EXHIBIT 10.1
SECOND AMENDMENT TO CREDIT AGREEMENT
AND CONSENT AND WAIVER
THIS SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER, dated
as of November 10, 2003 (this "Second Amendment"), is entered into by and among
DYCOM INDUSTRIES, INC., a Delaware corporation (the "Borrower"), certain
Domestic Subsidiaries of the Borrower as Guarantors (the "Guarantors" and
together with the Borrower, the "Credit Parties"), the Required Lenders
identified on the signature pages hereto and WACHOVIA BANK, NATIONAL
ASSOCIATION, as administrative agent for the Lenders (the "Administrative
Agent").
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, the Administrative Agent and the
Lenders are parties to that certain Credit Agreement dated as of June 3, 2002
(as previously amended and modified and as further amended, modified,
supplemented or restated from time to time, the "Credit Agreement"; capitalized
terms used herein shall have the meanings ascribed thereto in the Credit
Agreement unless otherwise defined herein);
WHEREAS, the Borrower has notified the Lenders that it intends to (a)
acquire the assets of First South Utility Construction, a North Carolina
corporation ("First South"), on terms and conditions substantially the same as
those set forth on the summary of material terms attached hereto as Schedule A
(the "First South Acquisition") and (b) acquire the Capital Stock of UtiliQuest
Holdings Corp., a Delaware corporation ("UtiliQuest"), on terms and conditions
substantially the same as those set forth on the summary of material terms
attached hereto as Schedule B (the "UtiliQuest Acquisition"; together with the
First South Acquisition, individually an "Acquisition" and collectively the
"Acquisitions");
WHEREAS, the Borrower has requested that the Required Lenders (a)
consent to the consummation of the Acquisitions by the Credit Parties, (b) waive
the Borrower's failure to provide certain documents twenty Business Days in
advance of a Permitted Acquisition and (c) agree to amend a certain provision of
the Credit Agreement; and
WHEREAS, the Required Lenders have agreed to the consent, waiver and
amendment requested by the Borrower, subject to the terms and conditions set
forth herein.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
CONSENT
1.1 Consent to Acquisitions. The Required Lenders, for and on
behalf of the Lenders under the Credit Agreement, hereby consent to the
consummation of the Acquisitions by the Credit Parties, notwithstanding any
prohibitions to the contrary set forth in Section 7.5 of the Credit Agreement
(Advances, Investments and Loans) or in the definition of "Permitted
Acquisition" in Section 1.1 of the Credit Agreement. This consent shall be
effective solely with respect to the specific circumstances of the Acquisitions.
SECTION 2
AMENDMENT
2.1 Consolidated Tangible Net Worth Covenant.
(a) If, and upon such time that, one (but not both) of the
Acquisitions is consummated, Section 6.7(c) to the Credit Agreement shall be
amended and restated in its entirety as of such date such that:
(i) if the First South Acquisition, but not the
UtiliQuest Acquisition, has been consummated, Section 6.7(c) to the
Credit Agreement shall read in its entirety as follows:
(c) Consolidated Tangible Net Worth. Maintain
Consolidated Tangible Net Worth of not less than (i)
$265,000,000 plus (ii) 50% of Consolidated Net Income
(positive or negative) from the date the Borrower's
acquisition of First South Utility Construction, a North
Carolina corporation, is consummated (the "First South
Acquisition Date") to the date of computation plus (iii) 75%
of the Equity Issuances made from the First South Acquisition
Date to the date of computation.
(ii) if the UtiliQuest Acquisition, but not the First
South Acquisition, has been consummated, Section 6.7(c) to the Credit
Agreement shall read in its entirety as follows:
(c) Consolidated Tangible Net Worth. Maintain
Consolidated Tangible Net Worth of not less than (i)
$200,000,000 plus (ii) 50% of Consolidated Net Income
(positive or negative) from the date the Borrower's
acquisition of UtiliQuest Holdings Corp., a Delaware
corporation, is consummated (the "UtiliQuest Acquisition
Date") to the date of computation plus (iii) 75% of the Equity
Issuances made from the UtiliQuest Acquisition Date to the
date of computation.
