exhibit10_2.htm


    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").

     

    WITNESSETH:

     

    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 officer of each of Gerber Scientific UK, LTD and Spandex Limited in each
case certifying (i) that the applicable Loan Party’s constitutional documents
delivered to the bank on January 31, 2008 remain in full force and effect
without amendment or rescission and (ii) that the incumbency of the officer
executing this Amendment on the applicable Loan Party’s behalf remains unchanged
since January 31, 2008.

     

    (m)           Certificates
of insurance with respect to the Virtek Guarantors naming the Agent as
additional insured and loss payee.

     

    (n)           Certificates
of legal existence and corporate good standing for the Loan Parties of recent
date issued by the appropriate Canadian and Massachusetts governmental
authorities.

     

    (o)           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.

     

    Section 5.  Joinder of Virtek
Guarantors.  In consideration of, and in order to induce the
Lenders to make Loans under the Credit Agreement and in accordance with Section
8.8 of the Credit Agreement, each Virtek Guarantor hereby consents and agrees
(i) to be jointly and severally  liable with all other Guarantors for
all Lender Obligations, and all other obligations and covenants of the Loan
Parties now or hereafter existing under the Credit Agreement and the other Loan
Documents, (ii) to be deemed to be a “Guarantor” (as defined in the Credit
Agreement) jointly and severally with all other Guarantors and (iii) to be bound
by all representations, warranties, covenants and agreements of the Guarantors
under the Credit Agreement, the Loan Documents and all related documents, in
each case, with the same force and effect as if such Virtek Guarantor was a
signatory to such documents and was expressly named therein, but subject to this
amendment.

     

    Section 6.  Covenants.  Gerber
covenants that it will, and will cause each of its Subsidiaries to, comply with
the following covenants and provisions:

     

    (a)           Gerber
Scientific Canada Inc. will continue to hold no assets and will be dissolved by
December 31, 2008.

     

    (b)           The
Virtek Guarantors shall have transferred their primary United States based
depository, operating, concentration and disbursement accounts to the Agent in
compliance with Section 8.7 of the Credit Agreement by December 15,
2008.

     

    (c)           Virtek
Public will cause stock certificates representing all shares of Virtek U.S.,
together with stock powers executed in blank, to be delivered to the Agent by
November 28, 2008.

     

    (d)           Virtek
will cause deposit account control agreements in form and substance reasonably
acceptable to the Agent with regard to each account of the Virtek Guarantors
(other than United States based accounts) to be delivered to the Agent by
December 31, 2008.

     

    (e)           Virtek
will cause a notarized share pledge executed by Virtek Private with regard to
65% of the shares of FOBA Technology + Services GmbH (the “FOBA Pledge”) in form
and substance reasonably acceptable to the Agent, to be delivered to the Agent
no later than December 31, 2008.

     

    (f)           Virtek
will cause a true and correct copy of any and all leases pursuant to which any
Virtek Guarantor is leasing any real property if the value of Collateral located
thereon exceeds $1,000,000, and if the location thereof is in the United States
or Canada, a landlord waiver in form and substance reasonably acceptable to the
Agent with respect to such real property, to be delivered to the Agent by
December 15, 2008.

     

    (g)           Upon
the earlier to occur of (i) 10 Business Days following the date that Virtek
Public becomes a private company and (ii) December 15, 2008,  Gerber
and each of its Subsidiaries shall pledge and deliver 100% of their equity
interests of Virtek Public to the Agent and shall cause Goodmans LLP to deliver
to the Agent an opinion in form and substance reasonably acceptable to the Agent
regarding the capitalization of Virtek Public and pledge of its
shares.

     

    Section 7.  Representations and
Warranties.  The Loan Parties, jointly and severally, represent
and warrant, on and as of the date of this Amendment, that:

     

    (a)           No
Default or Event of Default is outstanding both before and after giving effect
to this 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, 2008, 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.

     

    (d)           Except
with respect to the requirement of clause (iv) of the definition of Permitted
Acquisition as described in the Acquisition Waiver, the Virtek Acquisition was a
Permitted Acquisition.

     

    Section 8.  Survival.  Each
of the foregoing representations and warranties shall be made at and as of the
date of this 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 Amendment or any
investigation by the Administrative Agent or any Lender.

