<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________to________
Commission file number 0-5423
DYCOM INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-1277135
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4440 PGA Boulevard, Suite 600
Palm Beach Gardens, Florida 33410
(Address of principal executive office) (Zip Code)
(561) 627-7171
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of June 6, 1997
_____ __________________________________
Common Stock, par value $0.33 1/3 8,805,078
<PAGE> 2
DYCOM INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
________
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-
April 30, 1997 and July 31, 1996 3
Condensed Consolidated Statements of
Operations for the Three Months Ended
April 30, 1997 and 1996 4
Condensed Consolidated Statements of
Operations for the Nine Months Ended
April 30, 1997 and 1996 5
Condensed Consolidated Statements of
Cash Flows for the Nine Months Ended
April 30, 1997 and 1996 6-7
Notes to Condensed Consolidated
Financial Statements 8-13
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 14-16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
EXHIBIT INDEX 19
</TABLE>
<PAGE> 3
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
<TABLE>
<CAPTION>
April 30, July 31,
1997 1996
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 4,426,490 $ 3,835,479
Accounts receivable, net 20,818,895 13,306,064
Costs and estimated earnings in
excess of billings 11,615,597 7,137,212
Deferred tax assets, net 1,604,270 1,261,065
Other current assets 1,551,280 1,248,405
Total current assets 40,016,532 26,788,225
PROPERTY AND EQUIPMENT, net 20,872,998 19,574,410
OTHER ASSETS:
Intangible assets, net 4,723,130 4,839,447
Deferred tax assets 742,407 598,887
Other 193,668 272,916
Total other assets 5,659,205 5,711,250
TOTAL $ 66,548,735 $ 52,073,885
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 7,573,207 $ 3,541,789
Notes payable 7,054,914 2,758,795
Billings in excess of costs and
estimated earnings 38,714
Accrued self-insured claims 2,750,723 3,064,229
Income taxes payable 748,600 227,619
Other accrued liabilities 7,800,101 8,151,589
Total current liabilities 25,927,545 17,782,735
NOTES PAYABLE 8,986,446 9,452,630
ACCRUED SELF-INSURED CLAIMS 7,412,529 7,062,150
Total liabilities 42,326,520 34,297,515
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $.33 1/3 per share:
50,000,000 shares authorized; 8,771,501
and 8,601,492 shares issued and
outstanding, respectively 2,923,833 2,867,164
Additional paid-in capital 25,146,315 24,473,269
Retained deficit (3,847,933) (9,564,063)
Total stockholders' equity 24,222,215 17,776,370
TOTAL $ 66,548,735 $ 52,073,885
See notes to condensed consolidated financial statements--unaudited.
</TABLE>
<PAGE> 4
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
April 30, April 30,
1997 1996
<S> <C> <C>
REVENUES:
Contract revenues earned $ 47,929,157 $ 34,529,891
Other, net 256,827 860,754
Total 48,185,984 35,390,645
Expenses:
Costs of earned revenues
excluding depreciation 38,102,026 27,426,818
General and administrative 4,534,378 3,638,872
Depreciation and amortization 1,529,605 1,359,242
Total 44,166,009 32,424,932
INCOME BEFORE INCOME TAXES 4,019,975 2,965,713
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 1,847,785 1,500,211
Deferred (240,843) (238,648)
Total 1,606,942 1,261,563
NET INCOME $ 2,413,033 $ 1,704,150
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
Primary $0.27 $0.20
Fully diluted $0.27 $0.20
SHARES USED IN COMPUTING
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary 8,892,171 8,564,660
Fully diluted 8,892,312 8,564,660
See notes to condensed consolidated financial statements--unaudited.
</TABLE>
<PAGE> 5
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
April 30, April 30,
1997 1996
<S> <C> <C>
REVENUES:
Contract revenues earned $ 128,069,236 $ 104,544,413
Other, net 496,047 1,283,278
Total 128,565,283 105,827,691
Expenses:
Costs of earned revenues
excluding depreciation 103,099,014 84,331,152
General and administrative 11,637,961 11,073,271
Depreciation and amortization 4,473,683 4,138,546
Total 119,210,658 99,542,969
INCOME BEFORE INCOME TAXES 9,354,625 6,284,722
PROVISION (BENEFIT) FOR INCOME TAXES:
Current 4,125,221 3,171,692
Deferred (486,726) (543,990)
Total 3,638,495 2,627,702
NET INCOME $ 5,716,130 $ 3,657,020
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
Primary $0.64 $0.43
Fully diluted $0.64 $0.43
SHARES USED IN COMPUTING
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary 8,888,496 8,554,808
Fully diluted 8,888,680 8,554,808
See notes to condensed consolidated financial statements--unaudited.
</TABLE>
<PAGE> 6
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
April 30, April 30,
1997 1996
<S> <C> <C>
Increase (Decrease) in Cash and Equivalents from:
OPERATING ACTIVITIES:
Net income $ 5,716,130 $ 3,657,020
Adjustments to reconcile net cash provided
by operating activities:
Depreciation and amortization 4,473,683 4,138,546
Gain on disposal of assets (333,190) (945,910)
Deferred income taxes (486,726) (543,990)
Changes in assets and liabilities:
Accounts receivable, net (7,512,831) 4,757,864
Unbilled revenues, net (4,517,099) (1,952,257)
Other current assets (302,875) 106,164
Other assets 79,248 54,130
Accounts payable 4,031,418 (2,273,060)
Accrued self-insured claims and
other liabilities (314,614) 1,531,484
Accrued income taxes 653,550 475,481
Net cash inflow from operating activities 1,486,694 9,005,472
INVESTING ACTIVITIES:
Capital expenditures (5,871,687) (5,097,060)
Proceeds from sale of assets 1,149,947 2,070,328
Net cash outflow from investing activities (4,721,740) (3,026,732)
FINANCING ACTIVITIES:
Borrowing on bank lines-of-credit 16,259,396
Principal payments on notes payable
and bank lines-of-credit (13,030,485) (5,566,638)
Exercise of stock options 597,146 117,707
Net cash outflow from financing activities 3,826,057 (5,448,931)
NET CASH INFLOW FROM ALL ACTIVITIES 591,011 529,809
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 3,835,479 4,306,675
CASH AND EQUIVALENTS AT END OF PERIOD $ 4,426,490 $ 4,836,484
See notes to condensed consolidated financial statements--unaudited.
</TABLE>
<PAGE> 7
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(continued)
<TABLE>
<CAPTION>
For the Nine Months Ended
April 30, April 30,
1997 1996
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW AND
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid during the period for:
Interest $ 821,543 $ 1,200,196
Income taxes 3,528,134 2,753,674
Property and equipment acquired and
financed with:
Capital lease obligations $ 601,024
Income tax benefit related to incentive
stock options exercised $ 132,569
See notes to condensed consolidated financial statements--unaudited.
</TABLE>
<PAGE> 8
DYCOM INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--Unaudited
1. The accompanying condensed consolidated balance sheets of Dycom
Industries, Inc. and subsidiaries ("Dycom" or the "Company") as of April 30,
1997 and July 31, 1996, the related condensed consolidated statements of
operations for the three and nine months ended April 30, 1997 and 1996 and
the condensed consolidated statements of cash flows for the nine months ended
April 30, 1997 and 1996 reflect all normal recurring adjustments which are,
in the opinion of management, necessary for a fair presentation of such
statements. The results of operations for the nine months ended April 30,
1997 are not necessarily indicative of the results which may be expected for
the entire year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION-- The condensed consolidated financial statements
include Dycom Industries, Inc. and its subsidiaries, all of which are wholly-
owned. The Company's operations consist primarily of telecommunication and
electric utility services contracting. All material intercompany accounts
and transactions have been eliminated.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of the
financial statements and revenues and expenses during the period reported.
Actual results could differ from those estimates.
Estimates are used for the revenue recognition of work-in-process, allowance
for doubtful accounts, self-insured claims liability, deferred tax asset
valuation allowance, depreciation and amortization, and the estimated lives of
assets, including intangible assets.
REVENUE-- Income on long-term contracts is recognized on the percentage-of-
completion method based primarily on the ratio of contract costs incurred to
date to total estimated contract costs. As some of these contracts extend over
one or more years, revisions in cost and profit estimates during the course
of the work are reflected in the accounting period as the facts that require
the revision become known. At the time a loss on a contract becomes known,
the entire amount of the estimated ultimate loss is accrued. Income on
short-term unit contracts is recognized as the related work is completed.
Work-in-process on unit contracts is based on management's estimate of work
performed but not billed.
"Costs and estimated earnings in excess of billings" represent the excess of
contract revenues recognized under the percentage-of-completion method of
accounting for long-term contracts and work-in-process on unit contracts over
billings to date. For those contracts in which billings exceed contract
revenues recognized to date, such excesses are included in the caption
"billings in excess of costs and estimated earnings".
CASH AND EQUIVALENTS-- Cash and equivalents include cash balances in excess
of the daily requirements which are invested in overnight repurchase agreements,
certificates of deposits, and various other financial instruments having a
<PAGE> 9
maturity of three months or less. For purposes of the condensed consolidated
statements of cash flows, the Company considers these amounts to be cash
equivalents. The carrying amount reported in the condensed consolidated
balance sheets for cash and equivalents approximates its fair value.
PROPERTY AND EQUIPMENT-- Property and equipment is stated at cost, reduced in
certain cases by valuation reserves. Depreciation and amortization is
computed over the estimated useful life of the assets utilizing the straight-
line method. The estimated useful lives of the assets are: buildings--20-31
years; leasehold improvements--the term of the respective lease or the
estimated useful life of the improvement, whichever is shorter; vehicles--3-7
years; equipment and machinery--3-10 years; and furniture and fixtures--3-10
years. Maintenance and repairs are expensed as incurred; expenditures that
enhance the value of the property or extend its useful life are capitalized.
When assets are sold or retired, the cost and related accumulated
depreciation are removed from the accounts and the resulting gain or loss is
included in income.
INTANGIBLE ASSETS-- The excess of the purchase price over the fair market
value of the tangible net assets of acquired businesses (goodwill) is
amortized on the straight-line method over 40 years. The appropriateness of
the carrying value of goodwill is reviewed at the subsidiary level when
operating losses are incurred and there are other changes in the business
environment that may affect the recoverability of goodwill through future
operations. If operating losses have been incurred, and there is a liklihood
that such losses will continue, the Company will determine if impairment
exists by comparing the carrying value of goodwill to the estimated future
cash flows from operations and adjust the carrying value of the intangible
asset as appropriate.
Amortization expense, which is comprised primarily of goodwill, was $116,317
for the nine month periods ended April 30, 1997 and 1996. The intangible
assets are net of accumulated amortization of $1,112,587 at April 30, 1997
and $996,270 at July 31, 1996.
LONG-LIVED ASSETS-- In March 1995, the FASB issued SFAS No. 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of". SFAS No. 121 requires that the long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. The Company adopted the provisions of SFAS No. 121
effective August 1, 1996 and determined that no impairment loss need be
recognized.
SELF-INSURED CLAIMS LIABILITY-- The Company is primarily self-insured, up to
certain limits, for automobile and general liability, workers' compensation,
and employee group health claims. A liability for unpaid claims and the
associated claim expenses, including incurred but not reported losses, is
actuarially determined and reflected in the condensed consolidated financial
statements as an accrued liability. The self-insured claims liability
includes incurred but not reported losses of $5,100,000 and $4,458,000 at
April 30, 1997 and July 31, 1996, respectively. The determination of such
claims and expenses and the appropriateness of the related liability is
continually reviewed and updated.
<PAGE> 10
INCOME TAXES-- The Company and its subsidiaries file a consolidated federal
income tax return. Deferred income taxes are provided for the temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities.
A valuation allowance is provided when it is more likely than not that some
portion of the Company's deferred tax assets will not be realized.
Management has evaluated the available evidence about the Company's future
taxable income and other possible sources of realization of deferred tax
assets. The valuation allowance recorded in the financial statements reduces
deferred tax assets to an amount that represents management's best estimate
of the amount of such deferred tax assets that more likely than not will be
realized. Accordingly, at April 30, 1997 and July 31, 1996, deferred tax
assets are net of a valuation allowance of $513,912 and $728,491, respectively.
PER SHARE DATA-- Earnings per common and common equivalent share are computed
using the weighted average shares of common stock outstanding plus the common
stock equivalents arising from the effect of dilutive stock options, using the
treasury stock method.
CHANGE IN ACCOUNTING PRINCIPLE-- In October, 1995, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock Based Compensation," which was
effective for the Company beginning August 1, 1996. SFAS No. 123 requires
expanded disclosures of stock based compensation arrangements with employees
and encourages, but does not require, compensation cost to be measured based
on the fair value of the equity instrument awarded. Under SFAS No. 123,
companies are permitted, however, to continue to apply Accounting Principles
Board ("APB") Opinion No. 25, which recognizes compensation cost based on the
intrinsic value of the equity instrument awarded. The Company will continue
to apply APB Opinion No. 25 to its stock based compensation awards to
employees and will disclose in the annual financial statements the required
pro forma effect on net income and earnings per share.
RECENT ACCOUNTING PRONOUNCEMENTS-- In February, 1997, the FASB issued SFAS
No. 128 "Earnings per Share" which changes the method of calculating earnings
per share and is effective for fiscal years ending after December 15, 1997.
SFAS No. 128 requires the presentation of "basic" earnings per share and
"diluted" earnings per share on the face of the income statement. Basic
earnings per share is computed by dividing the net income available to common
shareholders by the weighted average shares of outstanding common stock. The
calculation of diluted earnings per share is similar to basic earnings per
share except the denominator includes dilutive common stock equivalents such
as stock options and warrants. The Company will adopt SFAS No. 128 in fiscal
1998 as early adoption is not permitted. The disclosure of earnings per
share under SFAS No. 128 is not expected to be materially different than the
current disclosure of earnings per share.
<PAGE> 11
3. ACCOUNTS RECEIVABLE
Accounts receivable, net consist of the following:
<TABLE>
<CAPTION>
April 30, July 31,
1997 1996
<S> <C> <C>
Contract billings $ 19,833,140 $ 12,305,652
Retainage 1,718,683 1,138,619
Other receivables 363,974 368,677
Total 21,915,797 13,812,948
Less allowance for doubtful accounts 1,096,902 506,884
Accounts receivable, net $ 20,818,895 $ 13,306,064
</TABLE>
4. COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROGRESS
The accompanying condensed consolidated balance sheets include costs and
estimated earnings on contracts in progress, net of progress billings as
follows:
<TABLE>
<CAPTION>
April 30, July 31,
1997 1996
<S> <C> <C>
Costs incurred on contracts in progress $ 29,749,015 $ 24,272,835
Estimated earnings thereon 1,656,020 334,905
31,405,035 24,607,740
Less billings to date 19,789,438 17,509,242
$ 11,615,597 $ 7,098,498
Included in the accompanying condensed
consolidated balance sheets under
the captions:
Costs and estimated earnings in
excess of billings $ 11,615,597 $ 7,137,212
Billings in excess of costs and
estimated earnings (38,714)
$ 11,615,597 $ 7,098,498
</TABLE>
<PAGE> 12
5. PROPERTY AND EQUIPMENT
The accompanying condensed consolidated balance sheets include the following
property and equipment:
<TABLE>
<CAPTION>
April 30, July 31,
1997 1996
<S> <C> <C>
Land $ 1,958,777 $ 1,711,464
Buildings 2,339,541 2,236,322
Leasehold improvements 809,095 743,101
Vehicles 22,868,696 22,153,365
Equipment and machinery 20,877,357 20,033,610
Furniture and fixtures 4,148,209 3,541,638
Total 53,001,675 50,419,500
Less accumulated depreciation and
amortization 32,128,677 30,845,090
Property and equipment, net $ 20,872,998 $ 19,574,410
</TABLE>
Certain subsidiaries of the Company entered into lease arrangements accounted
for as capitalized leases. The carrying value of capital leases at April 30,
1997 and July 31, 1996 was $874,965 and $372,170, respectively, net of
accumulated depreciation of $221,642 and $123,413, respectively. Capital
leases are included as a component of equipment and machinery.
