FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT made this 28th day of June, 2002 (the
"First Amendment"), is made by and among II-VI INCORPORATED, a
Pennsylvania corporation (the "Borrower"), each of the Guarantors (as
defined below), the LENDERS (as defined below), and PNC BANK, NATIONAL
ASSOCIATION, as a Lender ("PNC"), Swing Loan Lender, Issuing Bank and
Agent (the "Agent") for the Lenders under this Agreement.
WHEREAS, the Borrower, the Guarantors (as original parties or
by joinder), and the Lenders (as original parties or by assignment) and
the Agent are parties to a Credit Agreement dated as of August 14, 2000
(the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit
Agreement as provided herein.
NOW, THEREFORE, in consideration of the premises and
covenants contained herein and intending to be legally bound hereby,
the Borrower, the Guarantors, the Administrative Agent and the
Required Lenders agree as follows:
1. Definitions. Except as set forth herein, capitalized
terms used herein but not defined or amended herein shall have the
meanings set forth in the Credit Agreement.
2. Amendment to Definitions. The definition of "Rate
Protection Term Loan" set forth in the Credit Agreement is hereby
amended and restated as follows:
"Rate Protection Agreement" shall mean the Amended and
Restated Letter Agreement dated March 26, 1999 (as the same
may be amended) under which PNC Bank extended a rate
protection term loan to the Borrower, as may in the future be
amended, restated or replaced by a credit agreement or other
secured lending arrangement whereby PNC Bank extends a rate
protection term loan to II-VI Japan Incorporated of up to
Yen 300,000,000, such amount to be guaranteed by the Borrower
(amounts outstanding under the March 26, 1999 Letter
Agreement as amended, restated or replaced as described above
being referred to herein as the "Rate Protection Term Loan").
3. Confirmation of Security Interest and Pledge. Each of
the Loan Parties acknowledges and confirms that the reference to "Rate
Protection Agreement" and "Rate Protection Term Loan" in the definition
of "Secured Obligation" in each of the Security Agreements and Pledge
Agreements executed by such Loan Parties in favor of the Agent for the
benefit of the Lenders shall refer to the Rate Protection Agreement and
Rate Protection Term Loan as defined in this First Amendment.
4. Amendment to Section 8.1.11. Section 8.1.11 of the
Credit Agreement is hereby amended and restated as follows:
8.1.11 Interest Rate Protection
Within ninety (90) calendar days of the Closing
Date, the Borrower shall enter into or have entered
into, and Borrower shall maintain in place so long as
the Term Loan is outstanding hereunder, one or more
Interest Rate Protection Agreements covering 50% of
the principal amount of the Term Loan outstanding from
time to time, all in form and substance acceptable to
the Agent (collectively the "Interest Rate Protection
Agreement"). If one or more of the Lenders is a party
to such Interest Rate Protection Agreement, the Interest
Rate Protection Agreement shall be considered a Loan
Document secured by the Collateral.
5. Amendment to Section 8.2.1(vi). Section 8.2.1(vi) of the
Credit Agreement is hereby amended and restated to read as follows:
(vi) Indebtedness of the Borrower or II-VI Japan
Incorporated, as applicable, to PNC Bank, National
Association under the Rate Protection Term Loan of up to Y
300,000,000 (as guaranteed by the Borrower) (including Y
237,000,000 set forth in Schedule 8.2.1 to the Credit
Agreement as originally executed).
6. Dissolution of Subsidiaries. Notwithstanding the
provisions of Section 8.2.6 of the Credit Agreement or any provision of
the Pledge Agreements or the Security Agreements, the Loan Parties
shall be permitted to dissolve all or any of the following
Subsidiaries:
(a) II-VI Worldwide Inc.
(b) Laser Power FSC, Ltd.
(c) Laser Power Optics de Mexico S.A. de C.V.