     

    Section 9.  Ratification of Credit
Agreement and Loan Documents.  Except as expressly waived or
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 10.  Loan
Document.  This 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 11.  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 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.

     

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

     

    


     

    


     

    [Signatures
on Following Page]

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, the Borrowers, the Guarantors, the Agent and the Lenders have
caused this 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, General Counsel

     

                                                                        and
Secretary

     

                                                            GERBER SCIENTIFIC
INTERNATIONAL, INC.

     

                                                            By:           /s/ William V. Grickis,
Jr.

     

                                                            Name:  William
V. Grickis, Jr.

     

                                                            Title:    Director
and Secretary

     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    Signature
Page to First Amendment to Credit Agreement

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


                                                            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/ Rodney W.
Larson

                                                            Name:  Rodney
W. Larson

                                                            Title:    Director

    


     

                                                             SPANDEX LIMITED

     

    


     

                                                             By:           /s/ Rodney W.
Larson

                                                            Name:  Rodney
W. Larson

                                                            Title:    Director

    


     

                                                            GERBER SCIENTIFIC
INTERNATIONAL LTD.

     

    


     

                                                             By:           /s/ William V. Grickis,
Jr.

                                                            Name:  William
V. Grickis, Jr.

                                                            Title:    Vice
President, Director and Secretary

    
 

     

    


     

    


     

    


     

    


     

    Signature
Page to First Amendment to Credit Agreement

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


     

    


     

                                                        VIRTEK VISION
INTERNATIONAL INC.

     

    


     

                                                        By:           /s/ William V. Grickis,
Jr.

                                                        Name:  William
V. Grickis, Jr.

                                                        Title:    Secretary

    


     

                                                         V IRTEK EUROPEAN HOLDINGS
INC.

     

    


     

                                                 By:           /s/ William V. Grickis,
Jr.

                                                         Name:  William V. Grickis,
Jr.

                                                         Title:    Director
and Secretary

    


     

                                                         VIRTEK LASER SYSTEMS NORTH AMERICA,
INC.

     

    


     

                                                        
By:           /s/ William V. Grickis,
Jr.

                                                         Name:  William V. Grickis,
Jr.

                                                         Title:    Director
and Secretary

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    Signature
Page to First Amendment to Credit Agreement

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


     

                                                THE
AGENT:

     

                                                RBS CITIZENS, N.A.,
as Agent

     

                                                By: /s/ Carlos A.
Calixto

     

                                                Name:   Carlos
A. Calixto

     

                                                Title:     Vice
President

     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    Signature
Page to First Amendment to Credit Agreement

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


                                                THE
LENDERS:

     

                                                RBS CITIZENS,
N.A.

     

                                                By:        /s/ Carlos A.
Calixto

     

                                                Name:   Carlos
A. Calixto

     

                                                Title:     Vice
President

     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    Signature
Page to First Amendment to Credit Agreement

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


                                            SOVEREIGN
BANK

     

                                            By:        /s/ Jay L.
Massiro

     

                                            Name:   Jay
L. Massiro

     

                                            Title:     Senior
Vice President

     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    Signature
Page to First Amendment to Credit Agreement

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


                                            BANK OF AMERICA,
N.A.

     

                                             By:        /s/ Christopher T.
Phelan

     

                                            Name:   Christopher
T. Phelan

     

                                            Title:     Senior
Vice President

     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    Signature
Page to First Amendment to Credit Agreement

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


                                                HSBC BANK USA,
NATIONAL ASSOCIATION

     

                                                By:        /s/ Jeffrey N.
Wieser

     

                                                Name:   Jeffrey
N. Wieser

     

                                                Title:     Senior
Relationship Manager

        

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    Signature
Page to First Amendment to Credit Agreement

     

    


     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


                                        JP MORGAN CHASE BANK
N.A.

     

                                        By:      /s/ Dustin
Knoop

     

                                        Name:  Dustin
Knoop

     

                                        Title:   Associate

     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    Signature
Page to First Amendment to Credit Agreement

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


                                            MERRILL LYNCH CAPITAL
CORPORATION

     

                                             By:        /s/ John
Swadba

     

                                            Name:   John
Swadba

     

                                            Title:     Managing
Director

     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    


     

    Signature
Page to First Amendment to Credit Agreement