Exhibit 10.1

 

FIRST AMENDMENT TO CREDIT AGREEMENT AND FIRST AMENDMENT TO GUARANTY AND SECURITY
AGREEMENT

 

THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND FIRST AMENDMENT TO GUARANTY AND
SECURITY AGREEMENT (this “Amendment”), dated as of June 14, 2019, is entered
into by and among WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking
association, as administrative agent for each member of the Lender Group and the
Bank Product Providers (in such capacity, together with its successors and
assigns in such capacity, “Agent”), the Lenders identified on the signature
pages hereof (the “Lenders”), and NEOPHOTONICS CORPORATION, a Delaware
corporation (“NeoPhotonics”; and together with each other Person that hereafter
becomes a “Borrower” under the Credit Agreement (as defined below) in accordance
with the terms thereof, are referred to hereinafter each individually as a
“Borrower”, and individually and collectively, jointly and severally, as the
“Borrowers”).

 

RECITALS

 

A.                                    Borrowers, the Lenders and Agent have
previously entered into that certain Credit Agreement dated as of September 8,
2017 (as the same may be amended, restated, supplemented, or otherwise modified
from time to time, the “Credit Agreement”), pursuant to which the Lenders have
made certain loans and financial accommodations available to Borrowers.  Terms
used herein without definition shall have the meanings ascribed to them in the
Credit Agreement.

 

B.                                    Borrowers and Agent have previously
entered into that certain Guaranty and Security Agreement dated as of
September 8, 2017 (as the same may be amended, restated, supplemented, or
otherwise modified from time to time, the “Security Agreement” and together with
the Credit Agreement, the “Agreements”), pursuant to which the Borrowers and the
other grantors party thereto have granted to Agent, for the benefit of the
Lender Group and the Bank Product Providers, a continuing security interest in
and to the Collateral in order to secure the prompt and complete payment,
observance and performance of, among other things, the Secured Obligations (as
defined in the Security Agreement).

 

C.                                  Borrowers have requested that Agent and the
Lenders amend the Agreements, which Agent and the Lenders are willing to do
pursuant to the terms and conditions set forth herein.

 

D.                                    Borrowers are entering into this Amendment
with the understanding and agreement that, except as specifically provided
herein, none of Agent’s or any Lender’s rights or remedies as set forth in any
of the Agreements are being waived or modified by the terms of this Amendment.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

 

--------------------------------------------------------------------------------

 

1.                                      Amendments to Credit Agreement.

 

(a)                                 The following new definitions are hereby
added to Section 1.1 of the Credit Agreement in the appropriate alphabetical
order as follows:

 

‘“Beneficial Ownership Certification’ means a certification regarding beneficial
ownership as required by the Beneficial Ownership Regulation.”

 

‘“Beneficial Ownership Regulation’ means 31 C.F.R. § 1010.230.”

 

‘“Flood Laws’ means the National Flood Insurance Act of 1968, Flood Disaster
Protection Act of 1973, and related laws, rules and regulations, including any
amendments or successor provisions.”

 

“‘Huawei’ means, individually and collectively, Huawei Investment & Holding Co.,
Ltd and its subsidiaries and Affiliates, including, but not limited to,
Hisilicon Optoelectronics Co. Ltd, Huawei Technologies Co., Ltd, and Huawei
Tech. Investment Co., Ltd.”

 

“‘Huawei Accounts’ means Accounts owing from Huawei.”

 

‘“Huawei Ineligible Period’ means the period commencing June 14, 2019 and
continuing until the date when Huawei is no longer a Sanctioned Person or
Sanctioned Entity and a new Borrowing Base Certificate has been delivered to the
Agent reflecting such change in the status of Huawei, in form and substance
satisfactory to Agent.”

 

‘“Qualified Cash Account’ means a Deposit Account or Securities Account
containing Qualified Cash.”

 

(b)                                 The definition of “Borrowing Base
Certificate” in Section 1.1 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

 

‘“Borrowing Base Certificate’ means a certificate substantially in the form of
Exhibit B-1 to this Agreement, which such form of Borrowing Base Certificate may
be amended, restated, supplemented or otherwise modified from time to time
(including without limitation, changes to the format thereof), as approved by
Agent in Agent’s sole discretion.”

 

(c)                                  Clauses (c) and (j) of the definition of
“Eligible Accounts” in Section 1.1 of the Credit Agreement are hereby amended
and restated in their entirety to read as follows:

 

“(c)                            Accounts with selling terms of more than 90
days, provided, that up to $1,000,000 of Accounts owing from Alcatel-Lucent
Enterprise, Nokia Siemens Networks OY and their Affiliates with selling terms
between 91 to 120 days may be included,”

 

2

--------------------------------------------------------------------------------

 

