Exhibit 10.1

CONSENT AND FOURTH AMENDMENT TO CREDIT AGREEMENT
 
CONSENT AND FOURTH AMENDMENT TO CREDIT AGREEMENT (the “Fourth Amendment”) dated
as of December 1, 2010 by and among GERBER SCIENTIFIC, INC., GERBER SCIENTIFIC
INTERNATIONAL INC., as Borrowers, GERBER COBURN OPTICAL INTERNATIONAL, INC.,
GERBER SCIENTIFIC UK, LTD., SPANDEX LTD., and VIRTEK VISION INTERNATIONAL INC.
(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”).
 

 
Recitals
 
The Borrowers, the Guarantors, the Lenders and the Agent are each party to that
certain Credit Agreement dated as of January 31, 2008 as amended by that certain
First Amendment to Credit Agreement dated November 21, 2008, that certain Second
Amendment to Credit Agreement dated March 4, 2009 and that certain Third
Amendment to Credit Agreement dated November 19, 2009 (the “Credit Agreement”)
pursuant to which the Lenders have established a revolving credit facility for
the benefit of the Borrowers.  The Borrowers have requested that the Majority
Lenders consent to the sale of substantially all of the assets, properties,
rights and interests used in the Gerber Coburn business unit to a party
acceptable to Gerber Scientific, Inc. pursuant to that certain Asset Purchase
Agreement by and between a party acceptable to Gerber Scientific, Inc. and
Gerber Scientific International Inc. (“GSI”) (the “Gerber Coburn
Disposition”).  The Borrowers have also requested that the Majority Lenders
consent to the transfer by Gerber to WP Carey Co., LLC or its affiliates of real
property located at 24 Industrial Park Road West, Tolland, Connecticut (the
“Tolland Property”) and the acquisition by Gerber from WP Carey Co. LLC of real
property located at 83 Gerber Road, South Windsor, Connecticut (“83” and
together with the adjacent 33 acre parcel currently owned by GSI, the “83
Property”) (the “Real Estate Transaction”).  The Majority Lenders have agreed,
subject to the terms and conditions contained herein, to consent to the Gerber
Coburn Disposition and the Real Estate Transaction and to certain changes to the
terms of the Credit Agreement.
 
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. Fourth Amendment.  Section 1.1 of the Credit Agreement is hereby
amended by adding the following definition of “Fourth Amendment” in alphabetical
order:
 
“Fourth Amendment” shall mean that certain Consent and Fourth Amendment to
Credit Agreement among the Loan Parties, the  Majority
 

 
 

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Lenders and the Agent dated as of December 1, 2010.
 
“Connecticut Master Lease” shall mean Gerber’s and/or its Subsidiaries’ lease of
the Tolland Property (as defined in the Fourth Amendment) and certain additional
properties located at 55 Gerber Road, South Windsor, Connecticut and 151 Batson
Road, Manchester, Connecticut from WP Carey Co. or its affiliates, successors
and assigns
 
Section 3. Amendment of Section 1.1 of Credit Agreement
 
(a) .  Section 1.1 of the Credit Agreement is hereby further amended by deleting
the definitions of “Consolidated EBIT”, “Consolidated Interest Expense,” and
“Maximum Revolving Credit Amount” in their entirety and substituting therefor
the following:
 
“Consolidated EBIT” shall mean for any period ending on or after January 31,
2009 an amount equal to (a) Consolidated Net Income plus (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) non-cash
charges and other non-cash expenses arising (A) from the grant of or issuance or
repricing of stock, stock options, or other equity-based awards to the officers,
directors and employees of the Loan Parties incurred during such period, (B) in
respect of investments in connection with the Supplemental Executive Retirement
Plan of Gerber incurred during such period, (C) in accordance with GAAP under
Statement of Accounting Standards 142 during such period; provided that the
total amount added under this clause (iii)(C) during the term of this Agreement
shall not exceed $5,000,000, and (D) in connection with goodwill impairment in
respect of the contemplated sale of the Gerber Coburn business in an amount not
to exceed $17,000,000 in the aggregate, (iv) non-cash charges and non-cash
losses (i.e. the difference between book value and sale proceeds net of any
legal fees and advisory fees) arising from asset sales, disposals or
abandonments occurring after the date of the Second Amendment incurred during
such period (including the Gerber Coburn Disposition (as defined in the Fourth
Amendment), Designated Asset Sales and the Real Estate Transaction during such
period), (v) non-recurring fees and expenses incurred in connection with the
Second Amendment and Third Amendment (including any mortgage of the Tolland
Property pursuant to Section 10 of the Third Amendment) and the Fourth
Amendment, (vi) non-recurring fees and expenses incurred in connection with the
Gerber Coburn Disposition, including expenses in respect of severance payments,
in an aggregate amount not to exceed $2,900,000.00 and incurred on or prior to
January 31, 2011, in each case for the period under review, and (vii)
non-recurring fees and expenses incurred in connection with the Real Estate
Transaction in an aggregate amount not to exceed $200,000.00; provided, however,
that (w) for each of the four quarter periods ending January 31, 2009, April 30,
2009, July 31, 2009 and October 31, 2009, Consolidated EBIT shall be increased
by, without
 

