LOAN AND SECURITY AGREEMENT
between
UNIPHASE CORPORATION,
UNIPHASE TELECOMMUNICATIONS PRODUCTS, INC.,
ULTRAPOINTE CORPORATION,
UNIPHASE VERTRIEBS GMBH,
UNIPHASE LTD.
and
BANK OF THE WEST
January 28, 1997
TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION 1
1.1 Definitions 1
1.2 Accounting Terms 7
1.3 Code Terms 7
2. LOANS AND TERMS OF PAYMENT 8
2.1 Revolving Facility 8
2.1.1 Advances; Maturity. 8
2.1.2 Letters of Credit 8
2.1.3 Foreign Exchange Contracts 9
2.2 Interest Rates, Payments, and Calculations 9
2.2.1 Interest Rates 9
2.2.2 Default Rate 9
2.2.3 Interest Payments 9
2.2.4 Computation 9
2.3 Crediting Payments 10
2.4 Fees and Expenses. 10
2.4.1 Fees. 10
(a) Loan Commitment Fee 10
(b) Financial Examination and Appraisal
Fees 10
(c) Bank Expenses 10
2.4.2 Additional Costs 10
2.5 Overadvances 11
2.6 Term 11
3. CONDITIONS OF LOANS 11
3.1 Conditions Precedent to Initial Advance 11
3.2 Conditions Precedent to all Advances 12
4. CREATION OF SECURITY INTEREST 12
4.1 Grant of Security Interest 12
4.2 Delivery of Additional Documentation Required 12
4.3 Right to Inspect 12
5. REPRESENTATIONS AND WARRANTIES 12
5.1 Due Organization and Qualification 12
5.2 Due Authorization; No Conflict 12
5.3 No Prior Encumbrances 13
5.4 Bona Fide Accounts 13
5.5 Merchantable Inventory 13
5.6 Name; Location of Chief Executive Office 13
5.7 Litigation 13
5.8 No Material Adverse Change in Financial
Statements 13
5.9 Solvency 14
5.10 Regulatory Compliance 14
5.11 Environmental Condition 14
5.12 Taxes 14
5.13 Subsidiaries 14
5.14 Government Consents 14
5.15 Full Disclosure 14
6. AFFIRMATIVE COVENANTS 15
6.1 Good Standing 15
6.2 Government Compliance 15
6.3 Financial Statements, Reports, Certificates 15
6.4 Inventory 16
6.5 Taxes 16
6.6 Insurance 16
6.7 Principal Depository 17
6.8 Financial Covenants 17
(a) Profitability 17
(b) Debt-Net Worth Ratio 17
(c) Tangible Net Worth 17
(d) Quick Ratio 17
6.9 Further Assurances 17
7. NEGATIVE COVENANTS 17
7.1 Dispositions 17
7.2 Change in Business 18
7.3 Mergers or Acquisitions 18
7.4 Indebtedness 18
7.5 Encumbrances 18
7.6 Distributions 18
7.7 Investments 18
7.8 Transactions with Affiliates 18
7.9 Inventory 18
7.10 Compliance 18
8. EVENTS OF DEFAULT 19
8.1 Payment Default 19
8.2 Covenant Default 19
8.3 Material Adverse Effect 19
8.4 Attachment 19
8.5 Insolvency 19
8.6 Other Agreements 19
8.7 Judgments 19
8.8 Misrepresentations 19
9. BANK'S RIGHTS AND REMEDIES 20
9.1 Rights and Remedies 20
9.2 Power of Attorney 21
9.3 Accounts Collection 21
9.4 Bank Expenses 21
9.5 Bank's Liability for Collateral 21
9.6 Remedies Cumulative 21
9.7 Demand; Protest; Application 21
10. NOTICES 22
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER 22
12. GENERAL PROVISIONS 23
12.1 Successors and Assigns 23
12.2 Indemnification 23
12.3 Waivers, Etc. 23
12.4 Time of Essence 24
12.5 Severability of Provisions; Headings 24
12.6 Amendments in Writing, Integration 24
12.7 Counterparts 24
12.8 Survival 24
12.9 Renewal 24
LOAN AND SECURITY AGREEMENT
THIS AGREEMENT, dated as of January 28, 1997, is made by
UNIPHASE CORPORATION, UNIPHASE TELECOMMUNICATIONS PRODUCTS, INC.,
ULTRAPOINTE CORPORATION, UNIPHASE VERTRIEBS GMBH, UNIPHASE LTD.
