Document:

LIGHTPATH TECHNOLOGIES, INC. 8-K 

 

Exhibit 10.3

 

SECOND AMENDMENT 

TO

SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Second Amendment
to Second Amended and Restated Loan and Security Agreement is entered into as of January 16, 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 (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.            The
following definitions in Section 1.1 of the Agreement are hereby added or amended in their entirety to read as follows:

 

“Adjusted
EBITDA” means Borrowers’ consolidated earnings before interest, taxes, depreciation and amortization expenses, plus
(i) stock–based compensation expenses, (ii) non-cash expenses (income) related to change of fair value of warrant liabilities
or Subordinated Debt owing under the Seller Note, (iii) foreign currency translation loss, and (iv) one-time transaction expenses
in connection with acquisition of Target (not to exceed $50,000 for the trailing twelve month period ending in December 31, 2017).

 

“Credit
Extension” means any Advance, Acquisition Term Loan, the Term II Loan, or any other extension of credit by Bank for Borrowers’
benefit.

 

“Fixed
Charge Coverage Ratio” means, as of any particular measurement date (the “Measurement Date”), a ratio of (a)
Borrowers’ consolidated Adjusted EBITDA for the twelve month period ending on the Measurement Date to (b) the sum of (i)
the scheduled principal and interest payments to be made to Bank with respect to the Term II Loan during the twelve month period
immediately following the Measurement Date, plus (ii) the interest payments paid or payable to Bank with respect to the Advances
during the twelve month period ending on the Measurement Date, plus (iii) the scheduled principal and interest payments to be made
on all Subordinated Debt during the twelve month period immediately following the Measurement Date plus (iv) the amount of non-financed
capital expenditures made during the twelve month period ending on the Measurement Date, plus (v) taxes paid or payable during
the twelve month period ending on the Measurement Date, plus (vi) all the principal and interest payments on all capital lease
obligations during the during the twelve month period ending on the Measurement Date, plus (vii) all dividends and distributions
made during the twelve month period ending on the Measurement Date.

 

“Term
II Loan Prepayment Fee” means a cash fee in the amount equal to (i) 0.75% of the Excess Prepayment Amount if such prepayment
occurs on or prior to the first anniversary of the Second Amendment Date, or (ii) 0.5% of the Excess Prepayment Amount if such
prepayment occurs after the first anniversary of the Second Amendment Date but on or prior to the second anniversary of the Second
Amendment Date, or (iii) 0.25% of the Excess Prepayment Amount if such prepayment occurs after the second anniversary of the Second
Amendment Date but on or prior to the third anniversary of the Second Amendment Date, or (iv) 0.10% of Excess Prepayment Amount
if such prepayment occurs after the third anniversary of the Second Date but on or prior to the fourth anniversary of the Second
Amendment Date.

 

     

     

    

 

“Revolving
Maturity Date” means December 21, 2018.

 

“Second
Amendment Date” means January 16, 2018.

 

“Seller
Note” means that certain Unsecured Promissory Note in the original principal amount of $6,000,000 issued to Joseph Menaker
and Mark Lifshotz in connection with the acquisition of Target.

 

“Term
II Loan Maturity Date” means the fifth anniversary of the Second Amendment Date.

 

2.            The
following is added as a new subsection (c) to the end of Section 2.1:

 

(c)           Term
II Loan.

 

(i)          Subject
to and upon the terms and conditions of this Agreement, Bank agrees to make a single cash advance to Parent in an original principal
amount of $7,294,000 (the “Term II Loan”) on or around the Second Amendment Date. The proceeds of the Term II Loan
shall be used to repay all amounts owing with respect to the Acquisition Term Loan (other than the Prepayment Fee, which Bank hereby
waives), with any remainder used to repay amounts owing under the Seller Note. Thereafter, the Acquisition Term Loan shall be deemed
satisfied in full and terminated.