 
 

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duplication, (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 the inventory of Gamma
and its Subsidiaries purchased by the Borrowers on the date of the Gamma
Acquisition, (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 and (iii) the
consolidated net income of the Virtek Guarantors and Gamma plus all amounts
deducted in computing consolidated net income in respect of consolidated
interest expense and taxes based on or measured by income for the portion of
such four quarter periods prior to the Virtek Acquisition and the acquisition of
Gamma, respectively and (x) after the date of the Third Amendment, Consolidated
EBIT shall be increased by the amount of cash restructuring charges to the
extent deducted in computing Consolidated Net Income for such period up to an
aggregate amount of $3,000,000 for all such periods, (y) following the
consummation of the Yunique Acquisition, Consolidated EBIT shall include pro
forma Consolidated EBIT of Yunique consistent with the Consolidated EBIT figures
previously presented to the Lenders for the portion of such period preceding the
date of consummation of the Yunique Acquisition and (z) Consolidated EBIT shall
be increased by the amount of non-recurring fees and expenses incurred in
connection with preparation for or closing of the Yunique Acquisition to the
extent deducted in computing Consolidated Net Income minus (c) all amounts
included in computing Consolidated Net Income in respect of non-cash gains (i.e.
the excess of sale proceeds (net of any legal fees and advisory fees) over book
value) arising from asset sales, disposals or abandonments occurring after the
date of the Second Amendment and arising during such period (including gains
associated with the Gerber Coburn Disposition (as defined in the Fourth
Amendment) and Designated Asset Sales during such period).
 
“Consolidated Interest Expense” shall mean, for any period, interest expense for
such period of Gerber and its Subsidiaries, determined on a consolidated basis
in accordance with GAAP minus any amortization of non-recurring fees and
expenses incurred in connection with the Second Amendment, the Third Amendment
and the Fourth Amendment to the extent constituting interest expense under GAAP.
 
“Maximum Revolving Credit Amount” shall mean, subject to Section 2.18, as of any
date of determination, the lesser of (a) $60,000,000 and (b) the amount to which
the Maximum Revolving Credit Amount may have been reduced pursuant to Section
2.14 hereof; provided that if the obligation of the Lenders to make further
Revolving Credit Advances is terminated upon the occurrence of an Event of
Default, the Maximum Revolving Credit Amount as of any date of determination
thereafter shall be deemed to be $0.  For the purposes of determining the
Maximum Revolving
 

 
 

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Credit Amount Revolving Credit Advances denominated in an Alternative Currency
shall be converted into the U.S. Dollar equivalent as of the date of such
determination.
 
Section 4. Amendment of Article 7 of the Credit Agreement.  Article 7 of the
Credit Agreement is hereby amended by addition the following at the end of such
section:
 
“All financial covenants calculated for purposes of this Article 7 shall be
calculated such that the Connecticut Master Lease shall be treated as an
operating lease and not as a capital lease notwithstanding that all or part of
such Connecticut Master Lease may be accounted for as a capital lease under
GAAP”.

Section 5. Amendment of Section 9.1 of the Credit Agreement.  Section 9.1 of the
Credit Agreement is hereby amended by re-lettering subparagraph (i) thereof as
subparagraph (j) and inserting the following new subparagraph (i):
 
(i)            Indebtedness in respect of the Connecticut Master Lease.”

Section 6. Amendment of Schedules to the Credit Agreement.   Each of the
Schedules to the Credit Agreement is hereby amended by deleting such schedules
in their entirety and substituting therefor the Schedules attached hereto as
Exhibit A.  Upon the effective date of this amendment the aggregate amount of
Revolving Commitments shall be reduced to $60,000,000 as set forth on Schedule 1
to the Credit Agreement.
 
Section 7. Amendment of Schedules to the Security Agreement.   Each of the
Schedules to the Security Agreement is hereby amended by deleting such schedules
in their entirety and substituting therefor the Schedules attached hereto as
Exhibit B.
 
