UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 27, 2015
NEOPHOTONICS CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE |
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001-35061 |
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94-3253730 |
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(State of incorporation) |
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(Commission File No.) |
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(IRS Employer Identification No.) |
NeoPhotonics Corporation
2911 Zanker Road
San Jose, California 95134
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (408) 232-9200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On March 31, 2015, NeoPhotonics Corporation (the “Company”) entered into a Seventh Amendment to Credit Agreement (the “Amendment”) to that certain Revolving Credit and Term Loan Agreement (the “Credit Agreement”), dated as of March 21, 2013, with Comerica Bank, as Administrative Agent and Lead Arranger (the “Agent”), and the lenders from time to time party thereto. The Amendment provided for an increase to the senior secured revolving credit line from $25,000,000 to $30,000,000. The Company paid certain fees to the Agent in connection with the Amendment.
The Company intends to utilize a portion of the increased credit line under the Credit Agreement to repay all outstanding amounts under a promissory note held by EMCORE Corporation in the original principal amount of approximately $16.0 million. Such promissory note was issued by the Company as part of the consideration for its acquisition of the tunable laser product lines of EMCORE in January 2015. By repaying the EMCORE promissory note, the Company expects to save the additional interest expenses that would have arisen in the two-year period of the note, when the interest rate is 5% per annum in the first year and 13% per annum in the second year, compared to approximately 3% as of March 31, 2015 under the Credit Agreement.
The foregoing description of the Amendment is not intended to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is filed as Exhibit 10.1 hereto and incorporated by reference herein.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information in Item 1.01 above is incorporated by reference into this Item 2.03.
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.
2014 Bonus Awards
On March 27, 2015, the Compensation Committee (the “Compensation Committee”) of the Board of Directors of NeoPhotonics Corporation (the “Company”) awarded discretionary bonus awards payable to certain of the Company’s “named executive officers” (as defined in Item 402(a)(3) of Regulation S-K promulgated by the Securities and Exchange Commission (the “SEC”)) for performance related to the fiscal year 2014 in the amounts set forth below. The bonus awards are payable in cash and fully-vested restricted stock units (“RSU’s) issued under the Company’s 2010 Equity Incentive Plan.
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Named Executive Officer |
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2014
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2014
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Timothy S. Jenks, President and Chief Executive Officer |
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$ |
159,000 |
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28,659 |
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Clyde R. Wallin, Senior Vice President and Chief Financial Officer |
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60,420 |
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10,890 |
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Dr. Raymond Cheung, Senior Vice President and Chief Operating Officer |
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74,457 |
(1) |
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13,420 |
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Dr. Wupen Yuen, Senior Vice President and General Manager |
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55,385 |
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9,983 |
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Benjamin L. Sitler, Senior Vice President of Global Sales |
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47,700 |
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8,598 |
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(1) |
Calculated in U.S. dollars at the applicable exchange rate. Dr. Cheung’s actual bonus will be paid in Chinese RMB. |
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2015 Target Bonus
On March 27, 2015, the Compensation Committee also approved target bonuses for 2015 for its “named executive officers” in the amounts set forth below.