(collectively, "Borrowers"), and BANK OF THE WEST.
RECITALS
Borrowers wish to obtain credit from time to time from Bank,
and Bank desires to extend credit to Borrowers. This Agreement
sets forth the terms on which Bank will lend to Borrowers, and
Borrowers will repay the loan to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions. As used in this Agreement, the
following terms shall have the following definitions:
"Accounts" means all presently existing and
hereafter arising accounts, contract rights, royalties, and all
other forms of obligations owing to each Borrower arising out of
the sale, licensing or lease of property or the rendering of
services, whether or not earned by performance, and any and all
credit insurance, guaranties, and other security therefor, as
well as all property returned to or reclaimed by each Borrower,
all other Proceeds, and Borrower's Books relating to any of the
foregoing.
"Advance" means a cash advance under Section 2.1
of this Agreement.
"Affiliate" means, with respect to any Person, any
Person that owns or controls directly or indirectly such Person,
any Person that controls or is controlled by or is under common
control with such Person, and each of such Person's officers,
directors, and partners.
"Agreement" means this Loan and Security Agreement
and any extensions, renewals, supplements, riders, amendments or
modifications hereto.
"Bank" means BANK OF THE WEST, a California
banking corporation, and its Technology Industries Group located
at ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
"Bank Expenses" means all costs and expenses
incurred by Bank in connection with this Agreement or the
transactions contemplated hereby, including, without limitation,
all costs or expenses required to be paid by Borrowers under this
Agreement which are paid or advanced by Bank; filing, recording,
publication, search, appraiser or auditor fees, title insurance
premiums paid or incurred by Bank in connection with Bank's
transactions with Borrowers; costs and expenses of suit incurred
by Bank in enforcing or defending this Agreement or any portion
hereof; and reasonable attorneys' fees and expenses incurred by
Bank in structuring, negotiating, drafting, reviewing, amending,
terminating, enforcing, defending or otherwise concerning this
Agreement, any agreement related hereto, or any of the
transactions contemplated hereby, whether or not suit is brought,
and including, but not limited to, any expenses incurred in any
arbitration, Insolvency Proceeding or other proceeding.
"Borrowers" means UNIPHASE CORPORATION, a
California corporation, UNIPHASE TELECOMMUNICATIONS PRODUCTS,
INC., a corporation, ULTRAPOINTE CORPORATION, a corporation,
UNIPHASE VERTRIEBS GMBH, a corporation, and UNIPHASE LTD., a
corporation. Each of them is sometimes called a "Borrower."
"Borrower's Assets" means the Accounts; the
General Intangibles; the Negotiable Assets; the Inventory; the
Equipment; all deposit accounts of each Borrower; any other
tangible or intangible personal property and any real property of
each Borrower; all Proceeds; and Borrower's Books.
"Borrower's Books" means all books and records of
each Borrower including but not limited to minute books, ledgers,
records relating to Borrower's Assets, its liabilities, the
Obligations, and all information relating thereto; records
relating to each Borrower's business operations or financial
condition; and all computer programs, disc or tape files,
printouts, runs, other electronically stored or prepared
information, and all equipment used to post, produce, process,
analyze, store or retrieve any of the foregoing.
"Business Day" means any day that is not a
Saturday, Sunday, or other day on which banks in the State of
California are authorized or required to close.
"Closing Date" means the date of this Agreement.
"Code" means the California Uniform Commercial
Code.
"Collateral" means the Accounts, the Inventory,
each Borrower's deposit accounts with Bank, and Borrower's Books
relating to the foregoing.