6. NOTES PAYABLE
Notes and loans payable are summarized by type of borrowings as follows:
<TABLE>
<CAPTION>
April 30, July 31,
1997 1996
<S> <C> <C>
Bank Credit Agreement:
Revolving credit facility $ 4,200,000 $ 9,000,000
Term-loan 9,000,000 2,162,812
Equipment term-loans 2,052,396 704,167
Capital lease obligations 788,964 344,446
Total 16,041,360 12,211,425
Less current portion 7,054,914 2,758,795
Notes payable--non-current $ 8,986,446 $ 9,452,630
</TABLE>
On April 28, 1997 the Company signed a new $35.0 million credit agreement with
a group of banks. The proceeds of the new credit agreement were used to
refinance the previously existing credit facility and provide funding for
working capital and equipment requirements. As of April 30, 1997, the
Company's credit facility consists of a $10.0 million revolving working
capital credit facility of which $5.8 million was available, a $9.0 million
term loan, a $6.0 million revolving equipment acquisition facility of which
$3.9 million was available, and a $10.0 million standby letter of credit
facility of which $0.8 million was available. The bank credit agreement
contains restrictions which, among other things, require maintenance of
certain financial ratios and covenants, restrict encumbrances of assets and
creation of indebtedness, and limit the payment of cash dividends.
<PAGE> 13
Cash dividends are limited to 50% of each fiscal year's after-tax profits.
No cash dividends have been paid during the nine month period ending April
30, 1997. The credit facility is secured by the Company's assets. At April
30, 1997, the Company was in compliance with all financial covenants and
conditions.
The revolving working capital credit facility is available for a one-year
period and bears interest, at the option of the Company, at the bank's prime
interest rate minus 1% or LIBOR plus 1.50%. At April 30, 1997, the interest
rate was at LIBOR plus 1.50% or 7.56%. The proceeds of the revolving credit
facility were used for working capital requirements.
The term loan facility has a five-year maturity and bears interest at the
bank's prime interest rate minus 0.50% (8.00% at April 30, 1997). Principal
and interest is payable in quarterly installments through April, 2002. The
proceeds of the term loan were used to refinance the indebtedness under the
previous revolving credit facility.
The revolving equipment acquisition facility is available for a one-year
period and bears interest, at the option of the Company, at the bank's prime
interest rate minus 0.75% or LIBOR plus 1.75%. Advances against this
facility are converted to term-loans with maturities not to exceed 48 months.
The outstanding principal on the equipment term-loans is payable in monthly
installments through January, 2001. During the quarter ended April 30, 1997,
the Company borrowed $1.2 million to refinance the indebtedness under the
previous equipment acquisition term-loans and an additional $0.8 million for
current equipment requirements. At April 30, 1997, the interest rate was at
LIBOR plus 1.75% or 7.81%.
The standby letter of credit facility is available for a one-year period. At
April 30, 1997, the Company had $9.2 million in outstanding standby letters
of credit issued as security to the Company's insurance administrators as
part of its self-insurance program.
Interest costs incurred on notes payable and capital lease obligations, all of
which were expensed, for the nine month periods ended April 30, 1997 and 1996
were $771,886 and $1,141,292, respectively. Such amounts are included in
general and administrative expenses in the accompanying condensed
consolidated statements of operations.
In addition to the borrowings under the bank credit agreement, certain
subsidiaries have outstanding obligations under capital leases. The
obligations are payable in monthly installments expiring at various dates
through December, 2001.
7. COMMITMENTS AND CONTINGENCIES
In the normal course of business, certain subsidiaries of the Company have
pending and unasserted claims. Although the ultimate resolution and
liability of these claims cannot be determined, management believes the final
disposition of these claims will not have a material adverse impact on the
Company's consolidated financial condition or results of operations.
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
consolidated financial condition and results of operations. The discussion
should be read in conjunction with the condensed consolidated financial
statements and notes thereto.
Results of Operations
The Company reported earnings per common and common equivalent share of $0.27
and $0.20 for the quarters ended April 30, 1997 and 1996, respectively.
Earnings per common and common equivalent share for the nine month periods
ended April 30, 1997 and 1996 was $0.64 and $0.43, respectively. Earnings
per common share assuming full dilution for the three and nine month periods
ended April 30, 1997 was $0.27 and $0.64, respectively. This compares to
earnings per common and common equivalent share assuming full dilution of
$0.20 and $0.43 for the three and nine month period ended April 30, 1996.
Contract revenues for the quarter ended April 30, 1997 increased 38.8% to
$47.9 million as compared to $34.5 million for the same quarter last year.
The increase in contract revenues is attributable to increased volume
experienced in all service groups. The telecommunication services group
contract revenues increased 37.3% to $39.0 million, the utility line locating
services group contract revenues increased 6.7% to $3.7 million and the
electrical services group contract revenues increased 97.9% to $5.2 million
for the current quarter compared to the same quarter last year. For the nine
month period ended April 30, 1997, contract revenues increased 22.5% to
$128.1 million as compared to $104.5 million for the corresponding period
last year. The contract revenue growth reflects higher volume in all service
groups. Contract revenues increased 20.6% to $104.9 million in the
telecommunication services group, 13.6% to $10.6 million in the utility line
locating services group, and 51.8% to $12.6 million in the electrical
services group.
The contract revenue mix between telecommunication services, utility line
locating services and electrical services for the quarter ended April 30,
1997 was 81%,8%, and 11%, respectively, and 82%, 10% and 8%, respectively,
for the quarter ended April 30, 1996. The contract revenue mix reflects a
significant increase in the electrical services group due to increased volume
in bid jobs. For the nine month period ended April 30, 1997, the contract
revenue mix between the telecommunication services group, the utility line
locating services group and the electrical services group was 82%, 8% and
10%, respectively, compared to 83%, 9%, and 8%, respectively, for the
corresponding period last year. Multi-year comprehensive service contracts
continue to be the primary source of revenue for the telecommunication
services group. For the three and nine month periods ended April 30, 1997,
multi-year comprehensive service contracts represented 86% of
telecommunication services group contract revenues, as compared to 89% and
90% for the comparable periods last year. The decline is offset by higher
volume associated with premise wiring, inside network installations for
office buildings, and other telephony contracting services.
The Company's backlog of uncompleted work at April 30, 1997 was $247 million
as compared to $231 million at April 30, 1996. During the three month period
ending April 30, 1997 various contracts were awarded in the telecommunication
<PAGE> 15
services, utility line locating services and the electrical services group.
The significant contract awards in the telecommunication services group
included a multi-year telephone splicing and a multi-year broadband network
installation contract totaling $11.2 million, a multi-year engineering design
contract and an extension of an engineering design contract totaling $12.6
million, and several bid contracts totaling $1.5 million.
The Company's costs and operating expenses may be affected by a number of
factors including contract volumes, character of services rendered, work
locations, competition, and changes in productivity. Costs of earned
revenues, excluding depreciation, were 79% of contract revenues for both the
quarters ended April 30, 1997 and 1996, respectively, and 81% for both the
nine month periods ended April 30, 1997 and 1996. As a percentage of
contract revenues, the Company's prime costs of direct labor, materials,
subcontractors, and equipment costs were 59% for both the three and nine
month periods ended April 30, 1997, respectively. This compares to 60% and
61% for the corresponding periods last year. The Company's continued efforts
to control costs resulted in stable operating margins.
General and administrative expenses increased $0.9 million to $4.5 million
for the quarter ended April 30, 1997 as compared to $3.6 million for the
corresponding period last year. This is primarily attributable a $0.4 million
increase in the provision for doubtful accounts, a $0.3 million increase in
payroll and payroll taxes, and a $0.4 million increase in other general and
administrative expenses offset by a reduction in general insurance costs of
$0.2 million. For the nine month period ended April 30, 1997 general and
administrative expenses increased $0.5 million to $11.6 million as compared
to $11.1 million for the same period last year. This increase is
attributable to a $0.5 million increase in the provision for doubtful
accounts, a $0.4 million increase in payroll and payroll taxes, offset by a
$0.4 million reduction in interest costs.
The Company's 39% effective income tax rate for the nine month period ended
April 30, 1997 differs from the statutory rate due to state income taxes, the
amortization of intangible assets with no tax benefit, other non-deductible
expenses for tax purposes and the reduction of $0.2 million in the Company's
deferred tax asset valuation allowance.
Liquidity and Capital Resources
Cash and equivalents increased $0.6 million to $4.4 million during the nine
month period ending April 30, 1997. During this period, the Company generated
$1.5 million of positive cash flow from operating activities reflecting
strong earnings of $5.7 million. The cash flow from operating activities was
reduced by higher levels of accounts receivable and unbilled revenue and
partially offset by higher accounts payable. The cash flow from operating
activities is less than the reported net income due to an increase in working
capital required to support the growth in contract revenues.
The Company's investing activities absorbed $5.9 million in capital
expenditures during the nine month period ended April 30, 1997. These capital
expenditures represent the normal replacement of equipment and the start up
of a new contract in the telecommunication services group. In addition, the
Company acquired and financed $0.6 million of equipment with capital leases
and financed $1.6 million of equipment under various noncancelable operating
leases. Proceeds from the sale of surplus equipment was $1.1 million for the
nine months ended April 30, 1997.
<PAGE> 16
On April 28, 1997 the Company signed a new $35.0 million credit agreement
arranged by a group of banks. The new credit agreement provides a $10.0
million revolving working capital facility, a $10.0 million standby letter
of credit facility, a $9.0 million five-year term loan, and a $6.0 million
revolving equipment acquisition facility. The objective of establishing the
new credit agreement was to refinance the indebtedness under the previous
credit facility and to provide additional borrowing capacity to support the
future growth of the Company. The new credit agreement requires the Company
to maintain certain financial covenants and conditions such as debt-to-equity
ratios, current and quick ratios, and net profit levels. In addition, the
new credit agreement limits the payment of cash dividends to 50% of each
fiscal year's after-tax profits. At April 30, 1997, the Company was in
compliance with all covenants and conditions.
The revolving working capital facility is available for a one-year period and
bears interest, at the option of the Company, at the bank's prime interest
rate minus 1% or LIBOR plus 1.50%. During the quarter ended April 30, 1997,
the Company borrowed $4.2 million against the revolving working capital
facility to meet current working capital requirements leaving an available
borrowing capacity of $5.8 million. At April 30, 1997, the interest rate on
the outstanding balance was at LIBOR plus 1.50% or 7.56%.
The term loan facility has a five-year maturity and bears interest at the
bank's prime interest rate minus 0.50% (8.00% at April 30, 1997). The term
loan principal and interest is payable in quarterly installments through
April, 2002. At April 30, 1997, the $9.0 million outstanding principal was
used to refinance the indebtedness under the previous revolving credit facility.
The revolving equipment acquisition facility is available for a one-year
period and bears interest, at the option of the Company, at the bank's prime
interest rate minus 0.75% or LIBOR plus 1.75%. Advances against this
facility are converted into term-loans with maturities not to exceed 48
months. The outstanding principal on the equipment acquisition term-loans is
payable in monthly installments through January, 2001. During the quarter
ended April 30, 1997, the Company borrowed $1.2 million to refinance the
indebtedness under the previous equipment acquisition term-loans and an
additional $0.8 million for current equipment requirements. The Company has
available borrowing capacity of $3.9 million under this facility. At April
30, 1997, the interest rate on the outstanding equipment acquisition term-
loans was at LIBOR plus 1.75% or 7.81%.
The standby letter of credit facility is available for a one-year period. At
April 30, 1997, the Company had $9.2 million in outstanding standby letters
of credit issued as security to the Company's insurance administrators as
part of its self-insurance program leaving $0.8 million of available borrowing
capacity.
No cash dividends have been paid during the quarter ended April 30, 1997. The
Board will determine future dividend policies based on financial condition,
profitability, cash flow, capital requirements, and business outlook, as well
as other factors relevant at the time.
The Company's future operating results and cash flows may be affected by a
number of factors including, the Company's success in bidding on future
contracts and the Company's ability to effectively manage controllable costs.
The Company foresees its capital resources, including the funds available
under the new credit facility, together with existing cash balances, to be
sufficient to meet its financial obligations, support the normal replacement
of equipment and to finance internal growth.
<PAGE> 17
PART II. OTHER INFORMATION
__________________________
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibits furnished pursuant to the requirements of Form 10-Q:
See Exhibit Index on Page 18
(b) Reports On Form 8-K
No reports on Form 8-K were filed on behalf of the Registrant during the
quarter ended April 30, 1997.
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DYCOM INDUSTRIES, INC.
Registrant
<TABLE>
<S>
<C>
Date: June 9, 1997 /s/ Thomas R. Pledger
_________________ ____________________________
Thomas R. Pledger
Chairman and Chief Executive
Officer
Date: June 9, 1997 /s/ Steven Nielsen
_________________ ____________________________
Steven Nielsen
President and Chief Operating
Officer
Date: June 9, 1997 /s/ Douglas J. Betlach
_________________ ____________________________
Douglas J. Betlach
Vice President and Chief
Financial Officer
</TABLE>
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
______ ___________
<C> <C>
(11) Statement re computation of per share earnings
(27) Financial Data Schedule
(99) Credit Facility Agreement dated as of April 28,
1997 between Dycom Industries, Inc. and
Dresdner Bank Lateinamerika Aktiengesellschaft;
Bank Leumi Trust Company of New York; and
Republic National Bank of Miami, N.A.
Security Agreement dated as of April 28, 1997
between Dycom Industries, Inc. and Dresdner
Bank Lateinamerika Aktiengesellschaft; Bank
Leumi Trust Company of New York; and Republic
National Bank of Miami, N.A. Similar
agreements were executed by each subsidiary of
Dycom Industries, Inc.
Guaranty Agreement dated as of April 28, 1997
between Ansco & Associates, Inc. and Dresdner
Bank Lateinamerika Aktiengesellschaft; Bank
Leumi Trust Company of New York; and Republic
National Bank of Miami, N.A. Similar
agreements were executed by each subsidiary of
Dycom Industries, Inc.