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Named Executive Officer |
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2015 Target
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2015 Target
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Timothy S. Jenks, President and Chief Executive Officer |
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75 |
% |
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$ |
300,000 |
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Clyde R. Wallin, Senior Vice President and Chief Financial Officer |
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40 |
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114,000 |
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Dr. Raymond Cheung, Senior Vice President and Chief Operating Officer |
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40 |
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136,000 |
(3) |
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Dr. Wupen Yuen, Senior Vice President and General Manager |
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40 |
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110,000 |
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Benjamin L. Sitler, Senior Vice President of Global Sales |
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40 |
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106,000 |
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(1) |
Target bonuses percentages are expressed as a percentage of 2015 base salary. |
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(2) |
To the extent the applicable base salary is adjusted in 2015, the dollar amount resulting from the target bonus percentage would be adjusted for the pro rata portion of the year in which the adjusted salary applies. |
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(3) |
The Target Bonus Amount is calculated in U.S. dollars at the applicable exchange rate and Dr. Cheung’s actual bonus, if any, will be paid in RMB. |
The Compensation Committee structured target bonuses for the fiscal year 2015 so that payouts would be determined based in part on achievement against corporate objectives, including:
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Non-GAAP net income from operations for the fiscal year 2015; and |
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Completion of research and development product platforms expected to generate profitable revenue in fiscal year 2015 and beyond. |
For target bonuses for the fiscal year 2015, the Compensation Committee established performance goals for each of the above metrics that are aligned with corporate objectives. While these various performance goals were selected, they are merely non-binding guidelines to be used as one factor in determining the actual bonuses earned.
The Compensation Committee may in its discretion award up to fifty percent (50%) of the final earned 2015 bonuses to senior management and U.S. director level employees in the form of restricted stock units.
It is expected that, in the first quarter of 2016, the Compensation Committee will review the Company’s fiscal year 2015 corporate performance against each of the corporate goals and other aspects of corporate and individual performance to determine any actual bonus awards for performance related to the fiscal year 2015.
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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
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(d) |
Exhibits. |
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Exhibit Number |
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Description |
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10.1 |
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Seventh Amendment to Credit Agreement and Amendment to Security Agreement, dated March 31, 2015, by and between NeoPhotonics Corporation, Comerica Bank, as Agent and sole Lender. |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: April 1, 2015 |
NEOPHOTONICS CORPORATION |
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By: |
/s/ Clyde R. Wallin |
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Clyde R. Wallin |
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Senior Vice President and Chief Financial Officer |
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INDEX TO EXHIBITS
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Exhibit Number |
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Description |
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10.1 |
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Seventh Amendment to Credit Agreement and Amendment to Security Agreement, dated March 31, 2015, by and between NeoPhotonics Corporation, Comerica Bank, as Agent and sole Lender. |
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Exhibit 10.1
Execution Copy
SEVENTH AMENDMENT TO CREDIT AGREEMENT
This Seventh Amendment to Credit Agreement (“Seventh Amendment”) is made as of March 31, 2015, by and among NeoPhotonics Corporation (the “Borrower”), the Lenders (as defined below) and Comerica Bank, as administrative agent for the Lenders (in such capacity, the “Agent”).
RECITALS
A. Borrower entered into that certain Revolving Credit and Term Loan Agreement dated as of March 21, 2013 (as amended, restated or otherwise modified from time to time, the “Credit Agreement”), with certain financial institutions from time to time parties thereto (the “Lenders”) and Agent.
B. Borrower has requested that Agent and the Lenders make certain amendments to the Credit Agreement, and Agent and the Lenders are willing to do so, but only on the terms and conditions set forth in this Seventh Amendment.
NOW, THEREFORE , in consideration of the Recitals and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrower, Agent and the Lenders agree as follows:
1. The definition of “Revolving Credit Aggregate Commitment” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:
“Revolving Credit Aggregate Commitment” shall mean Thirty Million Dollars ($30,000,000), subject to reduction or termination under Section 2.11 or 9.2 hereof.
2. Existing Schedule 1.2 to the Credit Agreement is hereby deleted and replaced with revised Schedule 1.2 attached hereto as Attachment 1 .
