Exhibit 10.1
THIRD AMENDMENT AGREEMENT
Dated as of June 12, 2001
among
PHOTRONICS, INC.
The Lenders Party Hereto
THE CHASE MANHATTAN BANK,
as Administrative Agent
and
THE BANK OF NEW YORK,
as Documentation Agent
THIRD AMENDMENT AGREEMENT, dated as of June 12, 2001, among PHOTRONICS,
INC., a Connecticut corporation (the "Company"), the LENDERS party hereto, THE
CHASE MANHATTAN BANK, as Administrative Agent, and THE BANK OF NEW YORK, as
Documentation Agent.
WHEREAS, the Company, the Borrowing Subsidiaries, the Lenders, the
Administrative Agent and the Documentation Agent have entered into that certain
Credit Agreement dated as of November 19, 1998 (as amended as of September 13,
1999, as further amended as of April 28, 2000 and as in effect prior to the
effectiveness of this Agreement, the "Existing Credit Agreement," and, as
amended by this Agreement, the "Amended Credit Agreement"), pursuant to which
the Lenders have agreed, subject to the terms and conditions therein set forth,
to make or participate in Loans to, and to issue or participate in Letters of
Credit for the account of, the Borrowers;
WHEREAS, the Company has announced a realignment of its global photomask
manufacturing network by consolidating facilities in California, Florida and
Germany resulting in an approximate charge of $38,100,000 (the "Align-Rite
Realignment");
WHEREAS, the Company has purchased approximately 24% of the common stock
of PKL Co., Ltd., a Korean corporation ("PKL"), from certain shareholders of PKL
for the approximate purchase price of $23,000,000 in cash and intends to
purchase at least another 26% of the common stock of PKL from certain
shareholders of PKL (collectively, the "PKL Acquisition");
WHEREAS, the Company, the Lenders, the Administrative Agent and the
Documentation Agent have agreed to enter into this Agreement to provide for,
among other things, the modification of certain covenants and definitions and
the consent to the PKL Acquisition; and
WHEREAS, the Loan Documents (including, without limitation, this Agreement
and the Amended Credit Agreement), as amended and supplemented by this Agreement
and as each may be amended or supplemented from time to time, are referred to
herein as the "Amended Loan Documents";
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
AMENDMENTS TO EXISTING CREDIT AGREEMENT.
Each of the Company and, subject to the satisfaction of the conditions set
forth in Article III, the Lenders hereby consents and agrees to the amendments
to the Existing Credit Agreement set forth below:
(a) The first paragraph of the definition of "Applicable Rate" contained
in Section 1.01 of the Existing Credit Agreement is hereby amended and restated
to read as follows:
"APPLICABLE RATE" means, for any day, with respect to any Eurocurrency
Revolving Loan or Swingline Loan, or with respect to the facility fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption "Eurocurrency Spread", "Swingline Spread" or "Facility Fee
Rate", as the case may be, based upon the Leverage Ratio applicable on such
date:
==========================================================================================================
EUROCURRENCY SWINGLINE FACILITY FEE
LEVERAGE RATIO SPREAD SPREAD RATE
----------------------------------------------------------------------------------------------------------
CATEGORY 1 Greater than or equal to 1.500% 1.750% .375%
2.50 to 1
----------------------------------------------------------------------------------------------------------
CATEGORY 2 Greater than or equal to 1.250% 1.500% .350%
2.00 to 1 but less than
2.50 to 1
----------------------------------------------------------------------------------------------------------
CATEGORY 3 Greater than or equal to 1.000% 1.250% .300%
1.50 to 1 but less than
2.00 to 1
----------------------------------------------------------------------------------------------------------
CATEGORY 4 Greater than or equal to .750% 1.000% .275%
1.00 to 1 but less than
1.50 to 1
----------------------------------------------------------------------------------------------------------
CATEGORY 5 Less than 1.00 to 1 .625% .875% .250%
==========================================================================================================
(b) The definition of "Consolidated EBIT" contained in Section 1.01 of the
Existing Credit Agreement is hereby amended and restated to read as follows:
"CONSOLIDATED EBIT" means, for any period, Consolidated Net Income
for such period, minus the aggregate amount of extraordinary or
nonrecurring gains for such period, plus, without duplication and to the
extent deducted from revenues in determining Consolidated Net Income for
such period, the sum of (a) the aggregate amount of Consolidated Interest
Expense for such period, plus (b) the aggregate amount of income tax
expense for such period, plus (c) the aggregate amount of noncash charges
taken during the fiscal quarter ended on April 30, 2001 in connection with
the closure of the Palm Bay, Florida, Burbank, California, and Heilbronn,
Germany operations up to $29,600,000, plus (d) the aggregate amount of
extraordinary or nonrecurring noncash charges taken during the period for
which Consolidated EBIT is calculated to the extent that the aggregate
amount of extraordinary or nonrecurring noncash charges (other than
charges set forth in clause (c)) from August 2, 1998 to the end of such
period does not exceed 5% of Consolidated Net Worth as determined as of
the end of such period, all as determined on a consolidated basis with
respect to the Company and its consolidated Subsidiaries in accordance
with GAAP.
