Exhibit 10.42


 


SECOND AMENDMENT TO CREDIT AGREEMENT


 


SECOND AMENDMENT, dated as of February 27, 2009, and effective
as of December 31, 2008 (this “Amendment”) to the Credit Agreement dated as of August
20, 2007 (as amended by the First Amendment to Credit Agreement, dated as of
February 25, 2008, the “Credit Agreement”) by and among VEECO INSTRUMENTS INC., a Delaware
corporation (the “Company”), the Lenders party thereto and HSBC BANK USA, NATIONAL ASSOCIATION, a
national banking association, as Administrative Agent for the Lenders.


 


WHEREAS, the Company has requested that the Lenders
amend certain provisions of the Credit Agreement, and the Lenders have agreed
to amend such provisions of the Credit Agreement, subject to the terms and
conditions set forth herein;


 


NOW,
THEREFORE, in
consideration of the premises and of the mutual agreements herein contained,
the parties hereto agree as follows:


 


1.             Amendments.


 


a.             The first sentence of the
definition of Consolidated EBITDA in Section 1.01 of the Credit Agreement is
hereby amended and restated in its entirety to provide as follows:


 


“Consolidated
EBITDA” shall mean, for any Person for any period, the Consolidated Net Income
(Net Loss) of such Person and its Subsidiaries for such period before provision
for federal and state income taxes, minus the sum of (x) Consolidated
Interest Income and (y) all extraordinary gains, plus the sum, without
duplication, of (a) one-time non-cash charges related to (i) write-downs of
intangible assets (including the value of in-process research and development
related to a Permitted Acquisition) and (ii) to the extent included in
Consolidated Net Income before provision for federal and state income
taxes, write-downs of, or reserves for, deferred tax assets, (b) Consolidated
Interest Expense, (c) depreciation and amortization expenses, (d) any non-cash
equity-based compensation charges or expenses and any non-cash non-recurring
charges incurred in connection with changes to Statements of Financial
Accounting Standards and (e) those non-recurring charges to be recorded in the
fiscal year ending December 31, 2009 relating to severance and retention,
asset-impairment and lease commitments forecast (to the extent that such
charges do not exceed $5,000,000 for the fiscal quarter ending March 31, 2009,
$9,000,000 for the two fiscal quarters ending June 30, 2009, $9,750,000 for the
three fiscal quarters ending September 30, 2009 or $10,000,000 for the fiscal
year ending December 31, 2009), all determined in accordance with Generally
Accepted Accounting Principles applied on a consistent basis.


 


b.             The definition of the term “Applicable
Rate” in Section 1.01 of the Credit Agreement is hereby amended by amending and
restating the first paragraph thereof to provide as follows:


 


“Applicable
Rate” shall mean (a) on the Closing Date through and including February 28,
2009, (i) with respect to each Eurocurrency Loan, the percentage set forth
below under the heading “Eurocurrency Margin” opposite the applicable ratio of
Consolidated Senior Funded Debt to Consolidated EBITA (the “Applicable Ratio”),
(ii) with respect to each Prime Rate Loan, the percentage set 


 


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forth
below under the heading “Prime Rate Margin” opposite the Applicable Ratio and
(iii) with respect to the Unused Fee payable pursuant to Section 3.04(a) of
this Agreement, the percentage set forth below under the heading “Unused Fee
Rate” opposite the Applicable Ratio and (b) on March 2, 2009 and at all times
thereafter, (i) 3.50%, with respect to each Eurocurrency Loan, (ii) 2.00%, with
respect to each Prime Rate Loan and (iii) 0.50%, with respect to the Unused Fee
payable pursuant to Section 3.04(a) of this Agreement:”


 


c.             The following
definitions in Section 1.01 of the Credit Agreement are each hereby amended and
restated in their entirety to provide as follows:


 


“Consolidated
Quick Ratio” shall mean, on the date of determination, the ratio of (a)
Consolidated Quick Assets to (b) the sum, without duplication, of (i)
Consolidated Current Liabilities, and (ii) Aggregate Outstandings: provided
that, for purposes of calculating the Consolidated Quick Ratio, accounts
receivable of the Company and its Subsidiaries on a consolidated basis shall be
excluded from Consolidated Quick Assets to the extent such accounts receivable
exceed 50% of Consolidated Quick Assets.