Section 8. Gerber Coburn Disposition.  Subject to the conditions set forth in
Section 11 below and provided that (a) the Agent receives and approves final
acquisition documents with respect to the Gerber Coburn Disposition which are
consistent with the terms of the acquisition documents previously presented to
the Lenders, (b) the Gerber Coburn Disposition is consummated on or prior to
January 31, 2011 and (c) GSI provides evidence acceptable to the Agent
demonstrating that GSI has received net cash proceeds with respect to the Gerber
Coburn Disposition of at least $15,000,000, the Majority Lenders herby waive the
provisions of Sections 9.2 and 9.4 of the Credit Agreement as they apply to the
Gerber Coburn Disposition and consent to the Gerber Coburn Disposition.  GSI
agrees to apply the Net Proceeds of the Gerber Coburn Disposition to repay the
Revolving Credit Advances within four days of receipt thereof.
 
Section 9. Real Estate Transaction.  Subject to the conditions set forth in
Section 11 below and provided that the Agent shall have received (in each case
in form and substance acceptable to the Agent) with respect to the 83 Property
(a) a Mortgage, Assignment of Rents and Security Agreement, (b) an environmental
indemnity agreement, (c) an American Land Title
 

 
 

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Association (“Alta”) lender’s policy of title insurance in form customary in the
jurisdiction in which the 83 Property is located, (d) a survey of the 83
Property prepared by a surveyor duly licensed by the State of Connecticut,
substantially complying with the applicable ALTA standards for a land title
survey and (e) an opinion of William Grickis, General Counsel of Gerber together
with such other documents and certificates as the Agent may reasonably request,
the Majority Lenders hereby waive the provisions of Section 9.4 of the Credit
Agreement as they apply to the Real Estate Transaction and consent to the Real
Estate Transaction.
 
Section 10. Release of Security Interests and Guarantees.  Concurrently with the
consummation of the Gerber Coburn Disposition, the Agent will release its
security interests in the assets and/or Equity Interests being sold, and
guarantees in respect of any entity whose Equity Interests are being sold, in
such Gerber Coburn Disposition (including without limitation the guarantee of
Gerber Coburn Optical International, Inc. and the pledge of it equity
securities).  Concurrently with the consummation of the Real Estate Transaction,
the Agent will release its security interests and mortgages in respect of the
Tolland Property.
 
Section 11. Conditions Precedent.  The effectiveness of this Fourth Amendment is
subject to the truth and accuracy of the representations and warranties set
forth in Section 12 below and shall become effective upon receipt by the Agent
on the date hereof of:
 
(a) Counterparts of this Fourth Amendment duly executed by each of the Loan
Parties, the Agent and the Majority Lenders.
 
(b) The opinion of William Grickis, General Counsel of Gerber, in form and
substance acceptable to the Agent.
 
(c) Copies of the resolutions of the Board of Directors or equivalent body of
each of the Loan Parties 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).
 
(d) Certificates of legal existence and corporate good standing for the Loan
Parties of recent date issued by the appropriate Connecticut and Delaware
authorities.
 
(e) Such other documents, certificates and opinions as the Agent or the Lenders
may reasonably request which have been notified to the Borrowers in writing
prior to the date hereof.
 
(f) An amendment fee for each Lender executing this Fourth Amendment on the date
hereof equal to .00125 times such Lender’s Maximum Amount of Revolving Loans as
set forth on Schedule 1.
 
Section 12. Representations and Warranties.  The Loan Parties, jointly and
severally, represent and warrant, on and as of the date of this Amendment, that:
 

 
 

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(a) No Default or Event of Default is outstanding both before and after giving
effect to this Fourth Amendment.
 
(b) The representations and warranties of the Loan Parties contained in the
Credit Agreement are true and accurate on and as of the date of this Amendment,
except (i) that the references in Article 5 to the 2007 Financial Statements
(except in Section 5.12) shall be deemed to refer to the most recent audited
consolidated financial statements of Gerber and its Subsidiaries furnished to
the Agent and (ii) to the extent that such representations and warranties relate
solely to an earlier date (in which case such representations and warranties
were true and accurate as of such earlier date).
 
(c) Since April 30, 2010, there have been no events, acts, conditions or
occurrences of whatever nature, singly or in the aggregate, which have had, or
could reasonably be expected to have, a Material Adverse Effect.
 
Section 13. Survival.  Each of the foregoing representations and warranties
shall be made at and as of the date of this Fourth Amendment.  Each of the
foregoing representations and warranties shall constitute a representation and
warranty of the Loan Parties under the Credit Agreement, and it shall be an
Event of Default if any such representation and warranty shall prove to have
been incorrect or false in any material respect at the time when made or deemed
to have been made.  Each of the foregoing representations and warranties shall
survive and not be waived by the execution and delivery of this Fourth Amendment
or any investigation by the Agent or any Lender.
 
