 in an aggregate amount not to exceed
$4,000,000, but only to the extent such proceeds have not been expended for any
other purpose, (d) Capital Expenditures made during the Fiscal Year ending
June 30, 2011 in an aggregate amount not to exceed
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$2,500,000, only solely in connection with the acquisition by the Borrowers from
CEFCO Global Clean Energy, LLC of the exclusive rights to use the process for
the selective and sequential capture and removal of pollutants from gaseous
mixtures and (e) in addition to the Capital Expenditures permitted under clause
(b), (c) and (d), Capital Expenditures, the aggregate amount of which in any
Fiscal Year shall not exceed the Cap Ex Basket plus any unused portion of such
Cap Ex Basket for the Fiscal Year ending immediately prior to the applicable
Fiscal Year, provided that any amounts carried forward shall be applied to the
last Capital Expenditures made in the applicable Fiscal Year and shall expire at
the end of the applicable Fiscal Year. “Cap Ex Basket” shall mean (i) at any
time on or prior to the Trigger Date, $2,000,000 and (ii) after the Trigger
Date, $3,000,000.”
2. This Third Amendment shall become effective (according to the terms hereof)
on the date (the “Third Amendment Effective Date”) that the following conditions
have been fully satisfied by Borrowers (the “Conditions”):

  (a)  
Agent shall have received via facsimile or electronic mail (followed by the
prompt delivery of original signatures) counterpart originals of this Third
Amendment, in each case duly executed and delivered by the Agent, Borrowers and
the Lenders;

  (b)  
Agent shall have received a copy of the fully executed CEFCO Process
Manufacturing Licensing Agreement between Company and CEFCO Global Clean Energy,
LLC.

  (c)  
Borrowers shall have paid to the Agent all fees and reasonable costs and
expenses, if any, owed to the Agent and accrued to the Third Amendment Effective
Date, in each case, as and to the extent required to be paid in accordance with
the Loan Documents.

3. Borrowers hereby certify to the Agent and the Lenders as of the Third
Amendment Effective Date and after giving effect to this Amendment, that
(a) execution and delivery of this Third Amendment and the other Loan Documents
required to be delivered hereunder, and the performance by Borrowers of their
obligations under the Credit Agreement as amended hereby (herein, as so amended,
the “Amended Credit Agreement”) are within the Borrowers’ powers, have been duly
authorized, are not in contravention of law or the terms of its articles of
incorporation or bylaws or other organizational documents of the parties
thereto, as applicable, and except as have been previously obtained do not
require the consent or approval, material to the amendments contemplated in this
Third Amendment, of any governmental body, agency or authority, and the Amended
Credit Agreement and the other Loan Documents required to be delivered hereunder
will constitute the valid and binding obligations of such undersigned parties
enforceable in accordance with its terms, except as enforcement thereof may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium, ERISA
or similar laws affecting the enforcement of creditors’ rights generally and by
general principles of equity (whether enforcement is sought in a proceeding in
equity or at law), (b) the representations and warranties set forth in Section 6
of the Amended Credit Agreement are true and correct on and as of the Third
Amendment Effective Date (except to the extent such representations specifically
relate to an earlier date), and (c) on and as of the Third Amendment Effective
Date, after giving effect to this Third Amendment, no Default or Event of
Default shall have occurred and be continuing.

 

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4. Except as specifically set forth above, this Third Amendment shall not be
deemed to amend or alter in any respect the terms and conditions of the Amended
Credit Agreement (including without limitation all conditions and requirements
for Advances and any financial covenants), any of the Notes issued thereunder or
any of the other Loan Documents. Nor shall this Third Amendment constitute a
waiver or release by the Agent or the Lenders of any right, remedy, Default or
Event of Default under or a consent to any transaction not meeting the terms and
conditions of the Amended Credit Agreement, any of the Notes issued thereunder
or any of the other Loan Documents. Furthermore, this Third Amendment shall not
affect in any manner whatsoever any rights or remedies of the Lenders with
respect to any other non-compliance by Borrowers or any Guarantor with the
Amended Credit Agreement or the other Loan Documents, whether in the nature of a
Default or Event of Default, and whether now in existence or subsequently
arising, and shall not apply to any other transaction. Borrowers hereby confirm
that each of the Collateral Documents continues in full force and effect and
secures, among other things, all of its obligations, liabilities and
indebtedness owing to the Agent and the Lenders under the Credit Agreement and
the other Loan Documents (where applicable, as amended herein).
5. Borrowers hereby acknowledge and agree that this Third Amendment and the
amendments contained herein do not constitute any course of dealing or other
basis for altering any obligation of Borrowers, any other Credit Party, any
Guarantor or any other party or any rights, privilege or remedy of the Lenders
under the Credit Agreement, any other Loan Document, any other agreement or
document, or any contract or instrument.
6. Except as specifically defined to the contrary herein, capitalized terms used
in this Third Amendment shall have the meanings set forth in the Credit
Agreement.
7. This Third Amendment may be executed in counterpart in accordance with
Section 13.9 of the Credit Agreement and shall be considered a “Loan Document”
within the meaning of the Credit Agreement.
8. This Third Amendment shall be construed in accordance with and governed by
the laws of the State of Texas.

 

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WITNESS the due execution hereof as of the day and year first above written.

            COMERICA BANK, as Agent
      By:   /s/ Kelly Cowherd         Name:   Kelly Cowherd        Title:  
Assistant Vice President   

Signature Page to Third Amendment (1017576)

 

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            PMFG, INC.
      By:   /s/ Peter J. Burlage         Name:   Peter J. Burlage       
Title:   President   

            PEERLESS MFG. CO.
      By:   /s/ Peter J. Burlage         Name:   Peter J. Burlage       
Title:   President   

            NITRAM ENERGY, INC.
      By:   /s/ Peter J. Burlage         Name:   Peter J. Burlage       
Title:   President   

            BOS-HATTEN, INC.
      By:   /s/ Peter J. Burlage         Name:   Peter J. Burlage       
Title:   President   

            BURGESS — MANNING, INC.
      By:   /s/ Peter J. Burlage         Name:   Peter J. Burlage       
Title:   President   

            BURMAN MANAGEMENT, INC.
      By:   /s/ Peter J. Burlage         Name:   Peter J. Burlage       
Title:   President   

Signature Page to Third Amendment (1017576)

 

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LENDERS:

            COMERICA BANK, as a Lender, Issuing Lender
and Swing Line Lender
      By:   /s/ Kelly Cowherd         Name:   Kelly Cowherd        Title:  
Assistant Vice President   

Signature Page to Third Amendment (1017576)

 

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            MB FINANCIAL BANK, N.A.
      By:   /s/ David G. Killpack         Name:   David G. Killpack       
Title:   Senior Vice President   

Signature Page to Third Amendment (1017576)

 

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            CITIBANK N.A.
      By:   /s/ Morah T. Purvia         Name:   Morah T. Purvia        Title:  
Vice President   

Signature Page to Third Amendment (1017576)

 

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SCHEDULE 1
Peerless Mfg. Co.
PMC Acquisition, Inc.
Nitram Energy, Inc.
Bos-Hatten, Inc.
Burgess — Manning, Inc.
Burman Management, Inc.