 


“Revolving
Credit Commitment” shall mean, with respect to each Lender at any time, the
obligation of such Lender to make Revolving Credit Loans to the Company and to
acquire participations in Letters of Credit in an aggregate amount not to
exceed (i) with respect to a Lender party to this Agreement as of the Closing Date,
the amount set forth opposite such Lender’s name on Schedule 1.01(c) attached
hereto or, (ii) with respect to an Additional Lender, in an aggregate amount
not to exceed the amount set forth in the Assignment and Acceptance Agreement
pursuant to which such Additional Lender became a Lender, in each case, as such
amounts may be reduced or increased in accordance with any Assignment and
Acceptance Agreement executed by such Additional Lender.


 


“Total
Commitment” shall mean, at any time, the aggregate of the Revolving Credit
Commitments in effect at such time which shall be $100,000,000, on the Closing
Date and through and including February 28, 2009 and $30,000,000, on March 2,
2009 and at all times thereafter.


 


d.             The following new definitions are
hereby added to Section 1.01 of the Credit Agreement in their appropriate
alphabetical order:


 


“Consolidated
Cash” shall mean the aggregate value of any cash and cash equivalents of the
Company and its Subsidiaries maintained at, or held by, any financial
institution whether located in the United States of America or otherwise.


 


 “Consolidated Domestic Cash” shall mean the
aggregate Dollar value of any cash and cash equivalents of the Company and its
Domestic Subsidiaries maintained at, or held by, any financial institution
located in the United States of America.


 


“Compliance
Period” shall mean such fiscal quarter or quarters that EBITDA for the
immediately two preceding fiscal quarters of the Company, was greater than 


 


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or
equal to $20,000,000, as determined based upon the financial statements
delivered in accordance with Section 6.03 hereof.


 


e.             The first sentence of Section 3.02
of the Credit Agreement is hereby amended and restated in its entirety to
provide as follows:


 


“The proceeds of the
Revolving Credit Loans shall be used (a) to refinance the Existing
Indebtedness, (b) to finance Permitted Acquisitions, subject to Section 7.06(d)
hereof, (c) for general working capital and other corporate purposes and (d) at
any time during a Compliance Period, to finance repurchases by the Company of
the Subordinated Notes.”


 


f.              Section 6.03 of the Credit Agreement is hereby amended
to (i) re-letter clause “(i)” thereof to read as clause “(j)” and (ii) to
insert a new clause “(i)” immediately following “(h)” thereof as follows:


 


“(i)  within fifteen (15) days after the end of
each fiscal month of the Company, at the end of which there were any Loans outstanding
hereunder, and simultaneously with the Company’s request for a Loan or the
issuance, amendment, renewal or extension of any Letter of Credit hereunder, a certificate
prepared and signed by the Chief Financial Officer indicating the Consolidated
Quick Ratio as of the end of the most recently ended fiscal month and the
calculation thereof;”


 


g.             Section 7.06(d) of the Credit Agreement is hereby
amended and restated in its entirety to provide as follows:


 


“(d) Permitted Acquisitions
by the Company and any of its Subsidiaries, provided that Permitted
Acquisitions shall require the prior written consent of the Required Lenders at
all times other than during a Compliance Period;”


 


h.             Section 7.13 of the Credit Agreement is hereby amended
and restated in its entirety to provide as follows:


 


(a)           Consolidated Senior Funded Debt to
Consolidated EBITA. Permit the ratio of Consolidated Senior Funded Debt to
Consolidated EBITA to be greater than 3.00:1.00, commencing with the fiscal
quarter ending March 31, 2010, provided that notwithstanding anything to the
contrary in the definition thereof, Consolidated EBITA shall be determined on
an “annualized” basis for (i) the fiscal quarter ending March 31, 2010, by
multiplying actual Consolidated EBITA for the fiscal quarter then ending by a
multiple of four, (ii) the fiscal quarter ending June 30, 2010, by multiplying
actual Consolidated EBITA for the two fiscal quarters then ending by a multiple
of two, and (iii) the fiscal quarter ending September 30, 2010, by multiplying
actual Consolidated EBITA for three fiscal quarters then ending by a multiple
of one and one-third.


 


(b)           Consolidated Quick Ratio. Permit
the Consolidated Quick Ratio to be less than 1.20:1.00.