Section 14. Ratification of Credit Agreement and Loan Documents.  Except as
expressly amended herein, all terms, covenants and conditions of the Credit
Agreement and the other Loan Documents shall remain in full force and effect,
and the parties hereto do expressly ratify and confirm the Credit Agreement and
the other Loan Documents.  All future references to the Credit Agreement shall
be deemed to refer to the Credit Agreement as modified hereby.
 
Section 15. Loan Document.  This Fourth Amendment shall be deemed to be a Loan
Document and a breach of any covenant contained herein shall constitute an Event
of Default under the Credit Agreement.
 
Section 16. Miscellaneous Provisions.
 
(a) Counterparts and Expenses.  This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original, and all
counterparts, taken together, shall constitute but one and the same
document.  The Loan Parties, jointly and severally, agree to pay on demand all
the Agent’s reasonable expenses in preparing, executing and delivering this
Fourth Amendment, and all related instruments and documents, including, without
limitation, the reasonable fees and out-of-pocket expenses of Agent’s special
counsel, Goodwin Procter LLP.
 

 
 

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(b) Governing Law.  THIS FOURTH AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS.
 

[Signatures on Following Page]
 

 

 
 

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IN WITNESS WHEREOF, the Borrowers, the Guarantors, the Agent and the Lenders
have caused this Fourth Amendment to be executed by their duly authorized
officers as of the date set forth above.
 
 
THE BORROWERS:
 
 

 
 

 
 
GERBER SCIENTIFIC, INC.
 
By:  /s/ William V. Grickis, Jr.
 
Name:  William V. Grickis, Jr.
 
Title:  Senior Vice President
 
 
GERBER SCIENTIFIC INTERNATIONAL, INC.
 
By:  /s/ William V. Grickis, Jr.
 
Name:  William V. Grickis, Jr.
 
Title:  Secretary
 

 

 

 

 

 

 

 

 

 

 
Signature Page to Fourth Amendment to Credit Agreement
 

 
 

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GUARANTORS:
 
 

 
 
GERBER COBURN OPTICAL INTERNATIONAL, INC.
 
By:  /s/ William V. Grickis, Jr.
 
Name:  William V. Grickis, Jr.
 
Title:  Secretary
 
 
GERBER SCIENTIFIC UK, LTD.
 
By:  /s/ William V. Grickis, Jr.
 
Name:  William V. Grickis, Jr.
 
Title:  Director
 
 
SPANDEX LIMITED
 
By:  /s/ William V. Grickis, Jr.
 
Name:  William V. Grickis, Jr.
 
Title:  Director
 

 
 
VIRTEK VISION INTERNATIONAL, INC.
 
By:  /s/ William V. Grickis, Jr.
 
Name:  William V. Grickis, Jr.
 
Title:  President
 

 

 

 
Signature Page to Fourth Amendment to Credit Agreement
 

 
 

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THE AGENT:
 
 

 
 
RBS CITIZENS, N.A., as Agent
 
By:  /s/ Thomas F. McNamara
 
Name:  Thomas F. McNamara
 
Title:  Senior Vice President
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Signature Page to Fourth Amendment to Credit Agreement
 

 
 

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THE LENDERS:
 
 

 
 
RBS CITIZENS, N.A.
 
By:  /s/ Thomas F. McNamara
 
Name:  Thomas F. McNamara
 
Title:  Senior Vice President
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Signature Page to Fourth Amendment to Credit Agreement
 

 
 

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SOVEREIGN BANK
 
By:  /s/ Jay L. Massiro
 
Name:  Jay L. Massiro
 
Title:  Senior Vice President
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Signature Page to Fourth Amendment to Credit Agreement
 

 
 

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BANK OF AMERICA, N.A.
 
By:  /s/ Christopher T. Phelan
 
Name:  Christopher T. Phelan
 
Title:  SVP
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Signature Page to Fourth Amendment to Credit Agreement
 

 
 

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HSBC BANK USA, NATIONAL ASSOCIATION
 
By:  /s/ Manuel Burgueno
 
Name:  Manual Burgueno
 
Title:  Vice President
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Signature Page to Fourth Amendment to Credit Agreement
 

 
 

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JPMORGAN CHASE BANK, N.A.
 
By:  /s/ Kenneth D. Coons
 
Name:  Kenneth D. Coons
 
Title:  AVP / Underwriter
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Signature Page to Fourth Amendment to Credit Agreement
 

 
 

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MERRILL LYNCH CAPITAL CORPORATION
 
By:  /s/ Christopher T. Phelan
 
Name:  Christopher T. Phelan
 
Title:  SVP
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Signature Page to Fourth Amendment to Credit Agreement
 

 
 

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