Exhibit 10.13
MODIFICATION TO CREDIT AGREEMENT
This Modification to Credit Agreement (the "Modification") is entered
into as of December 31, 2001, by and among XXX, INC., a Delaware corporation
("Borrower") and U.S. BANK NATIONAL ASSOCIATION ("U.S. Bank"), as a Lender
(defined in the Credit Agreement defined below and as agent (in such capacity,
"Agent"). As of the effective date of this Agreement, U.S. Bank is the sole
Lender. Except as otherwise specifically provided herein, all capitalized terms
used and not defined herein shall have the meaning set forth in the Credit
Agreement (defined below).
RECITALS
A. Pursuant to the terms of that certain Credit Agreement (as amended,
the "Credit Agreement") dated as of August 28, 2000, by and among Borrower,
Lenders and Agent, Lenders and Agent agreed to provide Borrower the following:
(i) a Line of Credit not to exceed at any time the aggregate principal amount of
Twenty Million Dollars ($20,000,000.00); (ii) Term Loan A in the principal
amount of One Million One Hundred Ninety Thousand Dollars ($1,190,000.000);
(iii) Term Loan B in the principal amount of One Million Six Hundred Ten
Thousand Dollars ($1,610,000.00); (iv) Term Loan C in the principal amount of
Three Million Two Hundred Thousand Dollars ($3,200,000.00); and (v) a Letter of
Credit Facility.
B. Borrower may report a net loss for the fiscal year ended December 31,
2001 (due to Borrower's ownership of Finisar Stock) and similar losses are
projected for fiscal year 2002. As a result, Borrower and Agent wish to modify
the Credit Agreement to, among other things, decrease the amount of the Line of
Credit to $5,000,000.00, change the interest rates applicable to the Credits and
to extend the Line Maturity Date.
AGREEMENT
1. Recitals. The recitals set forth above are true, accurate and correct.
2. Reaffirmation of Credit Agreement. The Borrower reaffirms all of its
obligations under the Credit Agreement (as amended hereby), and the
Borrower acknowledges that as of the date hereof, it has no claims,
offsets or defenses with respect to the payment of sums due under the
Notes or any other Loan Document.
-1-
3. Waiver of Covenant Default. Upon the effectiveness of this Agreement and
satisfaction of the conditions precedent set forth herein, Agent hereby
waives any default by Borrower under Section 6.9 of the Credit Agreement
by reason of Borrower's failure to maintain the Tangible Net Worth
required thereunder prior to the date hereto.
4. Modifications to Credit Agreement. The Credit Agreement is hereby amended
as follows:
a. Business Day. The definition of "Business Day" in Section 1.1 of the
Credit Agreement is amended in its entirety to read as follows:
"'Business Day' means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close and, if the applicable Business Day relates
to any LIBOR borrowing, means such a day which is also a day on
which banks in the City of London are generally open for interbank
or foreign exchange transactions."
b. Fixed Charge Coverage Ratio. The definition of "Fixed Charge
Coverage Ratio" in Section 1.1 of the Credit Agreement is amended in
its entirety to read as follows:
"'Fixed Charge Coverage Ratio' means the ratio of (A) EBITDA less
the aggregate amount of (i) Unfinanced Capital Expenditures, (ii)
cash taxes, and (ii) permitted dividends, distributions and treasury
stock purchases, divided by (B) the aggregate amount of the
following, each measured for the most recent four historical
quarters (excluding the current quarter in possession) (i) cash
Interest Expense (including any letter of credit fees payable to
U.S. Bank) and (ii) capital lease payments plus the average of
current maturities of long-term debt (including all bond redemptions
required by this Agreement) measured for the most recent four
historical quarters (excluding the current quarter in possession)
and (iii) the current maturity of subordinated debt measured for the
most recent four historical quarters (excluding the current quarter
in possession)."
c. Guarantor. The definition of "Guarantor" in Section 1.1 of the
Credit Agreement is amended in its entirety to read as follows:
-2-
"'Guarantor' means, subject to the release provisions set forth in
Section 2.16 hereof, collectively, XXX-Japan, Beijing Tongmei Xtal
Technology Co., Ltd., American Xtal Technology (Hong Kong), Lyte
Optronics, Inc., Advanced Semiconductor (Xiamen), Bestal
International Corporation, and each future wholly-owned subsidiary
of Borrower."
