AMENDMENT NO. 1 (the ?Agreement?) to the Credit Agreement

Exhibit 10.1

 

Execution Version

 

 

AMENDMENT NO. 1

 

This Amendment No. 1 (the “ Agreement ”) to the Credit Agreement referred to below is dated as of July 8, 2009 and effective in accordance with Section 4 below, by and among L-1 IDENTITY SOLUTIONS OPERATING COMPANY (formerly known as L-1 Identity Solutions, Inc.), a Delaware corporation (the “ Borrower ”), L-1 IDENTITY SOLUTIONS, INC., a Delaware corporation (“ Holdings ”), each of the other Guarantors, each Lender party hereto, and BANK OF AMERICA, N.A., as administrative agent (the “ Administrative Agent ”) for the Lenders party to the Credit Agreement referred to below.

 

STATEMENT OF PURPOSE

 

WHEREAS, the Borrower, Holdings, the Lenders and the Administrative Agent are parties to the Second Amended and Restated Credit Agreement dated as of August 5, 2008 (as previously modified, as amended hereby and as further amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”).

 

WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders agree to amend the Credit Agreement as more specifically set forth herein. Subject to the terms and conditions set forth herein, the Administrative Agent and each of the Lenders party hereto have agreed to grant such requests of the Borrower.

 

NOW, THEREFORE, subject to the occurrence of the Effective Date (as defined below) pursuant to Section 4 hereof and in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.          Capitalized Terms . Except as otherwise provided herein, all capitalized undefined terms used in this Agreement (including, without limitation, in the introductory paragraph and the statement of purpose hereto) shall have the meanings assigned thereto in the Credit Agreement (as amended by this Agreement).

 

2.

Amendments .

 

(a)         Amendments to Section 1.01 . Section 1.01 (“Defined Terms”) of the Credit Agreement is hereby amended by:

 

(i)        deleting clause (a) of the definition of “Applicable Rate” in its entirety and replacing it with the following:

 

“(a)

with respect to Term Loans:

 

(i)        in the case of Term Loans constituting Tranche B-1 Term Loans, 4.50% in the case of Eurodollar Rate Loans and 3.50% in the case of Base Rate Loans; and

 

(ii)       in the case of Term Loans constituting Tranche B-2 Term Loans, 5.00% in the case of Eurodollar Rate Loans and 4.00% in the case of Base Rate Loans; and”

 

 

 

(ii)       amending and restating the definition of “Consolidated Debt Service Coverage Ratio” as follows:

 

“‘ Consolidated Debt Service Coverage Ratio ’ means, as of any date of determination, the ratio of (a) Consolidated EBITDA of the Borrower and its Consolidated Subsidiaries for the Reference Period ending on or immediately prior to such date to (b) the sum, without duplication, of (i) Consolidated Interest Charges of the Borrower and its Consolidated Subsidiaries paid or payable in cash during the Reference Period ended on or immediately prior to such date, plus (ii) Consolidated Debt Amortization of the Borrower and its Consolidated Subsidiaries as of such date; provided that for purposes of calculating Consolidated Debt Amortization with respect to the Consolidated Debt Service Coverage Ratio for any date of determination occurring prior to March 31, 2010, Consolidated Debt Amortization of the Borrower and its Subsidiaries shall be deemed to be the following:

 

(A)       with respect to any date of determination occurring prior to September 30, 2009 (including the calculation of the Consolidated Debt Service Coverage Ratio for the fiscal quarter ended June 30, 2009), the sum of:

 

(1)       all scheduled payments of Consolidated Funded Indebtedness for the period of twelve consecutive months ended on or immediately prior to such date (other than scheduled payments of Consolidated Funded Indebtedness under this Agreement), 

 

plus

 

(2)

an amount equal to the product of:

 

(A)

the Pro Forma Amortization Amount

 

multiplied by  

 

(B)

four (4);

 

(B)       with respect to any date of determination occurring on or after September 30, 2009 but prior to December 31, 2009, the sum of:

 

(1)       all scheduled payments of Consolidated Funded Indebtedness for the period of twelve consecutive months ended on or immediately prior to such date (other than scheduled payments of Consolidated Funded Indebtedness under this Agreement), 

 

plus

 

(2)

an amount equal to the product of:

 

 

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(A)       an amount equal to the sum of (x) the Pro Forma Amortization Amount and (y) the amount payable on September 30, 2009 in accordance with Section 2.07(c)(i) and (ii) (after giving effect to any adjustments made to any such amount pursuant to Section 2.07(c) ),

