Exhibit 10.10
AMENDMENT NUMBER FIVE TO CREDIT AGREEMENT
     This Amendment Number Five to Credit Agreement (“Amendment”) is entered
into as of December 16, 2009, by and among WELLS FARGO FOOTHILL, INC., a
California corporation, as Agent (the “Agent”) for the Lenders set forth in the
signature pages hereof (the “Lenders”) and the Lenders, on the one hand, and
OCLARO, INC., a Delaware corporation, formerly known as Bookham, Inc.
(“Parent”), and each of Parent’s Subsidiaries identified on the signature pages
hereof (such Subsidiaries, together with Parent, are referred to hereinafter
each individually as a “Borrower”, and individually and collectively, jointly
and severally, as the “Borrowers”), on the other hand, with reference to the
following facts:
     A. Agent, Lenders and Borrowers have previously entered into that certain
Credit Agreement, dated as of August 2, 2006 (as amended, supplemented, amended
and restated, or otherwise modified, the “Agreement”).
     B. Borrowers, Agent and Lenders desire to amend the Agreement as provided
for and on the conditions herein.
     NOW, THEREFORE, Borrowers, Agent and Lenders hereby amend and supplement
the Agreement as follows:
13. DEFINITIONS. All initially capitalized terms used in this Amendment shall
have the meanings given to them in the agreement unless specifically defined
herein.
14. AMENDMENTS TO THE AGREEMENT.
     (a) Section 6.1 of the Agreement is hereby amended by (i) deleting the word
“and” at the end of clause (f), (ii) deleting the period at the end of clause
(g), and (iii) adding a new clauses (h) and (i) after clause (g), which read as
follows:
“(h) Indebtedness in connection with the Xtellus Korea Mortgage; and
“(i) Indebtedness arising under the Merger Agreement owed to the shareholders or
option holders of Xtellus Parent which are shareholders or option holders
immediately prior to the Xtellus Merger.”
     (b) Section 6.7 of the Agreement is hereby amended by (i) deleting the word
“or” at the end of clause (c), (ii) deleting the period at the end of clause
(d) and replacing it with the word “or”, and (iii) inserting a new clause
(e) after clause (d), which reads as follows:
     “(e) make any cash payment on account of Indebtedness under Section 6.1(i)
without the prior written consent of Agent.”
     (c) Section 6.12(ii) of the Agreement is hereby amended by (i) deleting the
word “and” at the end of clause (e), (ii) inserting the word “and” at the end of
clause (f) after the comma, and (iii) inserting a new clause (g) after clause
(f), which reads as follows:
“g. The Xtellus Entities shall not have cash and Cash Equivalents in an
aggregate amount in excess of $3,500,000 at any one time,”
     (d) Article VI of the Agreement is hereby amended by adding the following
Section 6.17 after Section 6.16:
6.17 Xtellus Bridge Bank Facility.

 