d. LIBOR. The definition of "LIBOR" in Section 1.1 of the Credit
Agreement is amended in its entirety to read as follows:
"'LIBOR' means, for each Fixed Rate Term, the corresponding LIBOR
rate per annum quoted by the Agent from Telerate Page 3750 or any
successor thereto (which shall be the LIBOR rate in effect two
Business Days prior to the LIBOR Loan advance (a "LIBOR Rate
Loan"))."
e. Line Maturity Date. The definition of "Line Maturity Date" in
Section 1.1 of the Credit Agreement is amended in its entirety to
read as follows:
"'Line Maturity Date' means September 30, 2003."
f. Line of Credit. The definition of "Line of Credit" in Section 1.1 of
the Credit Agreement is amended by substituting "$5,000,000.00" in
place of "$20,000,000.00."
g. Line of Credit Pricing Grid. The definition of "Line of Credit
Pricing Grid" in Section 1.1 of the Credit Agreement is amended in
its entirety to read as follows:
"'Line of Credit Pricing Grid' means the following Line of Credit
Pricing Grid:
-3-
- APPLICABLE MARGINS (IN BASIS POINTS) & FEE -
Ratio of Funded Pricing LIBOR Reference Line of Credit
Debt to EBITDA Level Margin Rate Margin Facility Fee
---------------- ------- ------ ----------- --------------
< 1.00 I(*) 175 50 25.0
=/> 1.00 < 1.50 II(*) 200 75 25.0
=/> 1.50 < 2.00 III 225 100 37.5
=/> 2.00 < 2.50 IV 250 125 50.0
=/> 2.50 or < 0 V 300 150 75.0
(*)Pricing Level I and Level II options shall not be available for
the period from the date of effectiveness of the Modification to
April 1, 2002.
Borrower shall be eligible for Level I pricing when its ratio of
Funded Debt to EBITDA is less than 1.00:1.00; for Level II pricing
when such ratio is equal to or greater than 1.00:1.00, but less than
1.50:1.00; for Level III pricing when such ratio is equal to or
greater than 1.50:1.00, but less than 2.00:1.00; for Level IV
pricing when such ratio is equal to or greater than 2.00:1.00, but
less than 2.50:1.00; for Level V pricing when such ratio is equal to
or greater than 2.50:1.00 or is less than 0. This ratio shall be
measured quarterly for the preceding four-quarter period. The
pricing will be set at Level III until receipt of the Borrower's
next financial covenant compliance reflecting the Funded Debt to
EBITDA ratio."
h. Minimum Cash to Funded Debt Ratio. A definition of "Minimum Cash to
Funded Debt Ratio" shall be added to Section 1.1 of the Credit
Agreement between the definition of "Minimum Interest Coverage
Ratio" and "Monterey Park Property" to read as follows:
"'Minimum Cash to Funded Debt Ratio' means the ratio of (A) cash
plus marketable securities to (B) Funded Debt plus cash Interest
Expense (including any letter of credit fees payable to U.S. Bank)
for the most recent four historical quarters (excluding the current
quarter in possession)."
-4-
i. Minimum Quick Ratio. A definition of "Minimum Quick Ratio" shall be
added to Section 1.1 of the Credit Agreement between the definitions
of "Minimum Interest Coverage Ratio" and "Monterey Park Property" to
read as follows:
"'Minimum Quick Ratio' means the ratio of (A) cash plus short term
investments plus net trade accounts receivable divided by (B)
current liabilities plus any amounts outstanding on the Line of
Credit."
j. Reference Rate. The definition of "Reference Rate" is amended in its
entirety to read as follows:
"'Reference Rate" means at any time, as and when such rate changes,
the rate of interest which Agent establishes as its "prime rate" or
"reference rate" and is not necessarily the lowest rate of interest
which it collects from any borrower or class of borrowers. If Agent
ceases to publicly announce or publish its Reference Rate, Agent
will choose a new index by using a comparable index or reference
rate as its Reference Rate."
k. Term Loan Pricing Grid. The definition of "Term Loan Pricing Grid"
is amended in its entirety to read as follows:
"'Term Loan Pricing Grid' means the following Term Loan Pricing
Grid:
- APPLICABLE MARGINS (IN BASIS POINTS) -
Ratio of Funded Pricing Reference
Debt to EBITDA Level LIBOR Margin Rate Margin
--------------- ------- ------------ -----------
< 1.00 I(*) 200 75
=/> 1.00 < 1.50 II(*) 225 100
=/> 1.50 < 2.00 III 250 125
=/> 2.00 < 2.50 IV 275 150
=/> 2.50 or < 0 V 325 175
-5-
(*)Pricing Level I and Level II options shall not be available for
the period from the date of effectiveness of this Modification to
April 1, 2002.