2
(b) If, and upon such time that, both Acquisitions have been
consummated, Section 6.7(c) to the Credit Agreement shall be amended and
restated in its entirety as of such date to read as follows:
(c) Consolidated Tangible Net Worth. Maintain
Consolidated Tangible Net Worth of not less than (i)
$170,000,000 plus (ii) 50% of Consolidated Net Income
(positive or negative) from the date the Borrower has
completed the acquisitions of both UtiliQuest Holdings Corp.,
a Delaware corporation, and First South Utility Construction,
a North Carolina corporation (the "Acquisitions Completion
Date"), plus (iii) 75% of the Equity Issuances made from the
Acquisitions Completion Date to the date of computation.
SECTION 3
WAIVER
3.1 Waiver. The Required Lenders hereby waive, on a one-time basis
for the Acquisitions, any failure of the Borrower to comply with the requirement
set forth in Section 6.2(e) of the Credit Agreement to provide the Lenders with
a complete Permitted Acquisition report twenty Business Days' prior to the
consummation of a Permitted Acquisition. Except for the specific, one-time
waiver set forth above, nothing set forth herein or contemplated hereby is
intended to constitute a waiver of (i) any rights or remedies available to the
Lenders or the Administrative Agent under the Credit Agreement or any other
Credit Document or under applicable law (all of which rights and remedies are
hereby expressly reserved by the Lenders and the Administrative Agent) or (ii)
the Credit Parties' obligation to comply fully with any duty, term, condition,
obligation or covenant contained in the Credit Agreement and the other Credit
Documents.
SECTION 4
CLOSING CONDITIONS
AND POST-CLOSING REQUIREMENTS
4.1 Closing Conditions.
This Second Amendment shall be effective as of the date hereof upon
satisfaction of the following conditions precedent, in form and substance
reasonably acceptable to the Administrative Agent:
(a) Second Amendment. The Administrative Agent shall have
received a copy of this Second Amendment duly executed by each of the
Credit Parties and the Required Lenders.
3
(b) Officer's Certificate. The Administrative Agent shall
have received an officer's certificate, dated as of the date hereof,
executed by a Responsible Officer of the Borrower (i) certifying that
(A) no Default or Event of Default exists or will exist after giving
effect to the Acquisitions (after giving effect to this Second
Amendment), (B) each of First South and UtiliQuest has earnings before
interest, taxes, depreciation and amortization (excluding, in the case
of First South, any extraordinary credit losses) for the most recent
four fiscal quarters prior to the applicable acquisition date for which
financial statements are available in an amount greater than $0 and (C)
neither the First South Acquisition nor the UtiliQuest Acquisition is a
"hostile acquisition" and (ii) demonstrating that the Leverage Ratio
shall be less than or equal to 1.75 to 1.0 after giving effect to each
of the Acquisitions.
(c) Amendment Fee. The Borrower shall have paid a
non-refundable amendment fee to the Administrative Agent, for the pro
rata benefit of each Lender who duly executes and delivers a
counterpart to this Second Amendment on or before 12:00 Noon (Eastern
Time) on Monday, November 10, 2003 (the "Consenting Lenders"), in an
amount equal to ten basis points (.10%) of the aggregate Commitments of
the Consenting Lenders.
4.2 Post-Closing Requirements.
(a) Joinder Agreement. As soon as possible, and in any
event no later than ten (10) Business Days after the closing date of
the UtiliQuest Acquisition (or such later date as agreed to by the
Administrative Agent in its sole discretion), the Administrative Agent
shall have received, in accordance with the terms of Section 6.9 of the
Credit Agreement, a Joinder Agreement duly executed by the Borrower,
UtiliQuest and any other Domestic Subsidiary of the Borrower that is
not a Guarantor as of the date of this Second Amendment.
(b) Authority Documents. As soon as possible, and in any
event no later than ten (10) Business Days after the closing date of
the UtiliQuest Acquisition (or such later date as agreed to by the
Administrative Agent in its sole discretion), the Administrative Agent
shall have received, with respect to each of UtiliQuest and any other
Domestic Subsidiary of the Borrower party to the Joinder Agreement
referenced in Section 4.2(a) above, the following authority documents:
(i) a secretary's certificate of such Person, (ii) a copy of its
articles of incorporation, (iii) a copy of the resolutions of its board
of directors, approving and adopting the Joinder Agreement and the
other Credit Documents, (iv) a copy of its bylaws, (v) copies of a
certificate of good standing, existence or its equivalent certified as
of a recent date by the appropriate Governmental Authority of its state
of incorporation and (vi) an incumbency certificate.
