Exhibit 10.35
 
FIRST AMENDMENT TO CREDIT AGREEMENT
 
THIS FIRST AMENDMENT TO CREDIT AGREEMENT is entered into as of September 26,
2002 by and among PLANAR SYSTEMS, INC., an Oregon corporation, the Lenders
signatory hereto, and U.S. BANK NATIONAL ASSOCIATION as the Administrative
Lender.
 
RECITALS
 
Borrower, Administrative Lender and Lenders are parties to that certain Credit
Agreement dated April 22, 2002 (the “Credit Agreement”) and desire to amend the
Credit Agreement in the manner set forth below.
 
NOW, THEREFORE, in consideration of the mutual covenants and promises of the
parties contained herein, Administrative Lender, Lenders and Borrower hereby
agree as follows:
 
1.    Definitions.    All capitalized terms used herein and not otherwise
defined herein shall have the meaning attributed to them in the Credit
Agreement.
 
2.    Section 1.1 of the Credit Agreement.    Section 1.1 of the Credit
Agreement is amended as follows:
 

 
(a)
 
The following new defined terms are added:

 
“4Q’02 Charges” means the charges incurred by Borrower in its fiscal quarter
ending September 27, 2002 related to the announced closing of the Lake Mills, WI
facility, consolidation of EL manufacturing operations and exit from the
Photonics line of business, to the extent such charges do not exceed $20,000,000
in the aggregate and the cash portion of such charges do not exceed $4,000,000.
 
“Modified EBITDA” means, as of the end of a fiscal quarter, (A) Borrower’s
consolidated net income after taxes for the twelve months ending with such
quarter plus (i) the sum of the amounts for such twelve month period included in
determining such net income of (t) interest expense, (u) income tax expense, (v)
depreciation expense, (w) amortization expense, (x) up to $2,000,000 of unusual
charges, extraordinary losses and other non-recurring charges (other than losses
and charges described in the following item (A)(i)(y)), provided that in no
event may more than 30% of such charges/losses be cash charges/losses, (y) up to
$4,000,000 of non-cash expense taken in the same fiscal quarter as the Closing
Date in connection with the write-off of in-process research and development
resulting from Borrower’s acquisition of Guarantor and (z) to the extent not
included in items
 
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(A)(i)(t)–(y) above, non-cash 4Q’02 Charges; less (ii) gains on sales of assets
(excluding sales of inventory in the ordinary course of business) and other
extraordinary or unusual gains for such twelve month period, plus (B) as of the
end of each of the first four fiscal quarters after the Closing Date, except to
the extent the following duplicates amounts taken into account under item (A),
with respect to Guarantor, the following for the periods before Guarantor became
a Subsidiary: Guarantor’s consolidated net income after taxes for the twelve
months ending with such quarter plus (i) the sum of the amounts for such twelve
month period included in determining such net income of (u) interest expense,
(v) income tax expense, (w) depreciation expense, (x) amortization expense, (y)
up to $2,000,000 of non-cash compensation expense resulting from accelerated
vesting of stock options in connection with Borrower’s acquisition of Guarantor
and (z) up to $1,400,000 of extraordinary cash expenses incurred in connection
with the merger contemplated by the Merger Agreement; less (ii) gains on sales
of assets (excluding sales of inventory in the ordinary course of business) and
other extraordinary or unusual gains for such twelve month period.
 
“Modified Leverage Ratio” means, as of the end of a fiscal quarter, the ratio of
(i) Debt (exclusive of any Contingent Obligations) outstanding as of the end of
such quarter to (ii) Modified EBITDA.
 

 
(b)
 
The definition of “EBITDA” is amended in its entirety to read as follows:

 
“EBITDA” means, as of the end of a fiscal quarter, (A) Borrower’s consolidated
net income after taxes for the twelve months ending with such quarter plus (i)
the sum of the amounts for such twelve month period included in determining such
net income of (t) interest expense, (u) income tax expense, (v) depreciation
expense, (w) amortization expense, (x) up to $2,000,000 of unusual charges,
extraordinary losses and other non-recurring charges (other than losses and
charges described in the following item (A)(i)(y)), provided that in no event
may more than 30% of such charges/losses be cash charges/losses, (y) up to
$4,000,000 of non-cash expense taken in the same fiscal quarter as the Closing
Date in connection with the write-off of in-process research and development
resulting from Borrower’s acquisition of Guarantor and (z) to the extent not
included in items (A)(i)(t)–(y) above, 4Q’02 Charges; less (ii) gains on sales
of assets (excluding sales of inventory in the ordinary course of business) and
other extraordinary or unusual gains for such twelve month period, plus (B) as
of the end of each of the first four fiscal quarters after the Closing Date,
except to the extent the following duplicates amounts taken into account under
item (A), with respect to Guarantor, the following for the periods before
Guarantor became a Subsidiary: Guarantor’s consolidated net income after taxes
for the twelve months ending with such quarter plus (i) the sum of the amounts
for such twelve month period included in determining such net income of (u)
interest
 
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expense, (v) income tax expense, (w) depreciation expense, (x) amortization
expense, (y) up to $2,000,000 of non-cash compensation expense resulting from
accelerated vesting of stock options in connection with Borrower’s acquisition
of Guarantor and (z) up to $1,400,000 of extraordinary cash expenses incurred in
connection with the merger contemplated by the Merger Agreement; less (ii) gains
on sales of assets (excluding sales of inventory in the ordinary course of
business) and other extraordinary or unusual gains for such twelve month period.
 