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     Permit Parent, Borrowers, or any of their respective Subsidiaries to borrow
any funds, directly or indirectly, under the Xtellus Bridge Bank Facility.
     (e) The following definitions in Schedule 1.1 of the Agreement are hereby
amended as follows:
          (i) The definition of “Permitted Intercompany Advance” is hereby
amended by adding a new clause (j) which reads as follows:
     “(j) made by any of Parent’s Subsidiaries that is an Obligor to Xtellus
Israel or Xtellus Korea, so long as (i) no Default or Event of Default has
occurred and is continuing or would result therefrom, and (ii) all such
Intercompany Advances do not exceed $1,400,000 in any calendar month;”
          (ii) The definition of “Permitted Liens” is hereby amended by adding a
new clause (l) after clause (k), which reads as follows:
          “(l) Liens securing the Xtellus Korea Mortgage.”
     (f) Schedule 1.1 of the Agreement is hereby amended by adding the following
definitions in the appropriate alphabetical order:
          (i) “Xtellus Bridge Bank Facility” means that certain Business
Financing Agreement, dated as of June 12, 2009, by and between Xtellus Parent
and Bridge Bank, National Association, as amended and in effect as of
December 16, 2009.
          (ii) “Xtellus Entities” means, collectively, Xtellus Parent, Xtellus
Israel and Xtellus Korea.
          (iii) “Xtellus Israel” means Xtellus Ltd (formerly known as GalVite
Communications (Israel) Ltd.), a company organized under the laws of Israel
          (iv) “Xtellus Korea” means Xtellus Korea, Inc., a company organized
under the laws of Korea.
          (v) “Xtellus Korea Mortgage” means, collectively, those two
(2) certain Kun-mortgages that were entered into to secure the Company’s debts,
with one Kun-mortgage established for the first floor #102 Panam-dong 239-2
Dong-gu Daejeon-si in favor of Hana Bank with the maximum secured amount of KRW
260,130,000 on July 14, 2008, and one Kun-mortgage established for the first
floor #101 Panam-dong 239-2 Dong-gu Daejeon-si in favor of Hana Bank with the
maximum secured amount of KRW 802,750,000 on June 19, 2003; provided that these
Kun-mortgages constitute a “factory mortgage” established under the Factory
Mortgage Act, which provides for the mortgage with a security interest with
respect to the land and buildings constituting the factory, as well as all of
the machinery, equipment and other assets located in the factory over which the
mortgage has been established.
          (vi) “Xtellus Merger” has the meaning set forth in Amendment Number
Five to the Credit Agreement, dated as of December 16, 2009.
          (vii) “Xtellus Merger Agreement” means that certain Agreement of
Merger, dated as of December 16, 2009, by and among Parent, Xtellus Parent and
Rio Acquisition Corp., a Delaware corporation.
          (viii) “Xtellus Parent” means Xtellus Inc. (formerly known as GalVite
Communications, Inc.), a Delaware corporation.
15. CONSENT TO MERGER.
     (a) Parent has informed Agent that: (i) Parent has previously formed Rio
Sub 1, a Delaware corporation (“Rio 1”), Rio Sub 2, a Delaware corporation (“Rio
2”), and Rio Acquisition Corp., a Delaware

 