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(c) The definition of "Consolidated Subordinated Indebtedness" contained
in Section 1.01 of the Existing Credit Agreement is hereby amended to insert
"acceptable to the Required Lenders" in place of "acceptable to the Lenders".
(d) The definition of "Joint Venture" contained in Section 1.01 of the
Existing Credit Agreement is hereby amended to exclude PKL and its subsidiaries
from the operation thereof.
(e) Section 1.01 of the Existing Credit Agreement is hereby amended to add
the following definition in appropriate alphabetical order:
"PKL" means PKL Co., Ltd., a Korean corporation.
(f) The definition of "Subsidiary" contained in Section 1.01 of the
Existing Credit Agreement is hereby amended to exclude PKL and its subsidiaries
from the operation thereof.
(g) Section 5.01(a) and Section 5.01(b) of the Existing Credit Agreement
are hereby amended to insert "PSMC, PKL and their respective subsidiaries" in
place of "PSMC and its subsidiaries" throughout such Sections.
(h) Section 6.01 of the Existing Credit Agreement is hereby amended (i) to
delete "and" at the end of paragraph (d); (ii) to insert ";" in place of "." at
the end of paragraph (e); and (iii) to add the following paragraphs (f) and (g)
at the end of such Section:
(f) Consolidated Subordinated Indebtedness so long as, after giving
effect to the incurrence thereof, no Default shall have occurred and be
continuing and the Company shall be in compliance, on a pro forma basis
after giving effect to such incurrence, with the covenants contained in
Sections 6.13, 6.14, 6.15 and 6.16 recomputed as if such incurrence had
occurred on the first day of the period for testing such compliance; and
(g) (i) Indebtedness of the Company or any Subsidiary under any
Hedging Agreement otherwise permitted under Section 6.05, (ii) the
Guarantee of any Loan Party of any such Indebtedness and (iii) the
Guarantee of any Loan Party of the obligations of PSMC, PKL or any of
their respective subsidiaries under any Hedging Agreement entered into in
the ordinary course of business.
(i) Section 6.04(h) of the Existing Credit Agreement is amended to insert
"and approximately 51% of PKL" immediately subsequent to "approximately 51% of
PSMC".
(j) Section 6.13 of the Existing Credit Agreement is hereby amended and
restated to read as follows:
SECTION 6.13. INTEREST COVERAGE RATIO. The Company will not permit
the Interest Coverage Ratio as determined as of the end of each fiscal
quarter of the Company to be less than (a) if such fiscal quarter ends on
April 30, 2001 and July 31, 2001, 3.50 to 1.00, (b) if such fiscal quarter
ends on October 31, 2001, 3.75 to 1.00 or (c) if such fiscal quarter ends
thereafter, 4.00 to 1.00.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants that as of the Effective Date
(as defined in Article III of this Agreement):
Section 2.01. EXISTING REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties contained in Article III of the Existing Credit
Agreement and in each of the other Loan Documents is true and correct, except
that any representation or warranty limited by its terms to a specific date
shall be true and correct as of such specific date.
Section 2.02. NO DEFAULTS. After giving effect to the consents granted
under Article IV of this Agreement and the amendments to the Existing Credit
Agreement pursuant to Article I of this Agreement, no event has occurred and no
condition exists which would constitute a Default as defined in the Existing
Credit Agreement, and no event has occurred and no condition exists which would
constitute a Default as defined in the Amended Credit Agreement.