 

(ii)         Interest
shall accrue from the date the Term II Loan is made to Parent at the rate specified in Section 2.3. The Term II Loan shall be payable
in sixty (60) monthly installments of principal in the amount of $121,566.67 (each, a “Scheduled Payment”), plus all
accrued interest, beginning on the tenth day of the first month following the Second Amendment Date, and continuing on the same
day of each month thereafter for so long as the Term II Loan is outstanding. On the Term II Loan Maturity Date, the Term Loan and
all other amounts related thereto shall be immediately due and payable.

 

(iii)        In
addition to the foregoing, if Borrowers fail to timely comply with Section 6.14 of this Agreement, then on January 31, 2018, Borrowers
shall make an additional principal payment on account of the Term II Loan in the amount of $2,850,000, which shall be applied to
the Scheduled Payments in reverse order of due date.

 

(iv)       Borrowers
shall have the option to prepay all but not less than all of the Term II Loan provided that Borrowers provide written notice to
Bank of its election to prepay the Term II Loan at least ten (10) days prior to such prepayment, and pays, on the date of such
prepayment, (1) the outstanding principal amount of the Term II Loan being repaid, plus (2) all accrued interest thereon, plus
(3) with respect to the amount of the Term II Loan being prepaid that is in excess of $2,850,000 of the Term II Loan (the “Excess
Prepayment Amount”), the Term II Loan Prepayment Fee, plus (4) all other sums, if any, that shall have become due and payable
under the Loan Documents and relate to the Term II Loan. The Term II Loan once repaid, may not be reborrowed.

 

 

3.            The
following is added as a new subsection (iii) to the end of Section 2.3(a):

 

(iii)
Except as set forth in Section 2.3(b), the Term II Loan shall bear interest, on the outstanding Daily Balance thereof, at
a per annum rate equal to two percent (2.00%) above the Prime Rate, provided however that at no time shall the applicable
rate be less than five and one half percent (5.50%) per annum.

 

    2 

     

    

 

4.            Section
2.5(a) is amended and restated in its entirety to read as follows:

 

(a)           Facility
Fees. On the Second Amendment Date, Borrowers shall pay to Bank: (i) a facility fee with respect to the Revolving Facility equal
to $3,749, and (ii) a facility fee with respect to the Term II Loan equal to $20,000, each of which are fully earned and nonrefundable.

 

5.            Section
6.3(d) of the Agreement is amended and restated in its entirety to read as follows:

 

(d) as soon
as available, but in any event within ninety (90) days after the end of a Borrower’s fiscal year, audited consolidated and
consolidating financial statements of such Borrower prepared in accordance with GAAP, consistently applied, together with an unqualified
opinion on such financial statements of an independent certified public accounting firm reasonably acceptable to Bank; provided,
however that the filing of such financial statements and opinion of an independent certified public accounting firm with the Securities
and Exchange Commission through EDGAR will satisfy such Borrower’s delivery obligations hereunder upon notice to Bank of
such filings;

 

6.            The
following is added as a new Section 6.14 to the end of Section 6 of the Agreement:

 

6.14         ISP
Acquisition Repayment. On or before January 31, 2018, Borrowers shall provide evidence satisfactory to Bank of the satisfaction
of all obligations owing under the Seller Note (by way of repayment and conversion of such Indebtedness into equity securities
of Parent), including copies of the fully executed, definitive documents evidencing the conversion of amounts owing under the Seller
Note that results in the full satisfaction of all amounts owing under the Seller Note.

 

7.            Exhibit
D to the Agreement is replaced in its entirety with the Exhibit D attached hereto.

 

8.            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.

 

9.            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.

 

10.          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.

 

11.          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)           corporate
resolutions and incumbency certificate executed by each Borrower;

 

(c)           a
Term II Loan Request Form in the form attached hereto as Exhibit B-1;

 

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(d)           affirmation
of guarantee duly executed by Geltech, Inc.;

 

(e)           payment
of the fees set forth above plus all Bank Expenses incurred through the date of this Amendment; and

 

(f)           such
other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.

 

[signature
page follows]

 

    4 

     

    

 

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 & CEO	 
	 	 	 	 	 	 
	 	ISP OPTICS CORPORATION
	 	 	 	 	 	 
	 	By:	/s/ J. James Gaynor	 
	 	 	 	 	 	 
	 	Name:	J. James Gaynor	 
	 	 	 	 	 	 
	 	Title:	President & CEO	 
	 	 	 	 	 	 
	 	AVIDBANK	 
	 	 	 	 	 	 
	 	By:	/s/ Stephen Chen	 
	 	 	 	 	 	 
	 	Name:	Stephen Chen	 
	 	 	 	 	 	 
	 	Title:	AVP	 

 

    5 

     

    

 

EXHIBIT
B-1

TERM II LOAN REQUEST FORM

 

	To:	Avidbank	 

 

	Fax/Email:	(408) 200-7399 / (855) 208-1157 

corpfinance@avidbank.com	 

 

	Date:	 	 

 

	From:	LIGHTPATH TECHNOLOGIES, INC. et al.	 
	 	Borrower’s Name	 

 

 

	 	 	 
	 	Authorized Signature	 

 

	 	 	 
	 	Authorized Signer’s Name (please print)	 

 

	 	 	 
	 	Phone Number	 

 

	To Account #	 	 

 

LIGHTPATH TECHNOLOGIES, INC. (“Parent”) hereby requests
funding of the Term II Loan in the amount of $7,294,000 in accordance with Section 2.1(c) of the Second Amended and Restated Loan
and Security Agreement between Borrowers and Avidbank (“Lender”), dated as of December 21, 2016 and as amended (the
“Agreement”).

 

Each Borrower represents and warrants that it is in complete
compliance with the Agreement, including all covenants, and there are no Events of Default, and all representations and warranties
of Borrowers stated in the Agreement are true, correct and complete in all material respects as of the date of this request; provided
that those representations and warranties expressly referring to another date shall be true, correct and complete in all material
respects as of such date.

 

Capitalized terms used herein and not otherwise defined have
the meanings set forth in the Agreement.

 

     

     

    

 

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 (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 (quarterly)	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	 
	 	 	 	 	 	 
	DATELIGHTPATH TECHNOLOGIES, INC. 8-K 

 

Exhibit 10.4

 

AFFIRMATION
OF GUARANTEE

 

This
AFFIRMATION OF GUARANTEE is made as of January 16, 2018 (“Affirmation”), by the undersigned guarantor (“Guarantor”)
for the benefit of AVIDBANK (“Bank”).

RECITALS

Lightpath
Technologies, Inc. and ISP Optics Corporation (together, “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 (the “Agreement”).
In connection therewith, Guarantor executed for the benefit of Bank an Unconditional Guaranty dated as of September 30, 2013 (the
“Guarantee”). Borrower and Bank propose to enter into an amendment of the Agreement on or around date herewith (the
“Amendment”) to, among other things, increase and extend the credit facilities being provided by Bank to Borrower
thereunder, provided, that Guarantor consents to the Amendment and agrees that the Guarantee will remain effective.

AGREEMENT

NOW,
THEREFORE, Guarantor agrees as follows:

1.           Guarantor consents to the execution, delivery and performance by Borrower of the Amendment and the documents and instruments
executed in connection therewith.

2.           Guarantor confirms that, as of the date hereof, Guarantor has no defenses against its obligations under the Guarantee.

3.           The Guarantee is and shall remain in full force and effect with respect to Borrower’s Obligations and otherwise and
hereby is ratified and confirmed in all respects.

4.           Unless otherwise defined, all capitalized terms in this Affirmation shall be as defined in the Guarantee.

5.           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.

[signature
page follows]

     

     

    

 

IN
WITNESS WHEREOF, the undersigned has executed this Affirmation of Guaranty as of the first date above written. 

	 	GUARANTOR:
	 	 	 
	 	GELTECH INC.
	 	 	 
	 	By:	/s/
    J. James Gaynor	 
	 	 	 
	 	Name:	J. James
    Gaynor	 
	 	 	 
	 	Title :	President
    & CEO

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