Borrower shall be eligible for Level I pricing when its ratio of
Funded Debt to EBITDA is less than 1.00:1.00; for Level II pricing
when such ratio is equal to or greater than 1.00:1.00, but less than
1.50:1.00; for Level III pricing when such ratio is equal to or
greater than 1.50:1.00, but less than 2.00:1.00; for Level IV
pricing when such ratio is equal to or greater than 2.00:1.00, but
less than 2.50:1.00; for Level V pricing when such ratio is equal to
or greater than 2.50:1.00 or is less than 0. This ratio shall be
measured quarterly for the preceding four-quarter period. The
pricing will be set at Level III until receipt of Borrower's next
financial covenant compliance reflecting the Funded Debt to EBITDA
ratio."
l. Treasury Rate. The definition of "Treasury Rate" in Section 1.1 of
the Credit Agreement is hereby deleted.
m. Unfinanced Capital Expenditures. A definition of "Unfinanced
Capital Expenditures" shall be added to Section 1.1 of the Credit
Agreement after the definition of "Trustee" to read as follows:
"'Unfinanced Capital Expenditures' shall mean all of Borrower's
capital expenditures less (i) increases in long-term debt, (ii) net
proceeds received from the sale of Borrower's common and preferred
stock in the current period and (iii) any proceeds available from
the secondary offering of third quarter of fiscal year 2000 not
absorbed by previous capital expenditures."
n. Line of Credit. Section 2.1(a) of the Credit Agreement is amended in
its entirety to read as follows:
"Line of Credit. On the terms and subject to the conditions set
forth in this Agreement, each Lender hereby severally agrees, on a
pro rata basis in accordance with Schedule 1 attached hereto, to
make advances to Borrower under the Line of Credit from time to time
up to and including the Line Maturity Date, not to exceed at any
time the aggregate principal amount of Five Million Dollars
($5,000,000.00), the proceeds of which shall be used for
-6-
general corporate purposes, including working capital financing, and
for the issuance of standby and commercial letters of credit,
subject to a sublimit of $1,000,000 for such letters of credit as
described in subparagraph (d), below. Borrower's obligation to repay
advances under the Line of Credit shall be evidenced by the Line of
Credit Note, all terms of which are incorporated herein by this
reference. During the period from June 1 thru June 30 of each
calendar year, Borrower may request that the Line of Credit Maturity
Date be extended for one-year periods, which extension shall be
subject to Lender's credit approval for such extension, no
outstanding Default or Event of Default and such other conditions as
Lender may require."
o. Limitations on Borrowings. Section 2.1(b) of the Credit Agreement is
amended by substituting "$2,500,000.00" in place of "$7,500,000.00"
in the first paragraph thereof.
p. Borrower Letter of Credit Subfeature. Section 2.1(d) of the Credit
Agreement is amended in its entirety to read as follows:
"Borrower Letter of Credit Subfeature. As a subfeature under the
Line of Credit, Agent agrees from time to time during the term
thereof to issue standby or commercial letters of credit for the
account of Borrower (each, a 'Borrower Letter of Credit' and
collectively, 'Borrower Letters of Credit'); provided however, that
the form and substance of each Borrower Letter of Credit shall be
subject to reasonable approval by Agent and the aggregate amount of
Borrower Letters of Credit issued at any one time shall not exceed
$1,000,000.00. Except with the prior approval of Agent, which may be
granted or withheld in its sole discretion, no Borrower Letter of
Credit shall have an expiration date subsequent to the Line Maturity
Date. The undrawn amount of all Borrower Letters of Credit issued
and outstanding under this letter of credit subfeature shall be
reserved under the Line of Credit and shall not be available for
borrowings thereunder. Each Borrower Letter of Credit shall be
subject to the additional terms and conditions of the Borrower
Letter of Credit Agreement and related documents, if any, required
by Agent in connection with the issuance thereof (each, a 'Borrower
Letter of
-7-
Credit Agreement' and collectively, the 'Borrower Letter of Credit
Agreements'), each of which shall be substantially in the form
attached hereto as Schedule 2.1. Each draft paid by Agent under a
Borrower Letter of Credit shall be deemed an advance under the Line
of Credit and shall be repaid by Borrower on or before the Line
Maturity Date in accordance with the terms and conditions of this
Agreement. Borrower agrees that Agent, in its sole discretion, may
debit any demand deposit account maintained by Borrower with Agent,
other than a demand deposit account maintained by Borrower on behalf
of a joint venture of which Borrower is a member, for the amount of
any such draft."