 


(c)           Consolidated Fixed Charge Coverage
Ratio. Permit the Consolidated Fixed Charge Coverage Ratio to be less than
1.25:1.00, commencing with the 


 


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fiscal
quarter ending March 31, 2010, provided that, notwithstanding anything to the
contrary in the definition thereof, all components of the Consolidated Fixed
Charge Coverage Ratio shall be determined on an “annualized” basis for (i) the
fiscal quarter ending March 31, 2010, by multiplying the actual amount of each
such component for the fiscal quarter then ending by a multiple of four, (ii)
the fiscal quarter ending June 30, 2010, by multiplying the actual amount of
each such component for the two fiscal quarters then ending by a multiple of
two, and (iii) the fiscal quarter ending September 30, 2010, by multiplying the
actual amount of each such component for three fiscal quarters then by a
multiple of one and one-third.


 


(d)           Pre-tax Loss. Permit a pre-tax
loss greater than $5,000,000, on an aggregate basis, to exist during any two
consecutive fiscal quarters of the Company, commencing with the two fiscal
quarters ending June 30, 2010, provided that non-cash interest expense related
to the Subordinated Notes shall be excluded for purposes of calculating pre-tax
loss under this paragraph.


 


(e)           Consolidated EBITA. Permit
Consolidated EBITA to exceed (i) ($8,851,000), for the fiscal quarter ending
March 31, 2009, (ii) ($11,746,000), on a cumulative basis for the two fiscal
quarters ending June 30, 2009, (iii) ($10,901,000), on a cumulative basis for
the three fiscal quarters ending September 30, 2009 or (iv) ($8,141,000), for
the fiscal year ending December 31, 2009.


 


(f)            Consolidated Domestic Cash. Permit
Consolidated Domestic Cash to be less than $30,000,000, at any time.


 


(g)           Consolidated Cash. At all
times other than during a Compliance Period, permit Consolidated Cash to be
less than the Dollar Equivalent Amount of $62,500,000.


 


Compliance
with all of the financial covenants in this Section 7.13 may be determined by
reference to the consolidated financial statements of the Company delivered to
the Administrative Agent in accordance with Section 6.03 hereof. All financial
covenants will be applicable at all times and tested quarterly, as of the last
day of each fiscal quarter.”


 


i.              Section 7.15 of the Credit
Agreement is hereby amended to add the following text immediately preceding the
period at the end thereof:


 


“and (c) withhold-to-cover
transactions to facilitate the payments by employees of legally-required tax
withholding due upon the vesting of restricted stock,  provided that the actions described in
clauses (a) and (b) hereof shall require the prior written consent of the
Required Lenders at all times other than during a Compliance Period.”


 


j.              A new Section 9.10 is hereby added to the Credit
Agreement immediately following Section 9.09 thereof as follows:


 


“SECTION
9.10. APPOINTMENT AS SECURITY TRUSTEE. The Lenders, for
purposes of one or more Foreign Pledge Agreements, have 


 


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appointed
the Administrative Agent as a security trustee (the “Security Trustee”)
pursuant to Article 2328-1 of the French Civil Code.”


 


k.             Schedule 4.11 to the Credit
Agreement is hereby amended and replaced with Schedule 4.11 attached hereto. Schedule
1.01(c) attached hereto is hereby added as Schedule 1.01(c) to the Credit
Agreement.


 


2.                                      Conditions to Effectiveness.


 


This Amendment shall become
effective upon receipt by the Administrative Agent of: (a) this Amendment, duly
executed by the Company and the Guarantors, (b) amended and restated Revolving
Credit Notes, in the form attached hereto as Exhibit A, duly executed by the
Company in favor of each Lender, (c) executed consents from the Lenders
authorizing the Administrative Agent to execute this Amendment on behalf of the
Lenders (the “Consent”), and (d) an amendment fee for each Lender providing its
Consent to the Administrative Agent on or before the time that the
Administrative Agent shall sign this Amendment on behalf of the Required
Lenders, in an amount equal to twenty five (25) basis points of such Lender’s
Revolving Credit Commitment (after giving effect to this Amendment).


 


3.             Miscellaneous.


 


The Lenders acknowledge that
the Company may request that the credit facility provided under the Credit
Agreement be amended to be an “asset-based” facility. In the event that the
Company shall request such amendment, the Lenders shall agree to discuss such
amendment and may, at such time, agree to amend and/or restate the Credit Agreement
to provide for such change, all on such terms and conditions as the Lenders
shall approve at such time, including, without limitation revisions to the
covenants set forth in the Agreement, all based upon such factors and
considerations as the Lenders may determine are necessary, provided that
this acknowledgement shall not be deemed to be constitute and a commitment or
binding agreement of the Administrative Agent or any Lender to approve and
enter into such amendment nor for the Administrative Agent or any Lender to
remain the Administrative Agent or a Lender, as the case may be, under any such
amended facility nor shall this provision create any legally binding and/or
enforceable rights or obligations of the Administrative Agent and the Lenders
with respect thereto.


