EX-10.23 5 e89840_ex10-23.txt MASTER REAFFIRMATION & AMEND NO. 2 TO LOAN DOCS EXHIBIT 10.23 MASTER REAFFIRMATION AND AMENDMENT NO. 2 TO LOAN DOCUMENTS THIS MASTER REAFFIRMATION AND AMENDMENT NO. 2 TO LOAN DOCUMENTS (this "AGREEMENT") is made as of the 26th day of June, 2002, by and among ZYGO CORPORATION, a Delaware corporation with its principal place of business located at Laurel Brook Road, Middlefield, Connecticut 06455 ("ZYGO"), ZTO PROPERTY HOLDINGS, LLC, a Delaware limited liability company with its principal place of business located at 20 Walkup Drive, Westborough, Massachusetts 01581 ("ZTO"), ZYGO TERAOPTIX, INC., a Delaware corporation with its principal place of business located at 100 Kuniholm Drive, Holliston, Massachusetts 01746 ("TERAOPTIX" and together with Zygo and ZTO, the "OBLIGORS"), and FLEET NATIONAL BANK, a national bank with a place of business at 777 Main Street, Hartford, Connecticut 06115 ("LENDER"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to them in the Credit Agreement described below. W I T N E S S E T H: WHEREAS, Obligors and Lender are parties to that certain Amended and Restated Credit Agreement dated as of May 14, 2001 (as amended, modified, restated or otherwise supplemented from time to time, including, but not limited to, that certain Master Reaffirmation and Amendment to Loan Documents dated as of November 22, 2001, the "CREDIT AGREEMENT"), pursuant to which, among other things, Lender has extended to Zygo a commercial revolving loan/letter of credit facility in the original principal amount of up to $3,000,000 (the "REVOLVING CREDIT FACILITY"); and WHEREAS, ZTO and TeraOptix have each, among other things, unconditionally guaranteed payment and performance of the Obligations of Zygo under the Revolving Credit Facility, whether now existing or hereafter arising, pursuant and subject to the terms and conditions set forth in their respective Guaranty Agreements; and WHEREAS, Obligors have each requested Lender to amend the financial covenants of Obligors set forth in Sections 7.1 and 7.2 of the Credit Agreement; and WHEREAS, Lender is willing to make the accommodations requested by Obligors subject to and in reliance upon the representations, warranties, acknowledgments, covenants and agreements of Obligors contained herein. NOW, THEREFORE, in consideration of the premises set forth herein (which are incorporated herein as though fully set forth below, by this reference thereto) and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the undersigned agrees as follows: 24. Amendments to Credit Agreement and other Loan Documents. a. Each reference in the Loan Documents to the Credit Agreement shall mean the Credit Agreement as modified by this Agreement. b. Section 1.1 of the Credit Agreement, entitled "Defined Terms", is hereby amended by deleting the definition of "Applicable Margin" in its entirety and inserting the following in lieu thereof: "Applicable Margin" means for each LIBOR Loan then outstanding: (a) for the period commencing on the date hereof and ending on the day immediately preceding the Initial Adjustment Date, 1.0% above the applicable LIBOR Rate; and -61- (b) for each period commencing on an Adjustment Date (including, but not limited to, the Initial Adjustment Date) and ending on the day immediately preceding the next Adjustment Date, the percentage rate set forth below opposite the level of Zygo's consolidated financial performance as measured by its Consolidated Leverage Ratio as of the end of its most recent fiscal quarter for the then ended Rolling Period (as determined on the basis of the financial statements required to be delivered in respect of such Adjustment Date): -------------------------------------------------------------------------------- LIBOR LEVEL CONSOLIDATED LEVERAGE RATIO MARGIN -------------------------------------------------------------------------------- I <0.75x 1.00% -------------------------------------------------------------------------------- II >0.75x, but < 1.25x 1.25% - -------------------------------------------------------------------------------- III >1.25x, but < 2.00x 1.50% - -------------------------------------------------------------------------------- IV >2.00but < 400x 2.00% - -------------------------------------------------------------------------------- V >4.00 2.50% - -------------------------------------------------------------------------------- By way of illustration, if Zygo's Consolidated Leverage Ratio on June 30, 2002 is 1.70 to 1.0, then, effective on the first day following the date upon which Zygo's June, 2002 quarterly compliance certificate and