Section 2.03. POWER AND AUTHORITY; NO CONFLICTS. The execution, delivery
and performance by each of the Loan Parties of the Amended Loan Documents to
which it is a party are within such Loan Party's corporate, partnership or
limited liability company powers and have been duly authorized by all necessary
corporate, partnership or limited liability company and, if required,
stockholder, partner or member action. Each Amended Loan Document to which any
Loan Party is a party has been duly executed and delivered by such Loan Party
and constitutes a legal, valid and binding obligation of such Loan Party,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
Section 2.04. GOVERNMENTAL APPROVALS; NO CONFLICTS. The execution,
delivery and performance by each of the Loan Parties of the Amended Loan
Documents to which it is a party (a) do not require the Company or any
Subsidiary to obtain or make any consent or approval of, registration or filing
with, or other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect or that could not reasonably
be expected, individually or in the aggregate, to result in a Material Adverse
Effect, (b) will not violate any law or regulation applicable to the Company or
any Subsidiary, or the charter, by-laws or other organizational documents of the
Company or any Subsidiary, or any order of any Governmental Authority applicable
to the Company or any Subsidiary, except as to any law, regulation or order the
violation of which could not reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon the Company or any Subsidiary or their respective assets, or give rise to a
right thereunder to require any payment to be made by the Company or any of its
Subsidiaries, except for any such violations, defaults or rights to require
payment that could not reasonably be expected, individually or in the aggregate,
to result in a Material Adverse Effect, and (d) will not result in the creation
or imposition of any Lien on any asset of the Company or any of its
Subsidiaries.
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Section 2.05. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE. (a) The
Company has heretofore furnished to the Lenders the consolidated and
consolidating balance sheets of the Company and its consolidated Subsidiaries
and the related statements of income, stockholders equity and cash flows (i) as
of and for the fiscal years ended November 1, 1998, October 31, 1999 and October
31, 2000, such consolidated financial statements being reported on by Deloitte &
Touche LLP, independent public accountants, and (ii) as of and for the fiscal
quarter and the portion of the fiscal year ended January 31, 2001. Such
financial statements present fairly, in all material respects, the financial
condition and results of operations and cash flows of the Company and its
consolidated Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject to year-end audit adjustments and the absence of footnotes in
the case of the statements referred to in clause (ii) above.
(b) The Company has heretofore furnished to the Lenders the consolidated
condensed balance sheets of PKL and its consolidated subsidiaries and the
related condensed statements of income as of and for the fiscal year ended
December 31, 2000. To the best of the Company's knowledge (after due inquiry),
such financial statements present fairly, in all material respects, the
financial condition and results of operations of PKL and its consolidated
subsidiaries as of such dates and for such periods in accordance with generally
accepted accounting principles in the Republic of Korea.
(c) The projections and pro forma financial information provided by the
Company giving effect to the Align-Rite Realignment are based on good faith
estimates and assumptions by the management of the Company, it being recognized
by the Lenders, however, that projections as to future events are not to be
viewed as fact and that actual results during the period or periods covered by
any such projections may differ from the projected results and that the
differences may be material. After considering the pro forma condition of the
Company and its consolidated subsidiaries subsequent to the Align-Rite
Realignment, the Company believes in good faith that the Company and its
consolidated subsidiaries will continue to be in compliance with the financial
covenants contained in Article VI of the Existing Credit Agreement.
(d) Since January 31, 2001, there has been no material adverse change in
the business, assets, operations, prospects or condition, financial or
otherwise, of the Company and the Subsidiaries, taken as a whole. With respect
to the financial period commencing on January 1, 2001 and ending on the
Effective Date, to the best of the Company's knowledge (after due inquiry),
there has been no material adverse change in the business, assets, operations,
prospects or condition, financial or otherwise, of PKL and its consolidated
subsidiaries, taken as a whole.
ARTICLE III
CONDITIONS PRECEDENT
The effectiveness of this Agreement is subject to the condition precedent
that the Administrative Agent, the Documentation Agent and the Lenders shall
have received on or before June 12, 2001 (the "Effective Date") each of the
following, in form and substance satisfactory to the Administrative Agent, the
Documentation Agent and the Lenders:
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(a) counterparts of this Agreement executed by each of the Company,
the Required Lenders, the Administrative Agent and the Documentation Agent;
(b) certified complete and correct copies of each of the financial
statements referred to in Section 2.05;
(c) evidence that all actions necessary or appropriate (or, in any
event, as may be requested by the Administrative Agent or the Documentation
Agent) to create, perfect or protect the Liens created by the Security Documents
have been taken; and
(d) an amendment fee for the account of each Lender equal to .05% of
such Lender's Commitment together with all fees and disbursements required to be
paid pursuant to Section 5.04.