“(j)                              Except for such higher percentages otherwise
specified in this clause (j), Accounts with respect to an Account Debtor whose
Eligible Accounts owing to Borrowers exceed 10% (such percentage, as applied to
a particular Account Debtor, being subject to reduction by Agent in its
Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates) of all Eligible Accounts, to the extent of the obligations owing
by such Account Debtor in excess of such percentage; provided, such percentage
shall be (i) 20% in aggregate for Ciena Corporation and its Affiliates, (ii) 20%
in aggregate for Cisco Systems, Inc. and its Affiliates, (iii) 20% in aggregate
for Alcatel-Lucent Enterprise, Nokia Siemens Networks OY and any of their
Affiliates, (iv) 15% in aggregate for Sanmina Corporation and its Affiliates,
(v) 40% in aggregate for Huawei, and (vi) 15% in aggregate for Fabrinet and its
Affiliates, in each case set forth in clauses (i) through (vi), subject to
adjustment by Agent in its Permitted Discretion if the creditworthiness of any
such Account Debtor changes; provided further, during the Huawei Ineligible
Period, such percentage shall be (x) 30% in aggregate for Celestica, Inc. and
its Affiliates (including, but not limited to, Celestica (Thailand) Ltd),
(y) 20% in aggregate for Flex Ltd. (formerly known as Flextronics International
Ltd.) and its Affiliates (including, but not limited to, Flextronics
Manufacturing SRL), and (z) 45% in aggregate for Sanmina Corporation, Arrow
Electronics Inc., and their respective Affiliates, in each case set forth in
clauses (x) through (z), subject to adjustment by Agent in its Permitted
Discretion if the creditworthiness of any such Account Debtor changes; provided
further, that in each case, (1) the amount of Eligible Accounts that are
excluded because they exceed the foregoing percentage shall be determined by
Agent based on all of the otherwise Eligible Accounts prior to giving effect to
any eliminations based upon the foregoing concentration limit and (2) Agent may,
in its sole Permitted Discretion, increase or decrease such percentages or add
additional Account Debtors to this proviso from time to time upon request from
Administrative Borrower,”

 

(d)                                 The definition of “Eligible Tier 2 Accounts”
in Section 1.1 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

 

‘“Eligible Tier 2 Accounts’ means Eligible Accounts with respect to which the
Account Debtor (i) maintains its chief executive office in a Tier 2 Country, and
(ii) is organized under the laws of a Tier 2 Country, or any state or province
thereof; provided, that Eligible Accounts owing from (i) Huawei, (ii) Fiberhome
Telecommunication Technologies Co., Ltd and subsidiaries including, but not
limited to, Wuhan Fiberhome International Technologies Co., Ltd, (iii) Flex Ltd.
(formerly known as Flextronics International Ltd.) and subsidiaries including,
but not limited to, Flextronics Manufacturing SRL, (iv) Celestica, Inc. and
subsidiaries including, but not limited to, Celestica (Thailand) Ltd,
(v) Fabrinet and (vi) ZTE Corporation shall be treated as Eligible Tier 2
Accounts, subject to Agent’s right to modify such list for time to time in its
Permitted Discretion.”

 

(e)                                  Clause (n) of the definition of “Permitted
Indebtedness” in Section 1.1 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:

 

3

--------------------------------------------------------------------------------

 

“(n)                           Indebtedness comprising Permitted Investments,”

 

(f)                                   The definition of “Sanctioned Entity” in
Section 1.1 of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:

 

‘“Sanctioned Entity’ means (a) a country or territory or a government of a
country or territory, (b) an agency of the government of a country or territory,
(c) an organization directly or indirectly controlled by a country or territory
or its government, or (d) a Person resident in or determined to be resident in a
country or territory, in each case of clauses (a) through (d) that is a target
of Sanctions, including a target of any country sanctions program administered
and enforced by OFAC.”

 

(g)                                  The following section is hereby added to
the end of Section 1 of the Credit Agreement:

 

“1.7                         Divisions.  For all purposes under the Loan
Documents, in connection with any division or plan of division under Delaware
law (or any comparable event under a different jurisdiction’s laws): (a) if any
asset, right, obligation or liability of any Person becomes the asset, right,
obligation or liability of a different Person, then it shall be deemed to have
been transferred from the original Person to the subsequent Person, and (b) if
any new Person comes into existence, such new Person shall be deemed to have
been organized on the first date of its existence by the holders of its Equity
Interests at such time.”

 

(h)                                 Clause (I) of Section 2.4(b)(iii) of the
Credit Agreement is hereby amended and restated to read in its entirety as
follows:

 

“(I)                             ninth, ratably, to pay interest accrued in
respect of the Revolving Loans (other than Protective Advances and Swing Loans),
until paid in full,”

 

(i)                                     Clause (i) of Section 2.4(b)(iii)(J) of
the Credit Agreement is hereby amended and restated to read in its entirety as
follows:

 

“i.                                    ratably, to pay the principal of all
Revolving Loans (other than Protective Advances and Swing Loans), until paid in
full,”

 

(j)                                    Section 2.6(a) of the Credit Agreement is
hereby amended and restated to read in its entirety as follows:

 

“(a)                           Interest Rates.  Except as provided in
Section 2.6(c) and Section 2.12(d), all Obligations (except for undrawn Letters
of Credit) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest as follows:”

 

(k)                                 The following sentence is hereby added to
the end of Section 5.2 of the Credit Agreement:

 

4

--------------------------------------------------------------------------------

 

“Borrowers and Agent hereby agree that the delivery of the Borrowing Base
Certificate through the Agent’s electronic platform or portal, subject to
Agent’s authentication process, by such other electronic method as may be
approved by Agent from time to time in its sole discretion, or by such other
electronic input of information necessary to calculate the Borrowing Bases as
may be approved by Agent from time to time in its sole discretion, shall in each
case be deemed to satisfy the obligation of Borrowers to deliver such Borrowing
Base Certificate, with the same legal effect as if such Borrowing Base
Certificate had been manually executed by Borrowers and delivered to Agent.”

 

(l)                                     The following sentence is hereby added
to the end of Section 5.6 of the Credit Agreement:

 

“If at any time the area in which any Real Property that is subject to a
Mortgage is located is designated a “flood hazard area” in any Flood Insurance
Rate Map published by the Federal Emergency Management Agency (or any successor
agency), obtain flood insurance in such total amount and on terms that are
satisfactory to Agent and all Lenders from time to time, and otherwise comply
with the Flood Laws or as is otherwise satisfactory to Agent and all Lenders.”

