FIRST LOAN MODIFICATION AGREEMENT
EXHIBIT 10.60
This First Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as
of October 30, 2008, by and between SILICON VALLEY BANK, a California chartered bank, with its
principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 (“Bank”) and
FINISAR CORPORATION, a Delaware corporation with its chief executive office located at 0000 Xxxxxxx
Xxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 (“Borrower”).
1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and
obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a loan
arrangement dated as of March 14, 2008, evidenced by, among other documents, a certain Loan and
Security Agreement dated as of March 14, 2008, between Borrower and Bank (as amended, the “Loan
Agreement”). Capitalized terms used but not otherwise defined herein shall have the same meaning
as in the Loan Agreement.
2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as
described in the Loan Agreement (together with any other collateral security granted to Bank, the
“Security Documents”). Hereinafter, the Security Documents, together with all other documents
evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”.
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modifications to Loan Agreement.
| 1 | Borrower hereby agrees to deliver to Bank, on or prior to November 27, 2008, a joinder agreement and all other documentation requested by Bank in order to make Optium Corporation, a Delaware corporation that is a wholly-owned subsidiary of Borrower, a “Borrower” under the Loan Agreement. The failure of Borrower to comply with this provision shall result in an immediate Event of Default under the Loan Agreement, for which there shall be no grace or cure period. | ||
| 2 | The Loan Agreement shall be amended by inserting the following text, appearing at the end of Section 2.5 thereof: |
“ (d) Unused Revolving Line Facility Fee. A fee (the “Unused
Revolving Line Facility Fee”), payable quarterly, in arrears, on a
calendar year basis, in an amount equal to 0.35% per annum of the
average unused portion of the Revolving Line, as determined by Bank.
The unused portion of the Revolving Line, for the purposes of this
calculation, shall include amounts reserved under Section 2.1.4 for
products provided and under Section 2.1.3 for FX Forward Contracts.
Borrower shall not be entitled to any credit, rebate or repayment of
any Unused Revolving Line Facility Fee previously earned by Bank
pursuant to this Section 2.5(d) notwithstanding any termination of
this Agreement or the suspension or termination of Bank’s obligation
to make loans and advances hereunder.”
| 3 | The Loan Agreement shall be amended by deleting the following text appearing in Section 6.6 thereof: |
“ (b) In the event that the aggregate amount of Borrower’s
unrestricted cash and Cash Equivalents maintained with Bank and
Bank’s affiliates is less than Fifty Million Dollars ($50,000,000.00)
at any time, Borrower
shall immediately pay to Bank a one-time fee equal to Fifty Thousand
Dollars ($50,000.00), which fee shall be deemed to be earned as of
the Effective Date.”
| and inserting in lieu thereof the following: |
“ (b) In the event that the aggregate amount of Borrower’s
unrestricted cash maintained in a deposit account with Bank is less
than Five Million Dollars ($5,000,000.00) at any time, Borrower shall
immediately pay to Bank a one-time fee equal to Fifty Thousand
Dollars ($50,000.00), which fee shall be deemed to be earned as of
the Effective Date.”
| 4 | The Loan Agreement shall be amended by deleting the following appearing as Section 6.7 thereof: |
“ 6.7 Financial Covenants
Borrower shall maintain at all times, to be tested as of the
last day of each month, unless otherwise noted:
(a) Adjusted Quick Ratio. An Adjusted Quick
Ratio of at least (i) 0.90 to 1.0 through and including the
month ending June 30, 2008, (ii) 1.0 to 1.0 as of the month
ending July 31, 2008 through and including the month ending
September 30, 2008, and (iii) 1.25 to 1.0 as of the month
ending October 31, 2008 and thereafter.
(b) EBITDA. As of the last day of each of
Borrower’s fiscal quarters, commencing with the fiscal quarter
ended October 31, 2007, Borrower shall have EBITDA of at least
Five Million Dollars ($5,000,000.00) for the six-month period
ending on such date.”
| and inserting in lieu thereof the following: |
“ 6.7 Financial Covenants
Borrower shall maintain at all times, to be tested as of the
last day of each month, unless otherwise noted:
(a) Adjusted Quick Ratio. An Adjusted Quick
Ratio of at least (i) 0.90 to 1.0 through and including the
month ending June 30, 2008, (ii) 1.0 to 1.0 as of the month
ending July 31, 2008 through and including the month ending
September 30, 2008, (iii) 1.10 to 1.00 as of October 31, 2008
through and including the month ending June 30, 2009, and (iv)
1.25 to 1.00 as of the month ending July 31, 2009 and
thereafter.