 


Capitalized terms used
herein and not otherwise defined herein shall have the same meanings as defined
in the Credit Agreement.


 


Except as expressly amended
hereby, the Credit Agreement shall remain in full force and effect in
accordance with the original terms thereof.


 


The amendments set forth
above are limited specifically to the matters set forth above and for the
specific instances and purposes given and do not constitute directly or by
implication a waiver or amendment of any other provision of the Credit
Agreement or a waiver of any Default or Event of Default, whether now existing
or hereafter arising, which may occur or may have occurred.


 


The Company hereby
represents and warrants that (a) after giving effect to this Amendment, the
representations and warranties made by the Company and each of its Subsidiaries
pursuant to the Credit Agreement and the other Loan Documents to which each is
a party are true and correct in all material respects as of the date hereof
with the same effect as though such representations and warranties had been
made on and as of such date, unless any such representation or warranty is as
of a specific date, in which case, as of such date, and (b) after giving effect
to this Amendment, no Default or Event of Default has occurred and is
continuing.


 


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The Company hereby further
represents and warrants that the execution, delivery and performance by the
Company of this Amendment and the Credit Agreement (as amended by this
Amendment), (a) have been duly authorized by all requisite corporate action,
(b) will not violate or require any consent (other than consents as have been
made or obtained and which are in full force and effect) under (i) any
provision of law applicable to the Company, any applicable rule or regulation
of any Governmental Authority, or the Certificate of Incorporation or By-laws
of the Company, (ii) any order of any court or other Governmental Authority
binding on the Company or (iii) any agreement or instrument binding on the
Company. Each of this Amendment and the Credit Agreement (as amended hereby),
constitutes a legal, valid and binding obligation of the Company.


 


This Amendment may be
executed in one or more counterparts, each of which shall constitute an
original, but all of which when taken together shall constitute but one
Amendment. This Amendment shall become effective when duly executed
counterparts hereof which, when taken together, bear the signatures of each of
the parties hereto shall have been delivered to the Administrative Agent.


 


This Amendment shall
constitute a Loan Document.


 


This Amendment shall be
governed by, and construed in accordance with, the laws of the State of New
York.


 


[next page is signature
page]


 


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IN WITNESS
WHEREOF, the Company
and the Administrative Agent, as authorized on behalf of the Required Lenders,
have caused this Amendment to be duly executed by their duly authorized
officers, all as of the day and year first above written.


 


	
  VEECO
  INSTRUMENTS INC.

  	
   

  	
  HSBC BANK
  USA, NATIONAL ASSOCIATION, as 

  
	
   

  	
   

  	
   

  	
  Administrative Agent

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John F. Rein, Jr.

  	
   

  	
  By:

  	
  /s/ Christopher Mendelsohn

  
	
  Name:

  	
  John F. Rein, Jr.

  	
   

  	
  Name:

  	
  Christopher Mendelsohn

  
	
  Title:

  	
  Executive Vice President
  and Chief Financial Officer

  	
   

  	
  Title:

  	
  Senior Vice President

  



 


The undersigned, not parties
to the Credit Agreement but as Guarantors under the Guaranty dated as of the
Closing Date executed in favor of the Lenders, each hereby (a) accept and agree
to the terms of the foregoing Amendment; (b) acknowledge and confirm that all
terms and provisions contained in the Guaranty are, and shall remain, in full
force and effect in accordance with their respective terms; (c) reaffirm and
ratify all of the representations and covenants contained in the Guaranty; and
(d) represent, warrant and confirm the non-existence of any offsets, defenses
and counterclaims to its obligations under the Guaranty.


 


	
   

  	
  VEECO
  COMPOUND SEMICONDUCTOR INC.

  
	
   

  	
  VEECO
  METROLOGY INC.

  
	
   

  	
  VEECO
  PROCESS EQUIPMENT INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John F. Rein, Jr.

  
	
   

  	
  Name:

  	
  John
  F. Rein, Jr.

  
	
   

  	
  Title:

  	
  Vice
  President of each of the foregoing corporations

  



 


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