Exhibit 10.3
Bank of America [LOGO]
BUSINESS LOAN AGREEMENT
================================================================================
Borrower: Newport Corporation Lender: Bank of America, N.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇)
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ CA9-703-11-11
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
================================================================================
THIS BUSINESS LOAN AGREEMENT dated September 25, 2002, is made and executed
between Newport Corporation ("Borrower") and Bank of America, N.A. ("Lender") on
the following terms and conditions. Borrower has received prior commercial loans
from Lender or has applied to Lender for a commercial loan or loans or other
financial accommodations, including those which may be described on any exhibit
or schedule attached to this Agreement ("Loan"). Borrower understands and agrees
that: (A) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements as set forth in this
Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all
times shall be subject to Lender's sole judgment and discretion; and (C) all
such Loans shall be and remain subject to the terms and conditions of this
Agreement.
TERM. This Agreement shall be effective as of September 25, 2002, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender the following documents
for the Loan: (1) the Note; (2) Security Agreements granting to Lender
security interests in the Collateral; (3) financing statements and all
other documents perfecting Lender's Security Interests; (4) evidence of
insurance as required below; (5) together with all such Related Documents
as Lender may require for the Loan; all in form and substance satisfactory
to Lender and Lender's counsel.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents. In addition, Borrower shall have provided such other
resolutions, authorizations, documents and instruments as Lender or its
counsel, may require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement
or under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Organization. Borrower is a corporation for profit which is, and at all
times shall be, duly organized, validly existing, and in good standing
under and by virtue of the laws of the State of Nevada. Borrower is duly
authorized to transact business in all other states in which Borrower is
doing business, having obtained all necessary filings, governmental
licenses and approvals for each state in which Borrower is doing business.
Specifically, Borrower is, and at all times shall be, duly qualified as a
foreign corporation in all states in which the failure to so qualify would
have a material adverse effect on its business or financial condition.
Borrower has the full power and authority to own its properties and to
transact the business in which it is presently engaged or presently
proposed to engage. Borrower maintains an office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Unless Borrower has designated otherwise in writing, the
principal office is the office at which Borrower keeps its books and
records including its records concerning the Collateral. Borrower will
notify Lender prior to any change in the location of Borrower's state of
organization or any change in Borrower's name. Borrower shall do all things
necessary to preserve and to keep in full force and effect its existence,
rights and privileges, and shall comply with all regulations, rules,
ordinances, statutes, orders and decrees of any governmental or
quasi-governmental authority or court applicable to Borrower and Borrower's
business activities.
Assumed Business Names. Borrower has filed or recorded all documents or
filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete list
of all assumed business names under which Borrower does business: None.
Authorization. Borrower's execution, delivery, and performance of this
Agreement and all the Related Documents have been duly authorized by all
necessary action by Borrower and do not conflict with, result in a
violation of, or constitute a default under (1) any provision of Borrower's
articles of incorporation or organization, or bylaws, or any agreement or
other instrument binding upon Borrower or (2) any law, governmental
regulation, court decree, or order applicable to Borrower or to Borrower's
properties.
Financial Information. Each of Borrower's financial statements supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
constitute legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used or filed a financing statement
under any other name for at least the last five (5) years.
Hazardous Substances. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: (1) During the period of
Borrower's ownership of Borrower's Collateral, there has been no use,
generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance by any person on, under,
about or from any of the Collateral. (2) Borrower has no knowledge of,
BUSINESS LOAN AGREEMENT
(Continued) Page 2
================================================================================
or reason to believe that there has been (a) any breach or violation of any
Environmental Laws; (b) any use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any Hazardous
Substance on, under, about or from the Collateral by any prior owners or
occupants of any of the Collateral; or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters.
(3) Neither Borrower nor any tenant, contractor, agent or other authorized
user of any of the Collateral shall use, generate, manufacture, store,
treat, dispose of or release any Hazardous Substance on, under, about or
from any of the Collateral; and any such activity should be conducted in
compliance with all applicable federal, state, and local laws, regulations,
and ordinances, including without limitation all Environmental Laws.
Borrower authorizes Lender and its agents to enter upon the Collateral to
make such inspections and tests as Lender may deem appropriate to determine
compliance of the Collateral with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower's expense and for
Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are based
on Borrower's due diligence in investigating the Collateral for hazardous
waste and Hazardous Substances. Borrower hereby (1) releases and waives any
future claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws, and
(2) agrees to indemnify and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expenses which Lender
may directly or indirectly sustain or suffer resulting from a breach of
this section of the Agreement or a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release of a
hazardous waste or substance on the Collateral. The provisions of this
section of the Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the termination, expiration or
satisfaction of this Agreement and shall not be affected by Lender's
acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns
and reports that are or were required to be filed, have been filed, and
all taxes, assessments and other governmental charges have been paid in
full, except those presently being or to be contested by Borrower in good
faith in the ordinary course of business and for which adequate reserves
have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interests and rights in and to such
Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements (if
any), and all Related Documents are binding upon the signers thereof, as
well as upon their successors, representatives and assigns, and are legally
enforceable in accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:
Notices of Claims and Litigation. Promptly inform Lender in writing of (1)
all material adverse changes in Borrower's financial condition, and (2) all
existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of Borrower
or the financial condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with GAAP,
applied on a consistent basis, and permit Lender to examine and audit
Borrower's books and records at all reasonable times.