(c) Legal Opinion. As soon as possible, and in any event
no later than ten (10) Business Days after the closing date of the
UtiliQuest Acquisition (or such later date as agreed to by the
Administrative Agent in its sole discretion), the Administrative Agent
shall have received a legal opinion from counsel to the Credit Parties,
in form and
4
substance reasonably satisfactory to the Administrative Agent, which
opinion shall include, without limitation, an opinion as to the
enforceability of the Joinder Agreement referenced in Section 4.2(a)
above.
(d) Effect of Non-Compliance. Notwithstanding the terms
of Section 8.1(c)(iii) of the Credit Agreement to the contrary, the
failure of any requirement set forth in this Section 4.2 to be
satisfied within the time period allotted therefor shall constitute an
immediate Event of Default under the Credit Agreement.
SECTION 5
MISCELLANEOUS
5.1 Amended Terms. The term "Credit Agreement" as used in each of
the Credit Documents shall hereafter mean the Credit Agreement as amended by
this Second Amendment. Except as specifically amended or modified hereby or
otherwise agreed, the Credit Agreement is hereby ratified and confirmed and
shall remain in full force and effect according to its terms.
5.2 Representations and Warranties of the Borrower. Each of the
Credit Parties represents and warrants to the Lenders as follows:
(a) It has taken all necessary action to authorize the
execution, delivery and performance of this Second Amendment.
(b) This Second Amendment has been duly executed and
delivered by such Person and constitutes such Person's legal, valid and
binding obligations, enforceable in accordance with its terms, except
as such enforceability may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or
similar laws affecting creditors' rights generally and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(c) No consent, approval, authorization or order of, or
filing, registration or qualification with, any court or Governmental
Authority or third party is required in connection with the execution,
delivery or performance by such Person of this Second Amendment.
5.3 Reaffirmation of Credit Party Obligations. Each Credit Party
hereby ratifies the Credit Agreement (as amended by this Second Amendment) and
acknowledges and reaffirms (a) that it is bound by all terms of the Credit
Agreement (as amended by this Second Amendment) applicable to it and (b) that it
is responsible for the observance and full performance of its respective Credit
Party Obligations.
5.4 Credit Document. This Second Amendment shall constitute a
Credit Document under the terms of the Credit Agreement.
5
5.5 Expenses. The Borrower agrees to pay all reasonable costs and
expenses of the Administrative Agent in connection with the preparation,
execution and delivery of this Second Amendment, including, without limitation,
the reasonable fees and expenses of Xxxxx & Xxx Xxxxx, PLLC, and all previously
incurred fees and expenses, if any, which remain outstanding on the date hereof.
5.6 Entirety. This Second Amendment and the other Credit Documents
embody the entire agreement between the parties hereto and supersede all prior
agreements and understandings, oral or written, if any, relating to the subject
matter hereof.
5.7 Counterparts/Telecopy. This Second Amendment may be executed
in any number of counterparts, each of which when so executed and delivered
shall be an original, but all of which shall constitute one and the same
instrument. Delivery of executed counterparts of the Second Amendment by
telecopy shall be effective as an original and shall constitute a representation
that an original shall be delivered.
5.8 Governing Law. This Second Amendment and the rights and
obligations of the parties under this Second Amendment shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.
5.9 Consent to Jurisdiction; Service of Process; Waiver of Jury
Trial. The jurisdiction, services of process and waiver of jury trial provisions
set forth in Sections 11.14 and 11.18 of the Credit Agreement are hereby
incorporated by reference, mutatis mutandis.
5.10 Further Assurances. The Credit Parties agree to promptly take
such action, upon the request of the Administrative Agent, as is reasonably
necessary to carry out the intent of this Second Amendment.
[Signature Pages Follow]
6
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Second Amendment to be duly executed and delivered as of the date first
above written.
BORROWER: DYCOM INDUSTRIES, INC.,
a Florida corporation
By: -s- Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: Sr. Vice President & CFO
GUARANTORS: COMMUNICATIONS CONSTRUCTION
GROUP, INC.,
a Pennsylvania corporation
ANSCO & ASSOCIATES, INC.,
a Florida corporation
DYCOM CAPITAL MANAGEMENT, INC.,
a Delaware corporation
DYCOM CORPORATE IDENTITY, INC.,
a Delaware corporation
DYCOM INVESTMENTS, INC.,
a Delaware corporation
XXXXX CABLE CONSTRUCTION, INC.,
a Kentucky corporation
CABLE COM INC.,
a Delaware corporation
XXXXX XXXXX SONS COMPANY,
a Utah corporation
By: -s- Xxxxxxx X. Xxxx
---------------------------------
Name: Xxxxxxx X. Xxxx
Title: Treasurer of each of the foregoing
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
LENDERS: WACHOVIA BANK, NATIONAL ASSOCIATION,
individually in its capacity as a
Lender and in its capacity as Administrative Agent
By: -s- Xxxxxxx Xxxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
BANK OF AMERICA, N.A.