 

(m)                             The following sentence is hereby added to the
end of Section 5.12 of the Credit Agreement:

 

“Notwithstanding anything to the contrary contained herein (including
Section 5.11 hereof and this Section 5.12) or in any other Loan Document,
(x) Agent shall not accept delivery of any Mortgage from any Loan Party unless
each of the Lenders has received 45 days prior written notice thereof and Agent
has received confirmation from each Lender that such Lender has completed its
flood insurance diligence, has received copies of all flood insurance
documentation and has confirmed that flood insurance compliance has been
completed as required by the Flood Laws or as otherwise satisfactory to such
Lender and (y) Agent shall not accept delivery of any joinder to any Loan
Document with respect to any Subsidiary of any Loan Party that is not a Loan
Party, if such Subsidiary qualifies as a “legal entity customer” under the
Beneficial Ownership Regulation unless such Subsidiary has delivered a
Beneficial Ownership Certification in relation to such Subsidiary and Agent has
completed its Patriot Act searches, OFAC/PEP searches and customary individual
background checks for such Subsidiary, the results of which shall be
satisfactory to Agent.”

 

(n)                                 Section 6.4 of the Credit Agreement is
hereby amended and restated to read in its entirety as follows:

 

“6.4                         Disposal of Assets.  Other than Permitted
Dispositions or transactions expressly permitted by Sections 6.3 or 6.9, each
Loan Party will not, and will not permit any of its Subsidiaries to, convey,
sell, lease, license, assign, transfer, or otherwise dispose of any of its or
their assets (including by an allocation of assets among newly divided limited
liability companies pursuant to a “plan of division”).

 

5

--------------------------------------------------------------------------------

 

Notwithstanding the foregoing, if the most recent Borrowing Base Certificate
received by Agent includes Qualified Cash, the Loan Parties shall not transfer
any Qualified Cash out of a Qualified Cash Account if after giving effect to
such transfer the amount of Qualified Cash remaining in such Qualified Cash
Account is less than the amount of Qualified Cash shown in the most recent
Borrowing Base Certificate unless the Borrower delivers an updated Borrowing
Base Certificate demonstrating that after giving effect to such transfer the
Loan Parties are in compliance with the terms of this Agreement and no payment
would then be due under Section 2.4(e) of this Agreement.”

 

(o)                                 Section 14.1 of the Credit Agreement is
hereby amended by (i) deleting the “or” at the end of clause (x); (ii) replacing
the semi-colon and inserting “, or” at the end of clause (xi), and (iii) adding
the following clause (xii):

 

“(xii) at any time that any Real Property is included in the Collateral, add,
increase, renew or extend any Loan, Letter of Credit or Commitment hereunder
until the completion of flood due diligence, documentation and coverage as
required by the Flood Laws or as otherwise satisfactory to all Lenders.”

 

(p)                                 The following sentence is hereby added to
the end of Section 15.11(a) of the Credit Agreement:

 

“Notwithstanding the provisions of this Section 15.11, the Agent shall be
authorized, without the consent of any Lender and without the requirement that
an asset sale consisting of the sale, transfer or other disposition having
occurred, to release any security interest in any building, structure or
improvement located in an area determined by the Federal Emergency Management
Agency to have special flood hazards provided that such building, structure or
improvement has an immaterial fair market value.”

 

(q)                                 Exhibit C-1 (Form of Compliance Certificate)
to the Credit Agreement is hereby amended and restated in its entirety with the
Exhibit C-1 attached hereto as Exhibit A.

 

(r)                                    Schedule 5.1 (Financial Reporting) to the
Credit Agreement is hereby amended and restated in its entirety with the
Schedule 5.1 attached hereto as Exhibit B.

 

(s)                                   Schedule 5.2 (Collateral Reporting) to the
Credit Agreement is hereby amended and restated in its entirety with the
Schedule 5.2 attached hereto as Exhibit C.

 

2.                                      Amendments to Security Agreement.

 

(a)                                 The following new definitions are hereby
added to Section 1(a) of the Security Agreement in the appropriate alphabetical
order as follows:

 

‘“Access Termination Notice’ means notice provided by Agent to Wells Fargo Bank,
N.A. that the applicable Grantor no longer has access to the funds in the
Qualified Cash Account(s) maintained at Wells Fargo Bank, N.A., in accordance
with the terms set forth in the applicable Control Agreement between the
parties;

 

6

--------------------------------------------------------------------------------

 

provided that if the applicable Control Agreement includes a definition for
‘Access Termination Notice’, then such definition shall be used.”

 

“‘Domestic Unrestricted Cash’ means the sum of Qualified Cash plus the amount of
unrestricted cash and Cash Equivalents of the Loan Parties and their
Subsidiaries held in Deposit Accounts or Securities Accounts at Morgan Stanley
Smith Barney LLC subject to a Control Agreement in favor of the Agent to secure
the Secured Obligations.”

 

“‘Global Unrestricted Cash’ means the amount, determined in Dollars, of
unrestricted cash and Cash Equivalents of the Loan Parties and their
Subsidiaries held in Deposit Accounts or Securities Accounts, or any combination
thereof.”

 

“‘Huawei Cash Restriction Event’ means during the Huawei Ineligible Period, the
occurrence of either of the following: (A) at any time, Domestic Unrestricted
Cash is less than $30,000,000 in the aggregate, or (B) when measured on a
month-end basis, Global Unrestricted Cash is less than $40,000,000 in the
aggregate.”