(b) EBITDA. As of the last day of each of
Borrower’s fiscal quarters, commencing with the fiscal quarter
ended October 31, 2007, Borrower shall have EBITDA for the
six-month period ending on the last day of such quarter of at
least (i) Five Million Dollars ($5,000,000.00) for the
quarters ended October 31, 2007, January 31, 2008, April 30,
2008 and July 31, 2008, (ii) Twenty Million Dollars
($20,000,000.00) for the quarters ending October 31, 2008,
January 31, 2009 and April 30, 2009, and (iii) Twenty-Five
Million Dollars ($25,000,000.00) for the quarter ending on
July 31, 2009 and as of the last day of each quarter
thereafter.”
| 5 | The Loan Agreement shall be amended by inserting the following new definition appearing alphabetically in Section 13.1 thereof: |
“ “Unused Revolving Line Facility Fee” is defined in Section 2.5(d).”
| 6 | The Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof: |
“ “Adjusted Quick Ratio” is the ratio of Quick Assets to Current
Liabilities minus Deferred Revenue.”
“ “LIBOR Rate Margin” is two and one-half of one percent (2.50%).”
“ “Prime Rate Margin” is zero percent (0.00%).”
“ “Revolving Line” is an Advance or Advances in an aggregate
amount of up to Fifty Million Dollars ($50,000,000.00) outstanding at
any time.”
“ “Revolving Line Maturity Date” is March 13, 2009.”
| and inserting in lieu thereof the following: |
“ “Adjusted Quick Ratio” is the ratio of (a) Quick Assets to (b)
Current Liabilities minus Deferred Revenue and the current portion of
convertible subordinated notes to be paid by Borrower.”
“ “LIBOR Rate Margin” is three percent (3.0%).”
“ “Prime Rate Margin” is one-half of one percent (0.50%).”
“ “Revolving Line” is an Advance or Advances in an aggregate amount
of up to Forty-Five Million Dollars ($45,000,000.00) outstanding at
any time”
“ “Revolving Line Maturity Date” is July 15, 2010.”
| 7 | The Compliance Certificate appearing as Exhibit B to the Loan Agreement is hereby replaced with the Compliance Certificate attached hereto as Schedule 1. |
4. FEES. In connection with the Loan Agreement and this Loan Modification Agreement,
Borrower shall pay to Bank the following additional fees:
(a) Borrower shall pay to Bank a modification fee equal to Two Hundred Twenty-Five
Thousand Dollars ($225,000.00), which fee shall be deemed fully earned and shall be due and
payable as of the date hereof; provided, however, such fee shall be reduced by an amount
equal to (i) Two Hundred Thousand Dollars ($200,000.00), multiplied by (ii) the quotient of
(A) the number of days between the date following the date of this Loan Modification
Agreement and March 13, 2009 (inclusive of each such date), divided by (B) 364.
(b) Borrower shall pay to Bank the Anniversary Fee, which Anniversary Fee shall be
deemed fully earned on the date hereof and shall be due and payable on the earlier to occur
of (i) the date that is one (1) year from the date of this Loan Modification Agreement (the
“Anniversary Date”), and (ii) the early termination of the Loan Agreement. As used herein,
“Anniversary Fee” shall be an amount equal to (A) Two Hundred Twenty-Five Thousand Dollars
($225,000.00), multiplied by (B) the quotient of (1) the number of days between the date
following the Anniversary Date and July 15, 2010 (inclusive of each such date), divided by
(2) 365.
(c) Borrower shall reimburse Bank for all legal fees and expenses incurred in
connection with this Loan Modification Agreement.
5. RATIFICATION OF PERFECTION CERTIFICATE. Borrower hereby ratifies, confirms and
reaffirms, all and singular, the terms and disclosures contained in a certain Perfection
Certificate dated as of March 14, 2008 between Borrower and Bank, and acknowledges, confirms and
agrees the disclosures and information Borrower provided to Bank in the Perfection Certificate have
not changed, as of the date hereof.
6. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary
to reflect the changes described above.
7. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all
terms and conditions of all security or other collateral granted to the Bank, and confirms that the
indebtedness secured thereby includes, without limitation, the Obligations.
8. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that Borrower has no
offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or
otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or
counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby
expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.
9. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing
Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan
Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force
and effect. Bank’ s agreement to modifications to the existing Obligations pursuant to this Loan
Modification Agreement in no way shall obligate Bank to make any future modifications to the
Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the
Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers of
Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will
be released by virtue of this Loan Modification Agreement.
10. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it
shall have been executed by Borrower and Bank.