Financial Statements. Furnish Lender with the following:
Annual Statements. As soon as available, but in no event later than
one-hundred-twenty (120) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended,
audited by a certified public accountant satisfactory to Lender.
Interim Statements. As soon as available, but in no event later than
45 days after the end of each fiscal quarter, Borrower's balance sheet
and profit and loss statement for the period ended, prepared by
Borrower.
Additional Requirements.
Compliance Certificates-Revised Schedule. In lieu of the provisions
of the Affirmative Covenant paragraph entitled "Compliance
Certificates", the following provision in substituted to replace it in
its entirety:
Compliance certificates are not required.
All financial reports required to be provided under this Agreement shall be
prepared in accordance with GAAP, applied on a consistent basis, and
certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and statements,
as Lender may request from time to time.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies acceptable to Lender. Borrower, upon request of Lender,
will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least thirty (30)
days prior written notice to Lender. Each insurance policy also shall
include an endorsement providing that coverage in favor of Lender will not
be impaired in any way by any act, omission or default of Borrower or any
other person. In connection with all policies covering assets in which
Lender holds or is offered a security interest for the Loans, Borrower
will provide Lender with such lender's loss payable or other endorsements
as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (1) the
name of the insurer; (2) the risks insured; (3) the amount of the policy;
(4) the properties insured; (5) the then current property values on the
basis of which insurance has been obtained; and the manner of determining
those values; and (6) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually), Borrower will
have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties,
income, or profits.
BUSINESS LOAN AGREEMENT
(Continued) Page 3
================================================================================
Performance. Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower and
Lender. Borrower shall notify Lender immediately in writing of any default
in connection with any agreement.
Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner.
Environmental Studies. Promptly conduct and complete, at Borrower's
expense, all such investigations, studies, samplings and testings as may be
requested by Lender or any governmental authority relative to any
substance, or any waste or by-product of any substance defined as toxic or
a hazardous substance under applicable federal, state, or local law, rule,
regulation, order or directive, at or affecting any property or any
facility owned, leased or used by Borrower.
Compliance with Governmental Requirements. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's
properties, businesses and operations, and to the use or occupancy of the
Collateral, including without limitation, the Americans With Disabilities
Act. Borrower may contest in good faith any such law, ordinance, or
regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Borrower has notified Lender in writing
prior to doing so and so long as, in Lender's sole opinion, Lender's
interests in the Collateral are not jeopardized. Lender may require
Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender's interest.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such party to
permit Lender free access to such records at all reasonable times and to
provide Lender with copies of any records it may request, all at Borrower's
expense.
Compliance Certificates. Unless waived in writing by Lender, provide Lender
at least annually, with a certificate executed by Borrower's chief
financial officer, or other officer or person acceptable to Lender,
certifying that the representations and warranties set forth in this
Agreement are true and correct as of the date of the Certificate and
further certifying that, as of the date of the certificate, no Event of
Default exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all respects
with any and all Environmental Laws; not cause or permit to exist, as a
result of an intentional or unintentional action or omission on Borrower's
part or on the part of any third party, on property owned and/or occupied
by Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; shall furnish to Lender
promptly and in any event within thirty (30) days after receipt thereof a
copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning
any intentional or unintentional action or omission on Borrower's part in
connection with any environmental activity whether or not there is damage
to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, assignments,
financing statements, instruments, documents and other agreements as Lender
or its attorneys may reasonably request to evidence and secure the Loans
and to perfect all Security Interests.
RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including any
request or policy not having the force of law) shall impose, modify or make
applicable any taxes (except federal, state or local income or franchise taxes
imposed on Lender), reserve requirements, capital adequacy requirements or other
obligations which would (A) increase the cost to Lender for extending or
maintaining the credit facilities to which this Agreement relates, (B) reduce
the amounts payable to Lender under this Agreement or the Related Documents, or
(C) reduce the rate of return on Lender's capital as a consequence of Lender's
obligations with respect to the credit facilities to which this Agreement
relates, then Borrower agrees to pay Lender such additional amounts as will
compensate Lender therefor, within five (5) days after Lender's written demand
for such payment, which demand shall be accompanied by an explanation of such
imposition or charge and a calculation in reasonable detail of the additional
amounts payable by Borrower, which explanation and calculations shall be
conclusive in the absence of manifest error.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Borrower. All such expenses will become a
part of the Indebtedness and, at Lender's option, will (A) be payable in demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Indebtedness and Liens. (1) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (2) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's assets
(except as allowed as Permitted Liens), or (3) sell with recourse any of
Borrower's accounts, except to Lender.