By: -s- Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
LASALLE BANK NATIONAL ASSOCIATION
By: -s- Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: First Vice President
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
HSBC BANK USA
By: -s- Xxxxxxx Roll
--------------------------------------
Name: Xxxxxxx Roll
Title: First Vice President
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
XXXXXX TRUST AND SAVINGS BANK
By: -s- Xxx X. Xxxxxxx
--------------------------------------
Name: Xxx X. Xxxxxxx
Title: Managing Director
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
SUNTRUST BANK
By: -s- Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Director
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
REGIONS BANK
By: -s- Xxxxx Xxxxxx
--------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
COMPASS BANK
By: -s- C. French Xxxxxxxxx JR
--------------------------------------
Name: C. FRENCH XXXXXXXXX JR
Title: SVP
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
COMMERCEBANK N.A.
By: -s- Xxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
BANK HAPOALIM B.M.
By: -s- Xxxx Xxxx [ILLEGIBLE]
-----------------
Name: XXXX XXXX [ILLEGIBLE]
Title: VICE PRESIDENT
DYCOM INDUSTRIES, INC.
SECOND AMENDMENT TO CREDIT AGREEMENT AND CONSENT AND WAIVER
ISRAEL DISCOUNT BANK OF NEW YORK
By: -s- Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
Chief Landing Officer for Florida
SCHEDULE A
SUMMARY OF MATERIAL TERMS OF FIRST SOUTH ACQUISITION
[see attached]
EXECUTIVE SUMMARY
PROPOSED ACQUISITION
OF
SUBSTANTIALLY ALL OF THE ASSETS
OF
FIRST SOUTH UTILITY CONSTRUCTION, INC. (THE "COMPANY")
- LOCATION OF
COMPANY: Greensboro, North Carolina.
- SELLER: First South Utility Construction, Inc.
- ACQUISITION
STRUCTURE: Asset purchase by Dycom Industries, Inc.
- DESCRIPTION OF
THE ASSETS: - Substantially all of the property and assets
of Seller's business of construction, design
and engineering and rights of way services
for government agencies and utilities at
various locations in the United States.
- Includes, among other things, owned and
lease real property, tangible personal
property, vehicles, inventories,
receivables, records, goodwill, owned
intellectual property, claims and rights of
action, sales-related material, rights under
contracts and permits and licenses.
- Does not include assets used exclusively in
the Pot-Fill division of the Company.
- Dycom will also assume certain liabilities
associated with these assets and the
business.
- PURCHASE PRICE: $50 million in cash and $4 million in newly-issued
common stock, subject to adjustment.
- INDEMNIFICATION: - Representations and warranties survive until
October 1, 2004 (except tax which survives
until the 30th day after the applicable
statute of limitations
and environmental which survives until the
third anniversary of the Closing).
- $4 million reciprocal indemnification cap
(except in the case of tax indemnification
or Excluded Liabilities).
- $700,000 basket (except for tax
indemnification which has no basket); once
basket reached, recovery on claim from first
dollar.
- INDEMNITY ESCROW: - $4 million stock escrow.
- $3.5 million for General Indemnification
Claims.
- $500,000 for Environmental Indemnification
Claims.
- General Indemnification Escrow
"stepped-down" to $2 million in the event
Dycom receives $2,750,000 from outstanding
AT&T receivable.
- AT&T ESCROW: - $6,350,000 cash escrow.
- Paid back by Dycom (dollar for dollar) to
the Company as funds from outstanding AT&T
receivable are collected by Dycom.
- ANTITRUST FILING: Dycom will need to make an antitrust filing under the
Xxxx-Xxxxx-Xxxxxx Antitrust Act of 1976, as amended,
in connection with this transaction.
- EMPLOYMENT
AGREEMENTS: Dycom will enter into employment agreements with
Xxxxx X. Xxxx, Xxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx,
Xx. and Xxxxxx X. Xxxxxxx. The terms of these
agreements are substantially similar to the standard
Dycom employment agreements for executive officers at
the subsidiary level. The salary amounts are still
being negotiated.
