FIRST AMENDMENT TO CREDIT AGREEMENT AND LIMITED WAIVER
FIRST
AMENDMENT TO CREDIT
AGREEMENT
AND LIMITED WAIVER
This
FIRST AMENDMENT TO CREDIT AGREEMENT AND LIMITED WAIVER (this “First Amendment”)
dated as of September 11, 2009 made by and among CYALUME TECHNOLOGIES, INC., a
Delaware corporation (the “Borrower”), CYALUME TECHNOLOGIES HOLDINGS, INC., a
Delaware corporation (the “Holding Company”) and TD BANK, N.A., as
Administrative Agent and as the Lender (the “Agent”).
Background
The
Borrower, the Holding Company and the Agent entered into a credit agreement (the
“Original Credit Agreement”) dated as of December 19, 2008. The
Borrower has requested a waiver of the Senior Leverage Ratio and the Total Debt
Service Coverage Ratio each for the quarter ending June 30, 2009. In
addition, the Borrower has requested an amendment to the Senior Leverage
Ratio.
NOW,
THEREFORE, in consideration of the promises and the agreements, provisions and
covenants herein contained, the Borrower, the Holding Company and the Agent
hereby agree as follows:
1. Limited
Waiver. Subject to the terms and conditions herein contained
and in reliance on the representations and warranties of the Borrower herein
contained, effective upon the satisfaction of the conditions precedent set forth
in section 3 below, the Agent hereby waives the requirement that the
Borrower be in compliance with the Total Debt Service Ratio contained in
section 12.1(b) of the Original Credit Agreement for the quarter ending
June 30, 2009, and the Agent hereby waives the requirement that the Borrower be
in compliance with the Senior Leverage Ratio contained in section 12.2 of the
Original Credit Agreement for the quarter ending June 30, 2009. The
foregoing limited waivers are limited to the waivers of the specific Total Debt
Service Ratio and Senior Leverage Ratio for the specific time period referred to
in this section 1 and is not a commitment or agreement to grant any waiver in
the future.
2. Amendment. Subject
to the terms and conditions herein contained and in reliance on the
representations and warranties of the Borrower herein contained, effective upon
satisfaction of the conditions precedent contained in section 3
below:
(a) Section 1.1 “Definitions” of the Original
Credit Agreement is hereby amended by deleting the text of the defined terms
below and inserting the following in lieu thereof is hereby amended as
follows:
(1) Adjusted
EBITDA. With respect to any period, an amount equal to EBITDA
for such period plus to the extent
accounted for in EBITDA and without duplication, the sum of (i) Acquired
EBITDA and (ii) legal and professional fees related to Permitted
Acquisitions to the extent included in Consolidated Net Income. For
purposes of calculating trailing twelve (12) month Adjusted EBITDA for a portion
of the first twelve months following Closing, the following shall
apply: $1,193,000 of restructuring expenses for the quarter ending
March 31, 2008 are added, $700,000 of the Holding Company transaction expenses,
and $443,000 of one time Acquisition expenses are added, and $2,751,000 of gains
on settlement of lawsuit are subtracted.
(2) Applicable
Margin. Effective as of August 1, 2009, so long as no Event of
Default exists and subject to the terms of this definition, the applicable per
annum percentage set forth below; provided, that if any
Event of Default exists the applicable per annum percentage shall be that
specified for Level II.
