Amendment Three to Credit Agreement



 Exhibit 10.7 
  
 AMENDMENT THREE TO CREDIT AGREEMENT 
  
 This Amendment Three to Credit Agreement (“Amendment”) is dated as of December 19, 2003, among MATRIX SERVICE COMPANY, as Borrower, the
Lenders and BANK ONE, NA (as successor by merger to Bank One, Oklahoma, NA), with its main office in Chicago, Illinois, as a Lender and as Agent for the Lenders. 
  
 RECITALS 
  
 G. Reference is made to the Credit Agreement dated as of March 7, 2003, among Borrower, Lenders and Agent, as amended by Amendment One to Credit Agreement
dated as of May 22, 2003, and Amendment Two to Credit Agreement dated as of August 27, 2003 (as amended, the “Credit Agreement”) pursuant to which each of the Lenders established their respective Commitments in favor of the Borrower.

  
 H. Borrower has requested the Lenders to extend the maturity
of the Temporary Over-Advance; and the Lenders and Agent have agreed thereto, subject to the terms and conditions set forth below. 
  
 I. Terms used herein shall have the meanings ascribed to them in the Credit Agreement, unless otherwise defined herein. 
  
 AGREEMENT 
  
 13. Amendments to Credit Agreement. 
  
 1.6 Temporary Over-Advance-Increase. Lenders and Agent agree that the term “Borrowing Base” as used in Sections 2.1.1 and 2.7.2(iv) shall
read “Borrowing Base plus $15,000,000” until the earliest of: (a) December 31, 2004; (b) the occurrence of Default; or (c) upon the failure of Borrower to maintain outstanding Revolving Loans and LC Obligations equal to or below the
Borrowing Base for at least five (5) consecutive Business Days during each month through December 31, 2004; whereupon, the words “plus $15,000,000” shall be automatically deleted without any action by the Agent. With respect to any amounts
outstanding in excess of the Borrowing Base, the Applicable Margin shall equal 250 basis points. 
  
 1.7 Section 6.11(v) (Indebtedness-Capital Leases) is hereby amended as follows: 
  
 “(v) Capital Leases not to exceed $15,000,000 outstanding at any given time.” 
  









 1.8 Section 6.27.1. (Fixed Charge Coverage Ratio) is hereby amended as follows: 
  
 “6.27.1. Fixed Charge Coverage Ratio. The Borrower will not
permit the ratio, determined as of the end of each of its fiscal quarters, of (i) Consolidated EBITDA for the then most recently ended fiscal four quarters, minus cash dividends and cash distributions made or paid during the same
period, minus cash taxes paid during the same period and minus Capital Expenditures (excluding $7,500,000 of Capital Expenditures attributable to the Port facility during the ensuing twelve (12) months), to (ii) scheduled
current maturities long-term debt according to generally accepted accounting practices for the ensuing four fiscal quarters, plus Consolidated Interest Expense (excluding non-cash interest accrued on the Hake Acquisition deferred
purchase price) for the then most recently ended four fiscal quarters, plus current maturities on Capitalized Leases for the then most recently ended four fiscal quarters, to be less than 1.40 to 1.0 through February 28, 2005, and
thereafter 1.50 to 1.0. 
  
 1.9 6.27.3. (Minimum Net Worth) is
hereby deleted and replaced with the following: 
  
 “6.27.3.
Minimum Net Worth. The Borrower will at all times maintain a Consolidated Net Worth of not less than $60,000,000 plus, beginning effective March 1, 2003, fifty percent (50%) of quarterly positive net income on a cumulative
basis.” 
  
 14. Representations. Borrower represents to Agent and
Lenders that: (i) their exists no Default or Unmatured Default; (ii) the representations and warranties contained in Article V of the Loan Agreement are true and correct as of the date hereof, except to the extent such representation or warranty is
stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date; and (iii) it is in compliance with the financial covenants as set forth in Section 6.27.

  
 15. Ratifications. Borrower shall deliver to Agent fully executed
originals of the Ratification of Security Agreements and Ratification of Guaranty Agreement, in the forms set forth on Schedules “3-A” and “3-B”, respectively, attached hereto. 
  
 16. Fees. As inducement for the Lenders and Agent to execute this Amendment, Borrower
shall pay $82,500.00 in good funds, upon the execution hereof, to Agent for the Pro Rata distribution to the Lenders. 
  
 17. Governing Law. This Amendment shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of
Oklahoma. 
  
 18. Reimbursement. Borrower agrees to reimburse Agent for any
costs, expenses, and fees (including reasonable attorney fees) incurred in connection with the preparation of this Amendment. 
  
 19. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has 

  









 
been executed by the Borrower, the Agent, the LC Issuer and the Lenders and each party has notified the Agent by facsimile transmission or telephone that it
has taken such action. 
  
 IN WITNESS WHEREOF, the Borrower, the
Lenders, the LC Issuer and the Agent have executed this Amendment as of the date first above written. 
  

			
	MATRIX SERVICE COMPANY
		
	 By:
	 	 
	 	 	 Michael J. Hall, Vice President




			
		
	 Notice Address:
	 	10701 East Ute Street
	 	 	Tulsa, OK 74116
	 Attention:
	 	Michael J. Hall,
	 	 	Vice President
	 Telephone:
	 	(918) 838-8822
	 FAX:
	 	(918) 838-8810


  










			
	BANK ONE, NA (as successor by merger to Bank One, Oklahoma, NA)
	 Individually and as Agent and LC Issuer

		
	 By:
	 	 
	 	 	 David G. Page, First Vice President




			
		
	 Notice Address:
	 	4th Floor OK2-6110
	 	 	 15 East Fifth Street
 Tulsa, OK 74103

	 Attention:
	 	David G. Page,
	 	 	First Vice President
	 Telephone:
	 	(918) 586-5430
	 FAX:
	 	 (918) 586-5474