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(WHOLE DOLLARS EXCEPT PER SHARE DATA)
April 30, April 30,
1997 1996
<S> <C> <C>
THE QUARTERS ENDED APRIL 30, 1997 AND 1996:
Net Income Applicable to Common Stock $ 2,413,033 $ 1,704,150
========= =========
Primary Earnings:
Weighted average number of common shares outstanding 8,748,001 8,564,660
Common share equivalents arising from stock options<F1> 144,170 0
--------- ---------
Weighted average number of common shares as adjusted 8,892,171 8,564,660
========= =========
Net Income per common and common equivalent share $ 0.27 $ 0.20
========= =========
Fully Diluted Earnings:
Weighted average number of common shares outstanding 8,748,001 8,564,660
Common share equivalents arising from stock options<F1> 144,311 0
--------- ---------
Weighted average number of common shares as adjusted 8,892,312 8,564,660
========= =========
Net Income per common and common equivalent share $ 0.27 $ 0.20
========= =========
THE NINE MONTHS ENDED APRIL 30, 1997 AND 1996:
Net Income Applicable to Common Stock $ 5,716,130 $ 3,657,020
========= =========
Primary Earnings:
Weighted average number of common shares outstanding 8,697,402 8,554,808
Common share equivalents arising from stock options<F1> 191,094 0
--------- ---------
Weighted average number of common shares as adjusted 8,888,496 8,554,808
========= =========
Net Income per common and common equivalent share $ 0.64 $ 0.43
========= =========
Fully Diluted Earnings:
Weighted average number of common shares outstanding 8,697,402 8,554,808
Common share equivalents arising from stock options<F1> 191,278 0
--------- ---------
Weighted average number of common shares as adjusted 8,888,680 8,554,808
========= =========
Net Income per common and common equivalent share $ 0.64 $ 0.43
========= =========
<FN>
<F1>
In the quarter and nine month periods ended April 30, 1996, common share
equivalents arising from stock options did not impact the per share amounts as
they were either insignificant or anti-dilutive.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DYCOM INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEET AT APRIL 30,
1997 AND THE CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE
MONTHS ENDED APRIL 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000067215
<NAME> DYCOM INDUSTRIES, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> APR-30-1997
<EXCHANGE-RATE> 1
<CASH> 4,426,490
<SECURITIES> 0
<RECEIVABLES> 21,551,823
<ALLOWANCES> 1,096,902
<INVENTORY> 11,615,597
<CURRENT-ASSETS> 40,016,532
<PP&E> 53,001,675
<DEPRECIATION> 32,128,677
<TOTAL-ASSETS> 66,548,735
<CURRENT-LIABILITIES> 25,927,545
<BONDS> 16,041,360
0
0
<COMMON> 2,923,833
<OTHER-SE> 21,298,382
<TOTAL-LIABILITY-AND-EQUITY> 66,548,735
<SALES> 0
<TOTAL-REVENUES> 128,069,236
<CGS> 0
<TOTAL-COSTS> 103,099,014
<OTHER-EXPENSES> 4,473,683
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 794,575
<INCOME-PRETAX> 9,354,625
<INCOME-TAX> 3,638,495
<INCOME-CONTINUING> 5,716,130
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,716,130
<EPS-PRIMARY> .64
<EPS-DILUTED> .64
</TABLE>
<PAGE> 1
CREDIT FACILITY AGREEMENT
THIS AGREEMENT, dated as of the _28_ day of April, 1997, by and among
DRESDNER BANK LATEINAMERIKA AKTIENGESELLSCHAFT, Miami Agency, an
International Bank Agency licensed by the State of Florida, (as the context
requires, sometimes herein referred to as "Dresdner" and sometimes as a
"Lender"); BANK LEUMI TRUST COMPANY OF NEW YORK, a New York Banking
Corporation; and REPUBLIC NATIONAL BANK OF MIAMI, N.A., a National Banking
Association (each, herein referred to as a "Lender" and collectively, the
"Lenders"), on the one part, and DYCOM INDUSTRIES, INC., a Florida
Corporation (the "Borrower"), on the other part;
WITNESSETH:
WHEREAS, Borrower has requested that the Lenders extend credit to it in
a total amount not to exceed THIRTY FIVE MILLION AND 00/100 DOLLARS
($35,000,000.00) (the "Facility"), and the Lenders are willing to do so upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, the parties hereby,
agree as follows:
I. DEFINITIONS
1.01 "Banking Day" shall mean any day in which banks operating in the
State of Florida are open for business or are not required to be closed.
1.02 "Closing Date" shall mean April 28, 1997, and "Closing" shall mean
the acts scheduled to take place on the Closing Date in the State of Georgia
at a place to be designated by Lenders.
1.03 "Collateral Documents" mean the documents granting the security
interest in the Collateral specified in Paragraph 4.01, below.
1.04 "Guarantor or Guarantors" where the context so requires, means,
one or more of the following corporations, all of which are wholly owned
subsidiaries of Borrower:
ANSCO & ASSOCIATES, INC. , a Florida Corporation;
IVY H. SMITH COMPANY, a Florida Corporation;
KOHLER CONSTRUCTION COMPANY, INC., a Florida Corporation;
S.T.S. INC., a Florida Corporation;
FIBER CABLE, INC., a Delaware Corporation;
GLOBE COMMUNICATIONS, INC., a North Carolina Corporation;
STAR CONSTRUCTION, INC., a Tennessee Corporation;
TESINC, INC., an Arizona Corporation;
each of which shall execute a guarantee of the Indebtedness of the Borrower
to the Lenders (the "Guarantees").
<PAGE> 2
1.05 "Financial Statements" means the Borrower's or, where appropriate, a
Guarantor's, balance sheet, statements of income and related earnings, and
statement of changes in financial condition of the Borrower or, where
appropriate, Guarantor, heretofore delivered, or to be delivered, under the
terms of this Agreement, to Lenders.
1.06 "Indebtedness" means all items of indebtedness, obligation or
liability, whether matured or unmatured, liquidated or unliquidated, direct
or contingent, joint or several, including, without limitation:
(A) all indebtedness guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or deposit in the ordinary
course of business) or discounted with recourse;
(B) all indebtedness in effect guaranteed, directly or indirectly,
through agreements, contingent or otherwise: (1) to purchase such
indebtedness; or (2) to purchase, sell or lease (as lessee or lessor)
property, products, materials or supplies or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
indebtedness or to insure the owner of the indebtedness against loss; or
(3) to supply funds to or in any other manner invest in the debtor;
(C) all indebtedness secured by (or for which the holder of such
indebtedness has a right, contingent or otherwise, to be secured by) any
mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance on property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(D) all indebtedness incurred as the lessee of goods or services
under leases that, in accordance with generally accepted accounting
principles, should not be reflected on the lessee's balance sheet.
1.07 "Loan" shall mean an advance in accordance with Paragraphs 2.01,
2.02, 2.03 and 2.04, below.
1.08 "Majority Lenders" means Lenders whose aggregate Participations in
the outstanding Loans are at least sixty seven per cent (67%) of the
outstanding Loans from time to time or, if no Loan is outstanding, of the
commitments to such Participations.
1.09 "Note or Notes" means one or all of the notes identified in
Paragraphs 2.01, 2.02, 2.03 or 2.04, below.
1.10 "Obligations" means the obligations of the Borrower:
(A) to pay the principal of and interest on the Notes in
accordance with the terms thereof and to satisfy all of the other liabilities
to the Lenders, whether hereunder or otherwise, whether now existing or
hereafter incurred, matured or unmatured, direct or contingent, joint or
several, including any extensions, modifications, renewals thereof and
substitutions therefor;
(B) to repay to the Lenders all amounts advanced by the Lenders
hereunder or otherwise on behalf of the Borrower or any Guarantor including,
without limitation, advances for principal or interest payments to prior
secured parties, mortgagees, or lienors, or for taxes, levies, insurance,
rent, repairs to or maintenance or storage of any of the Collateral; and
(C) to reimburse the Lenders, on demand, for all of the Lenders'
<PAGE> 3
expenses and costs, including the reasonable fees and expenses of their
respective counsel, in connection with the preparation, administration,
amendment, modification or enforcement of this Agreement and the documents
required hereunder including, without limitation, any proceedings brought or
threatened to enforce payment of any of the obligations referred to in the
foregoing paragraphs (A) and(B).
1.11 "Participation" means in relation to each Lender, in respect of
any amount owing to the Lenders hereunder, the portion of that amount which
is owing to that Lender and, in respect of a proposed Loan, the portion of
that Loan which is to be made by that Lender.
1.12 "Permitted Liens" means:
(A) Liens for taxes, assessments or similar charges incurred in the
ordinary course of business that are not yet due and payable;
(B) Liens of mechanics, materialmen, warehousemen, carriers or other
like liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable; or
(C) Liens in favor of the Lenders pursuant to this Agreement.
1.13 "Prime Rate" means the rate published by The Wall Street Journal as
the "Prime Rate" from time to time, which is purely a benchmark, and is not
necessarily Lenders' best or lowest rate. The Prime Rate as applied to the
credit facilities under this Agreement shall fluctuate with each and every
change in the published Prime Rate.
1.14 "LIBOR" shall mean, in relation to any relevant sum and any
relevant period, the rate determined by Lenders to be the arithmetic mean
(rounded up if necessary to the nearest integral multiple of 1/16%) of the
respective rates shown on the Reuters Monitor Screen as being the rate per
annum at which Dollar deposits are offered for a period equal or comparable
to such period or, if there is no period equal, the period which is closest
in length to such period at or about 11:00 a.m. (London time) on the second
London Banking Day before the first day of such period; for this purpose
"Reuters Monitor Screen" means the display designated as page "LIBO" on the
Reuters Monitor system or such other page as may replace page "LIBO" on that
system for the purpose of displaying offered rates for Dollar deposits.
If, due to either (i) the introduction of or any change in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) in either case made subsequent
to the date hereof, there shall be any increase in the cost to any Lender of
agreeing to make or of making, funding or maintaining LIBOR based advances,
then the Borrower shall from time to time, upon demand by any Lender (with a
copy of such demand to Dresdner), pay to such Lender additional amounts
sufficient to compensate such lender for such increased cost. A certificate as
to the amount of such increased cost and calculating such amount in
reasonable detail, submitted to the Borrower by such Lender, shall be
conclusive and binding for all purposes, absent manifest error.
If any Lender determined that compliance with any law or regulation or any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law) made subsequent to the date hereof
affects or would affect the amount of capital required or expected to be
<PAGE> 4
maintained by such Lender or any corporation controlling such lender and that
the amount of such capital is increased by or based upon the existence of
such Lender's commitment to lend or to issue Standby Letters of Credit
hereunder and other commitments of such type or the issuance or maintenance
of the Standby Letters of Credit (or similar contingent obligations),
then, upon demand by such Lender (with a copy of such demand to Dresdner),
the Borrower shall pay to such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender in the light
of such circumstances, to the extent that such lender reasonably determines
such increase in capital to be allocable to the existence of such
Lender's commitment to lend or to issue Standby Letters of Credit hereunder
or to the issuance or maintenance of any Standby Letters of Credit. A
certificate as to the amount of such increased cost and calculating such
amount in reasonable detail, submitted to the Borrower by such Lender,
shall be conclusive and binding for all purposes, absent manifest error.
Notwithstanding any other provision of the Credit Facility Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender to perform its
obligations hereunder to make LIBOR based advances or to continue to fund or
maintain LIBOR advances hereunder, then, on notice thereof, and demand
therefor by such Lender to the Borrower, (i) each LIBOR based advance will
automatically, upon such demand by the Lender, convert into an advance based
on the Prime Rate such advance would have been charged under had it been a
Prime Rate advance originally, and (ii) the obligation of the Lenders
to make additional LIBOR based advances shall be suspended until the Lenders
notify the Borrower that they have determined that the circumstances causing
such suspension no longer exist.
1.15 "Standby Letter(s) of Credit" means any letter or letters of
credit issued in favor of an insurance company, bonding company or customer
of the Borrower and or one or more of the Guarantors to stand in lieu of a
retention or the posting of a bid, performance or completion bond in a
construction contract.
II. THE CREDIT FACILITIES
2.01 The "A" Line of Credit. So long as no uncured default under this
Agreement exists at the time a request for issuance is made, the "A" Line of
Credit Facility (the ' "A" Line of Credit') shall be available, for a period
of one (1) year from Closing up to a total aggregate of Ten Million US
Dollars ($10,000.000.00) for issuance of Standby Letters of Credit for the
benefit of Borrower and or any Guarantor, as follows:
(A) General. Standby Letters of Credit requested under this sub-
paragraph shall be upon written request by Borrower to Lenders ("Request for
Standby"), stating the specific purpose of each such Standby Letter of Credit
and the specific entity (whether Borrower or one or more of the Guarantors)
for whose benefit said Standby Letter of Credit is to be utilized and
shall provide all information required for issuance, including names and
addresses of all beneficiaries. Any such letters requested shall carry an
expiry of not more than one year, shall be in good commercial form, payable
against presentation of documents only, and incorporate only clear and
concise terms and conditions for payment, without ambiguities. Borrower
will request Lenders to issue two Standby Letters of Credit at Closing.
<PAGE> 5
(B) Effect of Issuance. The issuance of any Standby Letters of
Credit under the "A" Line of Credit shall reduce the availability of further
letters by the face amount of same, unless and until the same expire.
(C) Payment Under Letters. Any payments which Lenders are
required to make under the terms of any Standby Letter of Credit shall be
treated as cash advances under the "A" Line of Credit which shall be repaid
to Lenders on or before the expiration date provided for under the relevant
Standby Letter of Credit. Such payments shall likewise reduce the
availability of the issuance of further Standby Letters of Credit in the
amount of the same until and to the extent that such payments shall be
repaid. Interest on the outstanding balance of such advances shall be
payable monthly, in arrears.
(D) Fees for Issuance of Standby Letters of Credit. Fees for
issuance of Standby Letters of Credit shall be determined at the time a
Request for Standby is submitted, according to Borrower's election, at either:
(1) ninety (90) basis points per annum of face amount of the
relevant Standby Letter of Credit, payable quarterly, in advance, at issuance
and at the beginning of each quarter thereafter for so long as the relevant
Standby Letter of Credit remains outstanding; or
(2) seventy five (75) basis points per annum of the face
amount of the relevant Standby Letter of Credit, in advance, at issuance.
(E) Interest Rate on Payments Made Under Standby Letters of
Credit. Interest on all payments made by Lenders pursuant to such Standby
Letters of Credit shall be charged at the Prime Rate plus one per cent (1%)
per annum from the date of payment until the repayment thereof.
(F) Standby Letter of Credit Agreement. Borrower shall execute
Dresdner's standard Letter of Credit Application/Agreement with respect to
each Request for Standby under the "A" Line of Credit.
(G) Manner of Participation in Letters. Notwithstanding any other
term herein contained, Dresdner shall be the sole issuer of Standby Letters
of Credit under the "A" Line of Credit on behalf of all of the Lenders. Upon
notifications as provided for in Paragraphs 2.08 and 10.01, the Lenders shall
set up appropriate reserves on their respective books for the contingent
liability to Dresdner represented by the issuance of any Standby Letter of
Credit, and shall issue its own standby letter of credit, in favor of
Dresdner, in accordance with the respective Participations set forth in
Paragraph 2.05. Once Dresdner has been required to pay under the terms of a
Standby Letter of Credit, each of the Lenders shall be required to fund or
reimburse such payment to Dresdner.
(H) Note. The "A" Line of Credit shall be evidenced by a master
promissory note, substantially in the form attached hereto as Exhibit "A".
2.02 The "B" Line of Credit. So long as no uncured default under this
Agreement exists at the time a request for borrowing is made hereunder, for a
period of one (1) year from Closing, the "B" Line of Credit Facility (the
"B" Line of Credit') will be available on a revolving basis. During said
term, the Borrower may borrow, pay, prepay and re-borrow, on a revolving
basis, a total amount of up to a maximum of TEN MILLION DOLLARS
($10,000,000.00) as follows:
<PAGE> 6
(A) General. The initial advance under the "B" Line of Credit shall
be utilized for general working capital purposes of the Borrower and the
Guarantors, and shall be drawn upon at Closing for the purpose of paying all
the Borrower's and the Guarantors then existing Indebtedness to First Union
National Bank of Florida, to the extent that funding under the "C" Line of
Credit and the "D" Line of Credit shall not be sufficient to satisfy all such
Indebtedness. Such initial advances shall be against an estoppel letter from
First Union National Bank of Florida, reflecting the total amounts due from
Borrower. At Closing, Borrower shall elect the period of time for which the
initial advance is requested, either thirty (30), sixty (60), ninety (90)
or one hundred eighty (180) days and the rate of interest elected under the
terms of Section 2.02 (C). From and after such initial advance, and to the
extent that such initial advance is repaid, further advances requested under
this sub-paragraph shall be upon written request made by Borrower (a
"Request for Advance") stating the specific purpose of each advance, the
specific entity (whether Borrower or one or more of the Guarantors) utilizing
said advance, the period of time for which the advance is requested, either
thirty (30), sixty (60), ninety (90) or one hundred eighty (180) days, and
the rate of interest elected under the terms of Section 2.02 (C). Each
Request for Advance under the "B" Line of Credit shall be for not less than
Three Hundred Thousand US Dollars ($300,000.00) or for amounts greater than
said minimum only in multiples of Fifty Thousand US Dollars ($50,000.00).
