EXHIBIT 10.1
AGREEMENT AND THIRD AMENDMENT TO
CREDIT AGREEMENT
This Agreement and Third Amendment to Credit Agreement (this
"Amendment") dated as of November 18, 2004 among the financial institutions
(collectively, the "Banks") party to the Credit Agreement (as such term is
hereinafter defined); INTEGRATED ELECTRICAL SERVICES, INC. (the "Borrower"), and
JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA, with its main
office in Chicago, Illinois), as administrative agent (in such capacity, the
"Administrative Agent") for the Banks;
W I T N E S S E T H:
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WHEREAS, the Borrower, the Banks and the Administrative Agent executed
and delivered that certain Credit Agreement (as heretofore amended and
supplemented, the "Credit Agreement") dated as of February 27, 2004;
WHEREAS, the Borrower anticipates raising up to $50,000,000 in
aggregate outstanding principal amount of Senior Convertible Notes; and
WHEREAS, the Borrower, the Banks and the Administrative Agent now
desire to amend the Credit Agreement to (a) allow for the issuance of such Debt;
(b) provide for the application of part of the proceeds thereof; and (c)
otherwise amend the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations and warranties herein set forth, and for other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties hereby agree as follows:
Section 1. Section 1.1 of the Credit Agreement is hereby amended to add
thereto the following definition, which shall read in its entirety as follows:
"Initial Issuance Senior Convertible Notes" means the first
$36,000,000 of Senior Convertible Notes to be issued by the Borrower.
"Optional Issuance Senior Convertible Notes" means any Senior
Convertible Notes issued by the Borrower other than the Initial
Issuance Senior Convertible Notes.
"Senior Convertible Note Indenture" means the Indenture dated
as of November 22, 2004 among the Borrower, certain of its Subsidiaries
and The Bank of New York, as trustee, together with all instruments and
other agreements entered into by the Borrower or such Subsidiaries in
connection therewith, all relating to the Senior Convertible Notes.
"Senior Convertible Notes" means the outstanding 6.5% Senior
Convertible Notes due 2014 issued by the Borrower, together with the
subsidiary guarantees thereof.
Section 2. Clause (d) of the definition of "Permitted Debt" contained
in Section 1.1 of the Credit Agreement is hereby amended to read in its entirety
as follows:
(d) Debt in the form of Subordinated Debt, the Senior
Subordinated Notes and up to $50,000,000 in principal amount of
outstanding Senior Convertible Notes;
Section 3. The following definitions contained in Section 1.1 of the
Credit Agreement are hereby amended to read in their entirety as follows:
"Debt" means, with respect to any Person, without duplication,
(a) indebtedness of such Person for borrowed money, (b) obligations of
such Person evidenced by bonds, debentures, notes, or other similar
instruments, (c) obligations of such Person to pay the deferred
purchase price of property or services (other than trade debt and
normal operating liabilities incurred in the ordinary course of
business), (d) obligations of such Person as lessee under Capital
Leases, (e) obligations of such Person under or relating to letters of
credit, (f) obligations of such Person under or relating to guaranties,
purchase agreements, or other assurances in favor of obligees of the
kinds of indebtedness and obligations referred to in clauses (a)
through (e) of this definition, (g) nonrecourse indebtedness or
obligations of others of the kinds referred to in clauses (a) through
(f) of this definition secured by any Lien on or in respect of any
property of such Person, and (h) obligations of such Person evidenced
by preferred stock or other equity interests in such Person which
provide for mandatory redemption, mandatory payment of dividends, or
similar rights to the payment of money; provided, however, that in each
instance such term shall not mean or include any Debt in respect of
which monies sufficient to pay and discharge the same in full (either
on the expressed date of maturity thereof or on such earlier date as
such Debt may be duly called for redemption and payment) shall be
deposited with the trustee under the Senior Convertible Note Indenture
or appropriate Senior Subordinated Note Indenture, if relevant, or
otherwise a depository, agency or trustee acceptable to the
Administrative Agent, in each case in trust for the payment thereof.
