FIFTEENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENTS AND WAIVER OF DEFAULT
Exhibit 10.3
FIFTEENTH AMENDMENT TO CREDIT AND SECURITY
AGREEMENTS AND WAIVER OF DEFAULT
THIS FIFTEENTH AMENDMENT TO CREDIT AND SECURITY AGREEMENTS AND WAIVER OF DEFAULT (the “Amendment”), dated as of November 2, 2015, is entered into by and between CAPSTONE TURBINE CORPORATION, a Delaware corporation (“Company”), and XXXXX FARGO BANK, NATIONAL ASSOCIATION (“Xxxxx Fargo”).
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”), that certain Second Amendment to Credit and Security Agreements and Waiver of Defaults, dated November 5, 2009 (“Second Amendment”), that certain Third Amendment to Credit and Security Agreements and Waiver of Default, dated June 11, 2010 (“Third Amendment”), that certain Fourth Amendment to Credit and Security Agreements, dated June 29, 2010 (“Fourth Amendment”), that certain Fifth Amendment to Credit and Security Agreements, dated November 9, 2010 (“Fifth Amendment”), that certain Sixth Amendment to Credit and Security Agreement and Waiver of Default, dated March 23, 2011 (“Sixth Amendment”), that certain Seventh Amendment to Credit and Security Agreements and Waiver of Default, dated June 2, 2011 (“Seventh Amendment”), that certain Eighth Amendment to Credit and Security Agreements, dated September 27, 2011 (“Eighth Amendment”), that certain Ninth Amendment to Credit and Security Agreements and Waiver of Default, dated February 7, 2012 (“Ninth Amendment”), that certain Tenth Amendment to Credit and Security Agreement, dated June 11, 2012 (“Tenth Amendment”), that certain Eleventh Amendment to Credit and Security Agreement, dated June 5, 2013 (“Eleventh Amendment”), that certain Twelfth Amendment to Credit and Security Agreement, dated June 9, 2014 (“Twelfth Amendment”), that certain Thirteenth Amendment to Credit and Security Agreement, dated November 3, 2014 (“Thirteenth Amendment”), and that certain Fourteenth Amendment to Credit and Security Agreement, Waiver of Default, and Consent, dated June 10, 2015 (“Fourteenth 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, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment, the Ninth Amendment, the Tenth Amendment, the Eleventh Amendment, the Twelfth Amendment, the Thirteenth Amendment, and the Fourteenth Amendment, and as 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, all 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. Amendments to Credit Agreements. The Credit Agreements are amended as follows:
1.1 Section 1.2(a)(i) of the Credit Agreements. Section 1.2(a)(i) of the Credit Agreements is amended to read in its entirety as follows:
“(i) 85% of Eligible Accounts, during any period prior to December 1, 2015, 80% of Eligible Accounts, during the period December 1, 2015, through December 31, 2015, and 75% of Eligible Accounts on and after January 1, 2016, or (in each case) such lesser percentage of Eligible Accounts as Xxxxx Fargo in its sole discretion may deem appropriate; provided that the foregoing applicable rate may be reduced at any time by Xxxxx Fargo’s in its sole discretion by one percent (1%) for each percentage point by which Dilution on the date of determination is in excess of five percent (5.0%), plus”
1.2 Section 5.2(b) of the Credit Agreements. Section 5.2(b) of the Credit Agreements is amended to read in its entirety as follows:
“(b) Minimum Adjusted EBITDA. Company shall achieve Adjusted EBITDA, measured on each of the following test dates described below, for the periods specified below, of not less than the amount set forth opposite each such test date and test period (numbers appearing between “< >“ are negative):
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Test Date and Test Period |
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Minimum Adjusted EBITDA |
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Fiscal Year to Date Period ending |
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$<7,500,000> |
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Fiscal Year to Date Period ending |
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$<10,750,000> |
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Fiscal Year to Date Period ending |
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$<17,546,000> |
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Fiscal Year to Date Period ending |
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$<20,404,000> |
1.3 Section 5.28 of the Credit Agreement. Section 5.28 of the Credit Agreements is hereby amended to read in its entirety as follows:
“5.28 Cash Collateral. Company shall establish and maintain a pledge of cash collateral in the amount of $5,000,000 (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) except as provided below, 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 or except as provided below; (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) Xxxxx Fargo may, in Xxxxx Fargo’s sole discretion (and regardless of whether a Default Period is then existing), at any time apply all or any portion of the Cash Collateral to the Indebtedness (in any order selected by Xxxxx Fargo); (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) except as provided below, 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 reasonably 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. Notwithstanding any provision to the contrary herein, up to $2,500,000 of the Cash Collateral shall be released to Company subject to the following