quarterly financial statements are received by Lender, the interest rate applicable to the LIBOR Loans shall be adjusted (if not the same) to be priced at the LIBOR Rate plus 1.50%. c. Section 1.1 of the Credit Agreement, entitled "Defined Terms", is hereby amended by adding the following definitions in the appropriate alphabetical order: "Consolidated Liquidity Ratio" means, as of each applicable date, the ratio of (a) the Liquid Asset Amount as of such date, to (b) Senior Funded Debt as of such date. "Liquid Asset Amount" means, as of each applicable date, the sum of all assets of the Obligors on such date consisting of cash, cash equivalents, marketable securities and accounts receivable (which shall be valued at ninety percent (90%) the face amount thereof less any and all rebates, discounts, credits or other allowances applicable thereto). "Net Worth" means, at a particular date, (a) Total Assets as of such date, minus (b) Total Liabilities as of such date. "Total Assets" means, as of any particular date, all assets of the Obligors that, in accordance with GAAP, would properly be classified as assets on the consolidated balance sheet of the Obligors as of such date. "Total Liabilities" means, as of any particular date, all Debt and other liabilities of the Obligors that, in accordance with GAAP, would properly be classified as liabilities on the consolidated balance sheet of the Obligors as of such date, but, in any event, shall exclude (if not otherwise excluded in accordance with GAAP) liabilities of an Obligor to another Obligor. d. Article VII of the Credit Agreement, entitled "FINANCIAL COVENANTS", is hereby amended by deleting Sections 7.1 and 7.2 their entirety and inserting the following in lieu thereof: -62- Section 7.1 Consolidated Fixed Charge Coverage Ratio. Maintain a Consolidated Fixed Charge Coverage Ratio of not less than 1.50-to-1.0 as of the end of each fiscal quarter for the then ended Rolling Period commencing with the fiscal quarter ending on June 30, 2004. Section 7.2 Consolidated Senior Funded Debt-to-EBITDA Ratio. Not permit its Consolidated Senior Funded Debt-to-EBITDA Ratio to exceed 2.0 to 1.0 as of the end of each fiscal quarter for the then ended Rolling Period commencing with the fiscal quarter ending on June 30, 2004. Section 7.3 Consolidated Liquidity Ratio. Maintain a Consolidated Liquidity Ratio of not less than 2.0-to-1.0 as of the end of each fiscal quarter. Section 7.4 Net Worth. Maintain a Net Worth of not less than (a) $135,000,000 as of June 30, 2002, (b) $131,000,000 as of September 30, 2002, (c) $128,000,000 as of December 31, 2002, (d) $125,000,000 as of March 31, 2003, and (e) the sum of (i) $125,000,000 as of each fiscal quarter thereafter, plus (ii) seventy-five percent of Net Income for each Fiscal Year commencing with the Fiscal Year ending June 30, 2003, on a cumulative basis; PROVIDED, HOWEVER, that in the event a reduction in the valuation of TeraOptix and/or ZTO is required to be made in accordance with GAAP during any particular period, the applicable Net Worth requirement hereunder shall be reduced by the aggregate amount of any such reduction. 25. Reaffirmation. Each of Obligors, as maker, debtor, grantor, pledgor, assignor, obligor, or in other similar capacity in which it incurs obligations to Lender or grants liens or security interests in its properties under any of the Loan Documents, hereby ratifies and reaffirms all of its Obligations, contingent or otherwise, under each of the Loan Documents to which it is a party and, to the extent it granted liens on or security interests in any of its properties pursuant to any Loan Document as security for the Obligations under or with respect to the Credit Agreement and the other Loan Documents, hereby ratifies and reaffirms such grant of liens and security interests and confirms and agrees that such liens and security interests hereafter secure all of the Obligations, including without limitation, the Obligations arising under the Revolving Credit Facility, as hereby amended, in each case as if each reference in such Loan Document to the obligations secured thereby are construed to hereafter mean and refer to such Obligations under the Credit Agreement and other Loan Documents, as hereby amended. Each of Obligors acknowledges that each of the Loan Documents to which it is a party remains in full force and effect, continues to apply to the Obligations, including, but not limited to, the Obligations arising under the Revolving Credit Facility as hereby amended, and is hereby ratified and confirmed. The execution of this Agreement shall not operate as a novation, waiver of any right, power or remedy of Lender nor constitute a waiver of any provision of any of the Loan Documents, except as expressly set forth herein and shall be limited to the particular instance expressly set forth. Each of Obligors confirms and agrees that the Loan Documents and each and every covenant, condition, obligation, representation (except those representations which relate only to a specific date, which are confirmed as of such date only), warranty and provisions set forth therein are, and shall continue to be, in full force and effect and are hereby confirmed, reaffirmed and ratified in all respects. 