 

“‘Huawei Cash Restriction Period’ means the period commencing upon the
occurrence of a Huawei Cash Restriction Event and continuing until the earlier
of (A) the end of the Huawei Ineligible Period; provided that if any Default or
Event of Default is then continuing, then the Huawei Cash Restriction Period
shall continue until no Default or Event of Default is then continuing, and
(B) (i) with respect to the occurrence of a Huawei Cash Restriction Event
pursuant to clause (A) of such definition, receipt by Agent of a detailed report
of cash and Cash Equivalents of the Loan Parties and their Subsidiaries, in form
and substance reasonably satisfactory to Agent, demonstrating Domestic
Unrestricted Cash is then, and has been for the immediately preceding period of
30 consecutive days, equal to or greater than $30,000,000 in the aggregate, and
(ii) with respect to the occurrence of a Huawei Cash Restriction Event pursuant
to clause (B) of such definition, such date as agreed to by Agent in writing in
its sole discretion.”

 

(b)                                 Section 7(c) of the Security Agreement is
hereby amended by (i) deleting the word “and” at the end of sub-clause
(ii) thereof, (ii) deleting the period at the end of sub-clause (iii) thereof
and substituting “, and” in lieu thereof and (iii) adding the following new
clause (iv) in the appropriate order therein:

 

“(iv)                        Upon the occurrence of a Huawei Cash Restriction
Event, the Agent may send Access Termination Notices with respect to Qualified
Cash Accounts; provided, that (A) to the extent the Qualified Cash Accounts
contain Qualified Cash in excess of the amount of Qualified Cash permitted to be
included in the calculation of clause (c) of the Borrowing Base and (B) no Cash
Dominion Period is then continuing, upon the Borrowers’ written request, Agent
shall transfer such excess Qualified Cash into such other Deposit Account or
Securities Account of the Borrowers (as the Borrowers may designate) that is
subject to an authenticated Control Agreement.  Agent agrees to rescind such
Access Termination Notices after any Huawei Cash Restriction Period has ended.”

 

7

--------------------------------------------------------------------------------

 

3.                                      Huawei Accounts.  Borrowers acknowledge
and agree that the Huawei Accounts may no longer be treated as Eligible Tier 2
Accounts in the calculation of the Borrowing Base by virtue of clause (o) of the
definition of “Eligible Accounts” until such time the Huawei Accounts are no
longer deemed ineligible by virtue of one or more of the excluding criteria set
forth in the definition of “Eligible Accounts”.

 

4.                                      Conditions Precedent to Effectiveness of
this Amendment.  This Amendment shall not become effective until all of the
following conditions precedent shall have been satisfied in the sole discretion
of Agent or waived by Agent:

 

(a)                                 Agent shall have received a fully executed
counterparts to this Amendment.

 

(b)                                 Agent shall have received an updated
Borrowing Base Certificate reflecting the amendments contemplated in this
Amendment, in form and substance satisfactory to Agent.

 

(c)                                  The representations and warranties of each
Loan Party or its Subsidiaries set forth herein and in the Loan Documents (other
than any such representations and warranties that, by their terms, are
specifically made as of a date other than the date hereof, in which case such
representations and warranties shall be true and correct in all material
respects (except that such materiality qualifier shall not be applicable to any
representations and warranties that are already qualified or modified by
materiality in the text thereof) as of such earlier date) shall be true and
correct in all material respects (except that such materiality qualifier shall
not be applicable to any portion of any such representation and warranty that is
already qualified or modified by materiality in the text thereof).

 

5.                                      Release; Covenant Not to Sue.

 

(a)                                 Each Borrower hereby absolutely and
unconditionally releases and forever discharges Agent and each Lender, and any
and all participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing (each a “Released Party”), from any and all claims, demands
or causes of action of any kind, nature or description, whether arising in law
or equity or upon contract or tort or under any state or federal law or
otherwise, which any Borrower or its Subsidiaries has had, now has or has made
claim to have against any such person for or by reason of any act, omission,
matter, cause or thing whatsoever arising from the beginning of time to and
including the date of this Amendment, whether such claims, demands and causes of
action are matured or unmatured or known or unknown, in each case, arising out
of or related to the transactions contemplated by this Amendment, the Agreements
or any other Loan Document.  It is the intention of each Borrower in providing
this release that the same shall be effective as a bar to each and every claim,
demand and cause of action specified, and in furtherance of this intention it
waives and relinquishes all rights and benefits under Section 1542 of the Civil
Code of the State of California, which provides:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MIGHT

 

8

--------------------------------------------------------------------------------

 

HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

Each Borrower acknowledges that it may hereafter discover facts different from
or in addition to those now known or believed to be true with respect to such
claims, demands, or causes of action and agree that this instrument shall be and
remain effective in all respects notwithstanding any such differences or
additional facts.  Each Borrower understands, acknowledges and agrees that the
release set forth above may be pleaded as a full and complete defense and may be
used as a basis for an injunction against any action, suit or other proceeding
which may be instituted, prosecuted or attempted in breach of the provisions of
such release.

 

(b)                                 Each Borrower, on behalf of itself and its
successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably, covenants and agrees with and in favor of each
Released Party above that it will not sue (at law, in equity, in any regulatory
proceeding or otherwise) any Released Party on the basis of any claim released,
remised and discharged by each Borrower pursuant to the above release.  If any
Borrower or any of their successors, assigns or other legal representations
violates the foregoing covenant, each Borrower, for itself and its successors,
assigns and legal representatives, agrees to pay, in addition to such other
damages as any Released Party may sustain as a result of such violation, all
reasonable attorneys’ fees and costs incurred by such Released Party as a result
of such violation.