Continuity of Operations. (1) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(2) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, or (3) pay any dividends
on Borrower's stock (other than dividends payable in its stock), provided,
however that notwithstanding the foregoing, but only so long as no Event of
Default has occurred and is continuing or would result from the payment of
dividends, if Borrower is a "Subchapter S Corporation" (as defined in the
Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends
on its stock to its shareholders from time to time in amounts necessary to
enable the shareholders to pay income taxes and make estimated income tax
payments to satisfy their liabilities under federal and state law which
arise solely from their status as Shareholders of a Subchapter S
Corporation because of their ownership of shares of Borrower's stock, or
purchase or retire any of Borrower's outstanding shares or alter or amend
Borrower's capital structure.
Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or
assets, (2) purchase, create or acquire any interest in any other
enterprise or entity, or (3) incur any obligation as surety or guarantor
other than in the ordinary course of business.
BUSINESS LOAN AGREEMENT
(Continued) Page 4
================================================================================
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds
if: (A) Borrower or any Guarantor is in default under the terms of this
Agreement or any of the Related Documents or any other agreement that
Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor
dies, becomes incompetent or becomes insolvent, files a petition in
bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there
occurs a material adverse change in Borrower's financial condition, in the
financial condition of any Guarantor, or in the value of any Collateral
securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts
to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves
a right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include an ▇▇▇ or ▇▇▇▇▇ accounts, or any trust
accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all
sums owing on the Indebtedness against any all such accounts.
DEFAULT. Each of the following shall constitute an Event of Default under
this Agreement:
Payment Default. Borrower fails to make any payment when due under the
Loan.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or
in any of the Related Documents or to comply with or to perform any
term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults
under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's or any
Grantor's property or Borrower's or any Grantor's ability to repay the
Loans or perform their respective obligations under this Agreement or
any of the Related Documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this
Agreement or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished or
becomes false or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower's property, any assignment for the
benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against
Borrower.
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any collateral document to create a valid and perfected security
interest or lien) at any time for any reason.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the Loan. This
includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply
if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an
adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness.
Change in Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or
performance of the Loan is impaired.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make further Loan Advances or disbursements), and, at Lender's
option, all Indebtedness immediately will become due and payable, all
without notice of any kind to Borrower, except that in the case of an Event
of Default of the type described in the "Insolvency" subsection above, such
acceleration shall be automatic and not optional. In addition, Lender shall
have all the rights and remedies provided in the Related Documents or
available at law, in equity, or otherwise. Except as may be prohibited by
applicable law, all of Lender's rights and remedies shall be cumulative and
may be exercised singularly or concurrently. Election by Lender to pursue
any remedy shall not exclude pursuit of any other remedy, and an election to
make expenditures or to take action to perform an obligation of Borrower or
of any Grantor shall not affect Lender's right to declare a default and to
exercise its rights and remedies.
ARBITRATION. (a) This paragraph concerns the resolution of any controversies
or claims between the parties, whether arising in contract, tort or by
statute, including but not limited to controversies or claims that arise out
of or relate to: (i) this agreement (including any renewals, extensions or
modifications); or (ii) any document related to this agreement;
(collectively a "Claim").
(b) At the request of any party to this agreement, any Claim shall be
resolved by binding arbitration in accordance with the Federal Arbitration
Act (Title 9, U.S. Code) (the "Act"). The Act will apply even though this
agreement provides that it is governed by the law of a specified state.
(c) Arbitration proceedings will be determined in accordance with the Act,
the applicable rules and procedures for the arbitration of disputes of JAMS
or any successor thereof ("JAMS"), and the terms of this paragraph. In the
event of any inconsistency, the terms of this paragraph shall control.
(d) The arbitration shall be administered by JAMS and conducted, unless
otherwise required by law, in any U. S. state where real or tangible
personal property collateral for this credit is located or if there is no
such collateral, in the state specified in the governing law section of this
agreement. All Claims shall be determined by one arbitrator; however, if
Claims exceed $5,000,000, upon the request of any party, the Claims shall be
decided by three arbitrators. All arbitration hearings shall commence within
90 days of the demand for arbitration and close within 90 days of
commencement and the award of the arbitrator(s) shall be issued within 30
days of the close of the hearing. However, the arbitrator(s), upon a showing
of good cause, may extend the commencement of the hearing for up to an
addition 60 days. The arbitrator(s) shall provide a concise written
statement of reasons for the award. The arbitration award may be submitted
to any court having jurisdiction to be confirmed and enforced.
(e) The arbitrator(s) will have the authority to decide whether any Claim is
barred by the statute of limitations and, if so, to dismiss the arbitration
on that basis. For purposes of the application of the statute of
limitations, the service on JAMS under applicable JAMS rules of a notice of
Claim is the equivalent of the filing of a lawsuit. Any dispute concerning
this arbitration provision or whether a Claim is arbitratable shall be
determined by the arbitrator(s). The arbitrator(s) shall have the power to
award legal fees pursuant to the terms of this agreement.
(f) This paragraph does not limit the right of any party to: (i) exercise
self-help remedies, such as but not limited to, setoff; (ii) initiate
judicial or
BUSINESS LOAN AGREEMENT
(Continued) Page 5
================================================================================
nonjudicial foreclosure against any real or personal property collateral;
(iii) exercise any judicial or power of sale rights, or (iv) act in a court
of law to obtain an interim remedy, such as but not limited to, injunctive
relief, writ of possession or appointment of a receiver, or additional or
supplementary remedies.
(g) The filing of a court action is not intended to constitute a waiver of
the right of any party, including the suing party, thereafter to require
submittal of the Claim to arbitration.
(h) all obligations, debts and liabilities, including any swap, option or
forward obligations, plus interest thereon, of Borrower to Lender, or any
one or more of them, as well as all claims by Lender against Borrower or
any other party to this Agreement or any one or more of them, whether now
existing or hereafter arising, whether related or unrelated to the purpose
of the Note, whether voluntary or otherwise, whether due or not due, direct
or indirect, absolute or contingent, liquidated or unliquidated and whether
Borrower or any other party to this Agreement may be liable individually or
jointly with others, whether obligated as guarantor, surety, accommodation
party or otherwise, and whether recovery upon such amounts may be or
hereafter may become barred by any statute of limitations, and whether the
obligation to repay such amounts may be or hereafter may become otherwise
unenforceable. Unless the Borrower and any other party to this Agreement
shall have otherwise agreed in writing or received written notice thereof,
this Agreement shall not secure any obligation owing to Lender which
constitutes "consumer credit" subject to the disclosure requirements of the
Federal Truth in Lending Act and any regulations promulgated thereunder.
ADDITIONAL DEFAULTS. Each of the following shall constitute an event of
default ("Event of Default") under this Agreement:
Event of Default Under Related Documents. A default or event of default
occurs under the terms of any Related Document executed by Borrower or any
guarantor, pledgor, accommodation party or other obligor.
Revocation of Termination of Trust. If any Borrower, grantor, guarantor,
pledgor, accommodation party or other obligor on the indebtedness secured
hereunder or any of the related documents is a trust or the trustee(s) of a
trust, such trust is revoked or otherwise terminated or all or a
substantial part of such trust's assets are distributed or otherwise
disposed of, or in the case of a revocable trust, the grantor of such trust
dies.
Default by Affiliates. Any affiliate of Borrower default under any loan,
extension or credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of Lender or any other creditor.
COUNTERPART SIGNATURES. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
ADDRESS FOR NOTICES. Notwithstanding anything to the contrary herein, all
notices and communications to the Lender shall be directed to the following
address:
Bank of America, N.A.
Los Angeles CLSC, Attn: Notice Desk
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇.
EXHIBIT TO BUSINESS LOAN AGREEMENT. An exhibit, titled "EXHIBIT TO BUSINESS
LOAN AGREEMENT," is attached to this Agreement and by this reference is
made a part of this Agreement just as if all the provisions, terms and
conditions of the Exhibit had been fully set forth in this Agreement.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement. No alteration of or
amendment to this Agreement shall be effective unless given in writing
and signed by the party or parties sought to be charged or bound by
the alteration or amendment.
Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of
Lender's costs and expenses, including Lender's attorneys' fees and
Lender's legal expenses, incurred in connection with the enforcement
of this Agreement. Lender may hire or pay someone else to help enforce
this Agreement, and Borrower shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's attorneys' fees and
legal expenses whether or not there is a lawsuit, including attorney's
fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and
any anticipated post-judgement collection services. Borrower also
shall pay all court costs and such additional fees as may be directed
by the court.
Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to
Lender's sale or transfer, whether now or later, of one or more
participation interests in the Loan to one or more purchasers, whether
related or unrelated to Lender. Lender may provide, without any
limitation whatsoever, to any one or more purchasers, or potential
purchasers any information or knowledge Lender may have about Borrower
or about any other matter relating to the Loan, and Borrower hereby
waives any rights to privacy Borrower may have with respect to such
matters. Borrower additionally waives any and all notices of sale of
participation interests, as well as all notice of any repurchase of
such participation interests. Borrower also agrees that the purchasers
of any such participation interests will be considered as the absolute
owners of such interests in the Loan and will have all the rights
granted under the participation agreement or agreements governing the
sale of such participation interests. Borrower further waives all
rights of offset or counterclaim that it may have now or later
against Lender or against any purchaser of such a participation
interest and unconditionally agrees that either Lender or such
purchaser may enforce Borrower's obligation under the Loan
irrespective of the failure or insolvency of any holder of any
interest in the Loan. Borrower further agrees that the purchaser of
any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have
against Lender.
Governing Law. This Agreement will be governed by, construed and
enforced in accordance with federal law and the laws of the State of
California. This Agreement has been accepted by Lender in the State of
California.
Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the courts of any County,
State of California.