terms (including upon satisfaction of the following conditions precedent): (a) Company shall deliver an Authenticated Record to Xxxxx Fargo each time Company requests a release of the Cash Collateral, which Authenticated Record shall specify the amount of Cash Collateral to be released and the date of such release of Cash Collateral (provided that such release date shall be at least three (3) Business Days after receipt by Xxxxx Fargo of the Authenticated Record requesting such release of Cash Collateral and not more than 10 days after receipt by Xxxxx Fargo of the Authenticated Record); (b) no Default Period shall be existing as of the date of any release of the Cash Collateral; and (c) such release of the Cash Collateral shall occur after December 31, 2015, Xxxxx Fargo shall have received Company’s audited financial statements of Company for a fiscal year ending on or after December 31, 2015, and Xxxxx Fargo shall have confirmed that Company (x) remained in compliance with the financial covenants set forth in Section 5.2 of this Agreement at all times, and (y) Company’s Adjusted EBITDA for any such fiscal year was equal to or greater than $1.00.”
1.4 Exhibit A to Domestic Credit Agreement. Clause (o) of the defined term “Eligible Accounts” that appears in Exhibit A to the Domestic Credit Agreement is amended to read in its entirety as follows:
“(o) Accounts owed by an account debtor, regardless of whether otherwise eligible, to the extent that the aggregate balance of such Accounts exceeds 15% of the aggregate amount of all otherwise Eligible Accounts, but in each case the portion of the Accounts not in excess of the foregoing percentage may be deemed Eligible Accounts;”
2. Waiver of Default. Company is in default of the following provision of the Credit
Agreements (the “Existing Default”):
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Section/Covenant |
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Description |
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Section 5.2(b) |
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Company breached the minimum |
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 5 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.
3. No Other Changes. Except as explicitly amended by this Amendment, all of the terms and conditions of the Credit Agreements and the other Loan Documents shall remain in full force and effect and shall apply to any advance or letter of credit thereunder.
4. 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”).
5. 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:
5.1 A Certificate of Authority from the Company’s corporate secretary;
5.2 Payment of the Accommodation Fee described in Section 4 of this Amendment;
5.3 Consent and approval of this Amendment by the Export Import Bank of the United States, if required by Xxxxx Fargo;
5.4 The Acknowledgement and Agreement of Guarantor set forth at the end of this Amendment, duly executed by Guarantor; and
5.5 Such other matters as Xxxxx Fargo may require.
6. Representations and Warranties. Company hereby represents and warrants to Xxxxx Fargo as follows:
6.1 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.
6.2 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.
6.3 After giving effect to this Amendment, all of the representations and warranties contained in Section 4 of, and Exhibit D to, the Credit Agreements are true and correct in all material respects 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.
7. 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.
8. No Waiver. Except as expressly provided in Section 2 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.
9. 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 either 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.
10. 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 reasonable fees and disbursements of legal counsel. Without limiting the generality of the foregoing, Company specifically agrees to pay all reasonable 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 reasonable fees, disbursements, costs and expenses.
11. 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/Xxxxxxxxx Xxxxxxxx | ||
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Print Name: Xxxxxxxxx Xxxxxxxx |
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Title: Authorized Signatory |
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CAPSTONE TURBINE CORPORATION |
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By: |
/s/Xxxxx Xxxxxx |
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Print Name: Xxxxx Xxxxxx |
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Its: Chief Financial Officer & Chief Accounting |
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Officer | ||
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”), pursuant to the separate Guaranty dated February 9, 2009 (“Guaranty”), hereby (i) acknowledges receipt of the foregoing Fifteenth Amendment to Credit and Security Agreements and Waiver of Default (“Amendment”); (ii) consents and agrees to the terms (including, without limitation, the release set forth in Section 9 of the Amendment) and execution and performance 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/Xxxxx Xxxxxx | |
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Print Name: Xxxxx Xxxxxx | ||
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Title: Chief Financial Officer & Chief Accounting | ||
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Officer | |
