E
xhibit 10.60
EXECUTION VERSION
FOURTH AMENDMENT TO CREDIT
AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT
AGREEMENT (this “ Amendment ”) is made as of
March 30, 2009 by and among LECG, LLC (the “
Company ”), the financial institutions party hereto
(the “ Lenders ”), and BANK OF AMERICA, N.A.,
successor by merger to LaSalle Bank National Association, as
administrative agent for the Lenders (the “ Administrative
Agent ”).
RECITALS
A.
The Company, the financial institutions party thereto and the
Administrative Agent entered into a Credit Agreement dated as of
December 15, 2006 and amended as of July 16, 2007,
December 20, 2007, and February 9, 2009 (as so amended,
the “ Credit Agreement ”). As security for
the obligations under the Credit Agreement, LECG Corporation (the
“ Parent ”), the Company and LECG Canada
Holding, Inc. (together with the Parent and the Company, the
“ Grantors ”) executed with and in favor of the
Administrative Agent that Security Agreement dated as of
February 9, 2009 (the “ Security Agreement
”).
B.
The Company, the Lenders and the Administrative Agent wish to
further amend the Credit Agreement as set forth herein.
NOW THEREFORE, in consideration of
the matters set forth in the recitals and the covenants and
provisions herein set forth, and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1.
Definitions . Capitalized terms used but not defined
herein are used as defined in the Credit Agreement.
2.
Amendments to Credit Agreement . The Credit Agreement
is hereby amended as follows:
(a)
Section 1.1 of the Credit Agreement shall be amended by
adding the following additional defined terms, in appropriate
alphabetical order:
Adjusted EBITDA
means, for any period, Consolidated
Net Income for such period plus , to the extent deducted in
determining such Consolidated Net Income, and without duplication,
(i) Interest Expense, (ii) income tax expense,
(iii) depreciation and amortization for such period,
including, but not limited to, amortization of Signing and
Performance Bonus expense, (iv) non-cash equity compensation
expense, (v) other non-cash charges (excluding any such
non-cash charge to the extent that it represents an accrual or
reserve for potential cash items in the future),
(vi) extraordinary non-cash losses (as determined in
accordance with GAAP) incurred other than in the ordinary course of
business, (vii) goodwill impairment expense per GAAP,
(viii) for periods including such quarters, cash restructuring
charges incurred in the fiscal quarters ended December 31,
2008 (in an amount not to exceed $6,500,000) and ending
March 31, 2009 and June 30, 2009 (in an amount not to
exceed $2,500,000 for both quarters combined), and
(ix) expensed acquisition costs
of up to $500,000 minus , to the extent included in
Consolidated Net Income, extraordinary gains (as determined in
accordance with GAAP) realized other than in the ordinary course of
business, for such period. In addition, “ Adjusted
EBITDA ” shall also (x) include Adjusted EBITDA for
each Subsidiary, business or division acquired in an Acquisition
occurring during such period for which financial statements have
been received as required pursuant hereto as if such Acquisition
had occurred as of the first day of such period, and
(y) exclude Adjusted EBITDA attributable to each Asset
Disposition of a Subsidiary, business or division occurring in the
relevant period as if such Asset Disposition had occurred as of the
first day of such period.
Borrowing Base
Certificate means a
certificate substantially in the form of Exhibit F
.
Borrowing Base
Deficiency means, at any
time, the failure of (a) the sum of 80% of the value of the
Eligible Receivables (based upon the Borrowing Base Certificate
then most recently delivered by the Company to the Administrative
Agent hereunder) to equal or exceed (b) the Revolving
Outstandings at such time.
Defaulting Lender
means any Lender that (a) has
refused (which refusal may be given verbally or in writing and has
not been retracted) or failed to fund any portion of the Loans or
participations in Letters of Credit required to be funded by it
hereunder which refusal or failure is not cured within one Business
Day after the date of such refusal or failure, (b) has
otherwise failed to pay over to the Administrative Agent or any
other Lender any other amount required to be paid by it hereunder
within one Business Day of the date when due, unless the subject of
a good faith dispute or unless such failure has been cured, or
(c) is deemed insolvent or such Lender becomes subject to a
Lender-Related Distress Event.