ARTICLE IV
CONSENTS
Section 4.01. PKL ACQUISITION. Notwithstanding Section 6.04 of the
Existing Credit Agreement, each of the Lenders hereby consents to the PKL
Acquisition so long as (a) the aggregate purchase price paid for the shares of
capital stock of PKL acquired after January 1, 2001 does not exceed $60,000,000,
(b) the completion of the PKL Acquisition occurs no later than April 30, 2002,
(c) no Default shall have occurred and be continuing and (d) not later than 90
days after the date hereof, the Company shall cause all of the capital stock of
PKL owned or thereafter acquired by the Company, directly or indirectly, to be
pledged and delivered to the Administrative Agent and shall deliver such
resolutions, opinions and other documents as required under Section 5.09(b) of
the Amended Credit Agreement. For purposes of Section 6.04(h)(ii) of the Amended
Credit Agreement, the PKL Acquisition shall be treated as a "Permitted Business
Acquisition."
Section 4.02. RELEASE OF PSMC PLEDGED STOCK. So long as no Default shall
have occurred and be continuing and to the extent and for only so long as
required under Taiwanese law or by the applicable Taiwanese securities exchange,
each of the Lenders hereby consents, upon (or, if so required in connection
therewith, prior to) the public offering of common stock of PSMC, to the release
of the Lien of the Administrative Agent for the benefit of the Lenders on up to
100% of the shares of common stock of PSMC pledged to the Administrative Agent
for the benefit of the Lenders; provided that the Lien of the Administrative
Agent for the benefit of the Lenders shall be reinstated on any released shares
to the extent such shares become no longer subject to such restrictions. To the
extent that the terms of the Pledge Agreement relating to the pledge of the PSMC
shares conflict with the terms of this Section 4.02, the terms of this Section
4.02 shall govern.
ARTICLE V
MISCELLANEOUS
Section 5.01. DEFINED TERMS. The terms used herein and not defined herein
shall have the meanings assigned to such terms in the Existing Credit Agreement.
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Section 5.02. NONWAIVER. The terms of this Agreement shall not operate as
a waiver by the Administrative Agent, the Issuing Bank or any Lender or
otherwise prejudice the rights, remedies or powers of the Administrative Agent,
the Issuing Bank or any Lender under the Amended Credit Agreement, under any
other Amended Loan Document or under applicable law. Except as set forth in
Article I: (x) no terms and provisions of the Loan Documents are modified or
changed by this Agreement; and (y) the terms and provisions of the Loan
Documents shall continue in full force and effect.
Section 5.03. WAIVERS; AMENDMENTS. Any provision of this Agreement may be
amended or modified only by an agreement or agreements in writing signed by the
Company and the Required Lenders, or by the Company and the Administrative Agent
acting with the consent of the Required Lenders; provided that the consent of
each Lender shall be required with respect to any matters as to which such
Lender's consent is required under Section 10.02(b) of the Amended Credit
Agreement.
Section 5.04. EXPENSES. The Company shall pay all reasonable out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent, in connection with the preparation and administration of this Agreement,
the other Amended Loan Documents or any amendments, modifications or waivers of
the provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated).
Section 5.05. NOTICES. All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy in
accordance with the terms of the Amended Credit Agreement.
Section 5.06. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
Section 5.07. SEVERABILITY. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
Section 5.08. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. The Amended Loan Documents
and the separate letter agreements with respect to fees payable to the
Administrative Agent and the Documentation Agent constitute the entire contract
among the parties relating to the subject matter thereof and supersede any and
all previous agreements and understandings, oral or written, relating to the
subject matter hereof. Subject to the satisfaction of the conditions set forth
in Article III of this Agreement, this Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the Administrative
Agent shall have received counterparts hereof which, when taken together, bear
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the signatures of each of the other parties hereto, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
Section 5.09. GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PHOTRONICS, INC., a Connecticut corporation
By __________________________________
Name:
Title:
THE CHASE MANHATTAN BANK, individually
and as Administrative Agent,
By _________________________________
Name:
Title:
THE BANK OF NEW YORK, individually
and as Documentation Agent
By _________________________________
Name:
Title:
FIRST UNION NATIONAL BANK
By _________________________________
Name:
Title:
FLEET NATIONAL BANK
By _________________________________
Name:
Title:
[SIGNATURE PAGE TO THIRD AMENDMENT AGREEMENT[
HSBC BANK USA
By _________________________________
Name:
Title:
PEOPLE'S BANK
By _________________________________
Name:
Title:
CITIZENS BANK OF MASSACHUSETTS
By _________________________________
Name:
Title:
[SIGNATURE PAGE TO THIRD AMENDMENT AGREEMENT[