 

6.                                      Representations and Warranties.  Each
Borrower represents and warrants as follows:

 

(a)                                 Authority.  Each Borrower has the requisite
power and authority to execute and deliver this Amendment, and to perform its
obligations hereunder and under the Loan Documents (as amended or modified
hereby) to which it is a party.  The execution, delivery and performance by each
Borrower of this Amendment have been duly approved by all necessary action, have
received all necessary governmental approval, if any, and do not contravene
(i) any material provision of any law or (ii) where such contravention could
individually or in the aggregate reasonably be expected to result in a Material
Adverse Effect, any material contractual restriction binding on Parent or any
Borrower.  No other proceedings are necessary to consummate such transactions.

 

(b)                                 Enforceability.  This Amendment has been
duly executed and delivered by each Borrower.  This Amendment and each Loan
Document (as amended or modified hereby) are the legal, valid and binding
obligations of each Borrower, enforceable against each Borrower in accordance
with their respective terms, except as enforcement may be limited by equitable
principles (regardless of whether enforcement is sought in equity or at law) or
by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating
to or limiting creditors’ rights generally, and, are in full force and effect.

 

(c)                                  Representations and Warranties.  The
representations and warranties of each Loan Party or its Subsidiaries contained
in this Agreement or in the other Loan Documents shall be true and correct in
all material respects (except 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) on and as of the date hereof, as
though made on and as of such date

 

9

--------------------------------------------------------------------------------

 

(except to the extent that such representations and warranties relate solely to
an earlier date, in which case such representations and warranties shall be true
and correct in all material respects (except 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) as of such earlier
date).

 

(d)                                 No Default.  Immediately after giving effect
to the terms of this Amendment, no event has occurred and is continuing that
constitutes a Default or Event of Default.

 

7.                                      Choice of Law.  The validity of this
Amendment, the construction, interpretation, and enforcement hereof, and the
rights of the parties hereto with respect to all matters arising hereunder or
related hereto shall be determined under, governed by, and construed in
accordance with the laws of the State of California.

 

8.                                      Counterparts.  This Amendment may be
executed in any number of counterparts and by different parties and separate
counterparts, each of which when so executed and delivered, shall be deemed an
original, and all of which, when taken together, shall constitute one and the
same instrument.  Delivery of an executed counterpart of a signature page to
this Amendment by telefacsimile or other electronic method of transmission shall
be effective as delivery of a manually executed counterpart of this Amendment.

 

9.                                      Reference to and Effect on the Loan
Documents.

 

(a)                                 Upon and after the effectiveness of this
Amendment, (i) each reference in the Credit Agreement to “this Agreement”,
“hereunder”, “hereof” or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to “the Credit Agreement”,
“thereof” or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement as modified and amended hereby and
(ii) each reference in the Security Agreement to “this Agreement”, “hereunder”,
“hereof” or words of like import referring to the Security Agreement, and each
reference in the other Loan Documents to “the Guaranty and Security Agreement”,
“thereof” or words of like import referring to the Security Agreement, shall
mean and be a reference to the Security Agreement as modified and amended
hereby.

 

(b)                                 Except as specifically set forth in this
Amendment, the Agreements and all other Loan Documents, are and shall continue
to be in full force and effect and are hereby in all respects ratified and
confirmed and shall constitute the legal, valid, binding and enforceable
obligations of the Loan Parties to Agent and Lenders, except as enforcement may
be limited by equitable principles (regardless of whether enforcement is sought
in equity or at law) or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors’ rights generally.

 

(c)                                  The execution, delivery and effectiveness
of this Amendment shall not operate as a waiver of any right, power or remedy of
Agent or any Lender under any of the Loan Documents, nor constitute a waiver of
any provision of any of the Loan Documents except to the extent expressly
amended hereby.

 

10

--------------------------------------------------------------------------------

 

10.                               Ratification.  Each Borrower hereby restates,
ratifies and reaffirms each and every term and condition set forth in the
Agreements, as amended hereby, and the Loan Documents effective as of the date
hereof.

 

11.                               Estoppel.  To induce Agent and Lenders to
enter into this Amendment and to induce Agent and Lenders to continue to make
advances to Borrowers under the Credit Agreement, each Borrower hereby
acknowledges and agrees that, immediately after giving effect to this Amendment,
as of the date hereof, there exists no Default or Event of Default and no right
of offset, defense, counterclaim or objection in favor of any Borrower as
against Agent or any Lender with respect to the Obligations.

 

12.                               Integration.  This Amendment, together with
the other Loan Documents, incorporates all negotiations of the parties hereto
with respect to the subject matter hereof and is the final expression and
agreement of the parties hereto with respect to the subject matter hereof.

 

13.                               Severability.  In case any provision in this
Amendment shall be invalid, illegal or unenforceable, such provision shall be
severable from the remainder of this Amendment and the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

 

14.                               Submission of Amendment.  The submission of
this Amendment to the parties or their agents or attorneys for review or
signature does not constitute a commitment by Agent or any Lender to waive any
of their respective rights and remedies under the Loan Documents, and this
Amendment shall have no binding force or effect until all of the conditions to
the effectiveness of this Amendment have been satisfied as set forth herein.