Eligible Receivables
means Receivables of the Company
subject to the Lien of the Collateral Documents, the value of which
shall be determined by taking into consideration, among other
factors, their book value determined in accordance with GAAP;
provided , however , that none of the following
classes of Receivables shall be deemed to be Eligible
Receivables:
(a)
Receivables that do not arise out of sales of goods or rendering of
services in the ordinary course of the Company’s
business;
(b)
Receivables payable other than in Dollars or that are otherwise on
terms other than those normal or customary in the Company’s
business;
(c)
Receivables owing from any Person that is an Affiliate of the
Parent;
(d)
Receivables more than 120 days past original invoice
date;
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(e)
Receivables owing from any Person from which an aggregate amount of
more than 33% of the Receivables owing therefrom is more than 120
days past the date due;
(f)
Receivables owing from any Person that (i) has disputed
liability for any Receivable owing from such Person or
(ii) has otherwise asserted any claim, demand or liability
against the Parent or any of its Subsidiaries, whether by action,
suit, counterclaim or otherwise; provided that for purposes
of subclause (f)(i) , such Receivables shall be excluded
only to the extent of the amounts being disputed by such Person at
any date of determination;
(g)
Receivables owing from any Person that shall take or be the subject
of any action or proceeding of a type described in
Section 13.1.4 ;
(h)
Receivables (i) owing from any Person that is also a supplier
to or creditor of the Parent or any of its Subsidiaries unless such
Person has waived any right of setoff in a manner acceptable to the
Administrative Agent or (ii) representing any
manufacturer’s or supplier’s credits, discounts,
incentive plans or similar arrangements entitling the Parent or any
of its Subsidiaries to discounts on future purchase
therefrom;
(i)
Receivables arising out of sales to account debtors outside the
United States unless such Receivables are fully backed by an
irrevocable letter of credit on terms, and issued by a financial
institution, acceptable to the Administrative Agent and such
irrevocable letter of credit is in the possession of the
Administrative Agent; and
(j)
Receivables in respect of which there does not exist a valid and
perfected first priority lien or security interest in favor of the
Administrative Agent, securing the Obligations.
Lender-Related Distress
Event means, with respect
to any Lender or any Person that directly or indirectly controls
such Lender (each, a “ Distressed Person ”), as
the case may be, a voluntary or involuntary case with respect
to such Distressed Person under the U.S. Bankruptcy Code or any
similar bankruptcy or insolvency laws of its jurisdiction of
formation, or a custodian, conservator, receiver or similar
official is appointed for such Distressed Person or any substantial
part of such Distressed Person’s assets, or such Distressed
Person or any Person that directly or indirectly controls such
Distressed Person is subject to a forced liquidation, merger, sale
or other change of control supported in whole or in part by
guaranties or other support of (including without limitation the
nationalization or assumption of ownership or operating control by)
the U.S. government or other governmental authority, or such
Distressed Person makes a general assignment for the benefit of
creditors or is otherwise adjudicated as, or determined by any
governmental authority having regulatory authority over such
Distressed Person or its assets to be, insolvent, bankrupt, or
deficient in meeting any capital adequacy or liquidity standard of
any such governmental authority.
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Receivables
means accounts (as defined in the
Uniform Commercial Code) of the Company arising in the ordinary
course of business.
Restricted Period
means the period from March 30,
2009 through the Termination Date, provided , if the Company
delivers to the Administrative Agent a Compliance Certificate in
accordance with Section 10.1.3 in respect of any fiscal
quarter ending on or after June 30, 2009, demonstrating that
(i) EBITDA for the Computation Period ending on such date is
in excess of $25,000,000, and (ii) the Fixed Charge Coverage
Ratios for any two or more consecutive Computation Periods, each
ending after March 31, 2009, were greater than 2:00:1:00;
then the Restricted Period shall end on the Business Day
following the date of such delivery.
Swing Line
Availability means, at
any time, the lesser of (a) the Swing Line Commitment
Amount and (b) Revolving Commitment (less Revolving Outstandings at
such time), provided that during the Restricted Period, no
Borrowing Base Deficiency shall exist at such time.
Total Debt to Adjusted EBITDA
Ratio means, as of the
last day of any Fiscal Quarter, the ratio of (a) Total Debt as
of such day to (b) Adjusted EBITDA for the Computation Period
ending on such day.
(b)
Section 1.1 of the Credit Agreement shall be further
amended by amending and restating the definition of “
EBIT ”, to read as follows:
EBIT means, for any period, Consolidated Net Income
for such period plus , to the extent deducted in determining
such Consolidated Net Income, without duplication,
(i) Interest Expense, (ii) income tax expense,
(iii) amortization of Signing and Performance Bonus expense,
(iv) non-cash equity compensation expense, (v) other
non-cash charges (excluding any such non-cash charge to the extent
that it represents an accrual or reserve for potential cash items
in the future), (vi) extraordinary non-cash losses (as
determined in accordance with GAAP) incurred other than in the
ordinary course of business, (vii) goodwill impairment expense
per GAAP, (viii) for periods including such quarters, cash
restructuring charges incurred in the fiscal quarters ended
December 31, 2008 (in an amount not to exceed $6,500,000) and
ending March 31, 2009 and June 30, 2009 (in an amount not
to exceed $2,500,000 for both quarters combined), and
(ix) expensed acquisition costs of up to $500,000.