 

multiplied by  

 

(B)

two (2); and

 

(C)       with respect to any date of determination occurring on or after December 31, 2009 but prior to March 30, 2010, the sum of:

 

(1)       all scheduled payments of Consolidated Funded Indebtedness for the period of twelve consecutive months ended on or immediately prior to such date (other than scheduled payments of Consolidated Funded Indebtedness under this Agreement),

 

plus

 

(2)

an amount equal to the product of:

 

(A)       an amount equal to the sum of (x) the Pro Forma Amortization Amount and (y) the amounts payable on September 30, 2009 and December 31, 2009 in each case in accordance with Section 2.07(c)(i) and (ii) (after giving effect to any adjustments made to any such amount pursuant to Section 2.07(c)) ,

 

multiplied by

 

(B)

four-thirds (4/3).”

 

(iii)

amending the definition of “Consolidated EBITDA” by:

 

(A)       replacing the word “and” at the end of clause (a)(iv) in the first paragraph thereof with a comma;

 

(B)       replacing the comma at the end of clause (a)(v) in the first paragraph thereof with “, and”;

 

(C)       adding a new clause (a)(vi) in the first paragraph thereof as follows:

 

“(vi) acquisition-related costs incurred in connection with any acquisition of assets and assumption of liabilities or series of related acquisitions of assets and assumptions of liabilities that constitutes a business combination, as defined in the Statement of Financial Accounting Standards No. 141 (revised December 2007), and charges

 

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related to the valuation of contingent consideration related to such acquisitions, which costs and charges are deducted from Consolidated Net Income solely as a result of the adoption of the Statement of Financial Accounting Standards No. 141 (revised December 2007),”; and

 

(D)       adding the following parenthetical after the phrase “reasonable non recurring transaction-related costs” in clause (C)(ii)(x) in the second paragraph thereof:

 

“(including costs relating to exit activities required to be charged to income as a result of the adoption of the Statement of Financial Accounting Standards No. 141 (revised December 2007))”.

 

(iv)

amending and restating the definition of “Term Loan” as follows:

 

“‘ Term Loan ’ has the meaning specified in Section 2.01(b) , and at all times on and after the Amendment No. 1 Effective Date shall include both Term Loans constituting Tranche B-1 Term Loans and Term Loans constituting Tranche B-2 Term Loans, collectively.”

 

(v)

adding the following new defined terms in appropriate alphabetical order:

 

“‘ Amendment No. 1 ’ means that certain Amendment No. 1 dated as of July 8, 2009 by and among each of the Loan Parties, certain of the Lenders party thereto and the Administrative Agent.

 

‘ Amendment No. 1 Effective Date ’ means July 8, 2009.

 

‘ Amortization Extension Election ’ means the election and agreement by a Term Loan Lender, in the manner and form provided in Amendment No. 1 or otherwise acceptable to the Administrative Agent (and as reflected on Schedule 1 thereto, as such Schedule 1 may be updated in accordance therewith), to have all or a portion of its Term Loans amortize in accordance with Section 2.07(c)(ii) and bear an Applicable Rate in accordance with part (a)(ii) of the definition of “Applicable Rate”.

 

“ Pro Forma Amortization Amount ” means $2,395,037.76.

 

‘ Tranche B-1 Term Loans ’ means that portion of the Term Loans as to which an Amortization Extension Election was not made.

 

‘ Tranche B-2 Term Loans ’ means that portion of the Term Loans as to which an Amortization Extension Election was made.”

 

(b)        Amendment to Section 1.03 . Section 1.03 (“Accounting Terms”) of the Credit Agreement is hereby amended by:

 

(i)

deleting the period at the end of subsection (b) thereof; and

 

 

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(ii)

adding the following at the end of subsection (b) thereof:

 

“provided further that, notwithstanding the foregoing, all financial covenants contained herein shall be calculated without giving effect to any election made by a Person to value its financial liabilities or Indebtedness at the fair value thereof pursuant to the Statement of Financial Accounting Standards No. 159 (or any similar accounting principle). If financial statements delivered hereunder are prepared after giving effect to such an election, the Borrower shall provide to the Administrative Agent and the Lenders documentation setting forth a reconciliation between the calculations of each financial covenant and the corresponding information set forth on the financial statements delivered hereunder.”