(B) Repayment. Each advance under the "B" Line of Credit shall be
repaid within the period of time specified in the relevant Request For Advance.
(C) Interest Rate. Interest with respect to each advance under
the "B" Line of Credit shall accrue and be paid on the unpaid principal
balance from time to time outstanding at one of the following rates elected
by Borrower in the relevant Request for Advance:
(1) the thirty (30), sixty (60), ninety (90) or one hundred eighty (180) day
LIBOR rate effective on the date of such advance, according to the term for
which the relevant advance is requested, plus one and one-half per cent
(1.5%) per annum; or
(2) the Prime Rate minus one per cent (1%) per annum, to change with each
change in such rate.
Interest at the foregoing rate(s) shall be computed on the basis of a 360-day
year for the actual number of days elapsed (i.e., 1/360 of a full year's
interest shall accrue for each day any Loan is outstanding) and shall be due
quarterly (or, if earlier, at maturity) and payable in arrears. Said
interest rate shall never exceed the maximum rate allowed, from time to time,
by law. All principal and any unpaid interest on all such advances shall be
due and payable one year from the date of this Agreement.
(D) Facility Fee. A facility fee of Ten Thousand US Dollars
($10,000.00) shall be due and payable to the Lenders on the "B" Line of
Credit at Closing.
(E) Note. The "B" Line of Credit shall be evidenced by a master
promissory note ("Note") in the form attached hereto as Exhibit "B".
2.03 The "C" Term Loan. Upon delivery of this Agreement and
fulfillment of the conditions precedent as set forth herein, Lenders agree
that they will fund a term loan (the '"C" Term Loan') for the amount of NINE
MILLION DOLLARS ($9,000,000.00) as follows:
<PAGE> 7
(A) General. The "C" Term Loan shall be funded at Closing of this
Agreement for the purpose, together with funding under the "D" Line of Credit
and, if necessary the "B" Line of Credit, of paying all of Borrower's and
Guarantors' Indebtedness to First Union National Bank of Florida and such
initial advances shall be against an estoppel letter from First Union
National Bank of Florida, reflecting the total amounts due from Borrower.
(B) Repayment. The "C" Term Loan shall be repaid in twenty (20)
equal consecutive quarterly principal installments of Four Hundred Fifty
Thousand ($450,000.00) each, commencing ninety (90) days from the Closing
Date, with accrued interest to be paid with each installment of principal,
the intent hereof that all principal of and interest on the "C" Term
Loan shall be paid in full five (5) years from the Closing Date.
(C) Interest. Interest on the "C" Term Loan shall accrue at the
Prime Rate in effect, from time to time, minus one-half per cent (.5%) per
annum, to change with each change in such Prime Rate, provided, however,
that such rate shall not exceed the maximum rate allowed, from time to time,
by law.
2.04 The "D" Line of Credit. So long as no uncured default under this
Agreement exists at the time a request for borrowing is made hereunder, for a
period of one (1) year from Closing, the "D" Line of Credit Facility (the
"D" Line of Credit') will be available, on a revolving basis,
for Payment of certain of Borrower's existing Indebtedness and thereafter for
equipment acquisitions and small business purchases by Borrower or any
Guarantor. During said term, the Borrower may borrow, pay, prepay and
re-borrow, on a revolving basis, a total amount of up to a maximum limit of
SIX MILLION DOLLARS ($6,000,000.00), as follows:
(A) General. The initial advance under the "D" Line of Credit
shall be for an amount, which, together with the initial funding under the
"C" Line of Credit and, if necessary, from the "B" Line of Credit, will be
funded at Closing, for the purpose of paying all of Borrower's and
Guarantors' Indebtedness to First Union National Bank of Florida. Such initial
advances shall be against an estoppel letter from First Union National Bank
of Florida, reflecting the total amounts due from Borrower and from all
Guarantors. At Closing, Borrower shall elect the rate of interest elected
under the terms of Section 2.04 (C). From and after the date of said
initial advance, and to the extent that said initial advance is repaid,
further advances requested under this sub-paragraph shall be upon written
request made by Borrower (a "Request for Advance") stating the specific
purpose of each advance, the specific entity (whether Borrower or one or more
of the Guarantors) utilizing such advance, the specific equipment or business
acquisition to be financed with such advance and the rate of interest elected
under the terms of Section 2.04 (C). After the initial advance, each Request
for Advance under the "B" Line of Credit shall be for not less than One
Hundred Thousand US Dollars ($100,000.00) or for amounts greater than said
minimum only in multiples of Fifty Thousand US Dollars ($50,000.00).
(B) Repayment. each advance under the "D" Line of Credit shall be
repaid in the number of equal consecutive monthly installments elected by
Borrower in the relevant Request for Advance, but not in excess of forty
eight (48) such installments, beginning thirty (30) days from the date the
advance is made. with the balance of principal and interest being due and
payable on the date the last such installment is due, but, in the case where
Borrower elects to pay in forty eight installments, not later than the
twenty-seventh (27th) day after the due date for the forty-seventh (47th)
installment.
<PAGE> 8
(C) Interest Rate. Interest with respect to each advance under
the "D" Line of Credit shall accrue and be paid on the unpaid principal
balance of each Loan from time to time outstanding at one of the following
rates elected by Borrower, in the relevant Request for Advance:
(1) the thirty (30), sixty (60), ninety (90) or one-hundred eighty (180) day
LIBOR Rate in effect from time to time, plus one and three quarters per cent
(1.75%) per annum, to change every thirty (30), sixty (60), ninety (90) or
one-hundred eighty (180) days, as appropriate, with each change in such rate; or
(2) the Prime Rate in effect, from time to time, minus three quarters of
one per cent (.75%) per annum, to change with each change in such rate.
Interest at the foregoing rate(s) shall be computed on the basis of a 360-day
year for the actual number of days elapsed (i.e., 1/360 of a full year's
interest shall accrue for each day any Loan is outstanding) and shall be due
monthly (or, if earlier, at maturity) and payable in arrears. Said interest
rate shall never exceed the maximum rate allowed, from time to time, by law.
(D) Note. The "D" Line of Credit shall be evidenced by a master
promissory note ("Note") in the form attached as Exhibit "D."
(E) Additional Condition to Advance. Except for the initial
advance and for advances under Paragraph 2.04(F), advances under the "D" Line
of Credit shall not exceed 80% of verifiable cost for equipment financed
thereunder. All such Requests for Advance under the "D" Line of Credit
shall be accompanied by supplier's invoices and bills of lading for such
equipment and all such equipment shall be subject, at acquisition, to the
lien of the Collateral Documents.
(F) Availability of Line for Business Acquisitions. Upon
approval of Majority Lenders, which approval shall be in the sole discretion
of said Majority Lenders, the "D" Line of Credit shall also be available for
acquisitions of stock and or assets of small businesses by the Borrower. Any
Request for Advance for such purpose shall be accompanied by all relevant
financial and other data concerning such acquisition and shall be submitted
to all Lenders, who shall have a period of thirty (30) days to consider such
approval.
2.05 Participations. Each Lender will participate in each Loan or
advance in the proportion which its undrawn Commitment bears to the undrawn
amount of the Facility before such Loan or advance is made. It is understood
and agreed that the initial Commitment hereunder with respect to each Lender
is as follows:
DRESDNER BANK LATEINAMERIKA
AKTIENGESELLSCHAFT, Miami Agency $20,000,000.00
BANK LEUMI TRUST COMPANY OF NEW YORK 7,500,000.00
REPUBLIC NATIONAL BANK OF MIAMI, N.A 7,500,000.00
2.06 Lenders' Several Liability. The rights and obligations of the
Lenders under this Agreement are several and accordingly:
(A) the amount at any time owing hereunder by the Borrower to each
Lender shall be a separate and independent debt and each Lender shall be
entitled to protect and enforce its respective rights arising out of this
Agreement;
<PAGE> 9
(B) the failure of any Lender to perform its obligations hereunder
shall not relieve any other Lender, Dresdner or the Borrower of any of its
respective obligations, nor shall any Lender or Dresdner be responsible for
the obligations of any other Lender.
2.07 Conditions of Advances. Except with respect to payments under
Standby Letters of Credit required to be made by Dresdner and funded or
reimbursed by the Lenders and except for the portions of the Loans to be
funded at Closing, the funding of each Loan under this Facility is subject to
the following additional conditions:
(A) Any Request for Advance or Request for Standby shall be made,
in writing, delivered to all Lenders:
(1) with respect to any LIBOR based Loan or any Standby
Letter of Credit, on the second (2nd) banking day before the date on which
such Loan is to be funded or the Standby Letter of Credit is to be issued; or
(2) with respect to a Prime Rate based Loan, not later than
12:00 noon, Miami time, on the date on which such Loan is to be funded;
(B) No Event of Default or prospective Event of Default shall have
occurred or would, or would be likely to, occur as a result of the Loan being
made;
(C) All representations and warranties made by the Borrower in or
in connection with this Agreement shall be true and correct as at the date on
which the Loan is to be funded with reference to the facts and circumstances
then subsisting;
(D) not later than 11:00 A.M., Miami time, on the date on which the
Loan is to be funded, Dresdner shall have received and found satisfactory
such additional information, legal opinions and documents relating to the
Borrower or any Guarantor or this Agreement or any Collateral Document, as
Dresdner may reasonably require as a result of circumstances arising or
becoming known to Dresdner or the Lenders since the date of the previous
funding of a Loan or, if no funding has been made, the date of this
Agreement; and
(E) All Requests for Advance made under this Agreement shall
follow the form of the Exhibit "E", attached hereto and made a part hereof.
2.08 Notice to Participants. Borrower shall promptly notify all of the
Lenders of each Request for Advance and each Request for Standby and shall
forward a duplicate original thereof to each Lender. Subject to the
provisions of this Agreement, each Lender shall make available its
Participation in the relevant Loan directly to Borrower or, in the case of
advances made by Dresdner under a Standby Letter Credit, to Dresdner in
accordance with Paragraph 8.01.
2.09 Request Irrevocable. A Request for Advance or a Request for
Standby, once delivered to Dresdner, shall be irrevocable and the Borrower
shall be bound to draw the Loan or accept the issuance of the Standby Letter
of Credit in accordance therewith, except as otherwise provided in this
Agreement. If, for any reason, a Loan is not drawn in accordance with a
Request for Advance or a Requested Standby Letter of Credit is not issued,
the Borrower shall, on demand, pay to each Lender such amount (if any) as
such Lender may certify to be necessary to compensate it for any loss or
<PAGE> 10
expense incurred in liquidating or redeploying funds arranged for the
purpose of the proposed Loan not having been drawn or the proposed Standby
Letter of Credit not having been issued in accordance with the Request for
Advance or Request for Standby.
2.10 Payment to the Lenders. All sums payable to the Lenders hereunder
shall be paid to directly to the Lenders in immediately available funds, in
lawful money of the United States of America. Each Lender shall send the
Borrower and each other Lender statements for all amounts due hereunder,
which statements shall be considered correct and conclusively binding on
Borrower, unless Borrower notifies all the Lenders to the contrary within
fifteen (15) days of its receipt of any statement which it deems to be
incorrect. Alternatively, at their sole discretion, each of the Lenders may
charge against any deposit account of Borrower, all or any part of any
amounts due hereunder.
2.11 Prepayment of Loans. Any Prime Rate based Loan may be pre-paid
without penalty. In the event that Borrower prepays all or any part of any
Loan with respect to which the LIBOR based rate of interest has been elected,
then the rate of interest applicable to such Loan shall become the Prime Rate
(to change with each change in such Prime Rate) and Borrower shall reimburse
Lenders for costs incurred by them as a result of having funded such Loan as a
LIBOR Rate based Loan, by paying Lenders the sum of $100.00 plus, in the
event the LIBOR Rate on the date of prepayment is less than the LIBOR Rate
effective for such Loan, a sum equal to the difference, on an annualized
basis, between the LIBOR Rate effective for such Loan and the LIBOR Rate
effective on the date of such prepayment times the amount of principal of such
Loan for the remaining days between the date of prepayment and original
maturity.
III. CONDITIONS PRECEDENT
The obligation of the Lenders to make the Loans hereunder is subject to the
following conditions precedent:
3.01 Documents Required for the Closing. The Borrower shall have
delivered the following executed documents to the Lenders, in such form as
may be required by Lenders:
(A) All of the Notes, dated as of the Closing Date;
(B) Security agreements, financing statements, and such other
documents, acceptable to Lenders and their respective counsel, as may be
called for under the applicable law to perfect first and prior lien of the
Lenders against the Collateral (the "Collateral Documents");
(C) Guarantees, acceptable in form and content as agreed to by the
Lenders;
(D) Corporate Resolutions and Incumbency Certificates from the
Board of Directors of the Borrower authorizing the execution of this
Agreement, the Notes, the Borrower's Collateral Documents and related
documentation, in such form and content as may be required by Lenders or
their respective counsel;
<PAGE> 11
(E) Corporate Resolutions and Incumbency Certificates of the
Boards of Directors and Shareholders' Resolutions from each of the Guarantors
Authorizing the execution of the Guarantees and each of the Guarantors'
Collateral Documents;
(F) Certificates of good standing and certified copies of the
respective Articles of Incorporation and Bylaws of the Borrower and each
Guarantor;
(G) A written Opinion Letter from Borrower's counsel, in form and
content acceptable to Lenders and their respective counsel, containing legal
opinions with respect to the Representations and Warranties set forth below
and opining that:
(1) Borrower and each Guarantor are corporations duly organized, existing
and in good standing under the laws of their respective states of
incorporation, are qualified to transact business and are in good standing in
those states where the nature of their business or property owned by them
require qualification;
(2) The Borrower and each Guarantor has capacity (statutory and otherwise)
and power to execute and deliver this Agreement, to borrow money hereunder,
to grant the Collateral required hereunder, to execute and deliver the Notes,
the Guarantees and the Collateral Documents, and to perform its obligations
hereunder and thereunder; and
(3) All corporate action by Borrower and each Guarantor and all consents
and approvals of any persons necessary to the validity of this Agreement,
the Notes, the Guarantees, the Collateral Documents, and each other document
to be delivered hereunder has been duly obtained; this Agreement, the Notes,
the Guarantees, the Collateral Documents, and such other documents executed
in connection herewith, are enforceable in accordance with their respective
terms and do not conflict with any provision of the charter or by-laws of the
Borrower or any Guarantor or of any applicable laws or any other agreement
binding the Borrower or any of the Guarantors or its or their respective
property;
(H) With respect to any advance required at Closing in for a Loan upon
which Borrower desires to elect a LIBOR based interest rate, Borrower shall
have delivered notice of its election with respect thereto, not later than
the second (2nd) banking day before Closing; and
(I) Such other documentation as may reasonably be required by Lenders or
their counsel.
3.02 Legal Matters. At the time of the Closing and of each subsequent
disbursement, all legal matters incidental thereto shall be satisfactory to
Lenders' counsel, Messrs. Baker & McKenzie.
IV. COLLATERAL SECURITY
4.01 Composition of the Collateral. Borrower and each Guarantor shall
grant Lenders security interests in the following property belonging to each
of them (the "Collateral"):
(A) All machinery, equipment, vehicles, vessels, aircraft,
fixtures, appliances, furniture and other tangible assets, now owned or
hereafter acquired and wherever located.
<PAGE> 12
(B) All inventory now owned or hereafter acquired and products and
proceeds thereof.
(C) All accounts, contract rights and accounts receivable, now or
hereafter in existence and all proceeds thereof, and all returned or
repossessed goods arising from or relating to any of the said accounts or
rights.
(D) All instruments, documents, chattel papers and general
intangibles, now owned or hereafter acquired or arising.
(E) All cash or non-cash proceeds of any of the foregoing,
including insurance proceeds.
(F) All ledger sheets, files, records, documents, and instruments
(including, but not limited to, computer programs, tapes and related
electronic data processing software) evidencing an interest or relating to
the above.