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corporation (“Merger Sub”); (ii) Parent, together with Merger Sub, has entered
into the Xtellus Merger Agreement with Xtellus Parent, pursuant to which Merger
Sub will be merged with and into Xtellus Parent with Xtellus Parent as the
surviving entity and a wholly owned subsidiary of Parent (the “Xtellus Merger”);
and (iii) Xtellus Parent will be a wholly owned Subsidiary of Rio 2, Rio 2 will
be a wholly owned Subsidiary of Rio 1, and Rio 1 will be a wholly owned
Subsidiary of Parent (Xtellus Parent, Rio 1 and Rio 2 are collectively referred
to as “New Subs” and each individually as a “New Sub”).
     (b) Pursuant to the terms of the Credit Agreement, at the time any Obligor
forms any direct or indirect Subsidiary or acquires any direct or indirect
Subsidiary after the Closing Date, such Obligor shall (i) cause such new
Subsidiary to provide to Agent a joinder to the Guaranty and the Security
Agreement, together with such other security documents (including Mortgages with
respect to any Real Property of such new Subsidiary), as well as appropriate
financing statements (and with respect to all property subject to a Mortgage,
fixture filings), all in form and substance satisfactory to Agent (including
being sufficient to grant Agent a first priority Lien (subject to Permitted
Liens) in and to the assets of such newly formed or acquired Subsidiary),
(ii) provide to Agent a pledge agreement and appropriate certificates and powers
or financing statements, hypothecating all of the direct or beneficial ownership
interest in such new Subsidiary, in form and substance satisfactory to Agent,
and (iii) provide to Agent all other documentation, including one or more
opinions of counsel satisfactory to Agent, which in Agent’s opinion is
appropriate with respect to the execution and delivery of the applicable
documentation referred to above (including policies of title insurance or other
documentation with respect to all property subject to a Mortgage) (such
covenants, collectively, the “New Subsidiary Covenants”). Therefore, Parent
should comply with the New Subsidiary Covenants with respect to New Subs.
     (c) Pending the consummation of the Xtellus Merger, Parent has requested
that the Lender Group consent to the Xtellus Merger and provide a limited
extension for the compliance period with respect to the New Subsidiary Covenants
for New Subs.
     (d) Notwithstanding any term or provision of the Credit Agreement to the
contrary, including, without limitation, Section 5.16, the Lender Group hereby
waives Parent’s compliance with the New Subsidiary Covenants (except as provided
in clause (f) below), so long as the Xtellus Merger is consummated on or before
December 31, 2009 (the “Consummation Deadline”); provided, that in the event the
Xtellus Merger is not consummated by the Consummation Deadline, such waiver
shall continue to be effective so long as Parent and Borrowers perform and cause
New Subs to perform each of the New Subsidiary Covenants within 15 days of the
Consummation Deadline.
     (e) In addition to the foregoing, notwithstanding any term or provision of
the Credit Agreement to the contrary, including, without limitation,
Sections 6.3, 6.8 and 6.12, the Lender Group hereby consents to the Xtellus
Merger and agrees that the Xtellus Merger shall not cause an Event of Default,
subject to the satisfaction (or waiver) of each of the following conditions
precedent and affirmative and negative covenants:
          (i) The Xtellus Merger shall be subject to terms and conditions
materially consistent (as determined by Agent, in its reasonable discretion)
with the Xtellus Merger Agreement;
          (ii) The date of consummation of the Xtellus Merger (hereafter defined
as the “Xtellus Merger Date”) must occur on or before the Consummation Deadline;
          (iii) No Default or Event of Default shall have occurred and be
continuing or would result immediately after giving effect to the Xtellus
Merger;
          (iv) On or before the Xtellus Merger Date, Agent shall have completed
its legal due diligence with respect to the Xtellus Entities, the Xtellus Merger
and the New Subs, including (1) receipt and review of consolidated and
consolidating quarterly projections for Parent and its Subsidiaries for the
12-month period following the Xtellus Merger Date which projections shall take
into consideration the effects of the Xtellus Merger and creation of the New
Subs, with the results of such review to be satisfactory to Agent, (2) review of
Parent’s and its Subsidiaries’ corporate structure (taking into consideration
the effects of the Xtellus Merger and creation of the New Subs) and capital
structure (taking into consideration the effects of the Xtellus Merger and
creation of the New Subs), with the results of such review to be satisfactory to
Agent, (3) receipt and review of the final executed version of the Xtellus
Merger Agreement (and related documents) and the pro forma consolidated and
consolidating

 