No Waiver by Lender. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and
signed by Lender. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any
other right. A waiver by Lender of a provision of this Agreement shall
not prejudice or constitute a waiver of Lender's right otherwise to
demand strict compliance with that provision or any other provision of
this Agreement. No prior waiver by Lender, nor any course of dealing
between Lender and Borrower, or between Lender and any Grantor, shall
constitute a waiver of any of Lender's rights or of any of Borrower's
or any Grantor's obligations as to any future transactions. Whenever
the consent of Lender is required under this Agreement, the granting
of such consent by Lender in any instance shall not constitute
continuing consent to subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in
the sole discretion of Lender.
Notices. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed,
BUSINESS LOAN AGREEMENT
(Continued) Page 6
================================================================================
when deposited in the United States mail, as first class, certified or
registered mail postage prepaid, directed to the addresses shown near the
beginning of this Agreement. Any party may change its address for notices
under this Agreement by giving formal written notice to the other parties,
specifying that the purposes of the notice is to change the party's
address. For notice purposes, Borrower agrees to keep Lender informed at
all times of Borrower's current address. Unless otherwise provided or
required by law, if there is more than one Borrower, any notice given by
Lender to any Borrower is deemed to be notice given to all Borrowers.
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance. If feasible, the
offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified, it
shall be considered deleted from this Agreement. Unless otherwise required
by law, the illegality, invalidity, or unenforceability of any provision of
this Agreement shall not affect the legality, validity or enforceability of
any other provision of this Agreement.
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used in this Agreement shall include all of Borrower's subsidiaries and
affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any of Borrower's subsidiaries or
affiliates.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind Borrower's successors and assigns and shall
inure to the benefit of Lender and its successors and assigns. Borrower
shall not, however, have the right to assign Borrower's rights under this
Agreement or any interest therein, without the prior written consent of
Lender.
Survival of Representations and Warranties. Borrower understands and agrees
that in extending Loan Advances, Lender is relying on all representations,
warranties, and covenants made by Borrower in this Agreement or in any
certificate or other instrument delivered by Borrower to Lender under this
Agreement or the Related Documents. Borrower further agrees that regardless
of any investigation made by Lender, all such representations, warranties
and covenants will survive the extension of Loan Advances and delivery to
Lender of the Related Documents, shall be continuing in nature, shall be
deemed made and redated by Borrower at the time each Loan Advance is made,
and shall remain in full force and effect until such time as Borrower's
Indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Waive Jury. All parties to this Agreement hereby waive the right to any
jury trial in any action, proceeding, or counterclaim brought by any party
against any other party.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specificially stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:
Advance. The word "Advance" means a disbursement of Loan funds made, or to
be made, to Borrower or on Borrower's behalf on a line of credit or
multiple advance basis under the terms and conditions of this Agreement.
Agreement. The word "Agreement" means the Business Loan Agreement, as this
Business Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Business Loan
Agreement from time to time.
Borrower. The word "Borrower" means Newport Corporation, and all other
persons and entities signing the Note in whatever capacity.
Collateral. The word "Collateral" means all property and assets granted as
collateral security for a Loan, whether real or personal property, whether
granted directly or indirectly, whether granted now or in the future, and
whether granted in the form of a security interest, mortgage, collateral
mortgage, deed or trust, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention
contract, lease or consignment intended as a security device, or any other
security or lien interest whatsoever, whether created by law, contract, or
otherwise.
Environmental Laws. The words "Environmental Laws" mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
("▇▇▇▇"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the
California Health and Safety Code, Section 25100, et seq., or other
applicable state or federal laws, rules, or regulations adopted pursuant
thereto.
Event of Default. The words "Event of Default" mean any of the events of
default set forth in this Agreement in the default section of this
Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
Grantor. The word "Grantor" means each and all of the persons or entities
granting a Security Interest in any Collateral for the Loan, including
without limitation all Borrowers granting such a Security Interest.
Guarantor. The word "Guarantor" means any guarantor, surety, or
accomodation party of any or all of the Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The words "Hazardous Substances" mean materials that,
because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential
hazard to human health or the environment when improperly used, treated,
stored, disposed of, generated, manufactured, transported or otherwise
handled. The words "Hazardous Substances" are used in their very
broadest sense and include without limitation any and all hazardous or
toxic substances, materials or waste as defined by or listed under the
Environmental Laws. The term "Hazardous Substances" also includes, without
limitation, petroleum and petroleum by-products or any fraction thereof and
asbestos.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, including all principal and interest
together with all other indebtedness an costs and expenses for which
Borrower or Grantor or any other borrower, guarantor, pledgor, obligor or
accommodation party is responsible under this Agreement or under any of the
Related Documents, including any swap, option or forward obligations.
Lender. The word "Lender" means Bank of America, N.A., its successors and
assigns.
Loan. The word "Loan" means any and all loans and financial accommodations
from Lender to Borrower whether now or hereafter existing and
BUSINESS LOAN AGREEMENT
(Continued) Page 7
================================================================================
however evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule
attached to this Agreement from time to time.