For the purposes of determining the amount of any Debt, the amount of
any Debt described in clauses (e) and (f) of this definition shall be
valued at the maximum amount of the contingent liability thereunder,
the amount of any Debt described in clause (g) that is not covered by
clause (e) or (f) shall be valued at the lesser of the amount of the
Debt secured or the book value of the property securing such Debt, and
the amount of any Debt described in clause (h) shall be valued at the
stated redemption value of such Debt as of the date of determination.
"Fixed Charges" means, with respect to any Person and as of
the last day of any fiscal quarter, the sum of (a) the current
maturities of Debt (other than the
Revolving Loan, if relevant) of such Person as of such date plus (b)
principal payments on the Senior Subordinated Notes (not including (x)
principal payments made with the proceeds of Junior Interests Sales and
(y) principal payments (including, for purposes of this definition, any
cash paid in connection with a conversion of any Senior Convertible
Note) in connection with the Contemplated Senior Subordinated Note
Retirement), Senior Convertible Notes and the Subordinated Debt for the
preceding four fiscal quarters then ending plus (c) Interest Expense of
such Person for the preceding four fiscal quarters then ending.
"Prepayment Proceeds" means (a) all net cash proceeds
(including, if applicable, cash proceeds received over time as and when
the same are received) from an Asset Sale; (b) 75% of all net cash
proceeds (including, if applicable, cash proceeds received over time as
and when the same are received) from Eligible Junior Interest Sales;
(c) $6,000,000 upon the issuance of the Initial Issuance Senior
Convertible Notes, and (d) an amount equal to the outstanding principal
amount of the Optional Issuance Senior Convertible Notes upon the
issuance of the Optional Issuance Senior Convertible Notes.
Section 4. Section 2.1(c)(ii) of the Credit Agreement is hereby amended
to read in its entirety as follows:
(ii) Upon any Asset Sale, Junior Interests Sale or issuance of
Senior Convertible Notes by any Restricted Entity consummated before
the payment in full of the Term Loan, the Borrower shall use the
Prepayment Proceeds to prepay, on the date of the receipt of such
proceeds, (A) first, the principal of the Prime Rate Tranche with
respect to the Term Loan; (B) second, the principal of the LIBOR
Tranches of the Term Loan, selected in such order as to minimize the
unpaid accrued interest thereon and costs to be paid by the Borrower
pursuant to Section 2.7 (and such unpaid accrued interest and costs
shall be in addition to the mandatory prepayment due under this Section
2.1(c)(ii)); (C) third, the unpaid accrued interest on the Prime Rate
Tranche with respect to the Term Loan, and (D), fourth, the unpaid
principal of and accrued interest on the Revolving Loan as required by
Section 2.2(c)(ii); none of the requirements of Section 2.1(c)(i) with
respect to the prepayment of the Term Loan shall be applicable to
mandatory prepayments under this Section 2.1(c)(ii).
Section 5. Section 2.2(e) of the Credit Agreement is hereby amended to
add the following sentences after the first sentence of such Section:
The Revolving Loan Commitment shall be reduced by $6,000,000 upon the
issuance of the Initial Issuance Senior Convertible Notes and by the
principal amount of all issued Optional Issuance Senior Convertible
Notes. Immediately upon each receipt of Prepayment Proceeds from an
Asset Sale, the Revolving Loan Commitment shall be reduced by the
amount of such Prepayment Proceeds.
Section 6. Section 5.2(k) of the Credit Agreement is hereby amended to
read in its entirety as follows:
(k) Indentures. (i) As soon as available, a complete and
correct copy of the Senior Convertible Note Indenture, each of the
Senior Subordinated Note Indentures and any Subordinated Debt
Indenture; and (ii) no later than 5 Business Days prior to the
effectiveness thereof, copies of substantially final drafts of any
proposed amendment, supplement, waiver or other modification with
respect to the Senior Convertible Note Indenture, the Senior
Subordinated Note Indentures or any Subordinated Debt Indenture;
Section 7. Section 5.5(e) of the Credit Agreement is hereby amended to
read in its entirety as follows:
(e) Asset Coverage Ratio. As of the last day of each calendar
month, the Borrower shall not permit the ratio of (1) the difference of
(i) 60% (for the months of July through September, 2004) or 65% (for
each month after September, 2004) of consolidated Unbonded Accounts
Receivable minus (ii) the sum of (A) $6,000,000 if the Borrower has
issued the Initial Issuance Senior Convertible Notes plus (B) the
principal amount of all issued Optional Issuance Senior Convertible
Notes plus (C) an amount equal to the aggregate Prepayment Proceeds
from all Asset Sales to (2) the sum of (i) the Revolving Loan plus (ii)
the Letter of Credit Exposure plus (iii) the Term Loan plus (iv) the
Swing Line Loan to be less than 1.00 to 1. Compliance with this
paragraph (e) shall be determined in a report, duly certified by a
Responsible Officer of the Borrower and delivered no later than 25 days
after the end of the relevant calendar month.