(c)
Section 1.1 of the Credit Agreement shall be further
amended by amending and restating “ Applicable Margin
” to read as follows:
Applicable Margin
means, for any day, the rate per
annum set forth below opposite the level (the “ Level
”) then in effect, it being understood that the Applicable
Margin for (i) Eurocurrency Rate Loans and the L/C Fee Rate
shall be the percentage set forth under the column
“Eurocurrency Rate Margin and L/C Fee Rate”,
(ii) Base Rate Loans shall be the percentage set forth under
the column
4
“Base Rate Margin”, and
(iii) the Non-Use Fee Rate shall be the percentage set forth
under the column “Non-Use Fee Rate”:
|
Level
|
|
Total Debt
to EBITDA Ratio
|
|
Eurocurrency
Rate Margin
and
L/C Fee Rate
|
|
Base Rate
Margin
|
|
Non-Use
Fee Rate
|
|
|
I
|
|
Less than or equal to 1.0:1.0
|
|
3.50
|
%
|
2.50
|
%
|
0.50
|
%
|
|
II
|
|
Greater than 1.0:1.0 but less than or equal to
2.0:1.0
|
|
4.00
|
%
|
3.00
|
%
|
0.55
|
%
|
|
III
|
|
Greater than 2.0:1.0
|
|
4.50
|
%
|
3.50
|
%
|
0.60
|
%
|
The Eurocurrency Rate Margin, the
Base Rate Margin, the Non-Use Fee Rate and the L/C Fee Rate shall
be adjusted, to the extent applicable, on the fifth (5th) Business
Day after the Company provides the annual and quarterly financial
statements and other information pursuant to Sections 10.1.1
or 10.1.2 , as applicable (such day, the “
Adjustment Date ”), and the related Compliance
Certificate, pursuant to Section 10.1.3 ;
provided that Level II shall apply at all times from
March 30, 2009 through the Adjustment Date in respect of the
fiscal quarter ending September 30, 2009 unless and to the
extent Level III shall at any time otherwise be indicated under
this definition. Notwithstanding anything contained in this
paragraph to the contrary, (a) if the Company fails to deliver
the financial statements and Compliance Certificate in accordance
with the provisions of Sections 10.1.1 , 10.1.2 and
10.1.3 , the Eurocurrency Rate Margin, the Base Rate Margin,
the Non-Use Fee Rate and the L/C Fee Rate shall be based upon Level
III above beginning on the date such financial statements and
Compliance Certificate were required to be delivered until the
fifth (5th) Business Day after such financial statements and
Compliance Certificate are actually delivered, whereupon the
Applicable Margin shall be determined by the then current Level,
and (b) no reduction to any Applicable Margin shall become
effective at any time when an Event of Default or Unmatured Event
of Default has occurred and is continuing.
(d)
Section 1.1 of the Credit Agreement shall be further
amended by amending and restating “ Minimum Asset Coverage
Ratio ” to read as follows:
Minimum Asset Coverage
Ratio means, in respect
of the Parent and its Subsidiaries on a consolidated basis, as of
any date of determination, (i) the sum of cash and net
accounts receivable, divided by (ii) the sum of Total Debt
plus contingent obligations in respect of undrawn letters of
credit, as of such date.
(e)
Section 2.1.1 of the Credit Agreement shall be amended
and restated to read as follows:
2.1.1
Revolving Loan Commitment . Each Lender with a
Revolving Loan Commitment agrees to make loans on a revolving basis
(“ Revolving Loans ”) in the applicable
Designated Currency requested by Company from time
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to time until the Termination Date
in such Lender’s Pro Rata Share of such aggregate amounts as
the Company may request from all Lenders; provided that
(i) the Revolving Outstandings will not at any time exceed the
Revolving Commitment (less the amount of any Swing Line Loans
outstanding at such time; provided , that the aggregate
Dollar Equivalent of all outstanding Loans denominated in a Foreign
Currency shall not exceed $10,000,000), and (ii) during the
Restricted Period, no Borrowing Base Deficiency shall exist or
result therefrom.