Note. The word "Note" means (i) the Note executed by Borrower in the
principal amount of $5,000,000 dated September 25, 2002, (ii) any other
promissory note, credit agreement or letter of credit agreement now or
hereafter executed by Borrower in favor of Lender with respect to the
Indebtedness, including without limitation those promissory notes, credit
agreements and letter of credit agreements described on any schedule or
exhibit attached to this Agreement from time to time, and (iii) any
renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for any of the foregoing.
Permitted Liens. The words "Permitted Liens" mean (1) liens and security
interests securing Indebtedness owed by Borrower to Lender; (2) liens for
taxes, assessments, or similar charges either not yet due or being
contested in good faith; (3) liens of materialmen, mechanics, warehousemen,
or carriers, or other like liens arising in the ordinary course of business
and securing obligations which are not yet delinquent; (4) purchase money
liens or purchase money security interests upon or in any property acquired
or held by Borrower in the ordinary course of business to secure
indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled "Indebtedness and
Liens"; (5) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing;
and (6) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to
the net value of Borrower's assets.
Related Documents. The words "Related Documents" mean all promissory notes,
credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral
mortgages, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Loan.
Security Agreement. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
Security Interest. The words "Security Interest" mean, without limitation,
any and all types of collateral security, present and future, whether in
the form of a lien, charge, encumbrance, mortgage, deed of trust, security
deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional sale,
trust receipt, lien or title retention contract, lease or consignment
intended as a security device, or any other security or lien interest
whatsoever whether created by law, contract, or otherwise.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS
DATED SEPTEMBER 25, 2002.
BORROWER:
NEWPORT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------- -----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, VP of Finance ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, VP & General Counsel
& Treasurer of Newport Corporation of Newport Corporation
LENDER:
BANK OF AMERICA, N.A.
By: /s/ ▇ ▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
Authorized Signer
EXHIBIT TO BUSINESS LOAN AGREEMENT
================================================================================
Borrower: Newport Corporation Lender: Bank of America, N.A.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇)
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ CA9-703-11-11
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
================================================================================
This EXHIBIT TO BUSINESS LOAN AGREEMENT is attached to and by this reference
is made a part of the Business Loan Agreement, dated September 25, 2002, and
executed in connection with a loan or other financial accommodations between
BANK OF AMERICA, N.A. and Newport Corporation.
This schedule summarizes the loans and other financial accommodations that are
subject to this Loan Agreement. Reference is made to the applicable Note(s)
and Related Documents for a full description of the terms and conditions of
each Loan. Except with respect to the credit facilities specifically listed
below, this Loan Agreement does not supersede the requirements of any other
loan agreement or credit agreement between Lender and Borrower.
1.1 Revolving Line of Credit Facility.
(a) Note Description.
(i) Date: September 25, 2002.
(ii) Original Principal Amount: Five Million Dollars ($5,000,000).
(b) Revolving Line of Credit Amount. During the availability period
described below, Lender will provide a line of credit as described in the
Note. The amount of the line of credit (the "Commitment") is Five Million
Dollars ($5,000,000).
This is a revolving line of credit providing for cash advances and letters of
credit. During the availability period, Borrower may repay principal amounts
and reborrow them.
Borrower agrees not to permit the outstanding principal balance of cash
advances under the line of credit plus the outstanding amounts of any letters
of credit, including amounts drawn on letters of credit and not yet
reimbursed, to exceed the Commitment.
(c) Availability Period. The line of credit is available between September
25, 2002 and September 1, 2003, or such earlier or later date as the
availability may terminate as provided in the Loan Agreement, the Note or any
Related Documents (the "Expiration Date").
(d) Letters of Credit. This line of credit may be used for financing:
(i) commercial letters of credit with a maximum maturity of 90 days but not
to extend more than 90 days beyond the Expiration Date. Each commercial letter
of credit will require drafts payable at sight.
(ii) standby letters of credit with a maximum maturity of 365 days but not to
extend more than 180 days beyond the Expiration Date.
(iii) The amount of the letters of credit outstanding at any one time
(including amounts drawn on the letters of credit and not yet reimbursed) may
not exceed Five Million Dollars ($5,000,000). If any letter of credit is
issued in a foreign currency, for purposes of calculating outstandings the
amount thereof shall be converted into an equivalent amount in U.S. Dollars,
as provided in the related application and agreement for letter of credit
referenced in subparagraph (D) below.
(iv) Borrower agrees:
(A) any sum drawn under a letter of credit may, at the option of Lender, be
added to the principal amount outstanding under the Loan Agreement. The amount
will bear interest and be due as described elsewhere in the Loan Agreement.
(B) if there is a default under the Loan Agreement or any Related Document,
to immediately prepay and make Lender whole for any outstanding letters of
credit.
(C) the issuance of any letter of credit and any amendment to a letter of
credit is subject to Lender's written approval and must be in form and content
satisfactory to Lender and in favor of a beneficiary acceptable to Lender.
(D) to sign Lender's form Application and Agreement for Commercial Letter of
Credit or Application and Agreement for Standby Letter of Credit, as
applicable.