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financial statements of Parent’s and its Subsidiaries’ business (taking into
consideration the effects of the Xtellus Merger and creation of the New Subs),
in form and substance satisfactory to Agent with the results of such review to
be satisfactory to Agent, and (4) receipt of UCC, tax lien, litigation and
intellectual property searches (including foreign searches, as applicable) with
respect to Xtellus Parent and New Subs, the results of which shall be
satisfactory to Agent;
          (v) On the Xtellus Merger Date, Agent shall have received a
certificate (dated as of the Xtellus Merger Date) on behalf of Parent of an
Authorized Person of Parent attaching true and correct copies of the Xtellus
Merger Agreement, with such certificate to certify on behalf of Parent that the
attached document is a true and correct copy of such document and that such
document remains in full force and effect and no Obligor that is a party thereto
is in default in the performance of, or compliance with, any provisions thereof;
          (vi) No Indebtedness (other than Indebtedness permitted under
Section 6.1 of the Agreement and obligations, to the extent constituting
Indebtedness, described below in clause (e)(vii)) will exist or be incurred as a
result of the Xtellus Merger other than the Indebtedness relating to the Xtellus
Korea Mortgage and no Liens that are not permitted under Section 6.2 of the
Agreement (after giving effect to the amendments set forth in this Amendment)
will exist or be incurred as a result of the Xtellus Merger;
          (vii) The consideration for the Xtellus Merger shall consist primarily
of Parent Stock; provided, that under the Merger Agreement: (a) cash payments
will be made: (i) to any holder of common stock of Xtellus Parent that does not
deliver a Stockholder Representation Letter (as defined in the Merger Agreement)
in the form provided for in the Merger Agreement, (ii) on account of
consideration, if any, to be paid to holders of Company Options (as defined in
the Merger Agreement), and (iii) in respect of miscellaneous fees, expenses and
fractional shares, all as more fully set forth in the Merger Agreement, and
(b) in Parent’s sole discretion, cash payments may be made (i) on account of any
Value Protection Consideration Amount (as defined in the Merger Agreement) that
may be due an payable, and (ii) on account of payments to security holders of
Xtellus Parent out of the Escrow Fund (as defined in the Merger Agreement);
          (viii) The failure to satisfy any of the conditions in clause
(i) through (vii) above shall render the foregoing consent to the Xtellus Merger
ineffective and therefore the consummation of such Xtellus Merger an Event of
Default.
     (f) The failure by Obligors to satisfy any of the following conditions or
covenants or, if applicable, the last sentence of clause (d) above within the
prescribed time periods shall constitute an Event of Default:
          (i) On or before the date that is 15 days after the Xtellus Merger
Date (the “Xtellus Delivery Deadline”), Agent shall have received copies of the
Governing Documents of each of the New Subs, as amended, modified, or
supplemented as of the date of delivery;
          (ii) On or before the Xtellus Delivery Deadline, Agent shall have
received a certificate of status with respect to each of the New Subs, dated
within 15 days of the date of delivery, such certificate to be issued by the
appropriate officer of such New Sub’s jurisdiction of organization, which
certificate shall indicate that such New Sub is in good standing in such
jurisdiction;
          (iii) On or before the Xtellus Delivery Deadline, Agent shall have
received a certificate of status with respect to each of the New Subs, dated
within 30 days of the date of delivery, such certificates to be issued by the
appropriate officer of the jurisdictions (other than such New Sub’s jurisdiction
of organization) in which the failure of such New Sub to be duly qualified or
licensed would constitute a Material Adverse Change, which certificates shall
indicate that such New Sub is in good standing in such jurisdictions;
          (iv) Within 2 Business Days of the Xtellus Merger Date, Borrowers
shall deliver to Agent a certificate of an Authorized Person of Parent attaching
the Certificate of Merger issued by the Secretary of State of Delaware
evidencing the consummation of the Xtellus Merger;
          (v) On or before the Xtellus Delivery Deadline, Agent, for the ratable
benefit of the Lenders,

 

