THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENTS AND WAIVER OF DEFAULT
Exhibit 10.21
THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENTS
AND WAIVER OF DEFAULT
THIS THIRD AMENDMENT TO CREDIT AND SECURITY AGREEMENTS AND WAIVER OF DEFAULT (the “Amendment”), dated June 11, 2010, is entered into by and between CAPSTONE TURBINE CORPORATION, a Delaware corporation (“Company”), and XXXXX FARGO BANK, NATIONAL ASSOCIATION (“Xxxxx Fargo”), acting through its Xxxxx Fargo Business Credit operating division.
RECITALS
A. Company and Xxxxx Fargo are parties to (i) a Credit and Security Agreement dated February 9, 2009 (as amended by that certain First Amendment to Credit and Security Agreements, dated June 9, 2009 (“First Amendment”), and that certain Second Amendment to Credit and Security Agreements and Waiver of Defaults, dated November 5, 2009 (“Second Amendment”), and as further amended from time to time, the “Domestic Credit Agreement”), and (ii) a Credit and Security Agreement (Ex-Im Subfacility), dated February 9, 2009 (as amended by the First Amendment and the Second Amendment and further amended from time to time, the “Ex-Im Credit Agreement”; and together with the Domestic Credit Agreement, the “Credit Agreements”). Capitalized terms used in these recitals have the meanings given to them in the Credit Agreements unless otherwise specified.
B. Company has requested that (i) certain amendments be made to the Credit Agreements, and (ii) an Event of Default be waived, both of which Xxxxx Fargo is willing to agree to pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:
1. Section 5.2(a) of the Credit Agreements. Section 5.2(a) of the Credit Agreements is hereby deleted in its entirety and replaced with the following:
“(a) Minimum Book Net Worth. Company shall maintain a Book Net Worth, determined as of the following test dates, in an amount not less than the amount set forth for each such test date (numbers appearing between “< >” are negative):
| Test Date |
| Minimum Book Net Worth |
| |
| June 30, 2010 |
| $ | 64,346,000 |
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| September 30, 2010 |
| $ | 57,671,000 |
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| December 31, 2010 |
| $ | 52,983,000 |
|
| March 31, 2011 |
| $ | 50,090,000 |
|
2. Section 5.2(b) of the Credit Agreements. Section 5.2(b) of the Credit Agreements is hereby deleted in its entirety and replaced with the following:
“(a) Minimum Net Income. Company shall achieve Net Income, measured on each of the following test dates described below, for the quarter period ending on each such test date, Net Income of not less than the amount set forth opposite each such test date (numbers appearing between “< >” are negative):
| Test Date |
| Minimum Net Income |
| |
| June 30, 2010 |
| $ | <11,283,000> |
|
| September 30, 2010 |
| $ | <9,859,000> |
|
| December 31, 2010 |
| $ | <7,549,000> |
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| March 31, 2011 |
| $ | <5,161,000> |
|
3. Section 5.28 of the Credit Agreement. The following new Section 5.28 is hereby added to the Credit Agreements immediately after Section 5.27 of the Credit Agreements:
“5.28 Cash Collateral. Company shall establish and maintain a pledge of cash collateral in an amount of least $5,000,000 at all times (the “Cash Collateral”), subject to the following terms and conditions: (i) the Cash Collateral shall be held in a deposit account or securities account maintained at Xxxxx Fargo Bank, National Association or an affiliate of Xxxxx Fargo (the “Cash Collateral Account”); (ii) to secure the Indebtedness, Company hereby grants to Xxxxx Fargo a security interest in all of Company’s right, title, and interest in and to the Cash Collateral, the Cash Collateral Account, all interest that accrues (if any) on the Cash Collateral, and all products and proceeds thereof, in each case whether now existing or hereafter arising; (iii) Company shall have no access to the Cash Collateral or the Cash Collateral Account (i.e., the Cash Collateral Account shall be deemed “blocked”), until this Agreement has been terminated and all Indebtedness has been paid in full; (iv) any interest (if any) that may accrue on the Cash Collateral shall be held in the Cash Collateral Account, and shall itself be deemed to be Cash Collateral; (v) during any Default Period, Xxxxx Fargo may, in Xxxxx Fargo’s sole discretion, apply all or any portion of the Cash Collateral to the Indebtedness; (vi) the Cash Collateral, Cash Collateral Account, all interest that accrues (if any) on the Cash Collateral, and all products and proceeds thereof shall be deemed to be “Collateral” under this Agreement and the other Loan Documents; (vii) Company shall not have any right to access the foregoing collateral so long as this Agreement is in effect or any Indebtedness remains outstanding, Company shall not transfer (or attempt to transfer) any such collateral to any Person, and Company shall keep such collateral free and clear of all Liens (except in favor Xxxxx Fargo); and (viii) Company shall execute and/or deliver any instruments, documents, assignments, security agreements, control agreements, financing statements, and any other agreement that Xxxxx Fargo may request to evidence, maintain, perfect, and/or ensure the first priority of Xxxxx Fargo’s security interest in the foregoing collateral; provided that failure to execute or deliver any such items shall not affect the foregoing grant of the security interest in the foregoing collateral, and Xxxxx Fargo shall be deemed to have a duly perfected and first priority security interest in all such collateral at all times.”
4. Exhibit E to the Domestic Credit Agreement. Exhibit E to the Domestic Credit Agreement is hereby deleted and replaced with Exhibit E-1 attached to this Amendment.
5. Exhibit E to the Ex-Im Credit Agreement. Exhibit E to the Ex-Im Credit Agreement is hereby deleted and replaced with Exhibit E-2 attached to this Amendment.
6. Waiver of Default. Company is in default of the following provision of the Credit Agreements (the “Existing Default”):
| Section/Covenant |
| Test Date |
| Section 5.2(b) |
| March 31, 2010 |
Upon the terms and subject to the conditions set forth in this Amendment (including, but not limited to, the effectiveness of this Amendment in accordance with Section 9 of this Amendment), Xxxxx Fargo hereby waives the Existing Default. This waiver shall be effective only in this specific instance and for the specific purpose for which it is given, and this waiver shall not entitle Company to any other or further waiver in any similar or other circumstances.
7. No Other Changes. Except as explicitly amended by this Amendment, all of the terms and conditions of the Credit Agreements shall remain in full force and effect and shall apply to any advance or letter of credit thereunder.
8. Accommodation Fee. Company shall pay Xxxxx Fargo as of the date hereof a fully earned, non-refundable accommodation fee in the amount of $50,000 in consideration of Xxxxx Fargo’s execution and delivery of this Amendment (the “Accommodation Fee”).
9. Conditions Precedent. This Amendment shall be effective when Xxxxx Fargo shall have received an executed original of this Amendment, together with each of the following, each in substance and form acceptable to Xxxxx Fargo in its sole discretion:
9.1 A Certificate of the Secretary of Company certifying as to (i) the resolutions of the board of directors of Company approving the execution and delivery of this Amendment, (ii) the fact that the certificate of incorporation and bylaws of Company, which were certified and delivered to Xxxxx Fargo pursuant to the Certificate of Authority of Company’s secretary or assistant secretary dated February 9, 2009, continue in full force and effect and have not been amended or otherwise modified except as set forth in the Certificate to be delivered, and (iii) the fact that the officers and agents of Company who have been certified to Xxxxx Fargo, pursuant to the Certificate of Authority of Company’s secretary or assistant secretary dated February 9, 2009, as being authorized to sign and to act on behalf of Company continue to be so authorized;
9.2 Consent and approval of this Amendment by the Export Import Bank of the United States, if required by Xxxxx Fargo;
9.3 The Acknowledgement and Agreement of Guarantor set forth at the end of this Amendment, duly executed by Guarantor;
9.4 Payment of the Accommodation Fee described in Section 8 of this Amendment;
9.5 A Securities Account Control Agreement; and
9.6 Such other matters as Xxxxx Fargo may require.
10. Representations and Warranties. Company hereby represents and warrants to Xxxxx Fargo as follows:
10.1 Company has all requisite power and authority to execute this Amendment and any other agreements or instruments required hereunder and to perform all of its obligations hereunder, and this Amendment and all such other agreements and instruments have been duly executed and delivered by Company and constitute the legal, valid and binding obligation of Company, enforceable in accordance with their terms.
10.2 The execution, delivery and performance by Company of this Amendment and any other agreements or instruments required hereunder have been duly authorized by all necessary corporate action and do not (i) require any authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect, having applicability to Company, or the certificate of incorporation or bylaws of Company, or (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which Company is a party or by which it or its properties may be bound or affected.
10.3 All of the representations and warranties contained in Section 4 of, and Exhibit D to, the Credit Agreements are true and correct on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date (in which case they shall continue to be true and correct as of such earlier date), provided that the Existing Default has occurred.
11. References. All references in the Credit Agreements to “this Agreement” shall be deemed to refer to the relevant Credit Agreement as amended hereby; and any and all references in the Security Documents to the Credit Agreements shall be deemed to refer to the relevant Credit Agreement as amended hereby.
12. No Waiver. Except as expressly provided in Section 6 of this Amendment, the execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Default under the Credit Agreements or a waiver of any breach, default or event of default under any Security Document or other document held by Xxxxx Fargo, whether or not known to Xxxxx Fargo and whether or not existing on the date of this Amendment.
13. Release. Company and the Guarantor signing the Acknowledgment and Agreement of Guarantor set forth below hereby absolutely and unconditionally release and forever discharge Xxxxx Fargo, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents, attorneys, and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise,
which Company or Guarantor has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown. It is the intention of the Company and Guarantor in executing this release that the same shall be effective as a bar to each and every claim, demand and cause of action specified and in furtherance of this intention the Company and Guarantor each waives and relinquishes all rights and benefits under Section 1542 of the Civil Code of the State of California, which provides:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MIGHT HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
The parties acknowledge that each may hereafter discover facts different from or in addition to those now known or believed to be true with respect to such claims, demands, or causes of action and agree that this instrument shall be and remain effective in all respects notwithstanding any such differences or additional facts.
14. Costs and Expenses. Company hereby reaffirms its agreement under the Credit Agreements to pay or reimburse Xxxxx Fargo on demand for all costs and expenses incurred by Xxxxx Fargo in connection with the Loan Documents, including without limitation all fees and disbursements of legal counsel. Without limiting the generality of the foregoing, Company specifically agrees to pay all fees and disbursements of counsel to Xxxxx Fargo for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto. Company hereby agrees that Xxxxx Fargo may, at any time or from time to time in its sole discretion and without further authorization by Company, make a loan to Company under the Credit Agreements, or apply the proceeds of any loan, for the purpose of paying any such fees, disbursements, costs and expenses and the fee set forth in Section 8 of this Amendment.
15. Miscellaneous. This Amendment and the Acknowledgment and Agreement of Guarantor may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and all of which counterparts, taken together, shall constitute one and the same instrument. Transmission by facsimile or “pdf” file of an executed counterpart of this Amendment shall be deemed to constitute due and sufficient delivery of such counterpart. Any party hereto may request an original counterpart of any party delivering such electronic counterpart. This Amendment and the rights and obligations of the parties hereto shall be construed in accordance with, and governed by, the laws of the State of California. In the event of any conflict between this Amendment and the Credit Agreements, the terms of this Amendment shall govern. The Export-Import Bank of the United States shall be an express intended beneficiary of this Amendment.
[Signatures on next page]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
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| XXXXX FARGO BANK, | |
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| NATIONAL ASSOCIATION | |
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| By: | /s/ Edit Kondorosi |
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| Print Name: | Edit Kondorosi |
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| Title: | Vice President |
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| CAPSTONE TURBINE CORPORATION | |
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| By: | /s/ Xxxxxx Xxxxx |
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| Print Name: | Xxxxxx Xxxxx |
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| Its: | Executive Vice President and CFO |
ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR
The undersigned, a guarantor of the indebtedness of Capstone Turbine Corporation (“Company”) to Xxxxx Fargo Bank, National Association (as more fully defined in the Amendment, “Xxxxx Fargo”), acting through its Xxxxx Fargo Business Credit operating division, pursuant to the separate Guaranty dated February 9, 2009 (“Guaranty”), hereby (i) acknowledges receipt of the foregoing Amendment; (ii) consents to the terms (including without limitation the release set forth in Section 13 of the Amendment) and execution thereof; (iii) reaffirms all obligations to Xxxxx Fargo pursuant to the terms of the Guaranty; and (iv) acknowledges that Xxxxx Fargo may amend, restate, extend, renew or otherwise modify the Credit Agreements and any indebtedness or agreement of the Company, or enter into any agreement or extend additional or other credit accommodations, without notifying or obtaining the consent of the undersigned and without impairing the liability of the undersigned under the Guaranty for all of the Company’s present and future indebtedness to Xxxxx Fargo.
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| CAPSTONE TURBINE INTERNATIONAL, INC. | |
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| By: | /s/ Xxxxxx Xxxxx |
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| Print Name: | Xxxxxx Xxxxx |
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| Title: | Executive Vice President and CFO |
Exhibit E-1
Exhibit E to Credit and Security Agreement
COMPLIANCE CERTIFICATE
| To: |
| Xxxxx Fargo Bank, National Association |
| Date: |
| [ , 200 ] |
| Subject: |
| Financial Statements |
In accordance with our Credit and Security Agreement dated February 9, 2009 (as amended from time to time, the “Credit Agreement”), attached are the financial statements of Capstone Turbine Corporation (the “Company”) dated [ , 200 ] (the “Reporting Date”) and the year-to-date period then ended (the “Current Financials”). All terms used in this certificate have the meanings given in the Credit Agreement.
A. Preparation and Accuracy of Financial Statements. I certify that the Current Financials have been prepared in accordance with GAAP, subject to year-end audit adjustments, and fairly present Company’s financial condition as of the Reporting Date.
B. Name of Company; Merger and Consolidation. I certify that:
(Check one)
| o |
| Company has not, since the date of the Credit Agreement, changed its name or jurisdiction of organization, nor has it consolidated or merged with another Person. |
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| o |
| Company has, since the date of the Credit Agreement, either changed its name or jurisdiction of organization, or both, or has consolidated or merged with another Person, which change, consolidation or merger: o was consented to in advance by Xxxxx Fargo in an Authenticated Record, and/or o is more fully described in the statement of facts attached to this Certificate. |
C. Events of Default. I certify that:
(Check one)
| o |
| I have no knowledge of the occurrence of an Event of Default under the Credit Agreement, except as previously reported to Xxxxx Fargo in a Record. |
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| o |
| I have knowledge of an Event of Default under the Credit Agreement not previously reported to Xxxxx Fargo in a Record, as more fully described in the statement of facts attached to this Certificate, and further, I acknowledge that Xxxxx Fargo may under the terms of the Credit Agreement impose the Default Rate at any time during the resulting Default Period. |
D. Litigation Matters. I certify that:
(Check one)
| o |
| I have no knowledge of any material adverse change to the litigation exposure of Company or any of its Affiliates or of any Guarantor. |
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| o |
| I have knowledge of material adverse changes to the litigation exposure of Company or any of its Affiliates or of any Guarantor not previously disclosed in Exhibit D, as more fully described in the statement of facts attached to this Certificate. |
E. Financial Covenants. I further certify that:
(Check and complete each of the following)
1. Minimum Book Net Worth. Pursuant to Section 5.2(a) of the Credit Agreement, as of the Reporting Date, Company’s Book Net Worth was $[ ], which o satisfies o does not satisfy the requirement that such amount be not less than the applicable amount set forth in the table below (numbers appearing between “< >” are negative) on the Reporting Date:
| Test Date |
| Minimum Book Net Worth |
| |
| June 30, 2010 |
| $ | 64,346,000 |
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| September 30, 2010 |
| $ | 57,671,000 |
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| December 31, 2010 |
| $ | 52,983,000 |
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| March 31, 2011 |
| $ | 50,090,000 |
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2. Minimum Net Income. Pursuant to Section 5.2(b) of the Credit Agreement, as of the Reporting Date, Company’s Net Income was [$ ], which o satisfies o does not satisfy the requirement that Net Income be not less than the amount set forth in the table below (numbers appearing between “< >” are negative) on the Reporting Date:
| Test Date |
| Minimum Net Income |
| |
| June 30, 2010 |
| $ | <11,283,000> |
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| September 30, 2010 |
| $ | <9,859,000> |
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| December 31, 2010 |
| $ | <7,549,000> |
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| March 31, 2011 |
| $ | <5,161,000> |
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3. Minimum Cash to Unreimbursed Line of Credit Advances Coverage Ratio. Pursuant to Section 5.2(c) of the Credit Agreement, as of the Reporting Date, at all times, Company has o has not o been in compliance with the requirement that the percentage of the unreimbursed Line of Credit Advances under the Revolving Note plus the L/C Amount plus outstanding “Advances” under the Ex-Im Credit Agreement to the
amount of cash plus Cash Equivalents of Company in which Xxxxx Fargo has a perfected first priority security interest be not greater than 80%.
4. Capital Expenditures. Pursuant to Section 5.2(d) of the Credit Agreement, for the year-to-date period ending on the Reporting Date, Company has expended or contracted to expend during the fiscal year ended , 200 , for Capital Expenditures, $ in the aggregate, which o satisfies o does not satisfy the requirement that such expenditures not exceed $7,500,000 in the aggregate during the fiscal year ended March 31, 2009, $10,000,000 in the aggregate during the fiscal year ended March 31, 2010, and zero for each subsequent fiscal year.
Attached are statements of all relevant facts and computations in reasonable detail sufficient to evidence Company’s compliance with the financial covenants referred to above, which computations were made in accordance with GAAP.
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| Capstone Turbine Corporation | |
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| By: |
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| Its: Chief Financial Officer |
Exhibit E-2
Exhibit E to Credit and Security Agreement (Ex-Im Subfacility)
COMPLIANCE CERTIFICATE
| To: |
| Xxxxx Fargo Bank, National Association |
| Date: |
| [ , 200 ] |
| Subject: |
| Financial Statements |
In accordance with our Credit and Security Agreement (Ex-Im Subfacility) dated February 9, 2009 (as amended from time to time, the “Credit Agreement”), attached are the financial statements of Capstone Turbine Corporation (the “Company”) dated [ , 200 ] (the “Reporting Date”) and the year-to-date period then ended (the “Current Financials”). All terms used in this certificate have the meanings given in the Credit Agreement.