q. Letter of Credit. The following sentence is added to the end of the
first paragraph of Section 2.3(a) of the Credit Agreement:
"Notwithstanding anything herein, Borrower's obligations to Agent
with respect to the Letter of Credit shall terminate upon any proper
termination of the Letter of Credit and any other credit facility
under this Agreement may be terminated by Borrower upon payment of
the amounts due under such facility. All obligations of Borrower
hereunder shall terminate upon payment in full of all amounts due
under this Agreement and upon proper termination of the Letter of
Credit."
r. Interest on the Term Loans. Sections 2.5(a) and (b) of the Credit
Agreement are amended in their entirety to read as follows:
"(a) Interest on the Line of Credit. The outstanding principal
balance of the Line of Credit shall bear interest in accordance with
the following interest rate options, as designated periodically by
Borrower:
(i) upon notice to Agent, at the applicable margin over the
Reference Rate set forth in the Line of Credit Pricing Grid; or
(ii) upon a minimum of three (3) Business Days notice to
Agent, at the applicable margin over LIBOR set forth in the Line of
Credit Pricing Grid; provided, however, that each LIBOR interest
selection must be for a minimum amount of $1,000,000 and in integral
multiples of $100,000.
-8-
(b) Interest on the Term Loans. The outstanding principal balances
of each of the Term Loans shall bear interest in accordance with the
following interest rate options, as designated periodically by
Borrower:
(i) upon notice to Agent, at the applicable margin over the
Reference Rate set forth in the Term Loan Pricing Grid; or
(ii) upon a minimum of three (3) Business Days notice to
Agent, at the applicable margin over LIBOR set forth in the Term
Loan Pricing Grid; provided, however, that each LIBOR interest
selection must be for a minimum amount of $1,000,000 and in integral
multiples of $100,000.
The margins above the Reference Rate or LIBOR, as applicable (the
'Interest Rate Margins'), at which the outstanding principal
balances of the Line of Credit and each of the Term Loans bear
interest from time to time shall be adjusted in accordance with the
Line of Credit Pricing Grid and the Term Loan Pricing Grid,
respectively. Until such time as Agent receives Borrower's financial
statements (as required under this Agreement) evidencing Borrower's
compliance with any of the Funded Debt to EBITDA ratios set forth in
the applicable Pricing Grid, the Level III Interest Rate Margin
above the Reference Rate or LIBOR shall apply. Thereafter, Agent
shall adjust the Interest Rate Margins in accordance with the
applicable Pricing Grid on the first day of the month following each
month in which Agent receives updated financial statements from
Borrower pursuant to this Agreement. Such Interest Rate Margins
shall be determined (i) using the most recent quarterly financial
statement of Borrower available to Agent on the applicable
adjustment date to determine the amount of Funded Debt and (ii)
using the most recent financial statements of Borrower available to
Agent on the applicable adjustment date for a four (4) consecutive
quarter period to determine EBITDA. If a LIBOR Rate Loan is prepaid,
whether by the Borrower, as a result of acceleration upon default or
otherwise, the Borrower agrees to pay all of the Lenders' costs,
expenses and Interest Differential (as determined by the Agent)
-9-
incurred as a result of such prepayment. The term "Interest
Differential" shall mean that sum equal to the greater of 0 or the
financial loss incurred by the Lenders resulting from prepayment,
calculated as the difference between the amount of interest the
Lenders would have earned (from like investments as of the first day
of the LIBOR) had prepayment not occurred and the interest the
Lenders will actually earn (from like investments as of the date of
prepayment) as a result of the redeployment of funds from the
prepayment. Because of the short-term nature of this facility, the
Borrower agrees that the Interest Differential shall not be
discounted to its present value. Any prepayment of a LIBOR Rate Loan
shall be in an amount equal to the remaining entire principal
balance of such loan. In the event the Borrower does not timely
select another interest rate option at least three (3) Business Days
before a LIBOR Rate Loan expires, such LIBOR Rate Loan shall renew
for the same monthly term as initially chosen, with the rate (before
adding on the applicable basis points) to be determined three (3)
Business Days prior to renewal. The Agent's internal records of
applicable interest rates shall be determinative in the absence of
manifest error. Each rate option selected shall apply to a minimum
principal amount of $1,000,000.00 and integral multiples of
$100,000.00. For determining payment dates for LIBOR Rate Loans, the
New York Business Day shall be the standard convention. In the event
after the date of initial funding any governmental authority
subjects Lenders to any new or additional charge, fee, withholding
or tax of any kind with respect to any loans hereunder or changes
the method of taxation of such loans or changes the reserve or
deposit requirements applicable to such loans, the Borrower shall
pay to the Lenders such additional amounts as will compensate the
Lenders for such costs or lost income resulting therefrom as
reasonably determined by the Lenders."
s. Line of Credit Facility Fee. The following is added to the end of
Section 2.5(c)(i) of the Credit Agreement:
"In addition to the foregoing fees, Borrower shall pay to Agent, for
Lenders, an annual fee for the Line of Credit
-10-
equal to $50,000.00, payable annually on or before December 31 of
each calendar year."
t. Optional Prepayments. Section 2.8(a) of the Credit Agreement is
amended in its entirety to read as follows:
"Optional Prepayments. Borrower may, through one of its Authorized
Representatives and upon at least (i) one (1) Business Day's prior
written notice to Agent if interest is determined in relation to the
Reference Rate, or (ii) three (3) Business Days' prior written
notice to Agent if interest is determined in relation to LIBOR,
prepay in whole or in part the outstanding amount of the Line of
Credit or any Term Loan without premium or penalty, except as
required by Section 2.13 hereof."
u. Treasury Rate. Section 2.13(b) of the Credit Agreement is hereby
deleted.
v. Required Compensating Balances with Agent. A new Section 3.4 is
added to the Credit Agreement as follows:
"Section 3.4 REQUIRED COMPENSATING BALANCES WITH AGENT. In exchange
for the financial accommodations to be received by Borrower under
this Agreement, the Borrower will maintain on deposit with Agent in
non-interest bearing accounts average daily collected balances, in
excess of that to support account activity and other credit
facilities extended to the Borrower by Lenders, in an amount of at
least $3,000,000.00. If the Borrower fails to keep and maintain such
balances, Borrower shall pay a deficiency fee to Agent, within five
days after receipt of a statement therefor, calculated on the amount
by which the Borrower's average daily balance is less than the
requirements set forth above, computed at a rate equal to the actual
dollar shortfall amount times the current Reference Rate Margin as
indicated in the Line of Credit Pricing Grid, divided by 360 days,
times the actual number of days the Borrower is in default under
this Section 3.4."
w. Correctness of Financial Statement. Section 4.6 of the Credit
Agreement is amended in its entirety to read as follows:
-11-
"CORRECTNESS OF FINANCIAL STATEMENT. The audited consolidated
financial statements of Borrower dated as of December 31, 2000, and
the unaudited interim consolidated financial statements of Borrower
dated as of September 30, 2001, heretofore delivered by Borrower to
Agent, (a) are complete and correct and present fairly the financial
condition of Borrower as of the date thereof; (b) disclose all
liabilities of Borrower that are required to be reflected or
reserved against under GAAP, whether liquidated or unliquidated,
fixed or contingent; and (c) have been prepared in accordance with
GAAP. Since September 30, 2001, there has been no material adverse
change in the financial condition of Borrower, nor has Borrower
mortgaged, pledged or granted a security interest in or otherwise
encumbered any of its assets or properties except as permitted by
this Agreement or as disclosed by Borrower to Agent in the
Disclosure Schedule or in Pro Forma financial statements previously
delivered by Borrower to Agent, other than Permitted Liens."
x. Compliance. Section 5.2(a) of the Credit Agreement is amended in its
entirety to read as follows:
"Compliance. The representations and warranties contained herein and
in each of the other Loan Documents shall be true on and as of the
date of the signing of this Agreement and on the date of each
extension of credit by Lenders pursuant hereto, with the same effect
as though such representations and warranties had been made on and
as of each such date, and on each such date, no Default or Event of
Default shall have occurred and be continuing or shall exist,
Borrower shall be in full compliance with the then applicable
financial covenants set forth in Section 6.9 (taking into account
the effect of the requested advance of Loan funds), and Agent shall
have received a certificate confirming the matters set forth in this
Section 5.2(a) and in Section 6.9 signed by a senior financial
officer of Borrower."
y. Financial Statements. Section 6.3 of the Credit Agreement is amended
in its entirety to read as follows:
-12-
"FINANCIAL STATEMENTS. Provide to Agent all of the following,
in form and detail satisfactory to Agent:
a. not later than one hundred and twenty (120) days after and
as of the end of each fiscal year, an audited financial statement of
Borrower and each entity whose financial results are consolidated
with those of Borrower for reporting purposes, prepared by a
nationally recognized certified public accountant, to include a
balance sheet, income statement, statement of cash flows,
reconciliation of net worth and notes to financial statements,
together with Borrower's 10-K report;
b. not later than thirty (30) days prior to the end of each
fiscal year, an annual budget for Borrower, prepared by Borrower,
which shall include three-year projections of Borrower's operations
and planned capital expenditures and financial projections for
Borrower and each entity whose financial results are consolidated
with those of Borrower for reporting purposes for the next fiscal
year;
c. not later than forty-five (45) days after and as of the end
of each fiscal quarter, (i) a financial statement of Borrower and
each entity whose financial results are consolidated with those of
Borrower for reporting purposes, prepared by Borrower, to include a
balance sheet and income statement; (ii) investment brokerage
statements detailing all investments and current balances; (iii)
Borrower's filed 10-Q Statement and (iv) a statement of capital
expenditures;
d. not later than thirty (30) days after and as of the end of
each calendar month, (i) a calculation of the Borrowing Base
certified as correct by a senior financial officer of Borrower; (ii)
an accounts receivable aging and an accounts payable aging; (iii) a
financial statement of Borrower and each entity whose financial
results are consolidated with those of Borrower for reporting
purposes, prepared by Borrower, to include a balance sheet and
income statement; (iv) inventory listings; (v) investment brokerage
statements detailing all investments and current balances; and (vi)
a certificate of
-13-
the chief financial officer or other executive officer of Borrower
that Borrower is in compliance with the financial covenant set forth
in Section 6.9(g);
e. contemporaneously with each quarterly financial statement
of Borrower required hereby, a certificate of the chief financial
officer or other executive officer of Borrower that said financial
statements are accurate, calculating all financial covenants set
forth in Section 6.9 below and stating that Borrower is in
compliance with the financial covenants set forth in Section 6.9
below which Borrower is then required to comply with, and that there
is no Borrowing Base Deficiency as defined in Section 6.16 below,
and that there exists no Event of Default nor any condition, act or
event which, with the giving of notice or the passage of time or
both, would constitute an Event of Default;
f. from time to time such other information as Agent may
reasonably request."
z. Financial Condition. Section 6.9 of the Credit Agreement is amended
in its entirety to read as follows:
"FINANCIAL CONDITION. Maintain Borrower's financial condition
as follows, based on the consolidated financial statements of
Borrower and each entity whose financial results are consolidated
with those of Borrower for reporting purposes, using generally
accepted accounting principles consistently applied and used
consistently with prior practices (except to the extent modified by
the definitions herein):
a. Maintain at all times a Minimum Quick Ratio of 1.25 to
1.00.
b. Without Agent's prior written consent, Borrower shall not
incur expenses for capital expenditures in excess of $32,000,000.00
for Borrower's fiscal year ended 2001 and $12,000,000.00 for the
Borrower's fiscal years 2002 and 2003.
c. Commencing with the first quarter of Borrower's fiscal year
2003, maintain a Minimum Interest
-14-
Coverage Ratio of 3.00 to 1.00, measured quarterly, based upon the
four-quarter period then ended.
d. Maintain, as of the end of each fiscal quarter commencing
with the quarter ended December 31, 2001, a Tangible Net Worth
(exclusive of any loss-related effect to net worth from Borrower's
ownership of Finisar Corporation common stock and related other
comprehensive income adjustments) not less than $158,200,000.00 plus
eighty percent (80%) of net income for each fiscal quarter after
September 30, 2001 without deduction for losses, plus 100% of net
equity proceeds.
e. Commencing with the first quarter of Borrower's fiscal year
2003, maintain a Fixed Charge Coverage Ratio of not less than 1.25
to 1.00 measured for the most recent four historical quarters
(excluding the current quarter in possession).
f. Commencing with the first quarter of Borrower's fiscal year
2003, maintain a ratio of Funded Debt to EBITDA not to exceed 2.00
to 1.00 for the four (4) consecutive fiscal quarter period ending on
the last day of each fiscal quarter.
g. Maintain at all times a Minimum Cash to Funded Debt Ratio
of 1.05 to 1.00. The Minimum Cash to Funded Debt Ratio shall be
measured monthly, and will remain in effect until the Borrower: (i)
is in compliance with all covenants described in this Section 6.9
for two consecutive quarters, including compliance with the Fixed
Charge Coverage Ratio level of 1.25 to 1.00; and (ii) no further
covenant violations are projected.
Borrower shall include calculations of all of the above covenants in
its compliance certificates required to be delivered to Agent under
this Agreement irrespective of whether Borrower's obligation to
comply hereunder is in effect.
aa. Schedule 4. Attached hereto as Exhibit A are updated disclosures as
required under Schedule 4. Borrower hereby acknowledges that except
as set forth in Exhibit A, all disclosures on Schedule 4 to the
Credit Agreement remain true and correct.
-15-
bb. Schedule 8. A new Schedule 8 (Schedule of Patents, Trademarks and
Licenses of Borrower and each Guarantor) is added to the Credit
Agreement to read as Schedule 8 attached hereto.
5. Conditions Precedent. Before this Modification becomes effective and any
party becomes obligated under it, all of the following conditions shall
have been satisfied at the Borrower's sole cost and expense in a manner
acceptable to the Agent in the exercise of Agent's sole judgment:
a. The Agent shall have received fully executed and, where appropriate,
acknowledged originals of the following:
i. this Modification;
ii. Short Form Modification Agreements in recordable form amending
the Deeds of Trust pursuant to the amendments set forth herein
(each, a "Short Form Modification Agreement");
iii. a Reaffirmation of Guaranty and Security Agreement executed by
each Guarantor (the "Guarantor's Consent");
iv. a Closing Certificate executed by Borrower;
v. an incumbency certificate for Borrower;
vi. an Opinion of Borrower's counsel, in form and substance
satisfactory to Agent, as to the Borrower, Lyte Optronics,
Inc., and enforceability of this Modification;
vii. any other agreements or resolutions (including evidence of the
Borrower's and each Guarantor's authority to enter into this
Modification and the Guarantor Consent, respectively) that the
Agent may reasonably require or request in connection with
this Modification or in accordance with the Credit Agreement,
including evidence of dissolution of Lyte Optronics, Ltd. (UK)
b. A Short Form Modification Agreement amending the Deeds of Trust
shall have been recorded in the official records of Alameda County,
California and Los Angeles County, California.
c. The Agent shall be satisfied that the validity and priority of the
Deeds of Trust, as amended by the Short Form Modification Agreement,
has not been and will not be impaired by this Modification or the
transactions contemplated by it, and that such Deeds of Trust , as
amended by the Short Form Modification Agreement, secure the Line of
Credit and Term
-16-
Loans, as amended hereby. Such assurance includes receipt of
endorsements (or commitments to issue such endorsements) to the
policy to title insurance insuring the Deeds of Trust, including a
CLTA form 110.5 endorsement.
d. Agent, for Lenders, shall have received from Borrower the Line of
Credit annual fee in the amount of $50,000.00.
e. Borrower shall execute and deliver such UCC Financing Statements or
transitional forms as Agent may require and hereby authorizes Agent
to file such statements.
f. Agent shall have executed and filed a Release of Security Interest
and UCC Termination in favor of Beijing Tongmei Xtal Technology Co.,
Ltd.
6. The Borrower's Representations and Warranties. The Borrower represents and
warrants to Lenders as follows:
a. Credit Agreement. All representations and warranties made and given
by the Borrower in the Credit Agreement are true, accurate and
correct, except as limited by Exhibit A hereto.
b. No Default. No Event of Default has occurred and is continuing, and
no event has occurred and is continuing which, with notice or the
passage of time or both, would be an Event of Default.
c. Borrowing Entity. Borrower is a corporation which is duly organized,
validly existing and in good standing in the State of Delaware and
is duly qualified in each jurisdiction in which it is required to be
qualified, except where the failure to be so qualified would not
have a Material Adverse Effect. Except as otherwise disclosed or
delivered to Agent, there have been no changes in the formation
documents of Borrower or any Guarantor since the inception of the
Credit Agreement.
7. Incorporation. This Agreement shall form a part of the Credit Agreement,
and all references to the Credit Agreement shall mean the Credit Agreement
as hereby modified.
8. No Prejudice; Reservation of Rights. Except as specifically amended by
this Modification, this Modification shall not effect or limit any rights
or remedies of the Agent or Lenders under the Credit Agreement. The Agent
and Lenders reserve, without limitation, all rights which they have
against any indemnitor, guarantor, or endorser of the Credit Agreement.
-17-
9. No Impairment. Except as specifically hereby amended, the Credit Agreement
shall remain unaffected by this Modification and the Credit Agreement
shall remain in full force and effect.
10. Purpose and Effect of Approvals. In no event shall any approval of any
matter in connection with the Credit Agreement of the Agent or Lenders be
a representation of any kind with regard to the matter being approved or a
waiver of any rights under the Credit Agreement.
11. Disclosure to Title Company. Without notice to or the consent of the
Borrower, the Agent may disclose to any title insurance company that
insures any interest of the Agent under the Deeds of Trust (whether as
primary insurer, coinsurer or reinsurer) any publicly disclosed
information in the Agent's possession relating to the Borrower, the
property encumbered by the Deeds of Trust, or the Credit Agreement
reasonably required by such title company.
12. Reimbursement of Expenses. The Borrower agrees to reimburse the Agent for
all costs and expenses incurred by the Agent in connection with this
Modification, including title insurance premiums, recording, filing and
escrow charges, and reasonable legal fees and expenses of the Agent's
counsel.
13. Integration. The Credit Agreement, including this Modification: (a)
integrate all the terms and conditions mentioned in or incidental to the
Credit Agreement; (b) supersede all oral negotiations and prior and other
writings with respect to their subject matter; and (c) are intended by the
parties as the final expression of the agreement with respect to the terms
and conditions set forth in those documents and as the complete and
exclusive statement of the terms agreed to by the parties. If there is any
conflict between the terms, conditions and provisions of this Modification
and those of any other agreement or instrument, the terms, conditions and
provisions of this Modification shall prevail.
14. Miscellaneous. This Modification may be executed in counterparts, and all
counterparts shall constitute but one and the same document. If any court
of competent jurisdiction determines any provision of this Modification or
the Credit Agreement to be invalid, illegal or unenforceable, that portion
shall be deemed severed from the rest, which shall remain in full force
and effect as though the invalid, illegal or unenforceable portion had
never been a part of the Credit Agreement. This Modification shall be
governed by the laws of the State of California, without regard to the
choice of law rules of that State. As used here, the word "include(s)"
means "includes(s), without limitation," and the word "including" means
"including, but not limited to."
[SIGNATURES ON NEXT PAGE]
-18-
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first set forth above.
"Borrower"
XXX, INC., a Delaware corporation
By /s/ XXXXXX X. XXXXXX
---------------------------------------
Xxxxxx X. Xxxxxx
Senior Vice President,
Chief Financial Officer
---------------------------------------
[Printed Name and Title]
"Agent" and "Lender"
U.S. BANK NATIONAL ASSOCIATION
By /s/ XXXXXX X. XXXXXX
---------------------------------------
Xxxxxx X. Xxxxxx
Vice President and
Relationship Manager
---------------------------------------
[Printed Name and Title]
-19-
EXHIBIT A
SCHEDULE 4
-20-
SCHEDULE 8
(SCHEDULE OF PATENTS, TRADEMARKS
AND LICENSES)
-21-