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shall have a perfected (other than as contemplated by clause (ix) below) first
priority Lien over all the Collateral of each of the New Subs, subject only to
Permitted Liens;
          (vi) On or before the Xtellus Delivery Deadline, Parent and Borrowers
shall cause each of the New Subs to deliver to Agent’s counsel all documents
that would be required following the Xtellus Merger pursuant to the New
Subsidiary Covenants, fully executed and in final form and Parent and Obligors
shall enter into any amendments to the Loan Documents deemed necessary by Agent
to take into account the effects of the Xtellus Merger and creation of the New
Subs;
          (vii) On or before the Xtellus Delivery Deadline, Parent and Borrowers
shall cause the termination of the Xtellus Bridge Bank Facility and the
termination of any security interest relating thereto and shall deliver to
Agent’s counsel evidence, satisfactory to Agent, of such terminations;
          (viii) On or before the date that is 60 days after the Xtellus Merger
Date, Borrowers shall deliver to Agent’s counsel updated schedules to the Loan
Documents, as applicable; provided, that in no event may any schedule be updated
in a manner that would reflect or evidence a Default or an Event of Default;
provided further, that pending such direct update of the schedules to the Loan
Documents, such schedules shall be deemed to be amended to include and reflect
(i) the information about the Xtellus Entities as reflected in the disclosures
attached to the Xtellus Merger Agreement, so long as none of the information
reflected in such disclosures is determined by Agent to be adverse to the
interests of the Lenders and (ii) the basic corporate information regarding the
New Subs;
          (ix) Within 60 days of the Xtellus Merger Date, at Agent’s request,
Borrowers shall use their commercially reasonable best efforts to deliver to
Agent a Collateral Access Agreement with respect to (1) 66 Ford Road, Denville
Technical Park, Suite 121, Denville, New Jersey, and (2) any other facilities
located within the United States where each of the New Subs’s assets therein are
valued at more than: (y) $250,000 in the aggregate for all such facilities or
(z) $100,000 with respect to any individual facility; and
          (x) Within 60 days of the Xtellus Merger Date, with respect to each
Deposit Account and Securities Account maintained in the United States and owned
by each of the New Subs, Borrowers shall either (i) deliver to Agent the Cash
Management Agreements and Control Agreements with respect to the relevant
Deposit Account or Securities Account, each in form and substance satisfactory
to Agent or (ii) cause the relevant Deposit Account and Securities Account to be
closed and provide Agent satisfactory written evidence of such closure, it being
understood that during the period commencing on the Xtellus Merger Date and
ending on the Xtellus Delivery Deadline and notwithstanding Section 6.12, each
of the New Subs may maintain balances in such Deposit Accounts and Securities
Accounts.
     (g) The consent set forth herein shall be limited precisely as written and
shall not be deemed to be (1) an amendment, waiver or modification of any other
term or condition of the Agreement or (2) prejudice any right or remedy which
the Lender Group may now or in the future have under or in connection with the
Agreement.
16. REPRESENTATIONS AND WARRANTIES. Parent and each Borrower hereby affirms to
Agent and Lenders that, after giving effect to the consents and waivers herein,
all of such its representations and warranties set forth in the Agreement are
true, complete and accurate in all respects as of the date hereof.
17. NO DEFAULTS. Parent and Borrowers hereby affirm to the Lender Group that no
Event of Default has occurred and is continuing as of the date hereof.
18. CONDITION PRECEDENT. The effectiveness of this Amendment is expressly
conditioned upon receipt by Agent of the following: (i) Agent shall have
received completed reference checks (including compliance with Section 326 of
the US Patriot Act) with respect to the Xtellus Entities, the results of which
are satisfactory to Agent in its sole discretion, and (iii) a fully executed
copy of this Amendment.
19. COSTS AND EXPENSES. Borrowers shall pay to Agent all of Agent’s
out-of-pocket costs and reasonable expenses (including, without limitation, the
fees and expenses of its counsel, which counsel may include

 

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any local counsel deemed necessary, search fees, filing and recording fees,
documentation fees, appraisal fees, travel expenses, and other fees) arising in
connection with the preparation, execution, and delivery of this Amendment and
all related documents.
20. LIMITED EFFECT. In the event of a conflict between the terms and provisions
of this Amendment and the terms and provisions of the Agreement, the terms and
provisions of this Amendment shall govern. In all other respects, the Agreement,
as amended and supplemented hereby, shall remain in full force and effect.
21. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which
when so executed and delivered shall be deemed to be an original. All such
counterparts, taken together, shall constitute but one and the same Amendment.
This Amendment shall become effective upon the execution of a counterpart of
this Amendment by each of the parties hereto.
[Signatures on next page]

 

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     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first set forth above.

            WELLS FARGO FOOTHILL, INC.,
a California corporation, as Agent and a Lender
      By:           Title:                 OCLARO, INC.,
a Delaware corporation, as Parent
      By:           Name:           Title:           OCLARO TECHNOLOGY PLC,
a limited liability company incorporated under the laws of
England and Wales, as a Borrower
      By:           Name:           Title:               By:           Name:    
      Title:           OCLARO PHOTONICS, INC.,
a Delaware corporation, as a Borrower
      By:           Name:           Title:           OCLARO TECHNOLOGY, INC.,
a Delaware corporation, as a Borrower
      By:           Name:           Title: