Third Amendment to Second Amended and Restated Loan and Security Agreement dated May 11, 2018, by and between LightPath Technologies, Inc. and AvidBank

EX-10.7 2 lpth_ex107.htm THIRD AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT Blueprint
  Exhibit 10.7
 
THIRD AMENDMENT
TO
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
 
This Third Amendment to Second Amended and Restated Loan and Security Agreement is entered into as of May 11, 2018 (the “Amendment”), by and between AVIDBANK (“Bank”), and LIGHTPATH TECHNOLOGIES, INC. (“Borrower”).
 
RECITALS
 
Borrower and Bank are parties to that certain Second Amended and Restated Loan and Security Agreement dated as of December 21, 2016 and as amended from time to time, including pursuant to that certain First Amendment to Second Amended and Restated Loan and Security Agreement dated as of December 20, 2017 and that certain Second Amendment to Second Amended and Restated Loan and Security Agreement dated as of January 16, 2018 (collectively, the “Agreement”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.
 
NOW, THEREFORE, the parties agree as follows:
 
1. Borrower acknowledges that there is an existing and uncured Event of Default arising from Borrower’s failure to comply with Section 6.9(a) of the Agreement with respect to the Fixed Charge Coverage Ratio measured on March 31, 2018 (the “Covenant Default”). Subject to the conditions contained herein and performance by Borrower of all of the terms of the Agreement after the date hereof, Bank waives the Covenant Default. Bank does not waive Borrower’s obligations under such section after the date hereof and as amended hereby, and Bank does not waive any other failure by Borrower to perform its Obligations under the Loan Documents.
 
2. Bank acknowledges that Borrower intends to enter into a sale and leaseback transaction with Tetra Financial Group LLC, for Taylor Hobson equipment totaling $470,000 (the “Equipment Sales”). Bank hereby consents to the Equipment Sales and acknowledges that such sale and leaseback do not, in and of themselves, constitute an Event of Default under the Agreement (under Section 7.1 of the Agreement or otherwise).
 
3. Clause (c) of the defined term “Permitted Indebtedness” set forth in Section 1.1 of the Agreement is amended and restated in its entirety to read as follows:
 
(c)           Indebtedness secured by a lien described in clause (c) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed the lesser of the cost or fair market value of the equipment financed with such Indebtedness ;
 
4. Section 6.8(a) of the Agreement is amended and restated in its entirety to read as follows:
 
(a)           Domestic. Each Borrower shall maintain and shall cause each of its domestic Subsidiaries to maintain all of its domestic depository and operating accounts with Bank; provided that Borrowers shall have until May 31, 2018 to transition and close its existing account maintained with UBS and the account balance in such account shall not exceed Ten Thousand Dollars ($10,000) at any given time during such transition period.
 
5. Section 6.9(a) of the Agreement is amended and restated in its entirety to read as follows:
 
(a)           Fixed Charge Coverage Ratio. Borrowers shall maintain a Fixed Charge Coverage Ratio of at least 1.10 to 1.00, measured on June 30, 2018; and Borrowers shall maintain a Fixed Charge Coverage Ratio of at least 1.15 to 1.00, measured at the end of each calendar quarter beginning with the quarter ending on September 30, 2018 on a rolling twelve (12) month basis.
 
 
 
 
6. Exhibit D to the Agreement is replaced in its entirety with the Exhibit D attached hereto.
 
7. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof. Each Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection with the Agreement.
 
8. Borrowers represent and warrant that the representations and warranties contained in the Agreement are true and correct as of the date of this Amendment, and that no Event of Default has occurred and is continuing.
 
9. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original hereof. Notwithstanding the foregoing, Borrowers shall deliver all original signed documents no later than ten (10) Business Days following the date of execution.
 
10. As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:
 
(a) this Amendment, duly executed by Borrowers;
 
(b) payment of an amendment fee in the amount of $800 plus all Bank Expenses incurred through the date of this Amendment; and
 
(c) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.
 
[signature page follows]
 
 
 
 
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.
 
 
LIGHTPATH TECHNOLOGIES, INC.
 
 
By: /s/ J. James Gaynor                                      
Name: J. James Gaynor                                   
Title: President and Chief Executive Officer  
 
ISP OPTICS CORPORATION
 
 
By: /s/ J. James Gaynor                                  
Name: J. James Gaynor                                  
Title: President and Chief Executive Officer  
 
 
AVIDBANK
 
 
By: /s/ Stephen Chen                                      
Name: Stephen Chen                                       
Title: Assistant Vice President                         
 
 
 
EXHIBIT D
 
Compliance Certificate
 
TO: 
AVIDBANK (“Bank”)
 
FROM: 
LIGHTPATH TECHNOLOGIES, INC., ET AL
 
The undersigned authorized officer of LightPath Technologies, Inc. on behalf of Borrowers hereby certifies that in accordance with the terms and conditions of the Second Amended and Restated Loan and Security Agreement between Borrowers and Bank (as amended, the “Agreement”), (i) each Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below and (ii) all representations and warranties of each Borrower stated in the Agreement are true and correct as of the date hereof. Attached herewith are the required documents supporting the above certification. The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes.
 
Please indicate compliance status by circling Yes/No under “Complies” column.
 
Reporting Covenant
Required
Complies
 
 
 
 
A/R & A/P Agings
Monthly within 30 days
Yes
No
Deferred Revenue listing
Monthly within 30 days
Yes
No
Borrowing Base Certificate
Monthly within 30 days
Yes
No
Compliance Certificate
Monthly within 30 days
Yes
No
Bank statements for accounts outside of Bank
Monthly within 30 days
Yes
No
Monthly consolidated financial statements
Monthly within 30 days
Yes
No
Monthly consolidating financial statements
Monthly within 30 days
Yes
No
Annual financial statements (CPA Audited)
Annually within 90 days of fiscal year end
Yes
No
Annual projections (board approved)
Annually within 30 days following fiscal year beginning
Yes
No
10K and 10Q
(as applicable)
Yes
No
A/R Audit
Annually
Yes
No
IP Notices
As required under Section 6.10
Yes
No
 
 
 
 
Financial Covenant
Required
Actual
Complies
 
 
 
 
 
Fixed Charge Coverage Ratio (6/30/18)
1.10 : 1.00
____: 1.00
Yes
No
Fixed Charge Coverage Ratio (9/30/18 and thereafter)
1.15 : 1.00
____: 1.00
Yes
No
 
 
 
 
 
Minimum Asset coverage ratio (monthly)
1.50 : 1.00
____: 1.00
Yes
No
 
Comments Regarding Exceptions: See Attached.
BANK USE ONLY
 
 
 
 
 
Received by: _____________________________________
 
Sincerely,
AUTHORIZED SIGNER
 
 
 
 
 
Date: ___________________________________________
 
 
 
 
 ___________________________________________
Verified: _________________________________________
 
SIGNATURE
AUTHORIZED SIGNER
 
 
 
 
 
 
 
 ___________________________________________
Date: ___________________________________________
 
TITLE
 
 
 
Compliance Status
Yes
No
 
 ___________________________________________
 
 
DATE