Section 8. Section 6.1(k) of the Credit Agreement is hereby amended to
read in its entirety as follows:
(k) Certain Events. (i) There shall occur any default or event
of default (and such event or condition is not cured within the
applicable grace period, if any), however denominated, under the Senior
Convertible Notes, the Senior Subordinated Notes, the Senior
Convertible Note Indenture, either Senior Subordinated Note Indenture,
any Subordinated Debt or any Subordinated Debt Indenture; (ii) any
modification shall be made to the subordination provisions or economic
terms of the Senior Convertible Notes, the Senior Subordinated Notes,
the Senior Convertible Note Indenture, either Senior Subordinated Note
Indenture, any Subordinated Debt or any Subordinated Debt Indenture
without the prior written consent of the Majority Banks; (iii) any
"Change of Control Offer" (or any other defined term having a similar
purpose) as defined in the Senior Convertible Note Indenture, either
Senior Subordinated Note Indenture or any Subordinated Debt Indenture
shall occur, or (iv) on or after December 31, 2005, the holder of any
Senior Convertible Note has the right to convert such Senior
Convertible Note to cash on any date on or before the Revolving Loan
Maturity Date.
Section 9. Mandatory Prepayment of Revolving Loan. The Borrower agrees
to prepay the Revolving Loan upon the issuance of the Senior Convertible Notes
as described in
this Section. Upon the issuance of the Initial Issuance Senior Convertible
Notes, the Borrower shall prepay the Revolving Loan in the amount of
$19,000,000. Such prepayment shall be made on the date of issuance of such
Senior Convertible Notes and applied (A) first, to the principal of the Prime
Rate Tranche with respect to the Revolving Loan; (B) second, to the principal of
the LIBOR Tranches of the Revolving Loan, selected in such order as to minimize
the unpaid accrued interest thereon and costs to be paid by the Borrower
pursuant to Section 2.7 of the Credit Agreement (and such unpaid accrued
interest and costs shall be in addition to the mandatory prepayment due under
this Section), and (C) third, the unpaid accrued interest on the Prime Rate
Tranche with respect to the Revolving Loan, with any proceeds remaining
thereafter to be retained by the Restricted Entities; none of the requirements
of Section 2.2(c)(i) of the Credit Agreement with respect to the prepayment of
the Revolving Loan shall be applicable to mandatory prepayments under this
Section.
Section 10. Application of Term Loan Prepayment. The $6,000,000 payment
due on the Term Loan Advances upon the issuance of the Initial Issuance Senior
Convertible Notes shall be applied first to the quarterly installment due on
November 30, 2004 and then to the remaining principal installments of the Term
Loan in inverse order of maturity.
Section 11. Deposits. The Borrower shall use its best efforts to cause
the aggregate amount of all demand deposits, time deposits, certificates of
deposit and money market accounts maintained with financial institutions other
than the Banks not to exceed $15,000,000 at any time.