7. Amendment to Section 8.2.14. Section 8.2.14 of the
Credit Agreement is hereby amended and restated as follows:
8.2.14 Minimum Consolidated Fixed Charge Coverage Ratio.
The Loan parties shall not permit the Consolidated Fixed
Charge Coverage Ratio, calculated as of the end of each
fiscal quarter for the previous four fiscal quarters to be
less than the ratio set forth below for the periods set forth
below:
Period Ratio
------ -----
From the Closing Date 1.25:1.0
through and including
June 30, 2003
After June 30, 2003 1.5:1.0
8. Amendment to Section 8.2.16. Section 8.2.16 of the
Credit Agreement is hereby amended and restated as follows:
8.2.16 Minimum Net Worth.
The Borrower shall not at any time permit Consolidated
Net Worth to be less than $57,000,000 plus 50% of positive
quarterly net income for fiscal quarters ending on or after
June 30, 2000 plus 100% of the Net Cash proceeds of any
Offering plus 100% of the increase in the Borrower's
Consolidated Net Worth from the stock portion of the
purchase price for the Acquisition.
9. German Joint Venture. Notwithstanding the provisions of
Credit Agreement identified below or any provision of the Pledge
Agreements or the Security Agreements, the Borrower and its
Subsidiaries, as applicable, shall be permitted to undertake the
following actions in connection with the establishment of a German
subsidiary:
(a) Section 8.2.9 - Borrower shall be permitted to
create a wholly-owned subsidiary under the laws of The Netherlands
("DutchCo"), provided that Borrower shall pledge to the Agent for
the benefit of the Lenders under the Borrower Pledge Agreement 65%
of the outstanding capital stock of DutchCo.;
(b) Section 8.2.4, 8.2.7 and 8.2.9 - Borrower shall be
permitted to contribute to the capital of DutchCo all of the
outstanding capital stock of II-VI Singapore Pte, Ltd. ("Singapore
Holdco") and the Agent, on behalf of the Lenders, shall release
the pledge of 65% of the stock of Singapore Holdco which it holds;
(c) Sections 8.2.4 and 8.2.9 - DutchCo shall be
permitted to establish and create a wholly-owned subsidiary under
the law of Germany ("GmbH");
(d) Section 8.2.5 - Singapore Holdco shall be permitted
to distribute up to Euro 1,710,000 to DutchCo as a dividend;
(e) Section 8.2.4 - Singapore Holdco shall be permitted
to loan up to Euro 1,100,000 to DutchCo, GmbH or II-VI /LOT GmbH
(as defined below);
(f) Section 8.2.4 and 8.2.9 - DutchCo shall be permitted
to contribute to the capital of GmbH up to Euro 1,710,000;
(g) Section 8.2.4 - DutchCo shall be permitted to loan
up to Euro 1,100,000 to GmbH;
(h) Section 8.2.4 and 8.2.9 - GmbH shall be permitted to
purchase for Euro 2,820,000 from LOT GmbH Holding, a German
holding company ("LOT GmbH Holding") 75% of the capital stock of
LOT GmbH Holding's operating subsidiary, II-VI/LOT GmbH
("II-VI/LOT GmbH"), and
(i) The amounts set forth in subsection (d) and (e)
above and in subsections (f) and (g) above may be revised by the
Borrower, provided that in no case may the sum of the amount in
subsection (d) plus the amount in subsection (e), as so revised,
exceed Euro 2,820,000 and provided further that in no case may the
sum of the amount in subsection (f) plus the amount in subsection
(g), as so revised, exceed Euro 2,820,000.
10. Additional Foreign Joint Ventures. The Credit Agreement
is hereby amended to insert "(a)" prior to the first paragraph of
Section 8.2.9 and to add the following new subparagraph (b) to Section
8.2.9:
(b) Borrower and its Subsidiaries shall be permitted to
create, invest in or acquire interests in
corporations or other entities formed under the
laws of nations other than the United States and
its political subdivisions (each a "Permitted Joint
Venture") provided that in each such case the
following conditions are met:
(i) Borrower shall provide the Agent notice of
any such investment or acquisition not later
than 30 days prior to such investment or
acquisition;
(ii) The total amount of investments and
acquisition (measured at the time of each
such investment or acquisition) permitted
under this Section 8.2.9(b) (including any
indebtedness of such Permitted Joint Venture
guaranteed by Borrower or any subsidiary)
shall not at any time exceed $4,960,000; and
(iii) If the equity interest in the Permitted Joint
Venture is owned by a Loan Party, such Loan
Party shall pledge such equity interest (up
to 65%) of the total outstanding equity
interest of such Permitted Joint Venture) to
the Agent for the benefit of the Lenders, all
under documentation acceptable to the Agent.
11. Representations and Warranties. The Loan Parties
jointly and severally hereby represent and warrant to the Agent and
each of the Lenders as follows:
(a) all representations, warranties and covenants made
by the Loan Parties to the Agent and the Lenders that are
contained in the Loan Documents (after giving effect to any
revised Schedules attached hereto) are true and correct in all
material respects on and as of the date hereof with the same
effect as though such representations, warranties and covenants
had been made on and as of the date hereof;
(b) to the Loan Parties' knowledge, no event or
condition has occurred or exists which, with the giving of notice
or the passage of time, or both, would constitute an Event of
Default under any of the Loan Documents; and
(c) the execution and delivery of this Amendment and
the consummation of the transactions contemplated hereby and by
any other documents executed by the Loan Parties required to be
delivered to the Agent and the Lenders in connection with this
Amendment have been duly and validly authorized by each Loan Party
and all such documents together constitute the legal, valid and
binding agreement of each Loan Party, enforceable against each
Loan Party in accordance with their respective terms, except to
the extent that enforceability of any of such documents may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforceability of creditors'
rights generally or general equitable principles.
12. Effectiveness. This First Amendment and the amendment
to the Credit Agreement effected hereby shall become effective upon the
delivery to the Agent of:
(a) a copy of this First Amendment, executed by each
Loan Party;
(b) a stock certificate representing 65% of the capital
stock of DutchCo, together with a stock power in blank executed by
the Borrower and a written acknowledgment by Borrower that such
stock constitutes "pledge shares" under the Pledge Agreement
executed by the Borrower;
(c) Borrower shall pay to the Agent for the benefit of
the Lenders an amendment fee of $50,000; and
(d) the Borrower shall have paid or caused to be paid
to the Administrative Agent all accrued fees and expenses
(including the fees and expenses of Xxxxxxxxxxx & Xxxxxxxx LLP,
and any local counsel of the Agent) of the Agent and the Lenders
in connection with this First Amendment.
13. Counterparts. This First Amendment may be executed in
one or more counterparts by any party hereto in separate counterparts,
each of which when so executed and delivered to the other party shall
be deemed an original. All such counterparts together shall constitute
one and the same instrument.
14. Waivers. This First Amendment shall not, except as
expressly set forth above, serve to waive, supplement or amend the
Credit Agreement, which Credit Agreement shall remain in full force and
effect as amended hereby.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this First Amendment as of the date and year first above
written.
WITNESS: II-VI INCORPORATED
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Title: President
[Seal]
WITNESS: II-VI DELAWARE, INC.
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Title: President
[Seal]
WITNESS: VLOC INCORPORATED
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Title: Vice President
[Seal]
WITNESS: LASER POWER CORPORATION
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Title: Secretary
[Seal]
WITNESS: EMI ACQUISITION CORP.
/s/Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Title: Secretary
[Seal]
WITNESS: EXOTIC MATERIALS, INC.
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Title: Secretary
[Seal]
WITNESS: II-VI ACQUISITION CORP., a
Pennsylvania corporation
/s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
Title: President
[Seal]
WITNESS: PNC BANK, NATIONAL ASSOCIATION,
individually and as Agent
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxxxx
Title: Vice President
[Seal]
WITNESS: WACHOVIA BANK, NATIONAL ASSOCIATION
(f/k/a First Union National Bank)
as a Lender
/s/ Xxxxxx XxXxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
Title: Vice President
[Seal]
WITNESS: MANUFACTURERS AND TRADERS
TRUST COMPANY, as a Lender
/s/ Xxxxxx Xxxxx By: /s/ Xxxxxxxxxxx Xxxxx
Title: Vice President
[Seal]
WITNESS: NATIONAL CITY BANK OF
PENNSYLVANIA, as a Lender
/s/Xxxx X. Xxxxx By: /s/ Xxxx X. Xxxxx
Title: Vice President
[Seal]
