Exhibit 10.1
FIRST AMENDMENT TO CREDIT AND
SECURITY AGREEMENTS
AND WAIVER OF
DEFAULT
THIS FIRST AMENDMENT TO CREDIT AND
SECURITY AGREEMENTS AND WAIVER OF DEFAULT (this “
Amendment ”), dated November 3, 2008, is entered
into by and between IRIDEX CORPORATION, a Delaware corporation
(“ Company ”), and WELLS FARGO BANK, NATIONAL
ASSOCIATION (“ Wells Fargo ”), acting through
its Wells Fargo Business Credit operating division.
RECITALS
Company and Wells Fargo are parties
to (i) a Credit and Security Agreement dated March 27,
2008 (as amended from time to time, the “ Domestic Credit
Agreement ”), and (ii) a Credit and Security
Agreement (Ex-Im Subfacility) (as amended from time to time,
“ 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.
Company is in default of
Section 5.2(b) of the Credit Agreements, as Company’s
Debt Service Coverage Ratio on August 31, 2008, was 0.66 to
1.0, versus a minimum requirement of 1.10 to 1.0 (the “
Existing Default ”). The Existing Default constitutes
an Event of Default under the Credit Agreements.
The Company has requested that
certain amendments be made to the Credit Agreements and the
Existing Default be waived. Wells Fargo is willing to undertake the
amendments and waive the Existing Default, subject 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. Section 1.6(a) of the
Credit Agreements . The third full paragraph of
Section 1.6(a) of the Credit Agreements (that begins
“[t]he Margins through and including the adjustment occurring
as specified below shall be . . .”) is amended to read in its
entirety as follows:
“The Margins through and
including the adjustment occurring as specified below shall be
2.0% per annum for Floating Rate Advances, and 3.50% per
annum for LIBOR Advances. The Margins shall be reduced by
0.25% per annum on a one-time basis if the Company’s
Earnings Before Taxes, Depreciation, and Amortization for any
fiscal year ending on or after December 31, 2008, is greater
than $1,500,000.”
2. Exhibit A to the Credit Agreements .
The following defined term that appears in Exhibit A to the Credit
Agreements is amended to read in its entirety as
follows:
““Prime Rate”
means at any time the greater of (i) five
percent (5%) per annum, or (ii) the rate of interest most
recently announced by Wells Fargo at its principal office as its
Prime Rate, with the understanding that the Prime Rate is one of
Wells Fargo’s base rates, and serves as the basis upon which
effective rates of interest are calculated for those loans making
reference to it, and is evidenced by its recording in such internal
publication or publications as Wells Fargo may designate. Each
change in the rate of interest shall become effective on the date
each Prime Rate change is announced by Wells
Fargo.”
3. Effective Date of Certain
Changes; No Other Changes . The changes in the interest rates
set forth in Sections 1 and 2 of this Amendment shall be deemed
effective as of October 1, 2008, notwithstanding the date of
this Amendment or the date that this Amendment becomes effective
under Section 6 of this Amendment. Except as explicitly
amended by this Amendment, all of the terms and conditions of the
Credit Agreements shall remain in full force and effect and shall
apply to any advance or letter of credit thereunder.
4. Waiver of Defaults . Upon
the terms and subject to the conditions set forth in this
Amendment, Wells 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 the Company to any other or further waiver in any
similar or other circumstances.
5. Amendment Fee . The
Company shall pay Wells Fargo as of the date of this Amendment a
fully earned, non-refundable fee in the amount of $15,000 in
consideration of Wells Fargo’s execution and delivery of this
Amendment.
6. Conditions Precedent .
This Amendment , and the waiver set forth in Section 4
hereof, shall be effective when Wells Fargo shall have received an
executed original of this Amendment, together with each of the
following, each in substance and form acceptable to Wells Fargo in
its sole discretion:
6.1 A Certificate of the Secretary
of the Company certifying as to (i) the resolutions of the
board of directors of the Company approving the execution and
delivery of this Amendment, (ii) the fact that the certificate
of incorporation and bylaws of the Company, which were certified
and delivered to Wells Fargo pursuant to the Certificate of
Authority of the Company’s secretary or assistant secretary
dated March 27, 2008, continue in full force and effect and
have not been amended or otherw