[The remainder of this page is intentionally left blank]
This Loan Modification Agreement is executed as a sealed instrument under the laws of the
State of California as of the date first written above.
| BORROWER: | BANK: | |||||||||
| FINISAR CORPORATION | SILICON VALLEY BANK | |||||||||
By:
|
/s/ XXXXXXX X. XXXXXXX | By: | /s/ XXX XXXXX | |||||||
Name:
|
Xxxxxxx X. Xxxxxxx | Name: | Xxx Xxxxx | |||||||
Title:
|
Senior Vice President, Finance and CFO | Title: | Managing Director | |||||||
SCHEDULE 1
EXHIBIT B
COMPLIANCE CERTIFICATE
TO:
|
SILICON VALLEY BANK | Date: | ||
FROM:
|
FINISAR CORPORATION |
The undersigned authorized officer of FINISAR CORPORATION (“Borrower”) certifies that under
the terms and conditions of the Loan and Security Agreement between Borrower and Bank (as amended,
the “Agreement”), (1) Borrower is in complete compliance for the period ending with
all required covenants except as noted below, (2) there are no Events of Default, (3) all
representations and warranties in the Agreement are true and correct in all material respects on
this date except as noted below; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or modified by
materiality in the text thereof; and provided, further that those representations and warranties
expressly referring to a specific date shall be true, accurate and complete in all material
respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required
tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to
the terms of Section 5.8 of the Agreement, and (5) no Liens have been levied or claims made against
Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which
Borrower has not previously provided written notification to Bank. Attached are the required
documents supporting the certification. The undersigned certifies that these are prepared in
accordance with GAAP consistently applied from one period to the next except as explained in an
accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested
at any time or date of determination that Borrower is not in compliance with any of the terms of
the Agreement, and that compliance is determined not just at the date this certificate is
delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given
them in the Agreement.
Please indicate compliance status by circling Yes/No under “Complies” column.
| Reporting Covenant | Required | Complies | ||
Monthly Financial Statements and Compliance
Certificate
|
Monthly within 30 days | Yes No | ||
Annual financial statements (CPA Audited) on 10-K
|
FYE within 90 days | Yes No | ||
10-Q
|
Quarterly, within 5 days after filing with SEC or 45 days after quarter | Yes No | ||
8-K
|
Within 5 days after SEC filing | Yes No | ||
Board approved projections
|
As requested by Bank | Yes No |
| Financial Covenant | Required | Actual | Complies | |||||||||
Adjusted Quick Ratio (tested monthly) |
||||||||||||
As of October 31, 2008 |
1.10:1.00 | ___:1.00 | Yes No | |||||||||
As of July 31, 2009 |
1.25:1.00 | ___:1.00 | Yes No | |||||||||
Rolling Two-Quarter EBITDA (tested quarterly) |
||||||||||||
As of October 31, 2008 |
$ | 20,000,000 | $ | Yes No | ||||||||
As of July 31, 2009 |
$ | 25,000,000 | $ | |||||||||
The following financial covenant analyses and information set forth in Schedule 1 attached
hereto are true and accurate as of the date of this Certificate.
The following are the exceptions with respect to the certification above: (If no exceptions
exist, state “No exceptions to note.”)
| FINISAR CORPORATION | BANK USE ONLY | |||||||||
By:
|
Received by: | |||||||||
Name:
|
||||||||||
Title:
|
Date: | |||||||||
| Verified: | ||||||||||
| Date: | ||||||||||
| Compliance Status: Yes No | ||||||||||
Schedule 1 to Compliance Certificate
Financial Covenants of Borrower
Financial Covenants of Borrower
Dated:
In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan
Agreement shall control.
I. Adjusted Quick Ratio (Section 6.7(a))
Required:
|
___: 1.00* | |
Actual:
|
___: 1.00 |
| A. | Aggregate value of the unrestricted cash and Cash Equivalents of Borrower |
$ | ||||||
| B. | Aggregate value of the net billed trade accounts receivable of Borrower |
$ | ||||||
| C. | Investments of Borrower |
$ | ||||||
| D. | Quick Assets (the sum of lines A through C) |
$ | ||||||
| E. | Aggregate value of liabilities of Borrower (including all Indebtedness
to Bank) that mature within one (1) year and current portion of
Subordinated Debt permitted by Bank to be paid by Borrower |
$ | ||||||
| F. | Current Liabilities (line E)) |
$ | ||||||
| G. | Deferred Revenue |
$ | ||||||
| H. | Current portion of convertible subordinated notes to be paid by Borrower |
$ | ||||||
| I. | Line F minus line G and minus line H |
$ | ||||||
| J. | Adjusted Quick Ratio (line D divided by line I) |
Is line J equal to or greater than ____ : 1.00*?
See Section 6.7(a)
| No, not in compliance | Yes, in compliance | |||||||||
II. EBITDA (Section 6.7(b))
Required: |
$ | * (for prior two quarters) | ||||||
Actual: |
$ | |||||||
Is EBITDA for prior two quarters at least $ *?
| No, not in compliance | Yes, in compliance | |||||||||
| * | See Section 6.7(b) |
