Exhibit 10.2
FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST AMENDMENT TO CREDIT AGREEMENT (this "
Amendment ") dated as of November 21, 2008 by and among
GERBER SCIENTIFIC, INC., GERBER SCIENTIFIC INTERNATIONAL INC., as
Borrowers, GERBER COBURN OPTICAL INTERNATIONAL, INC., GERBER
SCIENTIFIC UK, LTD., SPANDEX LTD., and GERBER SCIENTIFIC
INTERNATIONAL LTD., as the Initial Guarantors, VIRTEK VISION
INTERNATIONAL INC., VIRTEK LASER SYSTEMS NORTH AMERICA, INC.,
VIRTEK EUROPEAN HOLDINGS INC., (the “ Virtek
Guarantors ”, and together with Initial Guarantors, the
“ Guarantors ”), the several banks and other
financial institutions and lenders from time to time party hereto
(the " Lenders "), and RBS CITIZENS, N.A., in its capacity
as administrative agent for the Lenders (the " Agent
").
WHEREAS, the Borrowers, the Initial Guarantors,
the Lenders and the Agent are each party to that certain Credit
Agreement dated as of January 31, 2008 (the “ Credit
Agreement ”) pursuant to which the Lenders established a
$125,000,000 revolving credit facility for the benefit of the
Borrowers.
WHEREAS, the Borrowers previously informed the
Agent and the Lenders that Gerber Scientific, Inc. (“
Gerber ”) desired to indirectly acquire all of the
capital stock of Virtek Vision International Inc. (“
Virtek Public ”) (the “ Virtek
Acquisition ”).
WHEREAS, the Borrowers requested a waiver of the
terms of clause (iv) of the definition of Permitted Acquisition as
such clause applies to the Virtek Acquisition (the “
Acquisition Waiver ”) and the Majority Lenders granted
such Acquisition Waiver on August 28, 2008.
WHEREAS, Gerber, acting through Gerber
Scientific International LTD, has consummated the Virtek
Acquisition.
WHEREAS, pursuant to Section 8.8 of the Credit
Agreement the Virtek Guarantors are required to become Guarantors
under the Credit Agreement.
WHEREAS, the Borrowers have requested certain
adjustments to the definitions of EBIT and EBITDA as a result of
the Virtek Acquisition and the Majority Lenders have agreed to such
adjustments.
NOW, THEREFORE, for and in consideration of the
mutual premises, covenants and conditions contained herein, and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms
. Capitalized terms which are used herein without
definition and which are defined in the Credit Agreement shall have
the same meanings herein as in the Credit Agreement.
Section 2. Amendment of
Credit Agreement . Section 1.1 of the Credit
Agreement is hereby amended by deleting the definitions of
Consolidated EBIT and Consolidated EBITDA in their entirety and
substituting therefor the following:
“‘ Consolidated EBIT ’
shall mean for any period the sum of (a) Consolidated Net Income
and (b) all amounts deducted in computing Consolidated Net Income
in respect of (i) Consolidated Interest Expense, and (ii) taxes
based on or measured by income, in each case for the period under
review, provided , however , that for each of the
four quarter periods ending October 31, 2008, January 31, 2009,
April 30, 2009 and July 31, 2009 Consolidated EBIT shall be
increased by (i) the non-cash “inventory step up” for
such period associated with the inventory of the Virtek Guarantors
and their Subsidiaries purchased by the Borrowers on the date of
the Virtek Acquisition and (ii) the non-cash expense required to be
taken by the Parent in the amount of the difference between the
ceiling and the spot rate on its hedging agreement in connection
with the Virtek Acquisition relating to Canadian Dollar
fluctuations not to exceed $750,000 U.S. Dollars in the
aggregate.”
“‘ Consolidated EBITDA
’ shall mean for any period the sum of (a) Consolidated Net
Income and (b) all amounts deducted in computing Consolidated Net
Income in respect of (i) Consolidated Interest Expense, (ii) taxes
based on or measured by income, (iii) consolidated depreciation and
amortization expense, in each case for the period under review, and
(iv) all non-cash expenses incurred in connection with the
termination of the Existing Credit Agreement provided ,
however , that for each of the four quarter periods ending
October 31, 2008, January 31, 2009, April 30, 2009 and July 31,
2009 Consolidated EBITDA shall be increased by (i) the non-cash
“inventory step up” for such period associated with the
inventory of the Virtek Guarantors and their Subsidiaries purchased
by the Borrowers on the date of the Virtek Acquisition
and (ii) the non-cash expense required to be taken by the Parent in
the amount of the difference between the ceiling and the spot rate
on its hedging agreement in connection with the Virtek Acquisition
relating to Canadian Dollar fluctuations not to exceed $750,000
U.S. Dollars in the aggregate.”
Section 3. Amendment of
Credit Agreement Schedules . Each of the Schedules
to the Credit Agreement is hereby amended and restated by deleting
the Schedules attached to the Credit Agreement in their entirety
and substituting therefor the Schedules attached hereto as
Exhibit A .
Section 4. Conditions
Precedent . The effectiveness of this Amendment is
subject to the truth and accuracy of the representations set forth
in Section 7 below and shall become effective upon receipt by the
Agent of:
(a) Counterparts
of this Amendment duly executed by each of the Loan Parties, the
Agent and the Majority Lenders.
(b) A
joinder of security agreement executed by Virtek Laser Systems
North America, Inc. (“ Virtek U.S.
”).
(c) A
general security agreement executed by Virtek Public.
(d) A
general security agreement executed by Virtek European Holdings
Inc. (“ Virtek Private ”).
(e) A
share pledge executed by Virtek Public with regard to shares of
Virtek Private.
(f) A
share pledge executed by Virtek Public with regard to shares of
Virtek U.S.
(g) Powers
of attorney with respect to pledge of shares of Virtek
Private.
(h) Stock
certificates representing all shares of Virtek Private.
(i) An
Intellectual Property Security Agreement executed by Virtek
U.S.
(j) The
opinions of (i) Cummings & Lockwood LLC, United States counsel
to the Loan Parties and (ii) Goodmans, LLP Canadian counsel to the
Guarantors, each dated the date of execution of this
Agreement.
(k) Copies
of the resolutions of the Board of Directors or equivalent body of
each of the Loan Parties (other than Gerber Scientific
UK, LTD and Spandex Limited) authorizing the execution, delivery
and performance of this Amendment and the other Loan Documents to
which such Loan Party is a party, certified by the Secretary or an
Assistant Secretary (or Clerk or Assistant Clerk) of such Loan
Party (which certificate shall state that such resolutions are in
full force and effect).
(l) Certificates
from an offi