(f)
Section 2.1.2(a) of the Credit Agreement shall be
amended by deleting the first sentence thereof and inserting in its
place the following:
Subject to Section 2.3.1
, the Issuing Lender agrees to issue letters of credit denominated
in Agreed Currencies, in each case containing such terms and
conditions as are permitted by this Agreement and are reasonably
satisfactory to the Issuing Lender (including the letters of credit
listed on Schedule 2.1 , each, a “ Letter of
Credit ”), at the request of and for the account of the
Company from time to time before the scheduled Termination Date;
provided that (i) the Dollar Equivalent of the
aggregate Stated Amount of all Letters of Credit shall not at any
time exceed $25,000,000, (ii) the Revolving Outstandings shall
not at any time exceed the Revolving Commitment (less the amount of
any Swing Line Loans outstanding at such time), and
(iii) during the Restricted Period, no Borrowing Base
Deficiency shall exist or result therefrom; and, as more fully set
forth in Section 2.3.2 , each Lender agrees to purchase
a participation in each such Letter of Credit.
(g)
Section 2.2.4(a) of the Credit Agreement shall be
amended by adding the following at the end thereof:
Notwithstanding the foregoing, in
the event that the Swing Line Lender determines that any other
Lender is a Defaulting Lender, the Swing Line Lender shall not be
required to extend any Swing Line Loan unless arrangements
satisfactory to such Swing Line Lender shall have been entered into
to eliminate such Swing Line Lender’s risk with respect to
the participation in Swing Line Loans of such Defaulting Lender,
which may include requiring the Company to cash collateralize in a
matter satisfactory to such Swing Line Lender such Defaulting
Lender’s Pro Rata Share of Swing Line Loans.
(h)
Section 2.3.1 of the Credit Agreement shall be amended
by adding the following at the end thereof:
Notwithstanding
the foregoing, in the event that any Issuing Lender determines that
any Lender is a Defaulting Lender, the respective Issuing Lender
shall not be required to issue any Letter of Credit unless
arrangements satisfactory to such Issuing Lender shall have been
entered into in order to eliminate such Issuing Lender’s risk
with respect to the participation in Letters of Credit of such
Defaulting Lender, which may include requiring the Company to cash
collateralize such Defaulting Lender’s Pro Rata Share of the
Stated Amount of all Letters of Credit.
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(i)
Section 6.2.2 of the Credit Agreement shall be amended
by adding at the end thereof:
(c)
If there exists at any time a Borrowing Base Deficiency, the
Company shall within three Business Days prepay Revolving Loans or
Cash Collateralize the outstanding Letters of Credit, or do a
combination of the foregoing, in an amount sufficient to eliminate
such deficiency.
(j)
Section 10.1.9 of the Credit Agreement shall be amended
and restated to read as follows:
10.1.9
Accounts Receivable Agings; Borrowing Base Certificate
. Promptly when available and in any event within 30 days
after the end of each calendar month, (i) an accounts
receivable aging report, in form and detail reasonably satisfactory
to the Administrative Agent, in respect of the Parent and its
Subsidiaries, and (ii) during the Restricted Period, a
Borrowing Base Certificate.
(k)
Section 10 of the Credit Agreement shall be further
amended by adding the following Section 10.10 at the
end thereof:
10.10
Deposit and Investment Accounts . Notwithstanding any
other term or provision of this Agreement or any other Loan
Document to the contrary, maintain at all times from and after
May 31, 2009 effective control agreements in form reasonably
satisfactory to the Administrative Agent in respect of all deposit
accounts and investment accounts held or maintained from time to
time with U.S. branches or offices of depository institutions,
financial intermediaries or financial institutions by the Parent,
the Company, or any of their respective Subsidiaries.
(l)
Section 11.12.1 of the Credit Agreement shall be
amended and restated to read in full as follows:
11.12.1
Total Debt to Adjusted EBITDA Ratio . Not permit the
Total Debt to Adjusted EDITDA Ratio as of the last day of any
Computation Period to exceed 2.50 to 1.00.
(m)
Section 11.12.2 of the Credit Agreement shall be
amended and restated to read in full as follows:
11.12.2
Fixed Charge Coverage Ratio . Not permit the Fixed
Charge Coverage Ratio as of the last day of any Computation Period
to be less than the amount indicated below:
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|
Fiscal Quarter
Ending Nearest
|
|
Minimum Ratio
|
|
December 31, 2008
|
|
2.00:1.00
|
|
March 31, 2009
|
|
1.50:1.00
|
|
June 30, 2009, September 30,
2009
|
|
1.25:1:00
|
|
December 31, 2009 and thereafter
|
|
2.00:1.00
|
(n)
Section 12.2.1 of the Credit Agreement shall be amended
and restated to read as follows:
12.2.1
Compliance with Warranties, No Default, etc . Both
before an