- CONSULTING
AGREEMENT: Dycom is also considering entering into a consulting
agreement with Xxxxxxx Xxxx.
- REGISTRATION
RIGHTS AGREEMENT: Dycom is currently negotiating a registration rights
agreement with the Company. This agreement will be
substantially similar to registration rights
agreements Dycom has entered into in past
transactions.
- SCHEDULED
CLOSING DATE: To be determined, but prior to December 5, 2003.
2
- SIGNIFICANT
CLOSING
CONDITIONS: - Antitrust approval (HSR)
- No Litigation
- Accuracy of representations and warranties.
- No governmental order prohibiting the
transaction.
- TERMINATION: - By either party due to a Material Adverse
Effect, untrue representations and
warranties or unfulfilled covenants.
- If the Closing has not occurred by December
5, 2003.
- By mutual consent.
- BROKER: None.
3
SCHEDULE B
SUMMARY OF MATERIAL TERMS OF UTILIQUEST ACQUISITION
[see attached]
SUMMARY OF PROPOSED TRANSACTION WITH UTILIQUEST HOLDINGS CORP.
CONSIDERATION: $120 million in cash, less (i) Closing Date Debt (includes capital
leases) which Dycom will repay (except for the capital leases) at
Closing (approximately $30 million) and (ii) UtiliQuest Holdings Corp.'s
("UtiliQuest") and GFI's (the "Sellers") expenses.
WORKING CAPITAL
ADJUSTMENT: Adjustment based on amount of working capital at Closing (>$750,000,
merger consideration is increased, <$750,000, merger consideration is
reduced).
STRUCTURE: Merger of newly-formed Dycom subsidiary with and into UtiliQuest with
UtiliQuest surviving the merger.
DESCRIPTION OF BUSINESS: UtiliQuest provides facility-locating services to utilities.
DEAL PROTECTIONS: GFI, as 99% shareholder of UtiliQuest, will have approved the merger by
the time the merger agreement is entered into. None of GFI, UtiliQuest
or any of their affiliates will solicit, initiate or encourage proposals
from other parties to enter into any competing business combinations.
KEY CLOSING CONDITIONS:
- Accuracy of representations and warranties;
- HSR clearance;
- GFI entering into a confidentiality/non-disclosure agreement;
- Number of dissenting shares must be less than 1% of the outstanding
shares of UtiliQuest;
- No Governmental Order or action or litigation seeking to restrain the
transaction;
- Delivery of payoff certificates/letters by UtiliQuest for each
repayment by UtiliQuest of a portion of the Closing Date Debt; and
- No Material Adverse Effect.
SCHEDULED CLOSING DATE: To be determined, but prior to December 5, 2003.
DROP DEAD DATE: December 5, 2003.
SUMMARY OF PROPOSED TRANSACTION (CONTINUED)
INDEMNIFICATION:
- Reps and warranties survive until the first anniversary of the
Closing.
- Dycom indemnified for:
- Breach of reps and warranties: Basket $1.2 million (deductible),
except for breach of tax representation which has no basket.
- Covenants not performed by Closing.
- Any action by dissenting stockholders.
- UtiliQuest expenses to the extent not paid as of Closing.
- Inaccuracy of the Per Share Merger Consideration.
- Cap - $10 million.
ESCROW: $10 million Indemnity Escrow and $ [ ] Working Capital Adjustment
Escrow.
TREATMENT OF OPTIONS: UtiliQuest optionholders will be cashed out at the Closing (included in
Merger Consideration).
ANTITRUST FILING: Dycom filed an antitrust filing under the Xxxx-Xxxxx-Xxxxxx Antitrust
Act of 1976, as amended, in connection with this transaction on October
31, 2003.
TERMINATION:
- By mutual consent;
- By Dycom if UtiliQuest is in material breach or closing conditions
are not satisfied;
- By GFI if Dycom is in material breach or closing conditions are not
satisfied;
- By Dycom or GFI if any law or governmental order makes consummation
of the Merger illegal; and
- If the Closing has not occurred by the Drop-Dead Date.
ENRON CLAIM: UtiliQuest has outstanding claims against Enron in connection with GFI's
initial acquisition of UtiliQuest. If these claims are not settled prior
to the Closing, Dycom will receive a portion of any subsequent
settlement.