(G) All substitutes, and replacements for, accessions, attachments,
and other additions to, and tools, parts, and equipment used in connection
with any of the above.
Said security interest shall be evidenced by appropriate Security Agreements
in such form as may be required by law and shall be perfected, as required by
Lenders, in all appropriate jurisdictions. The Collateral, together with all
of the Borrower's other property or the property of any Guarantor of any kind
held by any of the Lenders, shall stand as one general, continuing collateral
security for all Obligations, and such continuing security interest may be
retained by the Lenders until all Obligations have been satisfied in full.
4.02 Rights in Property Held by the Lenders. As security for the prompt
satisfaction of all Obligations, the Borrower hereby assigns, transfers and
sets over to the Lenders all of its right, title and interest in and to, and
grants the Lenders a lien on and a security interest in, all amounts that may
be owing from time to time by the Lenders to the Borrower in any capacity,
including, but without limitation, any balance or share belonging to Borrower
of any deposit or other account with the Lenders, which lien and security
interest shall be independent of any right of set-off which any of the
Lenders may have. The security interest shall be shared among the Lenders as
agreed to by them.
4.03 Priority of Liens. The foregoing liens shall be first and prior
liens except for the Permitted Liens.
4.04 Financing Statements . The Borrower will:
(A) Join and cause each Guarantor to join with the Lenders in
executing such financing statements (including amendments thereto and
continuation statements thereof), in form and content, satisfactory to the
Lenders, as the Lenders may specify;
(B) Pay or reimburse the Lenders for all costs and taxes of filing
or recording the same in such public offices as the Lender may designate; and
(C) Take such other steps as the Lender may direct, including the
noting of the Lenders' lien on the Collateral and on any certificates of
title therefor.
<PAGE> 13
A carbon, photographic, or other reproduction of this Agreement shall be
sufficient as a financing statement and may be filed, in Lenders' sole
discretion, in any appropriate office in lieu thereof.
However, to the extent lawful, the Borrower hereby appoints each Lender as
its attorney-in-fact (without requiring any Lender to act as such) to execute
any financing statement in the name of the Borrower, and to perform all other
acts that such Lender deems appropriate to perfect and continue its security
interest in, and to protect and preserve, the Collateral.
4.05 Other Perfection of Security Interests. Lenders may elect not to
perfect the security interests in all of the Collateral, including any such
Collateral as may require perfection by registry upon title certificates (as
in the case, in certain jurisdictions, of motor vehicle title certificates).
Lenders, nevertheless, reserve the right, in their sole discretion, to
require the perfection of such security interests in the future.
4.06 Reservation of Right to Require Additional Collateral. In the
event of the occurrence of an Event of Default under this Agreement, Lenders
further reserve the right, but shall not have the obligation, to require that
Borrower and any or all of the Guarantors grant additional collateral
security for repayment of the Facility including, but not limited to,
mortgages, deeds of trust and other security interests in any and all real
estate or other assets, (not included in the Collateral), owned or hereafter
acquired by Borrower or any Guarantor.
V. REPRESENTATIONS AND WARRANTIES
Borrower will make the following representations and warranties as of the
Closing Date, and as of each month during the effectiveness of this Agreement
and prior to disbursement of each Loan or issuance of a Standby Letter of
Credit under this Agreement, and will provide the Lenders with a settlement
sheet and a non-default certificate, signed by an authorized officer of the
Borrower, stating that the same are true on the date of the Loan or issuance
of a Standby Letter of Credit and that no Event of Default, as defined in
Paragraph 7.01, below, has occurred as of such date:
5.01 Organization. The Borrower and each Guarantor is a duly organized
corporation currently existing under the laws of its respective state or
country of incorporation, and has the necessary capacity (statutory and
otherwise) and power to execute this Agreement and related loan documents.
5.02 No Violations. The execution and performance of this Agreement
does not violate any provisions of any existing indenture, contract or
agreement to which the Borrower or any Guarantor is a party, or any
provision of their respective certificates of incorporation or bylaws.
5.03 Authorization. The execution, delivery and performance of this
Agreement, the Collateral Documents, the Loans, the Guarantees, and the
issuance of the Notes and other documents contemplated hereunder, have been
duly authorized by all necessary corporate action.
5.04 Financial Statements. The Financial Statements furnished to
Lenders were prepared in accordance with generally accepted principles and
practices of accounting consistently applied, and fairly reflect the
<PAGE> 14
financial conditions of each of the Borrower as of the date of such
statements, and no materially adverse change has occurred since that date.
5.05 Liens and Encumbrances. The properties and assets of the Borrower
and of each Guarantor are not subject to any lien or encumbrance which is not
permitted by this Agreement.
5.06 Legal Proceedings. No legal or administrative proceedings exist or
are threatened against the Borrower or any Guarantor, which will
substantially adversely affect their respective conditions, financial or
otherwise, and the Borrower and each Guarantor is in full compliance with the
respective state, federal or national regulatory agencies with regulatory
jurisdiction over its business.
5.07 Taxes. Borrower and each of the Guarantors has paid all income,
franchise and other taxes as they became due, and has established such
reserves as reasonably believed to be adequate for such purposes.
5.08 Adverse Contracts. Neither the Borrower nor any of the Guarantors
are parties to any instrument which adversely affects its respective
business, property or assets and none of them is in default under any
existing contract.
5.09 Intellectual Properties. Borrower and each Guarantor possesses
all necessary patents, trademarks, trade names, copyrights and licenses
necessary to conduct their respective businesses.
VI. THE BORROWER'S COVENANTS.
The Borrower, and each of the Guarantors, either jointly or severally, hereby
covenants and agrees with the Lenders that, so long as any of the Obligations
remain unsatisfied, it will comply with the following covenants:
6.01 Affirmative Covenants. During the term of the Loan agreement,
Borrower (and, if applicable, the Guarantors) will:
(A) Maintain and cause each of the Guarantors to maintain its
corporate existence, keep its properties and the Collateral in good repair
and maintain adequate insurance against fire and other such risks as is
customary in the trade or as required by law. Proof of such insurance must
be provided to the Lenders on the Closing Date and from time to time, as
reasonably requested by the Lenders.
(B) Promptly pay and cause each Guarantor to pay all taxes,
unless contested in good faith, as well as all lawful claims for labor,
materials and supplies which, if not paid, might become a lien or charge on
its properties.
(C) Furnish to the Lenders:
(1) Within one hundred (100) days after the end of each fiscal year, a true
copy of a duly completed Form 10-K as required by the Securities and Exchange
Act of 1934, as amended.
(2) Within forty-five (45) days after the end of each fiscal quarter, a true
copy of a duly completed Form 10-Q as required by the Securities and Exchange
Act of 1934, as amended.
<PAGE> 15
(3) Within forty-five (45) days from the end of each fiscal quarter, a
consolidating profit and loss statement (income statement) for Borrower
prepared by its management and certified by an officer of Borrower, as
follows: "We certify that these financial statements are true and correct
and subject to year-end audit adjustments."
(4) On an annual basis, individual balance sheets and profit and loss
statements (income statements) for the Borrower and each of the Guarantors;
(5) Within forty-five (45) after the end of each fiscal quarter, a
certificate from Borrower stating that no Event of Default under this
Agreement has occurred and that all covenants are met, with the actual
covenant position listed as of the quarter's close. Said certificate will be
issued by the Chief Executive Officer, the Chief Financial Officer or the
Chief Operating Officer of the Borrower;
(6) On an annual basis, Financial Statements and supplemental consolidating
information and independent auditor's report of Borrower and each of the
Guarantors.
(D) Upon request, furnish to Lenders copies of all information
furnished by Borrower or any Guarantor to shareholders of Borrower or of any
Guarantor, or to any governmental authority or general press release within
24 hours of release.
(E) Furnish to Lenders, within seven (7) business days, reports
of any new contract of Borrower or any Guarantor in a state or territory of
the United States or province of Canada, where the security interest in such
contract rights has not been perfected in favor of Lenders. Within forty
five (45) days of the commencement of such contract(s), Borrower is to
provide the Lenders with an inventory list of all titled and non-titled
equipment transferred into such state territory or province. Should Borrower
or any Guarantor contemplate entering into a contract outside the United
States, its territories or Canada, Borrower must seek Lenders' prior written
approval before any assets of the Borrower or any Guarantor are removed from
such jurisdictions.
(F) Furnish to Lenders such other information with regard to the
operations and affairs of Borrower or any Guarantor as the Lenders may
reasonably request.
(G) At Lenders' request, make available for inspection by duly
authorized representatives of the Lenders any of its books and records, any
of the books and records of any Guarantor, any of the Collateral, and any
information regarding its business affairs and financial condition or that of
any Guarantor, within a reasonable time after written request therefor.
(H) Collect its Accounts and sell its services and permit the
Guarantors to sell their respective Accounts or services only in the ordinary
course of business.
(I) Give immediate notice to the Lenders of: (1) any litigation or
proceeding in which it or any Guarantor is a party if an adverse decision
therein would require it or any Guarantor to pay over more than US
$250,000.00, or deliver assets the aggregate value of which exceeds such sum
(whether or not the claim is considered to be covered by insurance); and (2)
the institution of any other suit or proceeding involving it or any Guarantor
<PAGE> 16
that might materially and adversely affect its operations, financial
condition, property or business or that of any Guarantor.
(J) Pay when due or, with respect to any Guarantor, cause to be
paid when due (or within applicable grace periods) all Indebtedness owed to
third persons, except when the amount thereof is being contested in good
faith by appropriate proceedings, and adequate reserves therefor being set
aside on the appropriate books of the Borrower or Guarantor. If the Borrower
or any Guarantor defaults in the payment of any principal (or installment
thereof) of, or interest on, any such indebtedness, the Lenders shall have
the right in their discretion, to pay such interest or principal for the
account of such Borrower or Guarantor and be reimbursed, on demand, by the
Borrower.
(K) Notify the Lenders immediately if it becomes aware of the
occurrence of any Event of Default, or of any fact, condition or event that,
only with the giving of notice or passage of time or both, could become an
Event of Default.
(L) Notify the Lenders thirty (30) days in advance of any change
in its or any Guarantor's address, or in the location of its principal place
of business.
(M) Obtain, within forty five (45) days of the Closing Date,
terminations of all financing statements in favor of First Union National
Bank of Florida, naming Borrower or any Guarantor as debtor and obtain
satisfactions and or releases, of record, of any and all mortgage
and other liens in favor of First Union National Bank of Florida, as
Mortgagee or lienor, with respect to any real estate owned by Borrower or any
Guarantor.
(N) Maintain a Debt to Net Worth Ratio of not more than 3.0:1.
Said ratio is to be calculated by dividing the Borrower's Liabilities by
Borrower's Tangible Net Worth. "Tangible Net Worth" shall mean the
Borrower's shareholders' equity less the Borrower's intangible assets, net of
accumulated amortization.
(O) Maintain a Quick Ratio of not less than .75:1 and a current
ratio of not less than 1.4:1. The Quick Ratio shall be calculated by
dividing the sum of the Borrower's cash and net receivables by the Borrower's
current liabilities. The current ratio shall be calculated by dividing the
Borrower's current assets by the Borrower's current liabilities.
(P) Limit cash dividends to fifty per cent (50%) of each fiscal
year's after-tax profit. Such dividends shall only be paid after the close
of the corresponding fiscal year. Stock dividends shall not be restricted.
(Q) Achieve Net Profits for the current fiscal year of not less
than Four Million US Dollars ($4,000,000.00) and thereafter, achieve Net
Profits of not less than Four Million US Dollars ($4,000,000.00) plus an
additional Seven Hundred Fifty Thousand US Dollars ($750,000.00) for each
subsequent fiscal year.
(R) Hold Harmless. Except as otherwise provided herein, agree to
indemnify and hold Lenders and their successors and assigns absolutely
harmless from and against all costs, expenses, liabilities, loss, damage or
obligations incurred by or imposed upon or alleged to be due by Lenders or
their successors and assigns arising out of or resulting from (i) the terms or
<PAGE> 17
conditions of this Agreement or any other instrument executed in connection
with the Loans, and (ii) Borrower's or Lenders' performance of any and all
such terms and conditions. Without intending to limit the remedies available
to Lenders with respect to the enforcement of their indemnification rights as
stated herein or as stated in any security document, in the event any
claim or demand is made or any other fact comes to the attention of Lenders
in connection with, relating or pertaining to, or arising out of the
transactions contemplated by this Agreement, which Lenders believe might in
any manner result in the liability of Lenders, Borrower shall, immediately
upon receipt of written notification of any such claim or demand, assume in
full the personal responsibility for and the defense of any such claim or
demand and pay in connection therewith any loss damage, deficiency, liability
or obligation, including without limitation, legal fees and court costs
incurred in connection therewith prior to the institution of legal proceedings,
at all trial levels and levels of appeal. In the event of court action in
connection with any such claim or demand, the Borrower shall assume in full
the responsibility for the defense of any such action and shall immediately
satisfy and discharge any final decree or judgment rendered therein. The
Lenders may, at their sole and uncontrolled discretion, make any payments
sustained or incurred by reason of the foregoing, and the Borrower shall
immediately repay to Lenders in cash the amount of such payment, with
interest thereon at the maximum lawful rate form the date of such payment.
The Lenders shall have the right to join the Borrower as a party defendant
in any legal action brought against them, and the Borrower hereby consents to
the entry of any other making it a party defendant to any such action. The
indemnification and hold harmless obligations arising pursuant to this
paragraph, however, shall not apply to any costs, expenses, liabilities,
losses, damages or obligations asserted by Borrower or any of the Lenders and
incurred by, imposed upon or alleged to be due by any Lender as a result of
any Lender's breach of its contractual duties and obligations created
hereunder or under any other instrument executed in connection with the Loans
and owed to Borrower and/or any other Lender, as the case may be.
(S) Compliance with Laws. Duly observe, conform and comply with all
laws, decisions, judgments, rules, regulations and orders of all governmental
authorities relative to the conduct of its businesses, its properties, and
collateral, except those being contested in good faith by appropriate
proceedings diligently pursued; and obtain, maintain and keep in full force
and effect all governmental licenses, authorizations and permits necessary to
the proper conduct of its businesses.
6.02 Negative Covenants.
Borrower shall not, nor shall it permit any Guarantor directly or indirectly,
to:
(A) Incur, create, assume or permit to exist any indebtedness for
borrowed money, or an account of deposit, advance or progress payments under
contracts, or evidenced by notes, bonds, debentures or similar obligations
except for:
(1) those contemplated by this Agreement;
(2) those, up to One Million US Dollars ($1,000,000.00), for
the specific purpose of amortizing capital leases in existence as of the
Closing Date;
<PAGE> 18
(3) those, up to Six Million US Dollars ($6,000,000.00) per
year, for the specific purpose of amortizing operating leases existing as of
the Closing Date; and
(4) those contracts which require that the Borrower perform
the work under a performance bond or provide a bid bond in order to bid for a
project.
(B) Incur, create or permit to exist any mortgage, pledge, lien,
charge or other encumbrance on any of its assets other than
(1) Deposits under social security laws, or to secure the performance of bids,
tenders, contracts, or leases, statutory obligations and surety or appeal bonds;
(2) Liens imposed by law arising in the ordinary course of business and
liens arising out of a judgment award not exceeding $100,000 when an appeal
is in process, except where an insurance company, reasonably acceptable to
Lenders, acknowledges coverage in writing to Lenders; and
(3) Permitted Liens.
(C) Guarantee or otherwise in any way become or be responsible for
Indebtedness or obligations of any other person, except for the endorsement
of negotiable instruments for collection by Borrower or any of its
subsidiaries in the ordinary course of business.
(D) Sell, lease, transfer or otherwise dispose of all of or a
substantial part of its properties or assets, or consolidate with or merge
into any other corporation or allow any other corporation to merge with it or
acquire all or substantially all of the property or assets of any other person.
