Exhibit 10.1
SECOND AMENDMENT AND CONSENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement (herein, the "Amendment")
is entered into as of August 9, 2007, among CalAmp Corp., a Delaware
corporation (the "Borrower"), the lenders party hereto (herein, the
"Lenders"), and Bank of Montreal, as administrative agent for the Lenders
(the "Administrative Agent").
PRELIMINARY STATEMENTS:
A. The Borrower, certain subsidiaries of the Borrower as guarantors,
the Administrative Agent, and the other Lenders have entered into that
certain Credit Agreement dated as of May 26, 2006 (such Credit Agreement,
as the same has been or may be amended, modified or restated from time to
time, hereinafter referred to as the "Credit Agreement"). All defined
terms used herein shall have the same meaning as in the Credit Agreement
unless otherwise defined herein.
B. The Borrower has requested that the Lenders (i) consent to the
sale of its TelAlert business, and (ii) make certain amendments to the
Credit Agreement, and the Lenders are willing to consent to such sale and
so amend the Credit Agreement, all in the manner and on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. NOTICE OF DEFAULT AND RESERVATION OF RIGHTS.
The Borrower has disclosed to the Lenders that it was in default of
Sections 8.21(a) (Total Leverage Ratio), 8.21(b) (Net Worth) and 8.21(c)
(Fixed Charge Coverage Ratio) of the Credit Agreement as of June 2, 2007
(collectively, the "Existing Defaults"). The Lenders have not waived the
Existing Defaults, or any other default which may exist under the Loan
Documents, and the Lenders expressly reserve all of their rights and
remedies with respect to the Existing Defaults and such other defaults.
In light of the Borrower's inability to satisfy the conditions
precedent set forth in Section 7.1 of the Credit Agreement, any request
for credit under the Credit Agreement shall be made available to the
Borrower in the sole discretion of the Lenders on a case-by-case basis as
and when any such Loans or Letters of Credit are requested.
SECTION 2. CONSENT
The Borrower has notified the Lenders that the Borrower and its
Subsidiaries (including CalAmp Solutions, Inc.) intend to sell their
TelAlert business (the "TelAlert Sale") to MIR3, Inc. (the "Acquirer") for
a sale price not less than (i) $4,000,000 cash, (ii) monthly cash payments
of $140,000 for 18 months beginning the third month after closing of the
TelAlert Sale, and (iii) shares of the preferred stock of the Acquirer
which can be converted to 8% of the Acquirer's common stock (the "Stock
Consideration"), which preferred stock shall be worth not less than
$4,000,000 and shall have a liquidation preference of not less than
$4,000,000. The Borrower has requested that the Lenders consent to the
TelAlert Sale. To induce the Lenders to consent to the foregoing, by
signing below, the Borrower hereby represents, warrants and agrees that
(a) the sale price for the TelAlert Sale shall not be materially less than
as set forth above, (b) the 100% of the Net Cash Proceeds from the
TelAlert Sale (including, without limitation, the Net Cash Proceeds from
any Disposition of the Stock Consideration or any portion thereof whenever
it may occur) will be promptly after receipt thereof by the Borrower or
any Subsidiary paid over to the Administrative Agent to be held at a
collateral account under the control of the Administrative Agent and to be
disbursed pursuant to the written direction of the Required Lenders by no
later than August 20, 2007, (c) the Borrower shall deliver promptly after
the closing of the TelAlert Sale stock certificates evidencing the Stock
Consideration, together with blank stock powers therefor and (d) the
closing of the TelAlert Sale shall have occurred, if at all, on or before
September 30, 2007. By signing below, the Lenders hereby consent to the
TelAlert Sale as described above provided that the Borrower and its
Subsidiaries satisfy the conditions precedent set forth in Section 4
below.
SECTION 3. AMENDMENTS.
Subject to the satisfaction of the conditions precedent set forth in
Section 4 below, the Credit Agreement shall be and hereby is amended as
follows:
3.1. The following definition shall be added to Section 5.1 of the
Credit Agreement in appropriate alphabetical sequence:
"Disposition" means the sale, lease, conveyance or other disposition of
Property, other than sales or other dispositions expressly permitted under
Section 8.10(a)-(d), (f)-(h) hereof.
3.2. The definitions of "Net Cash Proceeds" and "Required Lenders"
appearing in Section 5.1 of the Credit Agreement shall be amended and
restated in their entirety to read as follows:
"Net Cash Proceeds" means, as applicable, (a) with respect to any
Disposition by a Person, cash and cash equivalent proceeds received by or
for such Person's account, net of (i) reasonable direct costs relating to
such Disposition and (ii) sale, use or other transactional taxes paid or
payable by such Person as a direct result of such Disposition and (b) with
respect to any offering of equity securities of a Person or the issuance
of any Indebtedness for Borrowed Money by a Person, cash and cash
equivalent proceeds received by or for such Person's account, net of
reasonable legal, underwriting, and other fees and expenses incurred as a
direct result thereof.