"Contingent Obligation" means, as applied to any
Person, any direct or indirect liability, contingent or
otherwise, of that Person with respect to (i) any Indebtedness,
lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed, co-made or discounted or sold
with recourse by that Person, or in respect of which that Person
is otherwise directly or indirectly liable; (ii) any obligations
with respect to undrawn letters of credit issued for the account
of that Person; and (iii) all Exchange Contracts and all other
obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest
rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; provided,
however, that the term "Contingent Obligation" shall not include
endorsements on items for collection or deposit in the ordinary
course of business. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determined
amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof
as determined by such Person in good faith; provided, however,
that if the document that evidences a Contingent Obligation
expressly states the maximum liability of such Person thereunder,
such amount shall not exceed that maximum liability.
"Current Liabilities" means, as of any applicable
date, all amounts that should, in accordance with GAAP, be
included as current liabilities on the consolidated balance sheet
of Borrowers and their Subsidiaries, as at such date, plus, to
the extent not already included therein, all outstanding Advances
made under this Agreement, including all Indebtedness that is
payable upon demand or within one year from the date of
determination thereof unless such Indebtedness is renewable or
extendable at the option of a Borrower or a Subsidiary to a date
more than one year from the date of determination, but excluding
Subordinated Debt.
"Daily Balance" means the amount of the
Obligations owed at the end of a given day.
"Debt Service Ratio" means in any period the ratio
of (a) the sum of Borrowers' net profits, depreciation,
amortization and interest expense to (b) the interest and
principal payments due on the current portion of any long term
debt, including payments due on any equipment leases.
"Equipment" means all of each Borrower's
equipment, whether currently leased or owned or hereafter
acquired, and wherever located, including without limitation all
fixtures and motor vehicles, and all substitutions, replacements,
accessories, additions, attachments, improvements, accessions,
Proceeds and products of the foregoing.
"ERISA" means the Employment Retirement Income
Security Act of 1974, as amended, and the regulations thereunder.
"Exchange Contracts" has the meaning ascribed by
Section 2.1.3 of this Agreement.
"Exchange Contracts Reserve" means at any time an
amount equal to ten percent (10%) of the face amount of
outstanding Exchange Contracts.
"Foreign Account" means an Account owed by an
account debtor whose principal place of business is not located
in the United States of America or Canada.
"GAAP" means generally accepted accounting
principles as in effect from time to time, consistently applied.
"General Intangibles" means and includes all of
the following in which any Borrower has or hereafter acquires an
interest (other than the Accounts and the Negotiable Assets): all
general intangibles and other intangible personal property
(including, without limitation, all licenses, other contract
rights, claims, causes of action, goodwill, patents, copyrights,
mask works, trade names, trademarks, service names, service
marks, applications, registrations and applications for
registration of any of the foregoing, trade secrets, blueprints,
drawings, designs, models, purchase orders, customer lists
computer programs, software, source code, object code, computer
discs, computer tapes, literature, reports, royalties, insurance
policies, and tax refunds, all Proceeds of the foregoing, and
Borrower's Books relating to the foregoing.
"Indebtedness" means (a) all Indebtedness for
borrowed money or the deferred purchase price of property or
services, including, without limitation, reimbursement and other
obligations with respect to surety bonds and letters of credit,
(b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (c) all capital lease obligations and (d)
all Contingent Obligations.
"Insolvency Proceeding" means any proceeding
commenced by or against any Person under any provision of the
United States Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions,
extension generally with its creditors, or proceedings seeking
reorganization, discharge, arrangement, or other relief.
"Inventory" means all inventory in which any
Borrower has any interest, either currently or hereafter, and
wherever located, including goods held by any Borrower for sale
or lease or to be furnished under a contract for services, new or
raw product and materials, components, work-in-process, finished
goods, labels and other package dress, advertising material and
packing and shipping materials, any documents of title
representing any of the above, any returns, insurance proceeds
or other Proceeds, and Borrower's Books relating to any of the
foregoing.
"Investment" means any beneficial ownership
(including without limitation any partnership interest or any
debt or equity securities) in or of any Person, or any loan,
advance or capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"L/C Agreement" means an application for letter of
credit and agreement for the issuance by Bank of a letter of
credit for the account of any Borrower.