Section 12. Conditions. This Amendment shall not become effective until
(a) the Borrower has delivered a copy of the executed Senior Convertible Note
Indenture to the Administrative Agent, substantially in the form of the draft of
November 18, 2004 heretofore delivered to the Administrative Agent; (b) the
Borrower has issued the Initial Issuance Senior Convertible Notes; (c) this
Amendment has been executed and delivered by the Borrower and the Majority
Banks; (d) the Borrower shall have paid to the Administrative Agent, for the
account of each Bank executing and delivering this Amendment before the issuance
of the Senior Convertible Notes, an amendment fee equal to $140,000 times the
quotient of (1) such Bank's Term Loan Advance plus its Revolving Loan Commitment
divided by (2) the aggregate Term Loan Advances plus Revolving Loan Commitments
of all Banks executing and delivering this Amendment before such time, with such
fee to be paid no later than the date of issuance of the Initial Issuance Senior
Convertible Notes; (e) the Borrower shall have delivered to the Administrative
Agent a certificate of the Secretary or an Assistant Secretary as to the
resolutions of the Board of Directors of the Borrower authorizing the execution
and delivery of this Amendment, and (f) the Administrative Agent shall have
received such other documents and instruments as it may reasonably request;
provided, however, that if all of such conditions are not satisfied by 5:00
p.m., Houston time, on November 24, 2004, then this Amendment shall be of no
force or effect.
Section 13. Representations True; No Default. The Borrower represents
and warrants that the representations and warranties contained in the Credit
Documents are true and correct in all material respects on and as of the date
hereof as though made on and as of such date. The Borrower hereby certifies that
no event has occurred and is continuing which constitutes a Default or an Event
of Default.
Section 14. Ratification. Except as expressly amended hereby, the Loan
Documents shall remain in full force and effect. The Credit Agreement, as hereby
amended, and all rights and powers created thereby or thereunder and under the
other Credit Documents are in all respects ratified and confirmed and remain in
full force and effect. In particular, the Borrower acknowledges and agrees that
the amendment of certain provisions of the Credit Agreement to allow for the
issuance of the Senior Convertible Notes does not constitute an amendment of
Section 5.5 of the Credit Agreement.
Section 15. Release. The Borrower, for itself and its successors,
assigns, receivers, trustees, shareholders, directors, officers, employees and
agents, hereby RELEASES, ACQUITS and FOREVER DISCHARGES the Administrative Agent
and each Bank, and each of their respective predecessors, successors, assigns,
representatives, officers, directors, employees, attorneys and agents
(collectively, the Administrative Agent, the Banks and the above-described
Persons receiving a release hereunder are hereinafter referred to as the
"Released Parties"), from any and all "Claims," as that term is defined below,
which the Borrower may have against any of the Released Parties that directly or
indirectly arise in connection with the Credit Documents, the transactions
contemplated thereby, the Credit Obligations, or the servicing or administration
of the Credit Obligations, including, but not limited to, Claims:
(a) based upon or arising out of breach of contract, breach of
commitment, breach of promise or representation, breach of funding commitment or
other commitments or breach of obligations of any kind;
(b) based upon or arising out of tort, violation of law or regulations,
unconscionable acts, deceptive trade practices, lack of good faith or fair
dealing, lack of commercial reasonableness, or breach of specific relationships,
such as a partner, fiduciary, trust or confidential relationship;
(c) based upon or arising out of fraud, dominion, control, alter ego,
instrumentality, misrepresentation, negligent misrepresentation, duress,
coercion, undue influence, interference, negligence or gross negligence,
business interruption or lost profits, slander, libel or damage to reputation;
(d) based upon or arising out of estoppel, promissory estoppel or
waiver;
(e) disputing, contesting or objecting to the validity or
enforceability of the Credit Obligations or any Credit Document or any claim,
rights, remedies, obligations and indebtedness thereunder;
(f) arising out of, connected with, or resulting from usury or penalty
or damages therefor, from any advances or loans, or from the contracting for,
charging, taking, reserving, collecting or receiving interest in excess of the
Highest Lawful Rate;
(g) based upon or arising out of any alleged breach by the
Administrative Agent or any Bank of an alleged promise to the Borrower regarding
the Credit Obligations or the Credit Documents;
(h) based upon or arising out of any alleged misrepresentation to the
Borrower relating to the Credit Obligations or the Credit Documents;
(i) based upon or arising out of any alleged intentional or negligent
infliction of mental distress, tortuous interference with contractual relations,
tortuous interference with governance or prospective business advantage, or
mistake;
(j) based upon or arising out of any negotiations or discussions
between the Borrower, on one hand, and the Administrative Agent or any Bank, on
the other hand;
(k) based upon or arising out of any act, failure to act, event,
omission, transfer, payment or transaction occurring on or before the date
hereof; and
(l) for damages, injunctive relief, and attorneys' fees.