"Required Lenders" means, as of the date of determination thereof, at
least 2 Lenders whose outstanding Loans and interests in Letters of Credit
and Unused Revolving Credit Commitments constitute more than 51% of the
sum of the total outstanding Loans, interests in Letters of Credit, and
Unused Revolving Credit Commitments of the Lenders; provided, in the event
there is only one Lender such Lender shall constitute the Required
Lenders.
3.3. Section 8.5 of Credit Agreement shall be amended by deleting
the period at the end of clause (j) and adding the following clauses
thereto:
"(k) No later than Monday of each week (beginning August 20, 2007),
the Borrower shall provide to the Administrative Agent and the Lenders a
cash balance report (reflecting actual cash receipts and cash
disbursements of the Borrower and its Subsidiaries from the prior week,
projected cash receipts and cash disbursements of the Borrower and its
Subsidiaries for such week and a 5-week cash balance forecast showing
projected cash receipts and cash disbursements of the Borrower and its
Subsidiaries over the following 5-week period, together with a
reconciliation of actual cash receipts and cash
disbursements of the Borrower and its Subsidiaries from the prior week
against the cash balance forecast previously furnished to the
Administrative Agent and the Lenders and showing any deviations on a
cumulative basis), prepared by the Borrower and in form and substance, and
with such detail, as the Administrative Agent may request;
(l) No later than Monday of every week (beginning August 20, 2007, a
report on the status of the Echostar matter, including updated valuation
analysis of the financial impact of such matter;
(m) No later than Monday of every other week (beginning August 20,
2007), the Borrower shall provide to the Administrative Agent and the
Lenders an updated accounts receivable listing, a current accounts
receivable and accounts payable aging report, and a report regarding
Echostar inventory held for potential rework, prepared by the Borrower and
in form and substance, and with such detail, as the Administrative Agent
may request; provided that the Borrower shall provide written notice of
any write offs promptly; and
(n) No later than 5 Business Days after the end of each fiscal month
(beginning September 10, 2007), the Borrower shall provide to the
Administrative Agent and the Lenders a report setting forth the cost basis
of inventory prepared by the Borrower and in form and substance, and with
such detail, as the Administrative Agent may request."
3.4. A new Section 8.25 shall be added to the Credit Agreement to
read as follows:
"Section 8.25. Financial Advisor. The Administrative Agent shall
have the right to engage on behalf of the Lenders a financial advisor,
selected promptly by the Borrower from an approved list provided by the
Administrative Agent to evaluate the financial condition, operating
performance, and business prospects of the Borrower and its Subsidiaries
and to perform such other information gathering or evaluation acts as may
be reasonably requested by the Administrative Agent, and the costs and
expenses of such financial advisor shall be borne by the Borrower and
constitute part of the Obligations. The Borrower shall take reasonable
steps to make available to such financial advisor and its representatives
such information respecting the financial condition, operating
performance, and business prospects of the Borrower and its Subsidiaries
as may be reasonably requested and shall make its officers, employees,
and, subject to approval by the Borrower, such approval not to be
unreasonably withheld, conditioned or delayed, independent public
accountants available with reasonable prior notice to discuss such
information with such financial advisor and its representatives."
SECTION 4. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction
of all of the following conditions precedent:
4.1. The Borrower, the Administrative Agent and the Lenders shall
have executed and delivered this Amendment.
4.2. The Administrative Agent shall have received and approved the
definitive sale agreement with respect to the TelAlert Sale.
4.3. The Administrative Agent shall have received copies (executed
or certified, as may be appropriate) of all legal documents or proceedings
taken in connection with the execution and delivery of this Amendment to
the extent the Administrative Agent or its counsel may reasonably request.
4.4. Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Administrative Agent and its
counsel.
4.5. The Guarantors shall have executed their reaffirmation,
acknowledgment, and consent in the space provided for that purpose below.
SECTION 5. CONDITIONS SUBSEQUENT.
The Borrower hereby agrees to deliver or cause to be delivered to
the Administrative Agent the following in form and substance satisfactory
to the Administrative Agent:
5.1. By no later than 7 days after the date hereof, an updated
Schedule 6.2 to the Credit Agreement and a listing of all owned and leased
real property of the Borrower and its Subsidiaries, together with a
description of the type of operation conducted at such property.