"Lien" means any mortgage, lien, deed of trust,
security interest or other encumbrance.
"Liquidity Position" at any time means the sum of
Borrowers' unrestricted cash plus the amount then available to
Borrowers for Advances under the Revolving Facility.
"Loan Documents" means, collectively, this
Agreement, the L/C Agreements, the Exchange Contracts, and any
other instrument, agreement, certificate or other document
executed by any Borrower in connection with any of them, all as
amended or extended from time to time.
"Material Adverse Effect" means a material adverse
effect on (i) the business operations or condition of Borrowers
and their Subsidiaries taken as a whole, (ii) the ability of
Borrowers to repay the Obligations or otherwise perform their
obligations under the Loan Documents, (iii) the validity or
enforceability of the Loan Documents, or (iv) the rights or
remedies of Bank under the Loan Documents.
"Maturity Date" means January 28, 1999.
"Negotiable Assets" means all present and future
letters of credit, notes, drafts, other instruments, securities,
documents of title, and chattel paper issued to or for the
benefit of each Borrower, and Borrower's Books relating to any of
the foregoing.
"Obligations" means all principal, interest, Bank
Expenses, Contingent Obligations, and other Indebtedness and
other obligations owed to Bank by each Borrower pursuant to this
Agreement, any other Loan Document, or any other instrument or
agreement, whether absolute or contingent, due or to become due,
now existing or hereafter arising (including all interest
accruing after the commencement of an Insolvency Proceeding), and
including any Indebtedness by each Borrower to others that shall
have been assigned, indorsed or transferred to Bank.
"Overadvance" has the meaning ascribed by Section
2.5 of this Agreement.
"Overdrafts" means at any time the aggregate
overdrafts in all deposit accounts of Borrowers and their
Subsidiaries with Bank without credit or offset for any credit
balance in any other such deposit account.
"Periodic Payments" means all installments or
similar recurring payments that any Borrower is or may hereafter
become obligated to pay to Bank pursuant to this Agreement or any
other instrument or agreement now or hereafter in existence
between any Borrower and Bank.
"Permitted Indebtedness" means:
(a) Indebtedness of Borrowers in favor of
Bank arising under this Agreement or any other Loan Document;
(b) Subordinated Debt;
(c) Capital leases or Indebtedness incurred
solely to purchase equipment, provided that any security therefor
complies with clause (c) of the definition of "Permitted Liens"
below, and provided further that it does not exceed the lesser of
the purchase price of such equipment or the fair market value of
such equipment on the date of acquisition;
(d) Indebtedness to trade creditors incurred
in the ordinary course of business; and
(e) Reasonable obligations to indemnify
officers, directors and employees of Borrowers.
"Permitted Investment" means securities issued by
the United States of America or securities rated as "A" or higher
by ▇▇▇▇▇'▇ or Standard & Poor's, or an equivalent rating.
"Permitted Liens" means the following:
(a) Any Liens in favor of Bank arising under
this Agreement or the other Loan Documents;
(b) Liens for taxes, fees, assessments or
other governmental charges or levies, either not delinquent or
being contested in good faith by appropriate proceedings,
provided the same have no priority over any of Bank's security
interests;
(c) Liens upon or in any equipment acquired
or leased by any Borrower or any Subsidiary to secure the
purchase price of such equipment or Indebtedness incurred solely
for the purpose of financing the acquisition or leasing of such
equipment or existing on such equipment at the time of
acquisition, provided that the Lien is confined solely to the
property so acquired and improvements thereon, and the proceeds
of such equipment;
(d) Liens incurred in connection with the
extension, renewal or refinancing of the Indebtedness secured by
Liens of the type described in clauses (a) through (c) above and
(h) below, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the Indebtedness being extended,
renewed or refinanced does not increase;
(e) Liens of materialmen, mechanics,
warehousemen, carriers, or employees or other like Liens arising
in the ordinary course of business and securing obligations
either not delinquent or being contested in good faith by
appropriate proceedings;
(f) Any judgment, execution, attachment or
similar Lien, provided that the obligation it secures is fully
covered by insurance, or such Lien is fully discharged within 30
days of the entry thereof;
(g) Easements, rights of way, servitudes or
zoning or building restrictions and other minor encumbrances on
real property and irregularities in the title to such property
which do not in the aggregate materially impair the use or value
of such property or risk the loss of forfeiture of title thereto;
(h) Liens on assets of corporations which
become Subsidiaries of any Borrower after the date hereof,
provided that such Liens existed at the time the respective
corporations became Subsidiaries and were not created in
anticipation thereof;
(i) Liens which constitute banker's liens,
rights of set-off or similar rights and remedies as to deposit
accounts or other funds maintained with any bank or other
financial institution, whether arising by operation of law or
pursuant to contract; provided that (i) such deposit account is
not a dedicated cash collateral account; and (ii) such deposit
account is not intended by Borrowers to provide collateral to the
depository institution; and (iii) such Lien is not prior to
Bank's Liens created under this Agreement; and
(j) Any financing statement filed in
connection with an operating lease not intended to be a secured
financing.
