Exhibit 10.1


 


THIRD AMENDMENT TO CREDIT AGREEMENT


 


THIS AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into
on December 19, 2008, by and between WILLDAN GROUP, INC., a Delaware
corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”)
and shall be deemed effective as of December 1, 2008.


 


RECITALS


 


A.                                   Borrower
is currently indebted to Bank pursuant to the terms and conditions of that
certain Credit Agreement between Borrower and Bank dated as of December 28,
2007, as amended from time to time (“Credit Agreement”).


 


B.                                     Pursuant
to Section 4.9 (c) of the Credit Agreement, Borrower and its
Subsidiaries are required to maintain, on a consolidated basis, net income
after taxes of not less than $1.00 for any fiscal quarter that immediately
follows a fiscal quarter in which Borrower failed to maintain net income after
taxes of not less than $1.00.  Borrower
and its Subsidiaries sustained net losses as of the fiscal quarters ending June 27,
2008 and September 26, 2008, resulting in a violation of this covenant and
an Event of Default under the Credit Agreement (the “Existing Default”).


 


C.                                     Borrower
has requested that Bank waive the Existing Default and Bank has agreed to do
so, subject to the terms and conditions set forth herein.  In addition, Bank and Borrower have agreed to
certain changes in the terms and conditions set forth in the Credit Agreement
and have agreed to amend the Credit Agreement to reflect said changes.


 


NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree that the Credit
Agreement shall be amended as follows:


 


1.                                       Section 1.1
(a) is hereby amended by deleting “Ten Million Dollars ($10,000,000.00)”
as the maximum principal amount available under the Line of Credit, and by
substituting for said amount “Five Million Dollars ($5,000,000.00),” with such
change to be effective upon the execution and delivery to Bank of a promissory
note dated as of December 1, 2008 (which promissory note shall replace and
be deemed the Line of Credit Note defined in and made pursuant to the Credit
Agreement) and all other contracts, instruments and documents required by Bank
to evidence such change.


 


2.                                       The
second paragraph under Section 1.4 is hereby deleted in its entirety, and
the following substituted therefor:


 


“As security
for all indebtedness and other obligations of Borrower to Bank subject hereto,
Borrower shall cause Willdan Financial Services, Willdan Geotechnical; Willdan
Engineering, Willdan Homeland Solutions, Willdan Energy Solutions and any other
Subsidiary (as defined below) to grant to Bank security interests of first
priority in all accounts receivable and other rights to payment, general
intangibles, inventory and equipment.”


 


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3.                                       Section 1.5
is hereby deleted in its entirety, and the following substituted therefor:


 


“SECTION 1.5.                 GUARANTIES.  The
payment and performance of all indebtedness and other obligations of
Borrower to Bank shall be guaranteed jointly and severally by Willdan Financial
Services, Willdan Geotechnical; Willdan Engineering, Willdan Homeland
Solutions, Willdan Energy Solutions and any other Subsidiary in the principal
amount of Five Million Dollars ($5,000,000.00) each, as evidenced by and
subject to the terms of guaranties in form and substance satisfactory to Bank.”


 


4.                                       The
sixth paragraph of Section 2.1 is hereby deleted in its entirety, and the
following substituted therefor:


 


“Willdan
Energy Solutions is a corporation, duly organized and existing and in good
standing under the laws of California, and is qualified or licensed to do
business (and is in good standing as a foreign corporation, if applicable) in
all jurisdictions in which such qualification or licensing is required or in
which the failure to so qualify or to be so licensed could have a material
adverse effect on it.  Borrower owns one
hundred percent (100%) of Willdan Energy Solutions.


 


As used herein
the term “Subsidiary” shall mean any corporation or other entity of which at
least a majority of the securities or other ownership interests having ordinary
voting power for the election of directors or other persons performing similar
functions are owned directly or indirectly by Borrower.  As of the date hereof, Willdan Financial
Services, Willdan Geotechnical, Willdan Engineering, Willdan Homeland Solutions
and Willdan Energy Solutions are the only Subsidiaries of Borrower.”


 


5.                                       Section 4.3
(c) is hereby deleted in its entirety, and the following substituted
therefor:


 


“(c)                            not
later than 45 days after and as of the end of each month, a financial statement
of Borrower, prepared by Borrower, to include balance sheet and income
statement;


 


(d)                                 from time to time such
other information as Bank may reasonably request.”