 

[Remainder of Page Left Intentionally Blank]

 

11

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered as of the date first above written.

 

 

BORROWERS:

NEOPHOTONICS CORPORATION,

 

 

 

a Delaware corporation

 

 

 

 

 

 

 

By:

/s/ Elizabeth Eby

 

 

 

Name:

Elizabeth Eby

 

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

[Signature page to First Amendment to Credit Agreement]

 

--------------------------------------------------------------------------------

 

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

 

a national banking association,

 

 

as Agent and as a Lender

 

 

 

 

 

 

 

 

By:

/s/ Carlos Valles

 

 

Name:

Carlos Valles

 

 

Title:

Vice President

 

[Signature page to First Amendment to Credit Agreement]

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

Amended and Restated Exhibit C-1 (Form of Compliance Certificate)

 

--------------------------------------------------------------------------------

 

EXHIBIT C-1

 

FORM OF COMPLIANCE CERTIFICATE

 

[on Administrative Borrower’s letterhead]

 

To:          Wells Fargo Bank, National Association

2450 Colorado Avenue, Suite 3000 West

Santa Monica, California 90404

Attn:  Supremna Cole

 

Re:          Compliance Certificate dated                 , 20

 

Ladies and Gentlemen:

 

Reference is hereby made to that certain Credit Agreement, dated as of
September 8, 2017 (as amended, restated, supplemented, or otherwise modified
from time to time, the “Credit Agreement”), by and among NeoPhotonics
Corporation, a Delaware corporation, and those additional entities that become
parties thereto as Borrowers in accordance with the terms thereof by executing
the form of Joinder attached thereto as Exhibit J-1 (each, a “Borrower” and
individually and collectively, jointly and severally, the “Borrowers”), the
lenders identified on the signature pages thereof (each of such lenders,
together with its successors and permitted assigns, is referred to hereinafter
as a “Lender” and, collectively, the “Lenders”), and Wells Fargo Bank, National
Association, a national banking association, as administrative agent for each
member of the Lender Group and the Bank Product Providers (in such capacity,
together with its successors and assigns in such capacity “Agent”). Capitalized
terms used herein, but not specifically defined herein, shall have the meanings
ascribed to them in the Credit Agreement.

 

Pursuant to Section 5.1 of the Credit Agreement, the undersigned officer of
Administrative Borrower hereby certifies as of the date hereof that:

 

1.             The financial information of Borrowers and their Subsidiaries
furnished in Schedule 1 attached hereto has been prepared in accordance with
GAAP (except, in the case of unaudited financial statements, for year-end audit
adjustments and the lack of footnotes), and fairly presents in all material
respects the financial condition of Borrowers and their Subsidiaries as of the
date set forth therein.

 

2.             Such officer has reviewed the terms of the Credit Agreement and
has made, or caused to be made under his/her supervision, a review in reasonable
detail of the transactions and financial condition of Borrowers and their
Subsidiaries during the accounting period covered by the financial statements
delivered pursuant to Section 5.1 of the Credit Agreement.

 

3.             Such review has not disclosed the existence on and as of the date
hereof, and the undersigned does not have knowledge of the existence as of the
date hereof, of any event or condition that constitutes a Default or Event of
Default, except for such conditions or events listed on Schedule 2 attached
hereto, in each case specifying the nature and period of existence thereof and
what action Borrowers and their Subsidiaries have taken, are taking, or propose
to take with respect thereto.

 

--------------------------------------------------------------------------------

 

4.             Except as set forth on Schedule 3 attached hereto, the
representations and warranties of Borrowers and their Subsidiaries set forth in
the Credit Agreement and the other Loan Documents are true and correct in all
material respects (except 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) on and as of the date hereof
(except to the extent that such representations and warranties relate solely to
an earlier date, in which case such representations and warranties shall be true
and correct in all material respects (except 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) as of such earlier
date).

 

5.             As of the date hereof, each Borrower and its Subsidiaries are in
compliance with the applicable covenants contained in Section 7 of the Credit
Agreement as demonstrated on Schedule 4 hereof.

 

6.             [Set forth on Schedule 5 attached hereto is a list identifying
all of each Grantor’s (as defined in the Guaranty and Security Agreement)
proprietary software that is material to generating revenue of such Grantor,
whether created or acquired before, on, or after the Closing Date. The
undersigned officer hereby certifies that such list identifies all of such
Grantor’s proprietary software that is material to generating revenue of such
Grantor.]1

 

7.             [Set forth on Schedule 6 attached hereto is a written report of
all new Patents, Trademarks or Copyrights (each, as defined in the Guaranty and
Security Agreement) of each Grantor that are registered or the subject of
pending applications for registrations, and of all Intellectual Property
Licenses (as defined in the Guaranty and Security Agreement) that are material
to the conduct of such Grantor’s business, in each case, which were acquired,
registered, or for which applications for registration were filed by any Grantor
during the prior period ended June 30 or December 31 and any statement of use or
amendment to allege use with respect to intent-to-use trademark applications.] 2

 

8.             [The Domestic Unrestricted Cash [has/has not] been at least
$30,000,000 in the aggregate at all times during the fiscal month ending 
                , 20   , as demonstrated on Schedule 7 hereof.] 3

 

9.             [The Global Unrestricted Cash [has/has not] been at least
$40,000,000 in the aggregate when measured on a month-end basis for the fiscal
month ending                  , 20   , as demonstrated on Schedule 7 hereof.] 4

 

[Signature page follows.]

