Exhibit 10.1

 

THIRD AMENDMENT TO CREDIT AGREEMENT AND CONSENT

 

This Third Amendment to Credit Agreement and Consent (herein, the “Amendment”)
is entered into as of February 26, 2016, among Willdan Group, Inc., a Delaware
corporation (the “Borrower”), the direct and indirect Subsidiaries of the
Borrower from time to time party to the hereinafter defined Credit Agreement
(the “Guarantors”), and BMO Harris Bank N.A. (the “Bank”).

 

PRELIMINARY STATEMENTS

 

A.                                   The Borrower, the Guarantors and the Bank
entered into a certain Credit Agreement, dated as of March 24, 2014 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”).  All capitalized terms used herein without definition shall have
the same meanings herein as such terms have in the Credit Agreement.

 

B.                                  The Borrower has requested that the Bank
consent to certain Acquisitions as described herein and make certain other
amendments to the Credit Agreement, and the Bank is willing to do so under the
terms and conditions set forth in this Amendment.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1.                                             AMENDMENT.

 

Subject to the satisfaction of the conditions precedent set forth in Section 3
below, effective as of the date hereof, the Credit Agreement shall be amended as
follows:

 

1.1.                        Section 1.1 of the Credit Agreement shall be amended
by inserting new defined terms therein in their appropriate alphabetical order,
each such defined term to read in its entirety as follows:

 

“Liquidity” means, with reference to any period, the aggregate amount of
Unrestricted Cash of the Loan Parties and undrawn availability under any
revolving credit facilities, including the Revolving Facility.

 

“Minimum Liquidity” means Liquidity of not less than $7,000,000.

 

“Repurchase Conditions” means with respect to any purchase, redemption or other
acquisition or retiring any of the Borrower’s capital stock or other equity
interests (as contemplated by Section 8.12 hereof) (each a “Share Repurchase”),
the following conditions:

 

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(i)                                     after giving effect to such Share
Repurchase, the Borrower shall demonstrate pro forma compliance with
Section 8.23 of the Credit Agreement and the then prevailing financial covenant
compliance levels permitted as of the last day of the most recently ended fiscal
quarter for which financial statements were required to be delivered under the
Credit Agreement;

 

(ii)                                  after giving effect to such Share
Repurchase, the Borrower shall demonstrate Liquidity in an amount no less than
the Minimum Liquidity;

 

(iii)                               the aggregate amount of all such Share
Repurchases under Section 8.12 made following the Third Amendment Date shall not
exceed $7,000,000; and

 

(iv)                              no Default or Event of Default exists or would
arise after giving effect to such Share Repurchase.

 

“Share Repurchase” is defined in the definition of “Repurchase Conditions”.

 

“Third Amendment” means that certain Third Amendment to Credit Agreement and
Consent dated as of the Third Amendment Date, among the Borrower, the Guarantors
and the Bank.

 

“Third Amendment Date” means February 26, 2016.

 

“Third Amendment Date Acquisitions” has the meaning set forth in the Third
Amendment.

 

“Unrestricted Cash” means, at any time the same is to be determined, all cash
and cash equivalents of the Loan Parties on deposit with a financial institution
and readily accessible by a Loan Party.

 

1.2.                            The following definitions appearing in
Section 1.1 of the Credit Agreement shall be amended and restated in their
entirety to read as follows:

 

“Delayed Draw Term Loan Maturity Date” means March 24, 2017.

 

“Revolving Credit Termination Date” means March 24, 2017, or such earlier date
on which the Revolving Credit Commitment is terminated in whole pursuant to
Section 2.11, 9.2 or 9.3.

 

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1.3.                            Section 8.7(l) and (m) of the Credit Agreement
shall be amended and restated in their entireties to read as follows:

 

(l)                                     indebtedness arising from Seller Notes;
provided that (x) all Indebtedness arising from any such Seller Notes shall be
unsecured and subordinated to the Secured Obligations pursuant to subordination
provisions or subordination agreements satisfactory to the Bank, and (y) the
aggregate principal amount of all Indebtedness outstanding from any such Seller
Notes shall not at any time exceed $4,150,000;

 

(m)                             indebtedness arising from Earn Out Obligations;
provided that (x) all Indebtedness arising from any such Earn Out Obligations
shall be unsecured, and (y) the aggregate principal amount of all Indebtedness
outstanding from any such Earn Out Obligations shall not at any time exceed
$10,500,000;

 

1.4.                            Section 8.7 of the Credit Agreement shall be
further amended by replacing the period at the end of clause (n) with “; and”,
and adding a new clause (o) as follows:

 

(o)                                 installment payments that constitute partial
consideration for the First Acquisition (as defined in the Third Amendment);
provided that (x) all such installment payments shall be unsecured, and (y) the
aggregate principal amount of all such installment payments shall not at any
time exceed $4,600,000 minus any and all installments payments (or any portion
thereof) paid prior to the date of determination.

 

1.5.                            Section 8.12 of the Credit Agreement shall be
amended in its entirety, and as so amended shall be restated to read as follows:

 

Section 8.12.                         Dividends and Certain Other Restricted
Payments.  No Loan Party shall, nor shall it permit any of its Subsidiaries to,
(a) declare or pay any dividends on or make any other distributions in respect
of any class or series of its capital stock or other equity interests (other
than dividends or distributions payable solely in its capital stock or other
equity interests), or (b) directly or indirectly purchase, redeem, or otherwise
acquire or retire any of its capital stock or other equity interests or any
warrants, options, or similar instruments to acquire the same (collectively
referred to herein as “Restricted Payments”); provided, however, that the
foregoing shall not operate to prevent the making of (i) dividends or
distributions by any Subsidiary to any Borrower or (ii) Share Repurchases by the
Borrower, following the Borrower’s delivery of a compliance certificate in the
form of Exhibit G attached hereto (or in such other form acceptable to the

 

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Bank) to the Bank certifying that the Repurchase Conditions have been satisfied
in connection with any such share redemption or purchase.

 

1.6.                            Effective as of December 31, 2015,
Section 8.23(b) shall be amended in its entirety, and as so amended shall be
restated to read as follows:

 

(b)                                 Tangible Net Worth.  The Borrower shall at
all times maintain Tangible Net Worth of the Borrower and its Subsidiaries
determined on a consolidated basis in an amount not less than (i) the Tangible
Net Worth of the Borrower and its Subsidiaries as of December 31, 2015; plus
(ii) for each Fiscal Quarter ending after the Third Amendment Date, 50% of Net
Income if such Net Income is a positive amount (i.e., there shall be no
reduction to the minimum amount of Tangible Net Worth required to be maintained
hereunder for any Fiscal Quarter in which Net Income is less than zero); plus
(iii) the aggregate amount of proceeds received by the Borrower related to the
issuance, assignment, sale or transfer of any shares of capital stock or other
equity interests of the Borrower made after the Third Amendment Date; minus
(iv) the aggregate dollar amount of expenditures for Share Repurchases made by
the Borrower after the Third Amendment Date, plus or minus, as applicable,
(v) 80% of any adjustments to Tangible Net Worth of the Borrower and its
Subsidiaries arising as a result of the consummation of any Third Amendment Date
Acquisition (such adjustments to be subject to the review and approval of the
Bank).

 

1.7.                            Exhibit E of the Credit Agreement shall be
amended and restated in its entirety, such Exhibit E to read in the form
attached hereto under Annex I hereof.

 

1.8.                            The Exhibits to the Credit Agreement shall be
amended by inserting a new Exhibit G therein in its appropriate alphabetical
order, such Exhibit G to read in its entirety in the form attached hereto under
Annex II hereof.

 

SECTION 2.                                             CONSENT.

 

Notwithstanding any term or provision of the Credit Agreement to the contrary,
including, without limitation, the definition of Permitted Acquisition and
Section 8.9 thereof, the Bank does hereby consent to (i) the Acquisition by the
Borrower or a Wholly-owned Subsidiary of the Borrower of substantially all of
the assets of, and subsequent merger with, a certain professional service
corporation, as previously discussed with the Bank and identified in writing in
connection with this Amendment, within the first ninety (90) days following the
Third Amendment Date (the “First Acquisition”) and (ii) the Acquisition by the
Borrower or a Wholly-owned Subsidiary of the Borrower of substantially all of
the assets or the equity interests of a certain limited liability company, as
previously discussed with the Bank and identified in writing in connection with
this Amendment, within the first one hundred eighty (180) days following the

 

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Third Amendment Date (the “Second Acquisition” and together with the First
Acquisition, collectively, the “Third Amendment Date Acquisitions”), and hereby
waives any Default or Event of Default under, or other violation of, the Credit
Agreement that will directly and solely result from use of proceeds under the
Credit Agreement for one or more of the Third Amendment Date Acquisitions.  The
Bank affirms that the total consideration paid or payable (including all
transaction costs, assumed Indebtedness and liabilities incurred, assumed or
reflected on a consolidated balance sheet of the Loan Parties and their
Subsidiaries after giving effect to such Acquisition) in connection with the
Third Amendment Date Acquisitions shall not be included for purposes of
calculating the aggregate limits set forth in clause (d) of the definition of
Permitted Acquisition.  Furthermore, the Bank affirms, without limiting the
foregoing sentence, that each Third Amendment Date Acquisition shall be deemed a
“Permitted Acquisition” under the Credit Agreement.

 

This consent shall be limited specifically as written herein and shall not
constitute a consent to any other transactions prohibited by the Credit
Agreement.  This consent shall not be a waiver of any Default or Event of
Default, except as expressly set forth herein.

 

SECTION 3.                                             CONDITIONS PRECEDENT.

 

The effectiveness of this Amendment is subject to the satisfaction of all of the
following conditions precedent:

 

3.1.                        The Loan Parties and the Bank shall have executed
and delivered this Amendment.

 

3.2.                        The Bank shall have received a duly completed pro
forma Compliance Certificate signed by a Responsible Officer of the Borrower
demonstrating that after giving effect to the Third Amendment Date Acquisition,
the Total Leverage Ratio shall be no greater than 1.75 to 1.00 and the Borrower
is otherwise in compliance with Sections 8.23(b) and (c) of the Credit
Agreement.

 

3.3.                        The Bank shall have received copies (executed or
certified, as may be appropriate) of all legal documents or proceedings taken in
connection with the execution and delivery of this Amendment to the extent the
Bank or its counsel may reasonably request.

 

3.4.                        Legal matters incident to the execution and delivery
of this Amendment shall be satisfactory to the Bank and its counsel.

 

SECTION 4.                                             POST-CLOSING COVENANTS.

 

On the date on which each Third Amendment Date Acquisition occurs but
immediately prior to each such Third Amendment Date Acquisition’s effectiveness:

 

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4.1.                        On the date of consummation of the applicable Third
Amendment Date Acquisition, the Bank, the sellers under such Third Amendment
Date Acquisition and the Loan Parties shall have executed and delivered
subordination agreements with respect to any Seller Notes issued in connection
with such Third Amendment Date Acquisition, which subordination agreements shall
be in form and substance satisfactory to the Bank.

 

4.2.                        On the date of consummation of the applicable Third
Amendment Date Acquisition, the Bank shall have received a certificate of a
Responsible Officer of each Loan Party certifying that (i) after giving effect
to such Third Amendment Date Acquisition, no Default or Event of Default shall
exist, (ii) such Third Amendment Date Acquisition satisfies clauses (a), (b),
(c), (h) and (i) of the definition of Permitted Acquisition, and (iii) attached
thereto are true, correct and complete copies of: (A) all agreements in
connection with such Third Amendment Date Acquisition, (B) all Seller Notes
issued in connection with such Third Amendment Date Acquisition, and (C) any
guaranty agreements that guarantee any Indebtedness under any Seller Note
entered into in connection with such Third Amendment Date Acquisition.

 

4.3.                        On the date of consummation of the applicable Third
Amendment Date Acquisition, the Bank shall have received with respect to the
Acquired Business or any Subsidiary created as a result of such Third Amendment
Date Acquisition (as applicable, the “Additional Guarantor”):

 

(i)                          UCC-1 financing statements, stock or other
appropriate certificates along with undated, blank equity powers executed with
respect thereto, if applicable, for all equity interests of the Additional
Guarantor owned by a Loan Party, and executed counterparts of the Additional
Guaranty Supplement and the Assumption and Supplement to Security Agreement (in
each case in form and substance satisfactory to the Bank);

 

(ii)                          any deposit account control agreements and
landlord waivers, to the extent requested by the Bank to perfect its Lien on the
Property of the Additional Guarantor;

 

(iii)                           certificates showing the existence of all
insurance policies required by Section 8.4 of the Credit Agreement, naming the
Bank, as mortgagee/lender’s loss payee and additional insured;

 

(iv)                         such certificates of resolutions or other similar
action, incumbency certificates and/or other certificates of Responsible
Officers of the Additional Guarantor as the Bank may require evidencing the
identity, authority and capacity of each Responsible Officer thereof authorized
to act as a Responsible Officer in connection with this Amendment and the other
Loan Documents to which the Additional Guarantor is a party;

 

(v)                         such documents and certifications as the Bank may
require to evidence that the Additional Guarantor is duly organized or formed,
and that the

 

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Additional Guarantor is validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease or operation
of properties or the conduct of its business requires such qualification, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect;

 

(vi)                         tax and judgment lien search results against the
Additional Guarantor, and the Property of the Additional Guarantor evidencing
the absence of Liens on its assets, except for Liens permitted by Section 8.8 of
the Credit Agreement;

 

(vii)                          pay-off and lien release letters from secured
creditors, if applicable, (other than holders of Permitted Liens) of the
Additional Guarantor and containing an undertaking to cause to be delivered to
the Bank UCC termination statements, mortgage releases and any other lien
release instruments reasonably necessary to release Liens on the assets of the
Additional Guarantor, in form and substance acceptable to the Bank;

 

(viii)                           an opinion of counsel to the Additional
Guarantor, in form and substance satisfactory to the Bank; and

 

(ix)                         all documentation and other information required by
bank                   regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including the Patriot
Act; and a fully executed IRS Form W-9 (or its equivalent) for the Additional
Guarantor.

 

SECTION 5.                                             REPRESENTATIONS.

 

In order to induce the Bank to execute and deliver this Amendment, the Borrower
hereby represents to the Bank that as of the date hereof (a) the representations
and warranties set forth in Section 6 of the Credit Agreement are and shall be
and remain true and correct (except that the representations contained in
Section 6.5 shall be deemed to refer to the most recent financial statements of
the Borrower delivered to the Bank) and (b) the Borrower is in compliance with
the terms and conditions of the Credit Agreement and no Default or Event of
Default has occurred and is continuing under the Credit Agreement or shall
result after giving effect to this Amendment.

 

SECTION 6.                                             MISCELLANEOUS.

 

6.1.                     The Borrower heretofore executed and delivered to the
Bank the Security Agreement and certain other Collateral Documents.  The
Borrower hereby acknowledges and agrees that the Liens created and provided for
by the Collateral Documents continue to secure, among other things, the Secured
Obligations arising under the Credit Agreement as amended hereby; and the
Collateral Documents and the rights and remedies of the Bank thereunder, the
obligations of the Borrower thereunder, and the Liens created and provided for
thereunder remain

 

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in full force and effect and shall not be affected, impaired or discharged
hereby.  Nothing herein contained shall in any manner affect or impair the
priority of the liens and security interests created and provided for by the
Collateral Documents as to the indebtedness which would be secured thereby prior
to giving effect to this Amendment.

 

6.2.                     Except as specifically amended herein, the Credit
Agreement shall continue in full force and effect in accordance with its
original terms.  Reference to this specific Amendment need not be made in the
Credit Agreement, the Notes, or any other instrument or document executed in
connection therewith, or in any certificate, letter or communication issued or
made pursuant to or with respect to the Credit Agreement, any reference in any
of such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.

 

6.3.                     The Borrower agrees to pay on demand all costs and
expenses of or incurred by the Bank in connection with the negotiation,
preparation, execution and delivery of this Amendment, including the fees and
expenses of counsel for the Bank.

 

6.4.                     This Amendment may be executed in any number of
counterparts, and by the different parties on different counterpart signature
pages, all of which taken together shall constitute one and the same agreement. 
Any of the parties hereto may execute this Amendment by signing any such
counterpart and each of such counterparts shall for all purposes be deemed to be
an original.  Delivery of a counterpart hereof by facsimile transmission or by
e-mail transmission of an Adobe portable document format file (also known as a
“PDF” file) shall be effective as delivery of a manually executed counterpart
hereof.  This Amendment shall be governed by, and construed in accordance with,
the internal laws of the State of Illinois.

 

[SIGNATURE PAGES TO FOLLOW]

 

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This Third Amendment to Credit Agreement and Consent is entered into as of the
date and year first above written.

 

 

“BORROWER”

 

 

 

WILLDAN GROUP, INC.

 

 

 

 

 

By

/s/ Thomas D. Brisbin

 

 

Name

Thomas D. Brisbin

 

 

Title

President and Chief Executive Officer

 

 

 

 

 

“GUARANTORS”

 

 

 

ABACUS RESOURCE MANAGEMENT COMPANY

 

ELECTROTEC OF NY ELECTRICAL INC.

 

PUBLIC AGENCY RESOURCES

 

WILLDAN ENERGY SOLUTIONS

 

WILLDAN ENGINEERING

 

WILLDAN ENGINEERS AND CONSTRUCTORS

 

WILLDAN FINANCIAL SERVICES

 

WILLDAN HOMELAND SOLUTIONS

 

WILLDAN INFRASTRUCTURE

 

WILLDAN LIGHTING & ELECTRIC, INC.

 

WILLDAN LIGHTING & ELECTRIC OF CALIFORNIA

 

WILLDAN LIGHTING & ELECTRIC OF WASHINGTON, INC.

 

 

 

 

 

By

/s/ Thomas D. Brisbin

 

 

Name

Thomas D. Brisbin

 

 

Title

Chairman of the Board

 

[Signature Page to Third Amendment to Credit Agreement and Consent]

 

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Accepted and agreed to.

 

 

BMO HARRIS BANK N.A.

 

 

 

 

 

By

/s/ Michael Gift

 

 

Name

Michael Gift

 

 

Title

Director

 

[Signature Page to Third Amendment to Credit Agreement and Consent]

 

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