3.    Section 2.2(b) of the Credit Agreement.    Items (iii) and (vi) of Section
2.2(b) of the Credit Agreement are amended to read as follows:
 
(iii) Borrower shall, within six months of receipt of any proceeds from the sale
of assets of Borrower or any Subsidiary that is not a Foreign Subsidiary (other
than the sale of inventory in the ordinary course and the sale of assets
disposed of in connection with 4Q’02 Charges), prepay the outstanding principal
amount of the Term Loans by an amount equal to such proceeds less the portion
thereof reinvested during such three month period in assets of like kind to the
assets sold, provided that the first $1,000,000 of such proceeds received by
Borrower and Subsidiaries in a fiscal year of Borrower shall not be subject to
this provision;
 
(vi) Borrower shall, within 100 days after the end of each fiscal year, prepay
the outstanding principal amount of the Term Loans by an amount equal to the
greater of (A) 50% of Modified Excess Cash Flow for such fiscal year or (B) 25%
of Excess Cash Flow for such fiscal year; provided that any payment required by
this item (vi) with respect to Borrower’s fiscal year ending September 27, 2002
shall not exceed $2,000,000.
 
4.    Section 9.1 of the Credit Agreement.    Section 9.1 of the Credit
Agreement is amended to read as follows:
 
As of the end of each fiscal quarter ending before July 1, 2003, Borrower shall
maintain a Leverage Ratio not greater than 1.75:1, and as of the end of each
fiscal quarter thereafter, Borrower shall maintain a Leverage Ratio not greater
than 1.50:1.
 
5.    Schedule I.    The contact information for Wells Fargo Bank, National
Association in Item 3 of Schedule I is amended in its entirety to read as
follows:
 
Wells Fargo Bank, National Association
1300 SW Fifth Avenue, 13th Floor
Portland, OR 97201
Attn: James R. Bednark, Senior Vice President
Telephone: (503) 886-2280
 
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Fax: (503) 886-3210
Email: james.r.bednark@wellsfargo.com
 
6.    Schedule II.    Each reference in Schedule II to “Leverage Ratio” is
amended to be “Modified Leverage Ratio.”
 
7.    Amendment Fee.    Contemporaneously with the execution of this First
Amendment, Borrower shall pay to Administrative Lender, for the ratable benefit
of Lenders, an amendment fee of $40,000.
 
8.    Effective Date.    This First Amendment shall be effective as of September
26, 2002 upon the payment of the amendment fee set forth in Section 4.
 
9.    Ratification.    Except as otherwise provided in this First Amendment, all
of the provisions of the Credit Agreement are hereby ratified and confirmed and
shall remain in full force and effect.
 
10.    One Agreement.    The Credit Agreement, as modified by the provisions of
this First Amendment, shall be construed as one agreement.
 
11.    Counterparts.    This First Amendment may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed signature page of this First Amendment by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.
 
12.    Statutory Notice.
 
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY LENDER AFTER
OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER’S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY THE LENDER
TO BE ENFORCEABLE.
 
IN WITNESS WHEREOF, this First Amendment to Credit Agreement has been duly
executed as of the date first written above.
 
PLANAR SYSTEMS, INC.
By:
 
/s/    STEVE BUHALY        

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Title:
 
Chief Financial Officer

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WELLS FARGO BANK, NATIONAL ASSOCIATION
     
U.S. BANK NATIONAL ASSOCIATION
By:
 
/s/    DOUG CARLSON        

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By:
 
/s/    ROSS BEATON        

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Title:
 
Senior Vice President

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Title:
 
Vice President

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CONSENT OF GUARANTOR
 
DOME IMAGING SYSTEMS, INC. hereby consents to the foregoing First Amendment to
Credit Agreement and acknowledges and represents that (1) all references in its
Guaranty and Security Agreement dated April 22, 2002 (“Guaranty”) to the Credit
Agreement shall include the Credit Agreement as amended by the foregoing First
Amendment to Credit Agreement and (2) the Guaranty remains in full force and
effect.
 
Dated as of September 26, 2002
 
DOME IMAGING SYSTEMS, INC.
By:
 
/s/    STEVE BUHALY        

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Title:
 
Vice President

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