|
Level
|
Senior Leverage
Ratio
|
LIBOR Rate
Margin
|
Base Rate
Margin
|
|
I
|
less
than 2.0:1.0
|
5.00%
|
5.00%
|
|
II
|
greater
than or equal to 2.0:1.0
|
5.50%
|
5.50%
|
Any
change in the Applicable Margin required pursuant to the foregoing shall become
effective on the fifth (5th) Business
Day after the Agent receives the Borrower’s officer’s certificate under Section
10.4 for the Borrower’s fiscal quarter or year-end, as the case may be, in
question; provided that
interest rate reductions shall become final only on the basis of Borrower’s
annual audited financial statements and (a) in the event that such annual
audited financial statements establish that the Borrower was not entitled to a
rate reduction which was previously granted, the Borrower shall, upon written
demand by the Agent, repay to the Agent an amount equal to the excess of
(i) interest at the rate which should have been charged based on such
annual audited financial statement(s) to (ii) the rate actually
charged on the basis of the Borrower’s quarterly financial statement(s) and
(b) in the event that such annual audited financial statements establish
the Borrower was entitled to a rate reduction which was previously not granted,
the Agent shall, upon written demand by the Borrower, apply the excess of
(i) the rate actually charged on the basis of the Borrower’s quarterly
financial statement(s) to (ii) interest at the rate which should have
been charged based on such annual audited financial statement(s), to the payment
of principal outstanding under the Term A Note and if no amounts are outstanding
thereunder, under the Term B Note, in inverse order of maturity without the
payment of any premium of penalty and if not amounts are outstanding thereunder
to the payments of the Revolving Credit Loans and if no Revolving Credit Loans
are outstanding such excess shall be remitted to the Borrower; provided, that in the
event of a dispute as to the appropriate fiscal quarter as to which any
adjustment should be allocated, the decision of the independent accountants of
the Borrower shall be made in accordance with GAAP and shall be binding upon the
Agent and the Borrower absent manifest error; and, provided further, that in the
event that the Borrower fails to provide any financial statements or officer’s
certificate on a timely basis in accordance with Section 10.4, any interest
rate increase payable as a result thereof shall be retroactively effective to
the date on which the financial statements or officer’s certificate, as the case
may be, should have been received by the Agent in accordance with Section 10.4
and the Borrower shall pay any amount due as a result thereof upon written
demand from the Agent . The Agent shall send the Borrower a written
acknowledgement of each change in the Applicable Margin in accordance with the
Agent’s customary procedures as in effect from time to time, but the failure to
send such acknowledgement shall have no effect on the effectiveness or
applicability of the foregoing provisions of this definition or the Borrower’s
obligations with respect to payment and calculation of interest on the
Loans.
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(3) Borrowing
Base. At the relevant time of reference thereto, an amount
determined by the Agent by reference to the most recent Borrowing Base Report
delivered to the Agent pursuant to §10.4(h), as adjusted pursuant to the
provisions below, which is equal to the sum of: 80% of Eligible
Accounts Receivable plus the lesser of
(i) $2,500,000 which amount will decrease in the amount of $100,000 on the
last day of each month with the first such reduction occurring on August 31,
2009 until December 31, 2009 (when the amount of this subsection (i) will be
$2,000,000 or (ii) 50% of Eligible Raw Material and Finished
Goods Inventory.
The
Required Lenders may, in their reasonable discretion, from time to time, in
accordance with §2.7: (x) reduce the lending formula with
respect to any Eligible Accounts Receivable to the extent that the Required
Lenders reasonably determine that: (i) the dilution with respect
of the Accounts Receivable for any period has increased in any material respect
or may be reasonably anticipated to increase in any material respect above
historical levels, or (ii) the general creditworthiness of account debtors
or other obligors of the Borrower has declined materially or (y) reduce the
lending formula with respect to any Eligible Raw Material and Finished Goods
Inventory to the extent that the Required Lenders determine
that: (i) the number of days of the turnover of the inventory
owned by Borrower for any period has changed in any material adverse respect,
(ii) the liquidation value of any Eligible Raw Material and Finished Goods
Inventory, or any category thereof, has materially decreased, or (iii) the
nature and quality of the inventory has changed materially and
adversely. In determining whether to reduce the lending formula(s),
the Required Lenders may consider events, conditions, contingencies or risks
which are also considered in determining Eligible Accounts Receivable and
Eligible Raw Material and Finished Goods Inventory.