 


6.                                       Section 4.9
is hereby deleted in its entirety, and the following substituted therefor:


 


“SECTION 4.9.     FINANCIAL CONDITION.  Borrower shall, and shall cause each
Subsidiary to, maintain the financial condition of Borrower and Subsidiaries on
a consolidated basis as follows using generally accepted accounting principles
consistently applied and used consistently with prior practices (except to the
extent modified by the definitions therein):


 


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(a)                                  Tangible
Net Worth not less than $20,000,000.00 at any time, with “Tangible Net Worth”
defined as the aggregate of total stockholders’ equity less any intangible
assets and less any loans or advances to, or investments in, any related
entities or individuals.


 


(b)                                 For
the fiscal year ending January 2, 2009, net losses before taxes of not
more than $1,000,000.00 on an annual basis.


 


(c)                                  Commencing
with Borrower’s fiscal year ending January 1, 2010, net income after taxes
not less than $1.00 on an annual basis, determined as of each fiscal year end.


 


(d)                                 Commencing
with Borrower’s fiscal quarter ending July 3, 2009, net income after taxes
not less than $1.00 for any fiscal quarter that immediately follows a fiscal
quarter in which Borrower failed to maintain net income after taxes of not less
than $1.00, determined as of each fiscal quarter end.


 


(e)                                  Total
Funded Debt to EBITDA not greater than 2.5 to 1.0 as of each fiscal quarter
end, determined on a rolling 4-quarter basis, with “Funded Debt” defined as the
sum of all obligations for borrowed money (including subordinated debt, any
contingent liabilities, the undrawn amount of any outstanding Letters of
Credit, earn out or seller notes resulting from acquisitions, and all capital
lease obligations), and with “EBITDA” defined as net profit before tax plus
interest expense (net of capitalized interest expense), depreciation and
amortization expense.


 


(f)                                    Minimum
Asset Coverage Ratio not less than 1.50 to 1.00 as of each fiscal quarter end,
with “Minimum Asset Coverage Ratio” defined as unencumbered liquid assets
(defined as cash, cash equivalents and/or publically traded/quoted marketable
securities acceptable to Bank in its sole discretion) plus the amount of net
billed accounts receivable divided by the outstanding principal balance under
the Line of Credit (including the undrawn amount of any outstanding Letters of
Credit issued thereunder).”


 


7.                                       Subject to the
terms and conditions set forth herein, Bank hereby waives the Existing
Default.  This waiver applies only to the
Existing Default.  It is not a waiver of
any subsequent breach of any of the same provisions of the Credit Agreement,
nor is it a waiver of any breach of any other provision of the Credit
Agreement.  Except as expressly stated in
this Amendment, Bank reserves all of the rights, powers and remedies available
to Bank under the Credit Agreement and any other contracts or instruments
signed by Borrower or any guarantor, including the right to cease making
advances to Borrower and the right to accelerate any of Borrower’s
indebtedness, if any subsequent breach of any of the same provisions of the
Credit Agreement or any other provision of the Credit Agreement should occur.


 


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8.                                       Except
as specifically provided herein, all terms and conditions of the Credit
Agreement remain in full force and effect, without waiver or modification.  All terms defined in the Credit Agreement
shall have the same meaning when used in this Amendment.  This Amendment and the Credit Agreement shall
be read together, as one document.


 


9.                                       Borrower
hereby remakes all representations and warranties contained in the Credit
Agreement and reaffirms all covenants set forth therein.  Borrower further certifies that other than
the Existing Default, as of the date of this Amendment there exists no Event of
Default as defined in the Credit Agreement, nor any condition, act or event
which with the giving of notice or the passage of time or both would constitute
any such Event of Default.


 


IN WITNESS WHEREOF,
the parties hereto have caused this Amendment to be executed on the day and
year first written above.


 


	
   

  	
   

  	
  WELLS FARGO
  BANK,

  
	
  WILLDAN
  GROUP, INC.

  	
   

  	
  NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/  Kimberly
  D. Gant

  	
   

  	
  By:

  	
  /s/  Jared
  Myres

  
	
   

  	
   

  	
   

  	
  Jared A.
  Myres

  
	
  Title:

  	
  CFO

  	
   

  	
   

  	
  Vice
  President

  
						



 


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