The purpose of this Section is to release Claims. Nothing in this Section is an
admission of merit or liability regarding any Claim released herein. In any
action, claim, lawsuit or proceeding by the Administrative Agent or any Bank to
enforce or interpret this Section, (x) the Borrower shall be obligated and
liable to pay the attorneys fees and expenses of the Administrative Agent and
the Banks and (y) the Administrative Agent and the Banks, in addition to all
other relief, shall be entitled to an award against the Borrower for their
attorneys' fees and expenses, including attorneys' fees and costs on appeal.
Section 16. Claims. As used herein, "Claims" shall mean any and all
claims, counterclaims, demands, actions, causes of actions, suits, debts, costs,
dues, sums of money, accounts, bonds, bills, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
executions, expenses, obligations and liabilities whatsoever, known or unknown,
at law or in equity, irrespective of whether such Claims arise out of contract,
tort, violation of laws or regulations or otherwise, which the Borrower or any
of its Subsidiaries ever had, now has or hereafter can, shall or may have
against any Released Party for, upon, or by reason of any act, event, conduct,
omission, matter, cause or thing whatsoever from any time before the date
hereof.
Section 17. No Transfer; No Other Claim. The Borrower represents and
warrants to the Administrative Agent and each Bank that the Borrower (a) has not
assigned or otherwise transferred to any Person any alleged Claim that the
Borrower had, has or may have had against any Released Party and (b) is not
aware of any events, facts or grounds that provide, or could provide, for any
dispute, Claim, action, lawsuit, arbitration or administrative claim of any sort
against any Released Party.
Section 18. Definitions and References. Any term used herein that is
defined in the Credit Agreement shall have the meaning therein ascribed to it.
The terms "Agreement" and "Credit Agreement" as used in the Credit Documents or
any other instrument, document or writing furnished to the Administrative Agent
or any Bank by the Borrower and referring to the Credit Agreement, shall mean
the Credit Agreement as hereby amended.
Section 19. Miscellaneous. This Amendment (a) shall be binding upon and
inure to the benefit of the Borrower, the Banks, the Administrative Agent and
their respective successors, assigns, receivers and trustees (but the Borrower
shall not assign its rights hereunder without the express prior written consent
of the Majority Banks); (b) may be modified or amended only by a writing signed
by the party against whom the same is to be enforced; (c) may be executed in
several counterparts, and by the parties hereto on separate counterparts, and
each counterpart, when so executed and delivered, shall constitute an original
agreement, and all such separate counterparts shall constitute but one and the
same agreement, and (e) together with the other Credit Documents, embodies the
entire agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements, consents and
understandings relating to such subject matter.
THE CREDIT DOCUMENTS (INCLUDING THIS AMENDMENT) REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER:
INTEGRATED ELECTRICAL SERVICES, INC.
By:
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Name:
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Title:
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BANKS:
JPMORGAN CHASE BANK, N.A.
By:
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Name:
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Title:
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U.S. BANK NATIONAL ASSOCIATION
By:
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Name:
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Title:
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BANK OF SCOTLAND
By:
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Name:
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Title:
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LaSALLE BANK NATIONAL ASSOCIATION
By:
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Name:
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Title:
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XXXXX FARGO BANK, N.A.
By:
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Name:
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Title:
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SOUTHWEST BANK OF TEXAS, N.A.
By:
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Name:
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Title:
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FIRST AMERICAN BANK, SSB HOUSTON
By:
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Name:
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Title:
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ALLIED IRISH BANK, P.L.C.
By:
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Name:
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Title:
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AIB DEBT MANAGEMENT LIMITED
By:
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Name:
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Title:
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REGIONS BANK
By:
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Name:
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Title:
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FIRST BANK & TRUST
By:
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Name:
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Title:
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HIBERNIA NATIONAL BANK
By:
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Name:
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Title:
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RZB FINANCE LLC
By:
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Name:
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Title:
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