 

(c)         Amendment to Section 2.07 . Section 2.07 (“Repayments of Loans”) is hereby amended by deleting clause (c) thereof in its entirety and replacing it with the following:

 

“(c)    Term Loan .       The Borrower shall repay the outstanding principal amount of the Term Loans in installments on the dates and in the amounts set forth in the applicable table below (as such installments may be adjusted after the Amendment No. 1 Effective Date as a result of prepayments made pursuant to Section 2.05 ), unless accelerated sooner pursuant to Section 8.02 :

 

(i)

with respect to the Tranche B-1 Term Loans:

 

 

 

(ii)

with respect to the Tranche B-2 Term Loans:

 

 

 

 

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(d)        Amendment to Section 7.03 . Section 7.03 (“Indebtedness”) is hereby amended by deleting clause (m) thereof in its entirety and replacing it with the following:

 

“(m)     Indebtedness of the Borrower or any Subsidiary consisting of (i) surety bonds or performance bonds securing the performance of the Borrower or any Subsidiary thereof pursuant to such agreements, or (ii) the financing of insurance premiums or take-or-pay obligations contained in supply arrangements, in each case, in the ordinary course of business;”

 

(e)         Amendment to Section 7.16 . Section 7.16 (“Holding Company”) is hereby amended by

 

(i)        deleting clause (b) thereof in its entirety and replacing it with the following:

 

“(b)      incurrence of (i) the Convertible Notes and other unsecured Subordinated Debt pursuant to and in accordance with Section 7.03(i)(ii) and (ii) any Guaranties permitted pursuant to Section 7.03(c)(i) ,”; and

 

(ii)       deleting clause (d) thereof in its entirety and replacing it with the following:

 

“(d)      participating in tax, accounting and other administrative activities as the parent of the consolidated group of companies, including the Loan Parties, and providing guarantees of obligations (including performance

 

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guarantees) incurred by a Loan Party (other than Holdings) in the ordinary course of its business that do not constitute Indebtedness and are otherwise permitted hereunder,”.

 

(f)         Amendment to Section 10.06 . Section 10.06 (“Successors and Assigns”) is hereby amended by deleting clause (b)(ii) thereof in its entirety and replacing it with the following:

 

“(ii)       Proportionate Amounts . Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not (A) apply to the Swing Line Lender’s rights and obligations in respect of Swing Line Loans, (B) prohibit any Lender from assigning all or a portion of its rights and obligations in respect of its Revolving Commitment (and the related Revolving Loans thereunder) and its outstanding Term Loans on a non-pro rata basis or (C) prohibit any Term Loan Lender from assigning all or a portion of its rights and obligations in respect of its outstanding Tranche B-1 Term Loans and its outstanding Tranche B-2 Term Loans on a non-pro rata basis;”

 

3.

Continuation of Term Loans as Tranche B-1 Term Loans and Tranche B-2 Term Loans .

 

(a)         Continuations Upon Effective Date . The Lenders signatory hereto agree that upon the Effective Date, the outstanding Term Loans of the Term Loan Lenders shall continue as Term Loans under the Credit Agreement either as Tranche B-1 Term Loans or as Tranche B-2 Term Loans, all as set forth on Schedule 1 hereto as of the Effective Date (and each Lender with a Term Loan constituting a Tranche B-2 Term Loan as of the Effective Date shall have executed this Agreement, it being understood that Schedule 1 may be updated in accordance with subsection (b) below after the Effective Date).

 

(b)

Continuations After Effective Date .

 

(i)        The Lenders signatory hereto further agree that after the Effective Date, but prior to the earlier of (x) the date and time at which the aggregate principal amount of all Amortization Extension Elections received by the Administrative Agent after the Effective Date (each such post-Effective Date Amortization Extension Election a “ Post-Effective Date Election ”) equals or exceeds $30,000,000, or (y) 12:00 Noon (Eastern Daylight Time) on July 31, 2009 (such earlier time, the “ Extension Deadline ”), any Lender with an outstanding Tranche B-1 Term Loan at such time may make a Post-Effective Date Election, by written notice by such Lender to the Administrative Agent (which notice may be made via facsimile, telecopy, pdf or email) made to Roberto Salazar at Bank of America (877-207-2382 or roberto.o.salazar@bankofamerica.com ), with a copy to Dave Lapp at Winston & Strawn LLP (704-350-7800 or dlapp@winston.com ) and to the Borrower at its address for notices provided in Section 10.02 of the Credit Agreement, to continue all or a portion of its Tranche B-1 Term Loans as Tranche B-2 Term Loans.