 

--------------------------------------------------------------------------------

1  To be included if this Compliance Certificate is being delivered in respect
of a fiscal quarter ending June 30 or a fiscal year (or, if an Event of Default
has occurred and is continuing, more frequently if requested by Agent).

2  To be included if this Compliance Certificate is being delivered in respect
of a fiscal quarter ending June 30 or a fiscal year (or, if an Event of Default
has occurred and is continuing, more frequently if requested by Agent).

3  To be included if this Compliance Certificate is being delivered during the
Huawei Ineligible Period.

4  To be included if this Compliance Certificate is being delivered during the
Huawei Ineligible Period.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned
this      day of                , 20   .

 

 

NEOPHOTONICS CORPORATION,

 

a Delaware corporation, as Administrative Borrower

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

SCHEDULE 1

 

Financial Information

 

--------------------------------------------------------------------------------

 

SCHEDULE 2

 

Default or Event of Default

 

--------------------------------------------------------------------------------

 

SCHEDULE 3

 

Representations and Warranties

 

--------------------------------------------------------------------------------

 

SCHEDULE 4

 

Financial Covenants

 

1.             Liquidity.

 

Liquidity has been at least $               at all times during the fiscal
[month/year] ending                  , 20   , which amount [is/is not] greater
than or equal to the amount set forth in Section 7 of the Credit Agreement for
the corresponding period.

 

2.             Excess Availability.

 

Excess Availability has been at least $               at all times during the
fiscal [month/year] ending                  , 20   , which amount [is/is not]
greater than or equal to the amount set forth in Section 7 of the Credit
Agreement for the corresponding period.

 

--------------------------------------------------------------------------------

 

SCHEDULE 5

 

Software

 

--------------------------------------------------------------------------------

 

SCHEDULE 6

 

Intellectual Property

 

--------------------------------------------------------------------------------

 

SCHEDULE 7

 

Domestic Unrestricted Cash and Global Unrestricted Cash

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

Amended and Restated Schedule 5.1 (Financial Reporting)

 

--------------------------------------------------------------------------------

 

Schedule 5.1

 

Deliver to Agent (and if so requested by Agent, with copies for each Lender)
each of the financial statements, reports, or other items set forth below at the
following times in form satisfactory to Agent:

 

as soon as available, but in any event within 30 days (45 days in the case of a
month that is the end of one of Borrowers’ fiscal quarters) after the end of
each month during each of Borrowers’ fiscal years,

 

 

(a)         A Compliance Certificate along with the underlying calculations,
including the calculations to arrive at Liquidity.

 

(b)         True and complete copies to the extent not previously provided of
(i) each Material Contract, (ii) each Amendment of or Waiver or Consent relating
to each Material Contract, (iii) any written notices of early termination or
expiration of any Material Contract, and (iv) any written notices received or
delivered relating to defaults, breaches, violations or claims relating in any
way to any Material Contract.

 

 

 

as soon as available, but in any event within 45 days after the end of each
quarter during each of Borrowers’ fiscal years,

 

 

(c)          An unaudited consolidated and consolidating balance sheet, income
statement, statement of cash flow, and statement of shareholder’s equity
covering Borrowers’ and their Subsidiaries’ operations during such period and
compared to the prior period and plan, together with a corresponding discussion
and analysis of results from management.

 

 

 

as soon as available, but in any event within 90 days after the end of each of
Borrowers’ fiscal years,

 

 

(d)         Consolidated and consolidating financial statements of Borrowers and
their Subsidiaries for each such fiscal year, and such consolidated financial
statements audited by independent certified public accountants reasonably
acceptable to Agent and certified, without any qualifications (including any
(i) “going concern” or like qualification or exception, (ii) qualification or
exception as to the scope of such audit, or (iii) qualification which relates to
the treatment or classification of any item and which, as a condition to the
removal of such qualification, would require an adjustment to such item, the
effect of which would be to cause any noncompliance with the provisions of
Section 7 of the Agreement) (other than a qualification or disclosure with
respect to going concern due to the determination that Borrowers have less than
twelve (12) months of liquidity), by such accountants to have been prepared in
accordance with GAAP (such audited consolidated financial statements to include
a balance sheet, income statement, statement of cash flow, and statement of
shareholder’s equity, and, if prepared, such accountants’ letter to management).

 

(e)          A Compliance Certificate along with the underlying calculations,
including the calculations to arrive at Liquidity.

 

--------------------------------------------------------------------------------

 

as soon as available, but in any event within 60 days after to the start of each
of Borrowers’ fiscal years,

 

(f)           Copies of Borrowers’ Projections, in form and substance (including
as to scope and underlying assumptions) reasonably satisfactory to Agent, in its
Permitted Discretion, for the forthcoming three years, year by year, and for the
forthcoming fiscal year, fiscal quarter by fiscal quarter, certified by the
chief financial officer of Administrative Borrower as being such officer’s good
faith estimate of the financial performance of Borrowers and their Subsidiaries
during the period covered thereby.

 

 

 

if and when filed by Administrative Borrower,

 

(g)          Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K
current reports.

 

(h)         Any other filings and material reports made by any Borrower with the
SEC.

 

(i)             Any other information that is provided by any Borrower to its
shareholders generally.

 

 

 

promptly, but in any event within 3 Business Days after any Borrower has
knowledge of any event or condition that constitutes a Default or an Event of
Default,

 

(j)            Notice of such event or condition and a statement of the curative
action that Borrowers propose to take with respect thereto.

 

 

 

promptly after the commencement thereof, but in any event within 5 days after
the service of process with respect thereto on any Borrower or any of its
Subsidiaries,

 

(k)         Notice of all actions, suits, or proceedings brought by or against
any Borrower or any of its Subsidiaries before any Governmental Authority which
reasonably could be expected to result in a Material Adverse Effect.

 

 

 

promptly, but in any event within 5 days, after any Borrower or any of its
Subsidiaries acquires knowledge of referenced damages, rejections or disputes,

 

(l)             Notice of damages owing by Borrower or any of its Subsidiaries
pursuant to any Material Contract or similar agreement.

 

(m)     Notice of rejection or dispute pertaining to goods or services delivered
or rendered to, or to be delivered or rendered to, any customer by Borrower or
any of its Subsidiaries under any Material Contract or similar agreement.

 

 

 

upon the request of Agent,

 

 

(n)         Any other information reasonably requested relating to the financial
condition of any Borrower or its Subsidiaries.

 

--------------------------------------------------------------------------------

 

promptly, but in any event within 5 days, after any Borrower or any of its
Subsidiaries receives or prepares,

 

(o)         Any transfer pricing reports, studies or audits prepared internally
or by an independent audit firm or other company, including any periodic reports
that are prepared or received in order to comply with any governmental
requirements.

 

 

 

commencing with the calendar month June 2019 and continuing until the Huawei
Ineligible Period is no longer in effect, monthly (but in any event within 14
days after the end of each month),

 

(p)         a monthly cash flow forecast showing projected cash receipts and
cash disbursements (including referencing line item sources and uses of cash) of
each Loan Party for the following 6-month period (inclusive of the month of
reporting), in form and substance, and with such detail (including material
assumptions), as the Agent may reasonably request.

 

 

 

if the Agent determines in its Permitted Discretion that there has been a
materially adverse development relating to the Borrowers’ on-going business or
financial condition during the Huawei Ineligible Period, promptly upon request
by Agent (but in any event, within 10 Business Days following Agent’s request),

 

(q)         a reconciliation of actual cash flow of each Loan Party to its
projected cash flow forecast for the previous 6-month period.

 

--------------------------------------------------------------------------------

 

EXHIBIT C

 

Amended and Restated Schedule 5.2 (Collateral Reporting)

 

--------------------------------------------------------------------------------

 

Schedule 5.2

 

Provide Agent (and if so requested by Agent, with copies for each Lender) with
each of the documents set forth below at the following times in form
satisfactory to Agent:

 

If (x) no Increased Reporting Period is in effect, monthly (no later than the
15th day of each month), or (y) an Increased Reporting Period is in effect,
weekly (no later than Wednesday of each week, commencing with the first such day
to occur during any Increased Reporting Period),

 

(a)         an executed Borrowing Base Certificate,

 

(b)         a detailed aging, by total, of each Borrower’s Accounts, together
with a reconciliation and supporting documentation for any reconciling items
noted,

 

(c)          a monthly Account roll-forward, in a format acceptable to Agent in
its discretion, tied to the beginning and ending account receivable balances of
Borrowers’ general ledger,

 

(d)         a detailed calculation of those Accounts that are not eligible for
the Borrowing Base,

 

(e)          notice of all claims, offsets, or disputes asserted by Account
Debtors with respect to each Borrower’s Accounts,

 

(f)           a detailed calculation of bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to
Borrowers’ Accounts,

 

(g)          a summary aging, by vendor, of each Loan Party’s accounts payable
and any book overdraft and an aging, by vendor, of any held checks,

 

(h)         a detailed report regarding each Loan Party’s and its Subsidiaries’
cash and Cash Equivalents, including an indication of which amounts constitute
Qualified Cash, and

 

(i)             a detailed report specifying for each Borrower’s Account where
the applicable Account Debtor is  located.

 

 

 

Monthly (no later than the 30th day of each month),

 

(j)            a reconciliation of Accounts and accounts payable of Borrowers’
general ledger to its monthly financial statements, including any book reserves
related to each category.

 

 

 

Quarterly (no later than the 45th day after the end of each fiscal quarter),

 

(k)         a report regarding each Loan Party’s and its Subsidiaries’ accrued,
but unpaid, ad valorem taxes, and

 

(l)             a Perfection Certificate or a supplement to the Perfection
Certificate.

 

 

 

Annually (no later than 90 days after the end of each fiscal year),

 

(m)      a detailed list of each Loan Party’s and its Subsidiaries’ customers,
with address and contact information.

 

--------------------------------------------------------------------------------

 

Promptly but in any event within 15 days after any Loan Party acquires any
Margin Stock,

 

(n)         notice of such acquisition, together with a description of the
Margin Stock and a Form U-1 (with sufficient additional originals thereof for
each Lender) duly executed and delivered by the Borrowers, together with such
other documentation as Agent shall reasonably request, in order to enable Agent
and the Lenders to comply with any of the requirements under Regulations T, U or
X of the Federal Reserve Board.

 

 

 

15 days following request by Agent,

 

(o)         such other reports as to the Collateral of any Loan Party and its
Subsidiaries, as Agent may reasonably request.

 

 

 

If the Huawei Ineligible Period is in effect, promptly upon request by Agent
(but in any event, no later than (x) end of the Business Day if such request is
made prior to 4:00 p.m. on such Business Day or (y) 10:00 a.m. on the following
Business Day if such request is made after 4:00 p.m.),

 

(p)         screenshots or similar evidence, in form and substance reasonably
satisfactory to Agent, demonstrating the account balances of any Deposit Account
or Securities Account not maintained at Wells Fargo Bank.

 

2

--------------------------------------------------------------------------------