Sales of assets in the normal course of Borrower's or Guarantor's business
shall be permitted. If any transfer of assets among Borrower and Guarantors,
not in the normal course of business, is contemplated, the Lenders must give
prior written approval of same.
(E) Make any investment in, or purchase any stock or other
securities or evidence of indebtedness of any person, except that Borrower or
any Guarantor may purchase U.S. government obligations maturing within one
year and certificates of deposit or similar investments from Lenders or
nationally known United States National Banks.
(F) Sell, discount or otherwise dispose of notes, accounts
receivable or other obligations owing to the Borrower or any Guarantor, with
or without recourse, other than for the purpose of collection in the ordinary
course of business.
(G) Change its name, enter into any merger, consolidation,
reorganization or recapitalization, reclassify or permit the transfer of its
capital stock.
(H) Prepay any Indebtedness, including Indebtedness for borrowed
money and Indebtedness secured by any of its assets (except the Obligations),
or enter into or modify any agreement as a result of which the terms of
payment of any of the foregoing Indebtedness are waived or modified.
(I) Furnish the Lenders any certificate or other document that
will contain any untrue statement of material fact or that will omit to
<PAGE> 19
state a material fact necessary to make in not misleading in light of the
circumstances under which it was furnished.
(J) Permit any material adverse change that, within the reasonable
judgment of Lenders, makes the continuation of the Facility no longer
financially feasible, provided, however, that Lenders have provided written
notice to Borrower of their judgment that such a material adverse change has
occurred and Borrower, within thirty (30) days of such notice fails to cure the
material adverse change to Lenders' reasonable satisfaction..
VII. DEFAULT
7.01 Events of Default. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder:
(A) Borrower or any Guarantor shall fail to pay, within ten (10)
days of the date when due, any installment of principal or interest, or, when
due, any other amount, payable hereunder or under any other obligation due
from such Borrower or Guarantor to Lenders.
(B) Borrower or any Guarantor shall fail to observe or perform any
obligation or Affirmative Covenant required of it hereunder, or under any of
the Collateral Documents.
(C) Borrower or any Guarantor shall breach any Negative Covenant
hereunder, or under any of the Collateral Documents.
(D) Borrower or any Guarantor shall fail to pay any material
Indebtedness due any third person, and such failure shall continue beyond any
applicable grace period, or the Borrower shall allow any other event of
default under any material agreement binding the Borrower.
(E) Any financial statement, representation, warranty or
certificate made or furnished by Borrower or any Guarantor to the Lenders in
connection with this Agreement, or as inducement to the Lenders to enter into
this Agreement, or in any separate statement or document to be delivered
hereunder to the Lenders, shall be materially false, incorrect or incomplete
when made.
(F) Borrower or any Guarantor shall admit its inability to pay its
debts as they mature, or make an assignment thereof for the benefit of its
creditors.
(G) Proceedings in bankruptcy, or for reorganization of Borrower,
or any Guarantor or for the readjustment of any its debts, under the U.S.
Bankruptcy Act, as amended, or any part thereof, or under any other laws for
the relief of debtors, now or hereafter existing, shall be commenced by or
against the Borrower or any Guarantor and shall not be discharged within
thirty (30) days of commencement.
(H) A receiver or trustee shall be appointed for Borrower or any
Guarantor or for any substantial part of its assets, or any proceedings shall
be instituted for the dissolution or the full or partial liquidation of
Borrower or any Guarantor, and such receiver or trustee shall not be
discharged within thirty (30) days of his/her appointment, or such
proceedings shall not be discharged within thirty (30) days of commencement.
<PAGE> 20
(I) Borrower or any Guarantor shall discontinue business or
materially change the nature of its business.
(J) Borrower or any Guarantor shall suffer final judgments for
payment of money aggregating in excess of $100,000 and shall not discharge
the same within a period of thirty (30) days, unless, pending further
proceedings, execution has not been commenced or has been stayed.
(K) A judgment creditor of Borrower shall obtain possession of any
of the Collateral by any means, including but without limitation, levy,
distraint, replevin or self-help.
7.02 Acceleration. Immediately and without notice upon the occurrence
of any Event of Default specified in the foregoing Paragraphs, all
Obligations of Borrower to Lenders, whether hereunder or otherwise, shall, at
the option of Lenders, immediately become due and payable without further
action of any kind.
7.03 Remedies. After any acceleration, as provided for in Paragraph
7.02, the Lenders shall have, in addition to the rights and remedies given it
by this Agreement, the Notes and the Collateral Documents, all those allowed
by all applicable laws including, but without limitation, the Uniform
Commercial Code or similar law as enacted in any jurisdiction in which any
Collateral may be located. Without limiting the generality of the foregoing,
the Lenders may immediately, without demand of performance and without other
notice (except as specifically required by this Agreement or the Collateral
Documents) or demand whatsoever to Borrower or any Guarantor, all of which
are hereby expressly waived by Borrower, and without advertisement, sell at
public or private sale or otherwise realize upon, the whole or, from time to
time, any part of the Collateral, or any interest which Borrower or any
Guarantor may have therein. After deducting from the proceeds of sale or
other disposition of the Collateral all expenses (including all reasonable
expenses for legal services), the Lenders shall apply such proceeds toward
the satisfaction of the Borrower's Obligations under this Agreement. Any
remainder of the proceeds after satisfaction in full of the Obligations shall
be distributed as required by applicable laws. Notice of any sale or other
disposition shall be given to the Borrower at least five (5) days before the
time of any intended public sale or of the time after which any intended
private sale or other disposition of the Collateral is to be made, which the
Borrower hereby agrees shall be reasonable notice of such sale or other
disposition. The Borrower agrees to assemble, at its own expense, the
Collateral at such place or places as the Lenders shall designate. At any
such sale or other disposition, the Lenders may, to the extent permissible
under applicable laws, purchase the whole or any part of the Collateral, free
from any right of redemption on the part of the Borrower or any Guarantor.
VIII. FUNDING AND PAYMENTS
8.01 Advances. Amounts to be advanced by the Lenders to the Borrower
under this Agreement shall be made available by each Lender directly to
Borrower in accordance with the provisions of Paragraph 2.07 or, with respect
to payments under the "A" Line of Credit, will be funded or reimbursed to
Dresdner in accordance with the provisions of Paragraph 2.01(I). The
Borrower shall be deemed to have borrowed the relevant amount when such
advances are made by the respective Lenders.
<PAGE> 21
8.02 Payments by Borrower. All payments by the Borrower under this
Agreement shall be made to the Lenders not later than 11:00 a.m. Miami time
on the relevant due date in immediately available funds, to such accounts as
such Lender shall have previously notified to the Borrower.
8.03 Banking Days. If any sum would otherwise become due for payment
hereunder on a non-Banking Day that sum shall become due on the next
following Banking Day, except that if any repayment would then become due in
another calendar month such repayment shall become due on the immediately
preceding Banking Day. Interest shall be adjusted accordingly.
8.04 Evidence of Debt. The Lenders shall each maintain on its books,
in accordance with its usual practice, a set of accounts recording the
amounts from time to time owing by the Borrower hereunder. In any legal
proceeding and otherwise for the purposes of this Agreement the entries made
in such accounts shall, in the absence of manifest error, be conclusive and
binding on the Borrower as to the existence and amounts of the obligations of
the Borrower recorded therein.
8.05 Certificate Conclusive and Binding. Where any provision of this
Agreement provides that Lenders may certify or determine an amount or rate
payable by the Borrower, a certificate by Lenders as to such amount or rate
shall be conclusive and binding on the Borrower in the absence of manifest
error.
IX. THE LENDERS AND DRESDNER
9.01 Appointment. Each Lender hereby irrevocably appoints Dresdner to
act as its agent solely for the purposes set out in Paragraphs 2.01 and 11.14
of this Agreement and irrevocably authorizes Dresdner to take such action on
its behalf and to exercise and enforce such rights, powers and discretions as
are expressly or by implication delegated to Dresdner by the terms hereof and
such rights, powers and discretions as are reasonably incidental thereto.
9.02 Nature of Duties. In respect of its duties and functions
hereunder Dresdner shall be considered to be acting solely as an agent of the
Lenders in an administrative capacity only and shall not be deemed to be a
trustee of any Lender or an agent or trustee of the Borrower for any
purpose. Dresdner shall have no duties or obligations except those provided
for in this Agreement.
9.03 No Liability to Borrower. Dresdner shall have no liability or
obligation to the Borrower as a result of any failure or delay by any Lender
or any other party in performing its respective obligations under this
Agreement, provided, however, that nothing in this paragraph shall be
construed to relieve Dresdner of its liabilities and obligations to the
Borrower as provided in this Agreement and/or any other instrument executed
in connection with the Loans.
9.04 Liability. Neither Dresdner nor any of its directors, officers,
employees or agents shall be liable for any action taken or omitted to be
taken in connection with this Agreement, provided, however, that nothing in
this paragraph shall be construed to relieve Dresdner of its liabilities for
(A) the breach of any of its duties and obligations created hereunder or
pursuant to any instrument executed in connection with the Loans, and/or (B)
resulting directly from its gross negligence or willful misconduct.
<PAGE> 22
X. INDEMNITIES, SET-OFF AND PRO RATA SHARING
10.01. Participations. The Borrower shall promptly notify each of the
Lenders of each Request for Advance and Request for Standby. Subject to the
provisions of this Agreement, each Lender shall make available its
Participation in the relevant Loan or Standby Letter of Credit in accordance
with Paragraphs 2.01, 2.07, 2.08 and 8.01.
10.02 General Indemnity. The Borrower and each Guarantor shall
indemnify each Lender against all losses, liabilities, damages, costs and
expenses which such Lender may incur as a consequence of any Event of Default
or any other breach by the Borrower or any Guarantor of any of their
obligations under this Agreement or otherwise in connection with this Agreement,
including any loss or expense incurred in liquidating or redeploying funds
acquired to maintain such Lender's Participation in any Loans or arranged for
the purpose of a proposed Loan (as the case may be) and any interest or fees
incurred in funding any unpaid sum.
10.03 Set-Off. If an Event of Default has occurred, each Lender shall
have the right, without notice to the Borrower or any other person, to set
off and apply any credit balance on any account (whether subject to notice or
not and whether matured or not and in whatever currency) of the Borrower or
of any Guarantor with such Lender, and any other indebtedness owing by
such Lender to the Borrower or such Guarantor, against the liabilities of the
Borrower or such Guarantor under this Agreement. Each Lender shall forthwith
notify each other Lender of any exercise of its rights under this Clause.
This Clause shall not affect any general or banker's lien, right of set-off
or other right to which any Lender may be entitled.
10.04 Pro Rata Sharing. If at any time any Lender receives any amount
in respect of sums due from the Borrower under this Agreement whether by way
of voluntary or involuntary payment, set-off or otherwise, it will promptly
pay the amount so received to the other Lenders pro rata in accordance with
their respective Participations in such amount. Such Lender shall treat such
amount as if it were a payment by the Borrower directly to all Lenders on
account of sums due from the Borrower hereunder so that, as between the
Borrower and the Lender which originally received the amount, the amount
shall be treated as not having been paid and such Lender shall retain all its
rights against the Borrower or otherwise in respect of such amount (except to
the extent of any sum retained by it as its pro rata share). Notwithstanding
the foregoing provisions of this paragraph:
(A) a Lender shall not be required to share any amount which it
has received as a result of any legal proceedings commenced in order to
recover sums owing to it under this Agreement with any other Lender which has
a legal right to but does not join in such legal proceedings after having
been given reasonable opportunity so to do and which does not commence and
diligently pursue separate legal proceedings for that purpose; and
(B) if any Lender is required to repay to the Borrower any part of an
amount originally received by it and shared pursuant to this Clause, the
other Lenders shall make funds available on a pro rata basis to reimburse
such Lender for the amount required to be repaid (less the appropriate
portion of any sum retained by such Lender in respect of such amount).
<PAGE> 23
XI. MISCELLANEOUS
11.01 Construction. The provisions of this Agreement shall be in
addition to those of any guaranty, pledge or security agreement, note or
other evidence of liability held by any of the Lenders, all of which shall be
construed as complementary to each other. Nothing herein contained shall
prevent the Lenders from enforcing any or all other notes, guarantees,
pledges or security agreements in accordance with their respective terms.
11.02 Further Assurance. From time to time, the Borrower will execute
and deliver to the Lenders such additional documents and will provide such
additional information as the Lenders may reasonably require to carry out the
terms of this Agreement and be informed of the status and affairs of the
Borrower.
11.03 Enforcement and Waiver by the Lenders. The Lenders shall have the
right at all times to enforce the provisions of this Agreement and the
Collateral Documents in strict accordance with the terms hereof and thereof,
notwithstanding any conduct or custom on the part of the Lenders in
refraining from so doing at any time or times. The failure of the Lenders at any
time or times to enforce their respective rights under such provisions,
strictly in accordance with the same, shall not be construed as having
created a custom in any way or manner contrary to specific provisions of this
Agreement or as having in any way or manner modified or waived the same. All
rights and remedies of the Lenders are cumulative and concurrent and the
exercise of one right or remedy shall not be deemed a waiver or release of
any other right or remedy.
11.04 Expenses of the Lenders. The Borrower will, on demand, reimburse
the Lenders for all expenses, including the reasonable fees and expenses of
legal counsel for the Lenders, incurred by the Lenders in connection with the
preparation, administration, amendment, modification, or enforcement of this
Agreement and the Collateral Documents and the collection or attempted
collection of the Notes.
11.05 Notices. Any notices, reports, requests, consents or other
communications required or permitted by this Agreement shall be in writing
and shall be deemed delivered if delivered in person or if sent by certified
mail,, postage prepaid, return receipt requested, or telegraph, as follows,
unless such address is changed by written notice hereunder:
(A) If to Borrower:
DYCOM INDUSTRIES, INC.
Suite 600
4440 PGA Blvd
Palm Beach Gardens, FL 33410
Attention: Thomas R. Pledger,
Chairman and Chief Executive Officer
With Copy to:
Chopin, Miller & Yudenfreund
440 Royal Palm Way
Palm Beach, FL 33480
Attention: Jacqueline S. Miller
Attention: L. Frank Chopin
<PAGE> 24
(B) If to the Lenders:
Dresdner Bank Lateinamerika
Aktiengesellschaft, Miami Agency
P.O. Box 01-6039
801 Brickell Avenue
Miami, FL 33131
Attention: Carmen Alvarez, First Vice-President. and
Attention: Theodore R. Walters, Esq., Assistant Vice-President
Bank Leumi Trust Company of New York
520 Fifth Avenue, Fifth Floor
New York, NY 10035
Attention: Paul Tine, Vice-President
Republic National Bank of Miami, N.A.
10 N.W. 42nd Ave.
Miami, FL
Attention: Jorge Nogueira, Vice-President
With Copy to:
Baker & McKenzie
Barnett Tower Suite 1600
701 Brickell Avenue
Miami, FL 33131-2827
Attention: Charles Lea Hume, Esq.
11.06 Waiver and Release by Borrower. To the maximum extent permitted by
applicable laws, Borrower:
(A) Waives:
(1) protest of all commercial paper at any time held by the
Lenders on which the Borrower is in any way liable; and
(2) notice and opportunity to be heard, after acceleration in
the manner provided in Paragraph 7.02, before exercise by the Lenders of the
remedies of self-help, set-off, or of other summary procedures permitted by
any applicable laws or by any agreement with Borrower, and, except where
required by this Agreement or by any applicable laws, notice of any other
action taken by the Lenders; and
(B) Releases the Lenders and their respective officers, attorneys,
agents and employees from all claims for loss or damage caused by any act or
omission on the part of any of them, provided, however, that nothing in this
paragraph shall be construed in any fashion, as a release of Lenders and
their respective officers, attorneys, agents and employees from (1) their
contractual obligations created hereunder and/or pursuant to any other
instrument executed in connection with the Loans, and/or (B) resulting
directly from its gross negligence or willful misconduct.