 

(ii)       Each Post-Effective Date Election received by the Administrative Agent shall be effective on the Business Day after the Business Day of actual receipt thereof by the Administrative Agent (with any such Post-Effective Date Election received after 2:00 p.m. (Eastern Daylight Time) being deemed to have been received on the next following Business Day, but being processed in order of actual receipt), and the Tranche B-1 Term Loans to be extended therein shall be deemed to be Tranche B-2 Term Loans on and at all times after such

 

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date of effectiveness. Each Post-Effective Date Election shall be processed in the order in which it is actually received by the Administrative Agent pursuant to the preceding sentence, provided that the maximum aggregate principal amount of all Post-Effective Date Elections may not exceed $30,000,000, and if any Post-Effective Date Election, if honored in full, would result in the aggregate principal amount of all Post-Effective Date Elections exceeding $30,000,000, then such Post-Effective Date Election shall only be honored to the extent of the principal amount thereof that would cause the aggregate principal amount of all Post-Effective Date Elections to equal $30,000,000 (with such Lender and the Borrower being notified of such lower amount), and any Post-Effective Date Election received thereafter shall not be effective (with such Lender and the Borrower being notified of such non-effectiveness).

 

(iii)      The parties hereto, as well as any Lender not a party hereto that makes a Post-Effective Date Election prior to the Extension Deadline pursuant to this subsection (b), agree that after the Extension Deadline (x) each of (I) Schedule 1 , (II) the amortization schedules set forth in Section 2.07(c)(i) and (ii) of the Credit Agreement (as amended by, and set forth in, Section 2(c) of this Agreement above), and (III) the dollar figure set forth in the definition of “Pro Forma Amortization Amount” (as provided in Section 2(a)(v) of this Agreement above), shall promptly be adjusted by the Administrative Agent (which adjustments shall be conclusive absent manifest error) to reflect all Post-Effective Date Elections that became effective in accordance with subsection (b)(ii) above, as well as any prepayments of the Term Loans after the Effective Date but prior to the Extension Deadline, and (y) such revised Schedule 1 , such amortization schedules and such amount in the definition of “Pro Forma Amortization Amount” shall be provided promptly to the Borrower and each Lender by the Administrative Agent. Such parties further agree and understand that the updating of Schedule 1 only after the Extension Deadline shall not impair or otherwise affect the timing of the effectiveness of each Post-Effective Date Elections in accordance with subsection (b)(ii) above.

 

(c)         General Provisions Applicable to All Continuations . The parties hereto, as well as any Lender not a party hereto that makes a Post-Effective Date Election prior to the Extension Deadline pursuant to subsection (b) above, further agree that:

 

(i)        the outstanding Term Loans of the Term Loan Lenders shall continue as Term Loans under the Credit Agreement either as Tranche B-1 Term Loans or as Tranche B-2 Term Loans (at the times and in accordance with provisions of subsections (a) and (b) above), and all Tranche B-1 Term Loans and Tranche B-2 Term Loans shall be set forth on Schedule 1 hereto on the Effective Date, and as revised after the Extension Deadline in accordance with subsection (b) above;

 

(ii)       all outstanding Term Loans that constitute Tranche B-1 Term Loans in accordance with this Agreement (whether on the Effective Date or after the Extension Deadline) shall be subject to the terms and conditions of the Credit Agreement applicable to Tranche B-1 Term Loans at all times such Term Loans constitute Tranche B-1 Term Loans;

 

(iii)      all outstanding Term Loans that constitute Tranche B-2 Term Loans in accordance with this Agreement (whether on the Effective Date or after the Extension Deadline) shall be subject to the terms and conditions of the Credit Agreement applicable to Tranche B-2 Term Loans at all times such Term Loans constitute Tranche B-2 Term Loans;

 

(iv)      the events and transactions described and contemplated in this Section are not intended to, and shall not, constitute a novation of the Credit Agreement or any of the Obligations thereunder, and shall not be construed to be a payment of any of the Term Loans or other

 

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Obligations, and no Lender shall demand or be entitled to any payment, or required to fund any amounts, in connection with the events and transactions described and contemplated in this Section; and

 

(v)       in furtherance of the agreements set forth in this Section, the Administrative Agent shall make such adjustments to the Register, including on or promptly after the Effective Date and the Extension Deadline, as are necessary to reflect the continuations and allocations among Tranche B-1 Term Loans and Tranche B-2 Term Loans pursuant to this Section.