F. Preparation and Accuracy of Financial Statements. I certify that the Current Financials have been prepared in accordance with GAAP, subject to year-end audit adjustments, and fairly present Company’s financial condition as of the Reporting Date.
G. Name of Company; Merger and Consolidation. I certify that:
(Check one)
| o |
| Company has not, since the date of the Credit Agreement, changed its name or jurisdiction of organization, nor has it consolidated or merged with another Person. |
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| o |
| Company has, since the date of the Credit Agreement, either changed its name or jurisdiction of organization, or both, or has consolidated or merged with another Person, which change, consolidation or merger: o was consented to in advance by Xxxxx Fargo in an Authenticated Record, and/or o is more fully described in the statement of facts attached to this Certificate. |
H. Events of Default. I certify that:
(Check one)
| o |
| I have no knowledge of the occurrence of an Event of Default under the Credit Agreement, except as previously reported to Xxxxx Fargo in a Record. |
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| o |
| I have knowledge of an Event of Default under the Credit Agreement not previously reported to Xxxxx Fargo in a Record, as more fully described in the statement of facts attached to this Certificate, and further, I acknowledge that Xxxxx Fargo may under the terms of the Credit Agreement impose the Default Rate at any time during the resulting Default Period. |
I. Litigation Matters. I certify that:
(Check one)
| o |
| I have no knowledge of any material adverse change to the litigation exposure of Company or any of its Affiliates or of any Guarantor. |
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| o |
| I have knowledge of material adverse changes to the litigation exposure of Company or any of its Affiliates or of any Guarantor not previously disclosed in Exhibit D, as more fully described in the statement of facts attached to this Certificate. |
J. Financial Covenants. I further certify that:
(Check and complete each of the following)
1. Minimum Book Net Worth. Pursuant to Section 5.2(a) of the Credit Agreement, as of the Reporting Date, Company’s Book Net Worth was $[ ], which o satisfies o does not satisfy the requirement that such amount be not less than the applicable amount set forth in the table below (numbers appearing between “< >” are negative) on the Reporting Date:
| Test Date |
| Minimum Book Net Worth |
| |
| June 30, 2010 |
| $ | 64,346,000 |
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| September 30, 2010 |
| $ | 57,671,000 |
|
| December 31, 2010 |
| $ | 52,983,000 |
|
| March 31, 2011 |
| $ | 50,090,000 |
|
2. Minimum Net Income. Pursuant to Section 5.2(b) of the Credit Agreement, as of the Reporting Date, Company’s Net Income was [$ ], which o satisfies o does not satisfy the requirement that Net Income be not less than the amount set forth in the table below (numbers appearing between “< >” are negative) on the Reporting Date:
| Test Date |
| Minimum Net Income |
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| June 30, 2010 |
| $ | <11,283,000> |
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| September 30, 2010 |
| $ | <9,859,000> |
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| December 31, 2010 |
| $ | <7,549,000> |
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| March 31, 2011 |
| $ | <5,161,000> |
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3. Minimum Cash to Unreimbursed Line of Credit Advances Coverage Ratio. Pursuant to Section 5.2(c) of the Credit Agreement, as of the Reporting Date, at all times, Company has o has not o been in compliance with the requirement that the percentage of the unreimbursed “Advances” plus the L/C Amount under the Domestic Facility Agreement plus outstanding “Advances” under the Domestic Facility Agreement
to the amount of cash plus Cash Equivalents of Company in which Xxxxx Fargo has a perfected first priority security interest be not greater than 80%.
4. Capital Expenditures. Pursuant to Section 5.2(d) of the Credit Agreement, for the year-to-date period ending on the Reporting Date, Company has expended or contracted to expend during the fiscal year ended , 200 , for Capital Expenditures, $ in the aggregate, which o satisfies o does not satisfy the requirement that such expenditures not exceed $7,500,000 in the aggregate during the fiscal year ended March 31, 2009, $10,000,000 in the aggregate during the fiscal year ended March 31, 2010, and zero for each subsequent fiscal year.
Attached are statements of all relevant facts and computations in reasonable detail sufficient to evidence Company’s compliance with the financial covenants referred to above, which computations were made in accordance with GAAP.
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| Capstone Turbine Corporation | |
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| By: |
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| Its: Chief Financial Officer |