(E) to pay any issuance and/or other fees that Lender notifies Borrower will
be charged for issuing and processing letters of credit for Borrower.
(F) to allow Lender to automatically charge its checking account for
applicable fees, discounts, and other charges.
(G) to pay Lender a non-refundable fee equal to 1.50% per annum of the
outstanding undrawn amount of each standby letter of credit, payable annually
in advance, calculated on the basis of the face amount outstanding on the day
the fee is calculated.
1.2 Exceptions to Negative Covenants.
(a) The paragraph entitled "Indebtedness and Liens" under NEGATIVE
COVENANTS, is intentionally deleted.
(b) The paragraph entitled "Continuity of Operations" under NEGATIVE
COVENANTS, is replaced in its entirety by the following:
"Continuity of Operations. (i) Engage in any business activities
substantially different than those in which Borrower is presently engaged; or
(ii) Cease operations or suspend its business for more than 7 days in any 30
day period, liquidate, merge, transfer, acquire or consolidate with any other
entity, change its name, dissolve or transfer or sell Collateral out of the
ordinary course of business."
(c) The paragraph entitled "Loans, Acquisitions and Guaranties" under
NEGATIVE COVENANTS, is intentionally deleted.
1.3 Exceptions to Conditions Precedent to Each Advance.
(a) The paragraph entitled "Representations and Warranties" under
CONDITIONS PRECEDENT TO EACH ADVANCE, is amended to read as follows:
"Representations and Warranties. The representations and
warranties set forth in this Agreement, in the Related Documents, and in any
document or certificate delivered to Lender under this Agreement are true and
correct, except for matters that would not have a material adverse effect on
Borrower's business or financial condition."
1.4 Exceptions to Representations and Warranties.
(a) The paragraph entitled "Financial Information" under REPRESENTATIONS
AND WARRANTIES, is amended to read as follows:
"Financial Information. Each of Borrower's financial statements
supplied to Lender truly and completely disclosed Borrower's financial
EXHIBIT TO BUSINESS LOAN AGREEMENT
(Continued) Page 2
================================================================================
condition as of the date of the statement, and there has been no material
adverse change in Borrower's financial condition subsequent to the date of
the most recent financial statement supplied to Lender. Borrower has no
material contingent obligations that would be required to be disclosed on
Borrower's financial statements in accordance with GAAP, except as
disclosed in such financial statements."
(b) The paragraph entitled "Hazardous Substances" under
REPRESENTATIONS AND WARRANTIES, is intentionally deleted.
1.5 Litigation Exceptions.
(a) The paragraph entitled "Litigation and Claims" under
REPRESENTATIONS AND WARRANTIES, is amended in its entirety to read as
follows:
"Litigation and Claims. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or threatened, and no other event has
occurred which may materially adversely affect Borrower's financial
condition or properties, other than (i) litigation, claims, or other
events, if any, that have been disclosed to and acknowledged by Lender in
writing, and (ii) litigation, claims, and other events that involve claims
that, if lost, would not exceed One Million Dollars ($1,000,000) in the
aggregate."
(b) The paragraph entitled "Notices of Claims and Litigation" under
AFFIRMATIVE COVENANTS, is amended in its entirety to read as follows:
"Notice of Claims and Litigation. Promptly advise Lender in writing of
(i) any condition, event or act which comes to its attention that would or
might materially adversely affect Borrower's financial condition or
operations or Lender's rights under the Loan Documents, (ii) any existing
or threatened litigation, arbitration, claims, investigations,
administrative proceedings or similar actions filed by or against Borrower
or any Guarantor or any Collateral affecting Borrower or any Guarantor or
any Collateral that involve claims that, if lost, would be in excess of
One Million Dollars ($1,000,000) in the aggregate."
1.6 Exceptions to Affirmative Covenants.
(a) The paragraph entitled "Financial Records" under AFFIRMATIVE
COVENANTS, is amended in its entirety to read as follows:
"Financial Records. Maintain its books and records in accordance with
GAAP, applied on a consistent basis."
(b) The paragraph entitled "Insurance" under AFFIRMATIVE COVENANTS,
is amended in its entirety to read as follows:
"Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance with respect to Borrower's properties
and operations, in form, amounts, coverages and with insurance companies
acceptable to Lender. Borrower, upon request of Lender, will deliver to
Lender from time to time the policies or certificates of insurance in form
satisfactory to Lender, including stipulations that coverages will not be
cancelled or diminished without a least thirty (30) days prior written
notice to Lender. Each insurance policy also shall include an endorsement
providing that coverage in favor of Lender will not be impaired in any way
by act, omission or default of Borrower or any other person. In connection
with all policies covering assets in which Lender holds or is offered a
security interest for the Loans, Borrower will provide Lender with such
lender's loss payable or other endorsements as Lender may require."
(c) The paragraph entitled "Insurance Reports" under AFFIRMATIVE
COVENANTS, is amended to read as follows:
"Insurance Reports. Furnish to Lender, upon request of Lender, reports
on each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (1) the
name of the insurer; (2) the risks insured; (3) the amount of the policy;
(4) the properties insured; (5) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (6) the expiration date of the policy."
(d) The paragraph entitled "Operations" under AFFIRMATIVE COVENANTS,
is amended to read as follows:
"Operations. Maintain executive personnel with substantially the
same qualifications and experience as the present executive personnel;
provide written notice to Lender of any changes in executive personnel;
conduct its business affairs in a reasonable and prudent manner."
(e) The paragraph entitled "Environmental Studies" under AFFIRMATIVE
COVENANTS, is intentionally deleted.
(f) The paragraph entitled "Inspection" under AFFIRMATIVE COVENANTS,
is intentionally deleted.
(g) The paragraph entitled "Environmental Compliance and Reports"
under AFFIRMATIVE COVENANTS, is intentionally deleted.
1.7 Exceptions to Default.
(a) The paragraph entitled "Payment Default" under DEFAULT, is
amended to read as follows:
"Payment Default. Borrower fails to make any payment due under the
Loan within five (5) business days of the date due."
(b) The paragraph entitled "Other Defaults" under DEFAULT, is
amended to read as follows:
"Other Defaults. Borrower fails to comply with or to perform any
other term, obligation, covenant or condition contained in this Agreement
or in any of the Related Documents or to comply with or to perform any
term, obligation, covenant or condition contained in any other agreement
between Lender and Borrower, and does not cure such failure with thirty
(30) days following notice from Lender of such failure."
(c) The paragraph entitled "Default in Favor of Third Parties" under
DEFAULT, is amended to read as follows:
"Default in Favor of Third Parties. Borrower of any Grantor defaults
under any loan extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's or any Grantor's property or
Borrower's or any Grantor's ability to repay the Loans or perform their
respective obligations under this Agreement or any of the Related
Documents, and does not cure such failure within thirty (30) days following
receipt of notice of such default."
(d) The paragraph entitled "Credit or Forfeiture Proceedings" under
DEFAULT, is amended to read as follows:
"Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings in connection with claims in excess of One Million
Dollars ($1,000,000) in each case whether by judicial proceeding,
self-help, repossession or any other method, by any creditor of Borrower or
by any governmental agency against any collateral securing the Loan. This
includes a garnishment of any of Borrower's accounts, including deposit
accounts, with lender. However, this Event of Default shall not apply if
there is a good faith dispute by Borrower as to validity or reasonableness
of the claim which is the basis of the creditor or forfeiture proceeding
and if Borrower gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in
its sole discretion, as being adequate reserve or bond for the dispute."
(e) The paragraph entitled "Change in Ownership" under DEFAULT, is
intentionally deleted.
1.8 Exceptions to Arbitration.
(a) Subparagraph (d) of the paragraph entitled "Arbitration", is
amended to read as follows:
(d) The arbitration shall be administered by JAMS and conducted,
unless otherwise required by law, in Orange County, California. All Claims
EXHIBIT TO BUSINESS LOAN AGREEMENT
(Continued) Page 3
================================================================================
shall be determined by one arbitrator; however, if Claims exceed $5,000,000,
upon the request of any party, the Claims shall be decided by three arbitrators.
All arbitration hearings shall commence within 90 days of the demand for
arbitration and close within 90 days of commencement and the award of the
arbitrator(s) shall be issued within 30 days of the close of the hearing.
However, the arbitrator(s), upon a showing of good cause, may extend the
commencement of the hearing for up to an additional 60 days. The arbitrator(s)
shall provide a concise written statement of reasons for the award. The
arbitration award may be submitted to any court having jurisdiction to be
confirmed and enforced."
1.9 Exceptions to Exhibit to Business Loan Agreement.
(a) The paragraph entitled "EXHIBIT TO BUSINESS LOAN AGREEMENT", is amended
to read as follows:
"EXHIBIT TO BUSINESS LOAN AGREEMENT. An exhibit, titled 'EXHIBIT TO
BUSINESS LOAN AGREEMENT', is attached to this Agreement and by this reference is
made part of this Agreement just as if all the provisions, terms and conditions
of the Exhibit had been fully set forth in this Agreement. In the event of any
conflict between this Agreement and such exhibit, the terms of such exhibit
shall control."
1.10 Exceptions to Miscellaneous Provisions.
(a) The paragraph entitled "Choice of Venue" under MISCELLANEOUS
PROVISIONS, is amended to read as follows:
"Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the courts of Orange County, State of
California."
(b) The paragraph entitled "Subsidiaries and Affiliates of Borrower" under
MISCELLANEOUS PROVISIONS, is intentionally deleted.
THIS EXHIBIT TO BUSINESS LOAN AGREEMENT IS EXECUTED ON SEPTEMBER 25, 2002.
BORROWER:
NEWPORT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, VP of Finance & Treasurer of
Newport Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ VP & General Counsel of Newport
Corporation
LENDER:
BANK OF AMERICA, N.A.
By: /s/ ▇ ▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------------------
Authorized Signer
================================================================================