 

4.          Conditions to Effectiveness . Upon the satisfaction of each of the following conditions, this Agreement shall be deemed to be effective as of the date hereof (the date of satisfaction of such conditions, the “ Effective Date ”):

 

(a)        the Administrative Agent shall have received (i) counterparts of this Agreement executed by the Administrative Agent, the Required Lenders and each of the Loan Parties and (ii) written notice from each Lender making an Amortization Extension Election (which notice may be made via facsimile, telecopy, pdf or email) to Roberto Salazar at Bank of America (877-207-2382 or roberto.o.salazar@bankofamerica.com ), with a copy to Dave Lapp at Winston & Strawn LLP (704-350-7800 or dlapp@winston.com ), it being understood that any Lender who submits a signature page without a written notice of the making of an Amortization Extension Election by 12:00 Noon (Eastern Daylight Time) on July 6, 2009 shall be deemed not to have made an Amortization Extension Election pursuant to this Agreement as of the Effective Date (without prejudice to its right to make an Amortization Extension Election after the Effective Date but prior to the Extension Deadline pursuant to Section 3(b) above), unless such later time (prior to the Effective Date) is otherwise agreed by the Administrative Agent and the Borrower;

 

(b)       the Borrower shall have paid to the Administrative Agent (or its applicable affiliate), for the account of each Lender that executes and delivers to the Administrative Agent (or its counsel) a signature page to this Agreement, an amendment fee in an amount equal to (i) 0.15% times (ii) the sum of (A) the principal amount of such consenting Lender’s Revolving Commitment plus (B) the aggregate Outstanding Amount of all Term Loans of such consenting Lender, provided that such fee shall only be paid to those Lenders whose signature page is actually received (whether as an original or as an electronic transmission in accordance with Section 8(c) below) by the Administrative Agent (or its counsel) on or prior to 12:00 Noon(Eastern Daylight Time) on July 6, 2009 unless such later time (prior to the Effective Date) is otherwise agreed by the Administrative Agent and the Borrower;

 

(c)        the Administrative Agent shall have been paid all other fees owed to it (including, without limitation, those owing under the Fee Letter dated as of June 15, 2009, among the Administrative Agent, Banc of America Securities LLC and the Borrower) and reimbursed for all reasonable, invoiced out-of-pocket costs and expenses incurred by the Administrative Agent in connection with this Agreement, including, without limitation, the reasonable, invoiced fees and disbursements of counsel for the Administrative Agent; and

 

(d)       the Administrative Agent shall have received such other instruments, documents and certificates as the Administrative Agent shall reasonably request in connection with the execution of this Agreement.

 

5.          Effect of the Agreement . Except as expressly provided herein, the Credit Agreement and the other Loan Documents shall remain unmodified and in full force and effect. Except as expressly set forth herein, this Agreement shall not be deemed (a) to be a waiver of, or consent to, a modification or amendment of, any other term or condition of the Credit Agreement or any other Loan Document, (b) to

 

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prejudice any other right or rights which the Administrative Agent or the Lenders may now have or may have in the future under or in connection with the Credit Agreement or the other Loan Documents or any of the instruments or agreements referred to therein, as the same may be amended, restated, supplemented or otherwise modified from time to time, (c) to be a commitment or any other undertaking or expression of any willingness to engage in any further discussion with the Borrower or any other Person with respect to any waiver, amendment, modification or any other change to the Credit Agreement or the Loan Documents or any rights or remedies arising in favor of the Lenders or the Administrative Agent, or any of them, under or with respect to any such documents or (d) to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of any other agreement by and among the Borrower, on the one hand, and the Administrative Agent or any other Lender, on the other hand. References in the Credit Agreement to “this Agreement” (and indirect references such as “hereunder”, “hereby”, “herein”, and “hereof”) and in any Loan Document to the Credit Agreement shall be deemed to be references to the Credit Agreement as modified hereby.

 

6.

Representations and Warranties/No Default . By its execution hereof,

 

(a)        the Borrower hereby certifies, represents and warrants to the Administrative Agent and the Lenders that after giving effect to the amendments set forth in Section 2 above, (i) the representations and warranties set forth in Article V of the Credit Agreement or in any other Loan Document are true and correct in all material respects (in each case, except to the extent any such representation and warranty is itself qualified by materiality or Material Adverse Effect, in which case it shall be true and correct in all respects) on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they