<PAGE> 25
11.07 Participation. Notwithstanding any other provision of this
Agreement, Borrower understands that each of the Lenders may at any time
enter into participation agreements with one or more participating banks or
other financial institutions whereby each of the Lenders will allocate
certain percentages of its commitment under this Agreement. Borrower
acknowledges that, for the convenience of all parties, this Agreement is
being entered into with the Lenders only and that its obligations under this
Agreement are undertaken for the benefit of, and as an inducement to, any
such participating bank and other financial institutions as well as the Lenders,
and Borrower hereby grants to each participating bank and other financial
institutions, to the extent of its participation in the Loan, the right to
set off deposit accounts maintained by Borrower with such bank or other
financial institutions.
11.08 Applicable Law. The laws of the State of Florida, excluding its
choice-of-law rules, shall govern the validity, construction and
interpretation of this Agreement, and the rights and remedies of the parties
hereto.
11.09 Binding Effect. Assignment and Entire Agreement. This Agreement
shall inure to the benefit of, and shall be binding upon, the respective
successors and permitted assigns of the parties hereto. Borrower shall not
have the right to assign any of its rights or obligations hereunder without
the prior written consent of the Lenders. This Agreement, and the documents
executed and delivered pursuant hereto, constitute the entire Agreement
between the parties, and may be amended only by a writing signed on behalf of
each party.
11.10 Superseding Effect of Loan Agreement. The terms and conditions
of that certain Loan Commitment Letter dated March 17, 1997 from Dresdner to
Borrower shall survive the Closing this Agreement, provided, however, that
this Agreement shall take precedence over and supersede any conflicting terms
or provisions contained in that Loan Commitment Letter.
11.11 Severability. If any provision of this Agreement shall be held
invalid under any applicable laws, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
11.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one and the same instrument.
11.13 Seal This Agreement is intended to take effect as an instrument
under seal.
11.14 Communications. Except as otherwise provided in this Agreement, all
communications between the Lenders and the Borrower in relation to this
Agreement shall be made through Dresdner provided, however, that any
requests, certificates, statements, reports or similar items required to be
provided by Borrower to Lenders shall be provided to each and every Lender.
11.15 Joinder by Guarantors. Guarantors join in the execution of this
Agreement to express their assent to the terms hereof and acknowledge that,
except for the execution and delivery of the Guarantees, the Facility would
not be offered by Lenders and that sufficient consideration exists for each
Guarantor to give its Guaranty to Lenders.
<PAGE> 26
11.1 Waiver of Jury Trial. LENDERS, AND THE UNDERSIGNED BORROWER
AND GUARANTORS, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT ANY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH, OR IN RESPECT OF ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
LENDERS TO ENTER INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have duly executed this agreement
as of the day and year first above written.
LENDERS:
DRESDNER BANK LATEINAMERIKA
AKTIENGESELLSCHAFT, Miami Agency
an International Bank Agency licensed by the State of
Florida
By: /s/ Carmen Alvarez
First Vice-President
By: /s/ Theodore R. Walters, Esq.
Assistant Vice-President
BANK LEUMI TRUST COMPANY OF NEW YORK
an New York Banking Corporation
By: /s/ Paul Tine
Vice-President
By: /s/ John Koenigsberg
Vice-President
REPUBLIC NATIONAL BANK OF MIAMI, N.A.,
a National Banking Association
By: /s/ Jorge Nogueira
Vice President
BORROWER:
DYCOM INDUSTRIES, INC.
A Florida corporation
<PAGE> 27
By: /s/ Thomas R. Pledger
Thomas R. Pledger,
Chairman and Chief Executive Officer
JOINDER BY GUARANTORS:
ANSCO & ASSOCIATES, INC.
A Florida Corporation
By: /s/ Thomas R. Pledger
Thomas R. Pledger, Vice-President
IVY H. SMITH COMPANY
A Florida Corporation
By: /s/ Thomas R. Pledger
Thomas R. Pledger, Vice-President
KOHLER CONSTRUCTION COMPANY, INC.
A Florida Corporation
By: /s/ Thomas R. Pledger
Thomas R. Pledger, Vice-President
S.T.S. INC.
A Florida Corporation
By: /s/ Thomas R. Pledger
Thomas R. Pledger, Vice-President
FIBER CABLE, INC.
A Delaware Corporation
By: /s/ Thomas R. Pledger
Thomas R. Pledger, Vice-President
GLOBE COMMUNICATIONS, INC.
A North Carolina Corporation;
By: /s/ Thomas R. Pledger
Thomas R. Pledger, Vice-President
<PAGE> 28
STAR CONSTRUCTION, INC.
A Tennessee Corporation
By: /s/ Thomas R. Pledger
Thomas R. Pledger, Vice-President
TESINC, INC.
An Arizona Corporation
By: /s/ Thomas R. Pledger
Thomas R. Pledger, Vice-President
<PAGE> 29
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, made this 28 day of April, 1997, by DYCOM
INDUSTRIES, INC., a Florida corporation (hereinafter called the "Debtor") who,
for valuable consideration, the receipt and sufficiency of which is, hereby,
acknowledged, hereby grants to DRESDNER BANK LATEINAMERIKA
AKTIENGESELLSCHAFT, Miami Agency, an international bank agency licensed by
the State of Florida; BANK LEUMI TRUST COMPANY OF NEW YORK, a New York
Banking Corporation; and REPUBLIC NATIONAL BANK OF MIAMI, N.A., a National
Banking Association (hereinafter , collectively, the "Secured Party") a
lien upon and security interest in the property and any replacements thereof
described in Exhibit "A" attached hereto and by this reference made a part
hereof as well as all proceeds therefrom and insurance thereon (said property
being hereinafter called the "Collateral").
This Security Agreement is entered into to secure payment of and
performance of any and all of Debtor's liabilities to the Secured Party
(hereinafter the "Obligations"). Any documents including, but not limited to
any notes, mortgages, security agreements, including this Security Agreement,
securing or evidencing the Obligations are hereinafter collectively called
the "Loan Documents."
Incident thereto, Debtor agrees with Secured Party as follows:
1. Debtor warrants and represents that:
(a) Debtor is the lawful owner of such Collateral and has good
right to pledge, sell, assign, co-sign, transfer and create a security
interest in the same;
(b) Debtor will, at Secured Party's request, defend the collateral
from all claims and demands of all persons;
(c) All tangible Collateral is to be kept at the business to be
maintained at Debtor's principal place of business, and will not be removed
therefrom, except in the ordinary course of business, without the prior
written consent of Secured Party, provided, however, that it may move
tangible Collateral to a location of an affiliate with respect to which
Secured Party also has a perfected security interest in like Collateral; and
(d) Debtor will, at its own cost and expense, keep the Collateral
in as good and substantial repair as the same is on at this date, or as the
same exists when acquired, reasonable wear and tear excepted, making
replacements when and where necessary and, in this connection, Secured Party
hereby agrees that it will give its written consent to the removal by Debtor
of the same, or any part thereof, from the above described property if and to
the extent that such removal is necessary or advisable so to do in connection
with Debtor's fulfilling of its obligations under this subparagraph '1', as
long as such Collateral is replaced by Collateral which is unencumbered and
of equal value and if, in the opinion of Secured Party, the priority of its
security interest therein will not be jeopardized.
(e) The Collateral is not subject to any other liens except the
first priority liens in favor of Secured Party set forth herein
2. Upon request and as instructed by Secured Party, Debtor agrees to
comply with the requirements of all applicable state and federal laws in
order to grant to Secured Party a valid lien upon, and a security interest
in, the Collateral described herein, or which may be described in any
amendment supplementary hereto.
<PAGE> 30
3. Debtor will pay, when due, all taxes, assessments, and other charges
lawfully and validly levied or assessed upon the Collateral or any part
thereof, and Debtor will pay any and all fees, costs and expenses, of
whatever kind and nature, which Secured Party may incur in filing public
notices, and the reasonable charges of any attorneys whom Secured Party may
engage in preparing and filing such documents, making title examinations and
rendering opinion letters, as well as expenses incurred by Secured Party,
including reasonable attorney's fees, in protecting, maintaining, preserving,
enforcing or foreclosing the security interest granted to Secured Party
hereunder, whether through judicial proceedings or otherwise, or in defending
or prosecuting any actions or proceedings arising out of or relating to this
transaction, promptly after Debtor shall have been notified by Secured Party
of the amount of such fees, costs or expenses.
4. Debtor agrees that Secured Party, or its agents, may enter upon
Debtor's Property at any time, and from time to time, for the purpose of
inspecting the Collateral, and any and all records pertaining thereto.
Debtor agrees to promptly notify Secured Party of any change in its mailing
address or principal place of business, in order that a prompt refiling of
any outstanding notices may be made, if necessary. Debtor shall also advise
Secured Party, within thirty (30) days, of any new facts known to Debtor
which, under the applicable provisions of law, would affect the priority of
the security interest granted to Secured Party by this instrument.
5. Debtor will have and maintain insurance at all times with respect to
all Collateral in types, forms, amounts and in the manner as specified in the
Loan Documents, such insurance to be payable to Secured Party. All policies
of insurance shall provide for thirty (30) days written minimum cancellation
notice to Secured Party and Debtor shall furnish Secured Party with
certificates or other evidence satisfactory to Secured Party of compliance
with the foregoing insurance provisions as set forth herein and in the Loan
Documents.
6. At its option, Secured Party may discharge taxes, liens or security
interests or other encumbrances at any time levied or placed on the
Collateral, may pay for insurance on the Collateral and may pay for the
maintenance and preservation of the Collateral. All such sums, as
well as costs, advanced by Secured Party pursuant to this Security Agreement
shall be due immediately from Debtor to Secured Party, shall be secured
hereby and shall bear interest at the highest Default Rate specified in any
note or other agreement evidencing the Obligations and if no such instrument
exists, then at the highest rate allowed by law, from the date of payment by
Secured Party until the date of repayment by Debtor. Until default, Debtor
may have possession of the Collateral and use it in any lawful manner not
inconsistent with this Security Agreement and not inconsistent with any
policy of insurance thereon.
7. Debtor shall be in default under this Security Agreement upon the
happening of any of the following events or conditions:
(a) Default in the payment or performance of any Obligation,
covenant or liability contained or referred to herein or if there should
occur an event of default under any Loan Documents or any other obligation
secured hereby; or
(b) If any written warranty, representation or statement
pertaining to Collateral set forth in this Agreement, made or furnished to
Secured Party by Debtor, or by any other party or agency clearly authorized
by Debtor to make such written warranty, representation or statement, proves
to have been false in any material respect when made or furnished.
<PAGE> 31
8. (a) Upon the occurrence of any event of default, as described
above, and at any time thereafter, Secured Party may declare all obligations
secured hereby immediately due and payable, and shall have the remedies of a
secured party under the Uniform Commercial Code as adopted in Florida.
Secured Party may require Debtor to assemble the Collateral and make it
available to Secured Party at a place to be designated by Secured Party
which is reasonably convenient to both parties. Secured Party may peaceably,
by its own means or with judicial assistance, enter Debtor's Property and
Debtor will not resist or interfere with such action. Unless the Collateral
is perishable or threatens to decline speedily in value or is a type
customarily sold on a recognized market, Secured Party will give Debtor
reasonable notice of the time and place of any public sale thereof, or of the
time after which any private sale or any other intended disposition thereof
is to be made. The requirements of reasonable notice shall be met if
such notice is mailed, postage prepaid, to the address of Debtor shown at the
beginning of this Security Agreement at least five (5) days before the time
of the sale or disposition. Expenses of retaking, holding, preparing for
sale, selling or the like shall include the Secured Party's reasonable
attorney's fees and legal expenses.
(b) In case of the exercise of any of the rights of Secured Party
hereunder, all Collateral, and other property or security given to secure the
indebtedness secured hereby, may be offered for sale for one total price, and
the proceeds of such sale accounted for in one account without distinction
between items of security or without assigning to them any proportion of the
proceeds of such sale, Debtor insofar as it legally may so do hereby waiving
the application of any doctrine of marshalling, or the Collateral, or such
other property or security, may be offered for sale separately, and sales may
be held from time to time, and all powers of Secured Party shall not be fully
executed until all Collateral, and such other property or security, shall have
been sold.
9. No waiver by Secured Party of any default shall operate as a waiver
of any other default or of the same default on a future occasion. All rights
of Secured Party hereunder shall inure to the benefit of its successors and
assigns; and all obligations of Debtor shall bind its successors and assigns.
If there be more than one Debtor, their obligations hereunder shall be
joint and several.
10. The covenants and agreements herein contained shall extend to,
inure to the benefit of, and be binding upon, the respective successors,
heirs, executors, administrators and assigns of the parties hereto, the same
as if they were in every case named and expressed.
11. Debtor covenants and agrees to execute such financing statements,
security agreements or other instruments with respect to the Collateral as
Secured Party may request, and hereby authorizes Secured Party to execute and
file, at any time, such financing statements without Debtor's signature.
Debtor agrees that Secured Party may file this Security Agreement in
lieu of any such financing statement.
THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS
ENTERING INTO THIS AGREEMENT.
<PAGE>32
IN WITNESS WHEREOF, Debtor has caused this instrument to be duly
executed on its behalf as of the day and year first above written.
Signed, sealed and delivered
in the presence of:
/s/ Steven Nielsen
/s/ Carmen Alvarez
DYCOM INDUSTRIES, INC
A Florida Corporation
By /s/ Thomas R. Pledger
Thomas R. Pledger,
Chairman and Chief Executive Officer
STATE OF )
: SS.
COUNTY OF )
The foregoing instrument was acknowledged before me this 28th day of
April 1997, by Thomas R. Pledger, as Chairman and Chief Executive Officer of
DYCOM INDUSTRIES, INC., A Florida Corporation personnally known to me and who
did (did not) take an oath.
/s/ Nancy Lynn Ward
______________________________________
NOTARY PUBLIC, STATE OF GEORGIA
My Commission Expires:
August 17, 1998
<PAGE> 33
EXHIBIT "A"
Description of the Collateral
All of the Debtor's interest in the following items of personal
property, wherever located, whether now owned or hereafter acquired, together
with all replacements and additions therefor and all cash and non-cash
proceeds (including insurance proceeds) thereof:
(A) All machinery, equipment, vehicles, vessels, aircraft,
fixtures, appliances, furniture and other tangible assets, now owned or
hereafter acquired and wherever located.
(B) All inventory now owned or hereafter acquired and products and
proceeds thereof.
(C) All accounts, contract rights and accounts receivable, now or
hereafter in existence and all proceeds thereof, and all returned or
repossessed goods arising from or relating to any of the said accounts or
rights.
(D) All instruments, documents, chattel papers and general
intangibles, now owned or hereafter acquired or arising.
(E) All cash or non-cash proceeds of any of the foregoing,
including insurance proceeds.
(F) All ledger sheets, files, records, documents, and instruments
(including but not limited to, computer programs, tapes and related
electronic data processing software) evidencing an interest or relating to
the above.
(G) All substitutes and replacements for, accessions, attachments,
and other additions to, and tools, parts, and equipment used in connection
with any of the above.
Together with all instruments, documents, chattel papers and general
intangibles relating to or arising from the foregoing collateral and all cash
and non-cash proceeds and products thereof.
THIS EXHIBIT "A" TO SECURITY AGREEMENT executed by Debtor this 28th day of
April, 1997.
DYCOM INDUSTRIES, INC.
A Florida corporation
By: /s/ Thomas R. Pledger
Thomas R. Pledger,
Chairman and Chief Executive Officer
<PAGE> 34
GUARANTY AGREEMENT
This absolute and unconditional guaranty given by the undersigned,
hereinafter called the "Guarantor", to induce DRESDNER BANK LATEINAMERIKA
AKTIENGESELLSCHAFT, Miami Agency, an International Bank Agency licensed by
the State of Florida; BANK LEUMI TRUST COMPANY OF NEW YORK, a New York
Banking Corporation; and REPUBLIC NATIONAL BANK OF MIAMI, N.A., a National
Banking Association, hereinafter called the "Lenders" having a business
address of P.O. Box 01-6039, 801 Brickell Avenue, Miami, FL 33131 to extend
credit to or otherwise become or remain the creditor of DYCOM INDUSTRIES,
INC., a Florida corporation, hereinafter called the "Borrower";
In consideration of the foregoing, the Guarantor does hereby agree with
the Lenders as follows:
1. OBLIGATION OF GUARANTOR.
The Guarantor absolutely and unconditionally guarantees to the
Lenders, their successors and assigns (whether collateral assigns or
otherwise), the prompt and full payment in United States currency and
performance to the Lenders at the place of business of the Lenders set
forth above or at such other place and to such other person as the Lenders
may designate at maturity of any and every obligation, in connection with
which either as maker, drawer, guarantor, endorser or otherwise, whether
directly, indirectly or contingently, the Borrower is, either individually or
jointly and severally with any other person or persons, nor or shall become
at any time in the future liable to the Lenders, with interest thereon at the
rate or rates provided in the obligations guaranteed hereby or at the maximum
rate allowed from time to time by law in Florida, whichever is less, until
payment in full has been received by Lenders, together with all attorneys'
fees, costs and expenses of collection whether suit be brought or not,
including costs, expenses and attorneys' fees on appeal if an appeal is taken
from any suit, incurred by the Lenders, in connection with any matter covered
by this Guaranty. The Guarantor also absolutely and unconditionally
guarantees the full and timely performance of all duties and obligations
whatsoever of the Borrower to Lenders, whether now existing or hereafter
arising, and agrees in the event the Borrower fails to fully and timely
perform any of said duties and obligations to fully and timely perform same.
2. TERM OF GUARANTY.
The liability of the Guarantor hereunder shall continue until the
earlier of (i) the 120th day after this Guaranty is marked "Cancelled" by the
Lenders and returned to the Guarantor or, (ii) until the Lenders shall
receive written notice, by registered mail signed by the Guarantor,
cancelling this Guaranty, but such cancellation shall not affect in any way the
continuing liability of the Guarantor on any transactions covered by this
Guaranty up to the time of the actual receipt by the Lenders of such notice
of cancellation, including any advance or other monies which may at any time
thereafter be made by the Lenders to the Borrower pursuant to any agreement,
promissory note or other instrument or document evidencing any indebtedness of
the Borrower to the Lenders, entered into prior to the receipt by the Lenders
of said notice by the Guarantor. Notwithstanding the receipt by the Lenders
of any notice of cancellation hereunder, the Lenders may in their discretion
amend, modify and renew in any way whatsoever any agreement, promissory note
or other instrument or document evidencing any indebtedness of the Borrower
to the Lenders and in existence at the time said notice of cancellation is
received by the Lenders, all without affecting in any way whatsoever the
continuing liability of the Guarantor hereunder, but the liability of the
<PAGE> 35
Guarantor solely in regard to the principal amount owed the Lenders shall not
exceed the amount of principal owing to the Lenders at the time said notice of
cancellation is received by the Lenders together with such additional amounts
as may thereafter be advanced by the Lenders to or on behalf of the Borrower
pursuant to any such agreement, promissory note or other instrument or
document in existence at the time said notice is received by the Lenders. In
the event said notice of cancellation is given, the liability of the Guarantor
shall continue without limitation whatsoever for all amounts other than
principal (which is limited under the preceding sentence) due the Lenders
such as interest, attorney's fees, costs, and other such amounts.
3. BANKRUPTCY OF BORROWER.
Notwithstanding that the Guaranty may have been cancelled under
paragraph 2, and/or returned to the Guarantor, to the extent the Borrower has
made any payments to the Lenders within the one (1) year period following the
date this Guaranty was so cancelled, and the Guarantor was obligated under
this Guaranty for said payments, the liability of the Guarantor hereunder
shall at all times continue for the amounts so paid by the Borrower to the
Lenders. If, for any reason, (e.g. bankruptcy, or otherwise), the Lenders
are not permitted to retain the payments so made by the Borrower during said
one (1) year period, the Guarantor shall be liable under this Guaranty for
the amount of such payments as if this Guaranty had never been cancelled and
the Lenders shall be entitled to recover said amount so paid by the Borrower
within said one (1) year period. Anything in this Guaranty to the contrary
notwithstanding, if at any time this Guaranty is to be cancelled under the
provisions of paragraph 2, the Lenders may retain this Guaranty for a period
of one hundred twenty (120) days after the date said Guaranty is to be so
cancelled and in the event no bankruptcy petition has been filed by or
against the Borrower for the one (1) year period following the date the
Guaranty is to be cancelled, then, in that event, the Guaranty shall be
returned to the Guarantor. If, however, a bankruptcy petition has been filed
by or against the Borrower during the one (1) year period, and the Borrower has
made payments to the Lenders during the one (1) year period, this Guaranty
shall not be cancelled and/or returned to the Guarantor unless and until a
decision by a court of competent jurisdiction, or other agreement has been
entered or reached, pursuant to which the Lenders shall be entitled to retain
all such monies paid during the one (1) year period. If, as set forth above,
the Lenders are obligated to return to the Borrower any monies so paid during
the one (1) year period, this Guaranty shall not be cancelled
(notwithstanding it being marked "Cancelled" and returned to the Guarantor)
and the Guarantor shall continue to be liable to the Lenders for all
monies paid during the one (1) year period. If the Lenders shall have marked
this Guaranty "Cancelled" and/or returned this Guaranty to the Guarantor, and
under the provisions of this paragraph 3 or paragraph 2, the Guarantor has
continuing liability to the Lenders for certain amounts which the Lenders
have or are obligated to return to the Borrower, then, in such case, the
Lenders may enforce their rights under this Guaranty upon any copy of this
Guaranty notwithstanding the fact that the original of this Guaranty may have
been marked "Cancelled" and/or returned to the Guarantor.
4. CONSENT TO LENDERS' ACTS.
The Guarantor consents, without affecting in any way the
Guarantor's liability to the Lenders hereunder, that the Lenders may, without
notice to or consent of the Guarantor and upon such terms as they may deem
advisable and with or without consideration and after notice of cancellation
<PAGE> 36
is received by the Lenders under paragraph 2 hereof: (a) extend, in whole or in
part, by renewal or otherwise, and as often as the Lenders may wish, the time
of payment of any indebtedness owing by the Borrower, to the Lenders, or held
by the Lenders as security for any such obligation; (b) release, surrender,
exchange, modify, impair, or extend the period of duration, or the time for
performance of payment, of any collateral securing any obligation of the
Borrower to the Lenders; (c) settle or compromise any claim of the Lenders
against the Borrower, or against any other person, firm or corporation, whose
obligation is held by the Lenders as collateral security for any obligation
of the Borrower to the Lenders; and (d) release in whole or in part any
person liable for the payment of any obligation of the Borrower to the
Lenders including, but not limited to, any person liable as an endorser,
guarantor or judgment debtor (if the Lenders obtain a judgment on any
obligation of the Borrower) of said obligation and, in any event, any such
release shall not affect the liability of the Guarantor for the entire
amount of any and every obligation of the Borrower to the Lenders. Further,
the Lenders shall not be under any obligation whatsoever to obtain or perfect
or to maintain the perfection of any security interest or other lien on
property to secure indebtedness of the Borrower to the Lendersand the Lenders
shall have no obligation to, and shall not have any liability for failing to,
obtain or perfect or to maintain the perfection of any security interest or
lien on property to secure indebtedness of the Borrower. Any failure of the
Lenders to obtain and perfect or to maintain the perfection of any security
interest or lien shall not affect in any way whatsoever the obligation of
the Guarantor to the Lenders under this Guaranty. The Guarantor hereby
ratifies and confirms any such extension, renewal, release surrender,
exchange, modification, impairment, settlement, or compromise, and all such
actions shall binding upon the Guarantor who hereby waives all defenses,
counterclaims, or offsets which the Guarantor might have by reason thereof.
5. WAIVERS BY GUARANTOR.
The Guarantor waives: (a) notice of acceptance of this Guaranty by
the Lenders; (b) notice of presentment, demand for payment, notice of
dishonor or protest of any of the Borrower's obligations or the obligation of
any person, firm, or corporation held by the Lenders as collateral security
for the Borrower's obligation; (c) notice of the failure of any person, firm, or
corporation to pay to the Lenders any indebtedness held by the Lenders as
collateral security for any obligation of the Borrower; (d) failure of the
Lenders to obtain and perfect or maintain the perfection or priority of any
security interest or lien on property to secure any indebtedness of the
Borrower; and (e) all defenses, offsets and counterclaims which the Guarantor
may at any time have to any claim of the Lenders against the Borrower.
6. SUBROGATION.
Nothing herein contained is intended or shall be construed to give
to Guarantor any right of subrogation in or under any note, security document
or any other loan document evidencing in any way or relating to any
obligation of the Borrower to the Lenders which is or may be covered by this
Guaranty, any right to participate in any way therein, or in the right, title
and interest of the Lenders in or to any collateral covered by any loan or
security documents relating to any such obligations notwithstanding any
payments made by Guarantor under this Guaranty, all such rights of
subrogation and participation being hereby expressly waived and released.
<PAGE> 37
7. SUBORDINATION.
In the event that for any reason whatsoever, the Borrower is now or
hereafter becomes indebted to the Guarantor, the Guarantor agrees that the
amount of such indebtedness and all interest thereon shall at all times be
subordinate as to lien, time of payment and in all other respects to all
obligations of the Borrower to the Lenders which are covered by this
Guaranty, and that the Guarantor shall not be entitled to enforce or receive
payment thereof until all sums then due and owing to the Lenders shall have
been paid in full. If any payment shall have been made to the Guarantor by
the Borrower on any said indebtedness during any time that there are
obligations outstanding from the Borrower to the Lenders which are covered
by this Guaranty, the Guarantor shall hold in trust all such payments for the
benefit of the Lenders and shall make said payments to the Lenders to be
credited and applied against obligations of the Borrower to the Lenders,
whether matured or unmatured, in accordance with the discretion of the
Lenders.
8. REPRESENTATIONS BY GUARANTOR.
The Guarantor represents that, at the time of the execution and
delivery of this Guaranty, nothing exists to impair the effectiveness of the
liability of the Guarantor to the Lenders hereunder, or the immediate taking
effect of this Guaranty as the sole agreement between the Guarantor and the
Lenders with respect to guaranteeing the Borrower's obligation to the Lenders.
9. REMEDIES OF LENDERS.
The Lenders may at its option proceed in the first instance against
the Guarantor to collect any obligation covered by this Guaranty, without
first proceeding against the Borrower for said obligation, or any other
person, firm or corporation liable for said obligation, and without first
resorting to any property at any time held by the Lenders as collateral
security for said obligation and without any marshalling of assets
whatsoever. The Guarantor hereby grants to the Lenders a lien on, and a
security interest in, the deposit balances, funds, accounts, items,
certificates of deposit, securities, other property and the moneys of the
Guarantor now or hereafter in the possession or custody of any of the Lenders
for any purpose (including property left in safekeeping or custody) or on
deposit with any of the Lenders to secure, and as collateral for, the payment
and performance of this Guaranty as well as of any other obligation or liability
(present or future, absolute or contingent, due or not due) of Guarantor to
any of the Lenders. Any such Lender may at any time and from time to time,
without demand or notice, appropriate and set off against such deposit
balances, funds, accounts, items, certificates of deposit, securities, other
property and moneys and apply the same to the obligations of the Guarantor
hereunder. Each of the Lenders shall further have any other rights provided
by law or under any other document, all of which rights are cumulative.
10. CONSTRUCTION AND BENEFIT.
This Guaranty is delivered and made in, and shall be construed
pursuant to and governed by, the laws of the State of Florida, and is binding
upon the Guarantor and its legal representatives and successors, and shall
inure to the benefit of the Lenders, their respective successors and assigns.
11. MISCELLANEOUS.
<PAGE> 38
In the event it becomes necessary for the Lenders to exercise their
rights under this Guaranty, whether suit be brought or not, the Guarantor
shall be liable for all costs and attorneys' fees incurred by the Lenders,
including costs and attorneys' fees incurred by the Lenders on appeal. To
the extent the Guarantor is obligated to make any payments to the Lenders
under this Guaranty, the Lenders may offset and retain in payment of said
amounts any and all monies of the Guarantor in the possession of any of the
Lenders at any time, including, but not limited to, any accounts of the
Guarantor at any of the Lenders. In the further event the Lenders obtain a
final judgment against the Guarantor upon this Guaranty, the judgment shall
bear interest not at the judgment rate but at the highest rate permitted by
applicable law from time to time in effect at the time of said judgment.
Further, the Guarantor agrees that the proper venue for any action which may
be brought under this Guaranty, in addition to any other venue permitted by
law, shall be in the county in which is located the Lenders' business office as
designated above or the office of an assignee of this Guaranty.
The liability of the Guarantor hereunder, if more than one, shall be joint
and several. The term "Lenders" shall be deemed to include the
aforementioned Lenders and all their respective departments and any individual,
partnership or corporation acting as their nominee or agent, and any of their
respective corporate subsidiaries or affiliates, the stock of which is owned
or controlled, directly or indirectly, by it or by any affiliate of any of
the Lenders. The term "Borrower" shall include the individual or
individuals, association, partnership, corporation or other entity named
herein as Borrower and (a) any successor individual or individuals,
association, partnership, corporation or other entity to which all or
substantially all of the business or assets of said Borrower shall have been
transferred, (b) in the case of a partnership Borrower, any new partnership
which shall have been created by reason of the admission of any new partner
or partners therein and/or the dissolution of the existing partnership by the
death, resignation or other withdrawal of any partner, and (c) in the case of
a corporate Borrower, any other corporation into or with which said Borrower
shall have been merged, consolidated, reorganized, purchased or absorbed.
12. FINANCIAL STATEMENTS.
At the request of the Lenders, the Guarantor shall, from time to
time, prepare and deliver to the Lenders a complete and current financial
statement of the Guarantor setting forth all the assets and liabilities of
the Guarantor (and to the extent any person other than the Guarantor has any
interest in said assets or any person other than the Guarantor is jointly
liable for any of said obligation, said matters shall be set forth in their
entirety in the financial statements) all signed by the Guarantor under oath
as being true and correct. To the extent any assets or liabilities set forth
on said financial statement are owned by the Guarantor with his or
her spouse or for which there is any such joint liability, all said assets
shall be so specified and set forth.
13. COMPLETE AGREEMENT.
The whole of this Guaranty is herein set forth and there is no
verbal or other written agreement, and no understanding or custom affecting
the terms hereof. This Guaranty can be modified only by a written instrument
signed by the party to be charged therewith.
THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
<PAGE> 39
WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS
ENTERING INTO THIS AGREEMENT.
IN WITNESS WHEREOF, The Guarantor has signed this agreement on the 28th
day of April, 1997.
Signed, sealed and delivered
in the presence of:
ANSCO & ASSOCIATES, INC.
a Florida corporation
/s/ Steven Nielsen
WITNESS
/s/ Carmen Alvarez By: /s/ Thomas R. Pledger
WITNESS Thomas R. Pledger, Vice-President
ADDRESS________________________
________________________
STATE OF Georgia
COUNTY OF DeKalb
The foregoing instrument was acknowledged before me by Thomas R. Pledger, as
Vice-President of ANSCO & ASSOCIATES, INC ., a Florida corporation, the 28th
day of April, 1997.
/s/ Nancy Lynn Ward
(NOTARIAL SEAL) NOTARY PUBLIC
My commission expires:August 17, 1998