Failure to comply with any of the foregoing covenants shall
constitute an Event of Default under the Credit Agreement.
SECTION 6. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this
Amendment, the Borrower hereby represents to the Lenders that as of the
date hereof after giving effect to this Amendment the representations and
warranties set forth in Section 6 of the Credit Agreement (other than
Section 6.22 thereof) are and shall be and remain true and correct in all
material respects, except to the extent the same expressly relate to an
earlier date (except that the representations contained in Section 6.5
shall be deemed to refer to the most recent financial statements of the
Borrower delivered to the Administrative Agent) and the Borrower is in
compliance with the terms and conditions of the Credit Agreement (other
than the Existing Defaults) and no Default or Event of Default (other than
the Existing Defaults) has occurred and is continuing under the Credit
Agreement or shall result after giving effect to this Amendment.
SECTION 7. MISCELLANEOUS.
7.1. The Borrower and the Guarantors heretofore executed and
delivered to the Administrative Agent certain Collateral Documents and the
Borrower hereby, and the Guarantors by signing below, acknowledge and
agree, that, notwithstanding the execution and delivery of this Amendment,
the Collateral Documents remain in full force and effect and the rights
and remedies of the Agent and the Lenders, the obligations of the Borrower
and the Guarantors thereunder and the liens and security interests created
and provided for thereunder remain in full force and effect and shall not
be affected, impaired or discharged hereby. Nothing herein contained
shall in any manner affect or impair the priority of the liens and
security interests created and provided for by the Collateral Documents as
to the indebtedness which would be secured thereby prior to giving effect
to this Amendment.
7.2. Except as specifically amended herein, the Credit Agreement
shall continue in full force and effect in accordance with its original
terms. Reference to this specific Amendment need not be made in the
Credit Agreement, the Notes, or any other instrument or document executed
in connection therewith, or in any certificate, letter or communication
issued or made pursuant to or with respect to the Credit Agreement, any
reference in any of such items to the Credit Agreement being sufficient to
refer to the Credit Agreement as amended hereby.
7.3. The Borrower agrees to pay on demand all reasonable costs and
expenses of or incurred by the Administrative Agent in connection with the
negotiation, preparation, execution and delivery of this Amendment,
including the reasonable fees and expenses of counsel for the
Administrative Agent.
7.4. This Amendment may be executed in any number of counterparts,
and by the different parties on different counterpart signature pages, all
of which taken together shall constitute one and the same agreement. Any
of the parties hereto may execute this Amendment by signing any such
counterpart and each of such counterparts shall for all purposes be deemed
to be an original. This Amendment shall be governed by the internal laws
of the State of New York.
[SIGNATURE PAGE TO FOLLOW]
This Second Amendment and Consent to Credit Agreement is entered
into as
of the date and year first above written.
"BORROWER"
CALAMP CORP.
By /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President of Finance
Accepted and agreed to by the Required Lenders.
"LENDERS"
BANK OF MONTREAL, acting through its Chicago Branch, in its individual
capacity
as a Lender, as L/C Issuer, and as Administrative Agent
By /s/ Xxxxxxx Xxxxxxxxxxx
Name Xxxxxxx Xxxxxxxxxxx
Title Director
UNION BANK OF CALIFORNIA, N.A.
By /s/ Xxxxxx Xxxxxx
Name Xxxxxx Xxxxxx
Title Vice President
BANK OF THE WEST
By /s/ E. Xxxxx Xxxxx
Name E. Xxxxx Xxxxx
Title Senior Vice President
REAFFIRMATION, ACKNOWLEDGEMENT AND CONSENT OF GUARANTORS
Each of the undersigned, the Guarantors, heretofore executed and
delivered to the Administrative Agent, on behalf of the Lenders, the
Credit Agreement or an Additional Guarantor Supplement. Each of the
undersigned hereby consents to the Second Amendment and Consent to Credit
Agreement (the "Amendment") set forth above, including, without
limitation, Section 5.1 thereof, and confirms that its Guaranty, and all
obligations of the undersigned thereunder, remains in full force and
effect. Each of the undersigned further agrees that the consent of the
undersigned to any further amendments to the Credit Agreement shall not be
required as a result of this consent having been obtained. Each of the
undersigned acknowledges that the Lenders are relying on the assurances
provided herein in entering into the Amendment.
"GUARANTORS"
CALAMP SOLUTIONS HOLDINGS, INC.
By /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
CALAMP SOLUTIONS, INC.
By /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
DATARADIO HOLDINGS, INC.
By /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
DATARADIO CORPORATION
By /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
DATARADIO COR LTD.
By /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Treasurer