3. This Seventh Amendment shall become effective (according to the terms hereof) on the date (the “Seventh Amendment Effective Date”) that the following conditions have been fully satisfied by Borrower:
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(a) |
Agent shall have received counterpart signature pages to this Seventh Amendment, duly executed and delivered by Agent, Borrower and the Lenders; |
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Agent shall have received a signature page to the replacement Revolving Credit Note, duly executed and delivered by the Borrower; and |
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(c) |
Borrower shall have paid to Agent an amendment fee of $10,000 and all other fees, costs and expenses, if any, owed to Agent and the Lenders and accrued to the Seventh Amendment Effective Date, in each case, as and to the extent required to be paid in accordance with the Loan Documents. |
4. Borrower hereby represents and warrants that, after giving effect to the amendments to the Credit Agreement contained herein, (a) the execution and delivery of this Seventh Amendment are within such party’s corporate or limited liability company powers, have been duly authorized, are not in contravention of any law applicable to such party or the terms of its organizational documents, and except as have been previously obtained do not require the consent or approval, material to the amendments contemplated in this Seventh Amendment, of any governmental body, agency or authority, and this Seventh Amendment and the Credit Agreement (as amended herein) will constitute the valid and binding obligations of such undersigned party, enforceable in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law), (b) the representations and warranties set forth in Article 6 of the Credit Agreement are true and correct in all material respects on and as of the date hereof (other than any representation or warranty that expressly speaks only as of a certain date), and (c) as of the Seventh Amendment Effective Date, no Default or Event of Default shall have occurred and be continuing.
5. Except as specifically set forth above, this Seventh Amendment (i) shall not be deemed to amend or alter in any respect the terms and conditions of the Credit Agreement (including without limitation all conditions and requirements for Advances and any financial covenants), any of the Notes issued thereunder or any of the other Loan Documents; and (ii) shall not constitute a waiver or release by Agent or the Lenders of any right, remedy, Default or Event of Default under or a consent to any transaction not meeting the terms and conditions of the Credit Agreement, any of the Notes issued thereunder or any of the other Loan Documents. Furthermore, this Seventh Amendment shall not affect in any manner whatsoever any rights or remedies of the Lenders with respect to any other non-compliance by Borrower with the Credit Agreement or the other Loan Documents, whether in the nature of a Default or Event of Default, and whether now in existence or subsequently arising, and shall not apply to any other transaction.
6. Borrower and each other Credit Party hereby acknowledges and agrees that this Seventh Amendment and the amendments contained herein do not constitute any course of dealing or other basis for altering (i) any obligation of Borrower, any other Credit Party or any other party or (ii) any rights, privilege or remedy of the Lenders under the Credit Agreement, any other Loan Document, any other agreement or document, or any contract or instrument.
7. Except as specifically defined to the contrary herein, capitalized terms used in this Seventh Amendment shall have the meanings set forth in the Credit Agreement.
8. This Seventh Amendment may be executed in counterparts in accordance with Section 13.9 of the Credit Agreement.
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9. This Seventh Amendment shall be construed in accordance with and governed by the laws of the State of California, without regard to principles of conflict of laws that would result in the application of the laws of a different jurisdiction.
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IN WITNESS WHEREOF, Borrower, the Lenders and Agent have each caused this Seventh Amendment to be executed by their respective duly authorized officers or agents, as applicable, all as of the date first set forth above.
COMERICA BANK , as Agent and sole Lender
By: /s/ Robert Shutt
Name: Robert Shutt
Title: Senior Vice President
Signature Page to Seventh Amendment to Credit Agreement
(5334810)
IN WITNESS WHEREOF, Borrower, the Lenders and Agent have each caused this Seventh Amendment to be executed by their respective duly authorized officers or agents, as applicable, all as of the date first set forth above.
neophotonics corporation
By: /s/ Clyde R. Wallin
Name: Clyde R. Wallin
Its: Senior V.P. and CFO
Signature Page to Seventh Amendment to Credit Agreement
(5334810)
Attachment 1
Schedule 1.2
Percentages and Allocations
Revolving Credit and Term Loan Facilities
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LENDERS
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REVOLVING CREDIT PERCENTAGE |
REVOLVING CREDIT ALLOCATIONS |
WEIGHTED PERCENTAGE |
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Comerica Bank |
100% |
$30,000,000 |
100% |
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TOTALS |
100% |
$30,000,000 |
100% |