26. No Default or Event of Default, No Defenses. Each of Obligors hereby represents and warrants to, and covenants with Lender that, as of the date hereof, (a) no Default or Event of Default has occurred and is continuing, (b) it has no defense, offset or counterclaim of any kind or nature whatsoever against Lender with respect to the Revolving Credit Facility, the Obligations, or any of the Loan Documents to which it is a party, or any action previously taken or not taken by Lender with respect thereto or with respect to any security interest, encumbrance, lien or collateral in connection therewith to secure the Obligations, and (c) that Lender has fully performed all obligations to Obligors which it may have had or has on and as of the date hereof. 27. Fee. Simultaneously herewith, in consideration of the Lender's extension of the Maturity Dates of the Revolving Loan Commitment and L/C Commitment Termination Date, Zygo shall pay to Lender on the date hereof a non-refundable commitment fee in the amount of $7,500. 28. Successors and Assigns. This Agreement shall be binding upon each of Obligors and their respective successors and assigns, and shall inure to the benefit of Lender and its successors and assigns. The successors and assigns of such entities shall include, without limitation, their respective receivers, trustees, or debtors-in-possession. -63- 29. Further Assurances. Each of Obligors hereby agrees from time to time, as and when requested by Lender, to execute and deliver or cause to be executed and delivered all such documents, instruments and agreements and to take or cause to be taken such further or other action as Lender may reasonably deem necessary or desirable in order to carry out the intent and purposes of this Agreement and the Loan Documents. 30. Authorization. Each of Obligors is duly authorized to execute and deliver this Agreement and to perform its obligations under the Credit Agreement and the other Loan Documents to which it is a party, each as amended hereby. 31. No Conflicts. The execution and delivery of this Agreement, and the performance by each of Obligors of their respective obligations hereunder and under any Loan Documents to which any of them may be a party, each as amended hereby to the extent applicable, do not and will not conflict with any provision of law or of the charter or by-laws of any of them or of any agreement binding upon any of them. 32. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement. 33. Merger. This Agreement represents the final agreement of Obligors and Lender with respect to the matters contained herein and may not be contradicted by evidence of prior or contemporaneous agreements, or prior or subsequent oral agreements. 34. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 35. Section Headings. The section headings herein are for convenience of reference only, and shall not affect in any way the interpretation of any of the provisions hereof. 36. Governing Law. This Agreement shall be governed by the internal substantive laws of the State of Connecticut (without regard to its conflicts of law provisions). REMAINDER OF PAGE INTENTIONALLY LEFT BLANK THE NEXT PAGE IS THE SIGNATURE PAGE -64- IN WITNESS WHEREOF, this Agreement has been duly executed by the undersigned as of the day and year first set forth above. WITNESSES (AS TO OBLIGORS): _______________________________ ZYGO CORPORATION _______________________________ By: /s/ Richard M. Dressler ---------------------------------------- Richard M. Dressler Its Treasurer ZTO PROPERTY HOLDINGS, LLC By: /s/ Richard M. Dressler ---------------------------------------- Richard M. Dressler Its Treasurer ZYGO TERAOPTIX, INC. By: /s/ Richard M. Dressler ---------------------------------------- Richard M. Dressler Its Treasurer WITNESSES (AS TO LENDER): _______________________________ FLEET NATIONAL BANK By: /s/ Matthew E. Hummel _______________________________ ----------------------------------------- Matthew E. Hummel Its Senior Vice President -65-