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(4) EBITDA. With
respect to any period, an amount equal to the Consolidated Net Income of the
Borrower and its Subsidiaries for such period, plus to the extent
accounted for in Consolidated Net Income during such period and without
duplication the sum of: (i) depreciation and amortization,
(ii) Consolidated Total Interest Expense for such period,
(iii) non-cash expenses, (iv) income tax expense and
(v) extraordinary losses (net of tax effects) approved by the Agent in
writing, all as determined in accordance with GAAP minus the sum
of: (a) interest and dividend income during such period,
(b) gain on the sale of assets other than the sale of inventory in the
ordinary course of business during such period, (c) extraordinary gains
during such period, and (d) any non-cash components of income during such
period.
(5) Revolving
Credit Loan Maturity Date. December 31, 2010, unless sooner
occurring following acceleration.
(6) Total
Debt Service Coverage Ratio. The ratio of (i) EBITDA for
the two fiscal quarters then ending (including deductions for any Restricted
Payments during the period) to (ii) Consolidated Total Debt Service for the
same period.
(b) Section
6.2 “Interest on
Loans” of the Original Credit Agreement is hereby amended by deleting the
text contained therein and inserting the following in lieu thereof:
Section
6.2 Interest
on Loans.
(a) Unless
an Event of Default shall have occurred and the Default Rate applies, the
outstanding principal of the Term Loans shall bear interest at (x) the Reserve
Adjusted LIBOR plus the Applicable Margin for the LIBOR Rate Loans or the Base
Rate plus the Applicable Margin for the Base Rate Loans.
(b) Unless
an Event of Default shall have occurred and the Default Rate applies, the
outstanding principal of the Revolving Credit Loans shall bear interest at a
rate per annum selected by the Borrower equal to:
(i) the
Base Rate plus the Applicable Margin for the Base Rate Loans; or
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(ii) Reserve
Adjusted LIBOR plus the Applicable Margin for the LIBOR Rate Loans.
(c) The
Borrower promises to pay interest on the outstanding amount of each Revolving
Credit Loan, in arrears, on the first day of each calendar month commencing with
the payment to be made on September 1, 2009 (subject to the Following
Business Day Convention).
(d) The
Borrower promises to pay interest on the outstanding amount of each of the Term
Loans, in arrears, on the first day of each calendar month commencing with the
payment to be made on September 1, 2009 (subject to the Following
Business Day Convention).
(c) Section
11.4 “Restricted
Payments” contained in the Original Credit Agreement is hereby amended by
deleting the text contained therein and inserting the following in lieu
thereof:
Section
11.4 Restricted
Payments. The Borrower will not and will not permit any of its
Subsidiaries to make any Restricted Payment:
(i) provided, that: the
Borrower may make a Distribution to the Holding Company to allow the Holding
Company to make a payment of the Management Fee under the Management Agreement
in the amount of such Management Fees upon such payment, so long as:
(x) the aggregate amount of all of such payments made pursuant to this
clause (a) shall not exceed $21,000 in any calendar month and (y) both
at the time of and after giving effect to each such payment no Default or Event
of Default shall have occurred and be continuing or would be caused if such
payment were made;
(ii) provided, that so
long as no Default or Event of Default has occurred and is continuing, the
Borrower may make a Distribution to the Holding Company to allow the Holding
Company to pay out-of-pocket expenses for accounting, board of director fees and
expenses, investor relations, legal, SEC reporting and other operating costs
(excluding such costs and expenses incurred in connection with closing the
Acquisition and this financing transaction) in an amount not to exceed $500,000
in any fiscal year of the Borrower;
(iii) provided, that any
Subsidiary of the Borrower may make a Distribution to the Borrower;
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(iv) provided, that the
Borrower may make payments on Subordinated Debt permitted under an Agent
Approved Subordination Agreement;
(v) provided, that the
Borrower may pay to the Seller under the Purchase Agreements net cash proceeds
actually received which it is required to pay to such Sellers from the
litigation described in Section 8.12 of the Purchase Agreement in effect on the
date hereof; or
(vi) provided, that the
Borrower may make a Distribution to the Holding Company to allow the Holding
Company to pay costs and expenses, including, without limitation, legal fees,
incurred in connection with closing the Acquisition and this financing
transaction so long as: (x) the aggregate amount of such payments
made pursuant to this clause (f) shall not exceed $150,000 in any fiscal quarter
and (y) both at the time of and after giving effect to each such payment no
Default or Event of Default shall have occurred and be continuing or would be
caused if such payment were made.
(d) Section
12.2 “Leverage
Ratio” contained in the Original Credit Agreement is deleted in its
entirety and the following is hereby inserted in lieu thereof:
Section
12.2 Leverage Ratio. At
any time during the periods set forth below, the Senior Leverage Ratio shall not
be more than the ratio set forth below during such period:
|
Period
|
Ratio
|
|
The
date hereof through and including September 30, 2009
|
3.60:1.00
|
|
October
1, 2009, through and including December 31, 2009
|
3.00:1.00
|
|
January
1, 2010, through and including September 30, 2010
|
2.50:1.00
|
|
October
1, 2010, through and including September 30, 2011
|
2.00:1.00
|
|
October
1, 2011, and thereafter
|
1.50:1.00
|
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(e) The
original Credit Agreement is hereby amended by adding the following new Section
12.5 “Minimum Quarterly
EBITDA”:
Section
12.5 Minimum Quarterly EBITDA. At any time during the periods set
forth below the minimum EBITDA of the Borrower and its subsidiaries for the
fiscal quarter then ending shall not be less than the amount set forth
below:
|
Quarterly
Date
|
Minimum
EBITDA for Quarter
|
|
September
30, 2009
|
$1,700,000
|
|
December
31, 2009
|
$1,700,000
|
|
March
31, 2010 and the last day of each quarter thereafter
|
$2,000,000
|
3. Conditions
Precedent. The provisions of this First Amendment shall be
effective as of the date on which all of the following conditions shall be
satisfied:
(a) the
Borrower shall have delivered to the Agent a fully executed counterpart of this
first amendment;
(b) the
Borrower shall have paid all fees, costs and expenses owing to the Agent and its
counsel on or before the date hereof;
(c) the
Agent shall have indicated its consent and agreement by executing this First
Amendment;
(d) the
Borrower shall have delivered certified copies of the resolutions of its Board
of Directors approving the execution of this First Amendment and the actions
contemplated herein, in form and substance satisfactory to the Agent;
and
(e) the
Borrower shall have paid the Agent $75,000 for this First
Amendment.
4. Miscellaneous.
(a) Ratification. The
terms and provisions set forth in this First Amendment shall modify and
supersede all inconsistent terms and provisions set forth in the Original Credit
Agreement and except as expressly modified and superseded by this First
Amendment, the terms and provisions of the Original Credit Agreement and the
other Loan Documents are ratified and confirmed and shall continue in full force
and effect. The Borrower and the Agent agree that the Original Credit Agreement
as amended hereby and the other Loan Documents shall continue to be legal,
valid, binding and enforceable in accordance with their respective terms. For
all matters arising prior to the effective date of this First Amendment, the
Original Credit Agreement (as unmodified by this Amendment) shall
control. The Borrower hereby acknowledges that, as of the date
hereof, the security interests and liens granted to the Agent under the Credit
Agreement and the other Loan Documents are in full force and effect, are
properly perfected and are enforceable in accordance with the terms of the
Credit Agreement and the other Loan Documents.
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(b) Representations
and Warranties. The Borrower hereby represents and warrants to
the Agent that the representations and warranties set forth in the Loan
Documents, after giving effect to the waiver contained in this First Amendment,
are true and correct in all material respects on and as of the date hereof, with
the same effect as though made on and as of such date except with respect to any
representations and warranties limited by their terms to a specific
date. The Borrower further represents and warrants to the Agent that
the execution, delivery and performance by the Borrower of this consent letter
(i) are within the Borrower’s power and authority; (ii) have been duly
authorized by all necessary corporate and shareholder action; (iii) are not in
contravention of any provision of the Borrower’s certificate or articles of
incorporation or bylaws or other organizational documents; (iv) do not violate
any law or regulation, or any order or decree of any Governmental Authority; (v)
do not conflict with or result in the breach or termination of, constitute a
default under or accelerate any performance required by, any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which the
Borrower is a party or by which the Borrower or any of its property is bound;
(vi) do not result in the creation or imposition of any Lien upon any of the
property of the Borrower other than in favor of Agent; (vii) do not require the
consent or approval of any Governmental Authority. All
representations and warranties made in this First Amendment shall survive the
execution and delivery of this First Amendment, and no investigation by the
Agent shall affect the representations and warranties or the right of the Agent
to rely upon them.
(c) Release. In
addition, to induce the agent to agree to the terms of this first amendment, the
borrower represents and warrants that as of the date of its execution of this
first amendment there are no claims or offsets against or rights of recoupment
with respect to or defenses or counterclaims to its obligations under the loan
documents and in accordance therewith it:
(i) Waives
any and all such claims, offsets, rights of recoupment, defenses or
counterclaims, arising prior to the date of its execution of this amendment
and
(ii) Releases
and discharges the agent and its officers, directors, employees, agents and
affiliates (collectively the "released parties") from any and all liabilities,
claims, causes of action, in law or equity, which the borrower or any guarantor
may have against any released party arising prior to the date hereof in
connection with the loan documents or the transactions contemplated
thereby.
(d) Reference
to Agreement. Each of the Loan Documents, including the
Original Credit Agreement and any and all other agreements, documents, or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Original Credit Agreement as amended hereby, are
hereby amended so that any reference in such Loan Documents to the Original
Credit Agreement shall mean a reference to the Original Credit Agreement as
amended hereby.
(e) Expenses
of the Agent. As provided in the Credit Agreement, the
Borrower agrees to pay all reasonable costs and expenses incurred by the Agent
in connection with the preparation, negotiation, and execution of this First
Amendment, including without limitation, the reasonable costs and fees of the
Agent’s legal counsel.
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(f) Severability. Any
provision of this First Amendment held by a court of competent jurisdiction to
be invalid or unenforceable shall not impair or invalidate the remainder of this
First Amendment and the effect thereof shall be confined to the provision so
held to be invalid or unenforceable.
(g) Applicable
Law. This Amendment shall be governed by and construed in
accordance with the laws of The Commonwealth of Massachusetts and the applicable
laws of the United States of America.
(h) Successors
and Assigns. This First Amendment is binding upon and shall
inure to the benefit of the Agent, the Holding Company and the Borrower, and
their respective successors and assigns, except the Borrower may not assign or
transfer any of its rights or obligations hereunder without the prior written
consent of the Agent.
(i) Counterparts. This
First Amendment may be executed in one or more counterparts and on facsimile
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
agreement.
(j) Effect
of Waiver. No consent or waiver, express or implied, by the
Agent to or for any breach of or deviation from any covenant, condition or duty
by the Borrower shall be deemed a consent or waiver to or of any other breach of
the same or any other covenant, condition or duty.
(k) Headings. The
headings, captions, and arrangements used in this Amendment are for convenience
only and shall not affect the interpretation of this Amendment.
(l) Entire
Agreement. This First
Amendment embodies the entire agreement among the parties hereto with respect to
the subject matter thereof, and supersedes any and all prior representations and
understandings, whether written or oral, relating to this
Amendment. There are no oral agreements among the parties hereto with
respect to the subject matter hereof.
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IN
WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the
date first above written.
| BORROWER | |||
| CYALUME TECHNOLOGIES, INC. | |||
|
|
By:
|
/s/ Xxxxxxx Xxxxxxxx | |
| Name: Xxxxxxx Xxxxxxxx | |||
| Title: Chief Financial Officer | |||
| HOLDING COMPANY | |||
| CYALUME TECHNOLOGIES HOLDINGS, INC. | |||
|
|
By:
|
/s/ Xxxxx Xxxxxxx | |
| Name: Xxxxx Xxxxxxx | |||
| Title: Chief Executive Officer | |||
| AGENT | |||
| TD BANK, N.A. | |||
|
|
By:
|
/s/ Xxxx Xxxxx | |
| Name: Xxxxxxx X. Xxxxx | |||
| Title: Senior Vice President | |||
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