"Person" means any individual, sole
proprietorship, limited liability company, partnership, joint
venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity, government or governmental agency.
"Prime Rate" means at any time the variable rate
of interest per annum most recently announced by Bank as its
"prime rate," whether or not such announced rate is the lowest
rate available from Bank.
"Proceeds" means (a) any dividends, interest,
rent, profits, royalties, distributions or other income from any
of Borrower's Assets; or (b) whatever is due or received upon the
sale, lease, exchange, collection, liquidation or other
disposition of any of Borrower's Assets or proceeds, including,
without limitation, proceeds of insurance covering Borrower's
Assets and tax refunds; or (c) all products and proceeds of any
of Borrower's Assets.
"Quick Assets" means the consolidated cash, cash
equivalents, Accounts and short-term investments of Borrowers
determined in accordance with GAAP at any time.
"Responsible Officer" means each of the Chief
Executive Officer, Chief Financial Officer, and Corporate
Controller of UC, and such other officers of Borrowers as may be
designated by UC in a manner satisfactory to Bank.
"Revolving Facility" means the facility under
which Borrowers may request Bank to issue Advances and letters of
credit and enter into Exchange Contracts as provided in Section
2.1 hereof.
"Subordinated Debt" means Indebtedness of any
Borrower that is expressly and legally subordinated in right and
priority of payment to the Obligations.
"Subsidiary" means any Person in which any
Borrower owns, either directly or through an Affiliate: (a) any
general partnership interest; or (b) any interest that would give
any Borrower power to elect 50% or more of the Board of
Directors, managers or trustees; or (c) any other controlling
interest.
"Tangible Net Worth" means the consolidated total
assets of Borrowers and their Subsidiaries minus, without
duplication: (i) the sum of any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount
and expense, patents, trade and service marks and names,
copyrights and research and development expenses except prepaid
expenses, (c) all Indebtedness owed to each Borrower and each
Subsidiary by any Affiliate thereof, and (d) all reserves not
already deducted from assets; and (ii) Total Liabilities.
"Total Liabilities" means all obligations that
should in accordance with GAAP be classified as liabilities on
the consolidated balance sheet of Borrowers, including in any
event all Indebtedness, but specifically excluding Subordinated
Debt.
"UC" means Uniphase Corporation, one of the
Borrowers.
"UL" means Uniphase Ltd., one of the Borrowers.
"Ultrapointe" means Ultrapointe Corporation, one
of the Borrowers.
"UTP" means Uniphase Telecommunications Products,
Inc., one of the Borrowers.
"UV" means Uniphase Vertriebs GmbH, one of the
Borrowers.
1.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP and all calculations made hereunder shall be made in
accordance with GAAP. When used herein, the terms "financial
statements" shall include the notes and schedules thereto.
1.3 Code Terms. All terms which are defined in the
Code but which are not expressly defined in this Agreement shall
have the meanings ascribed to them by the Code.
2. LOANS AND TERMS OF PAYMENT
2.1 Revolving Facility.
2.1.1 Advances; Maturity.
(a) Subject to and upon the terms and
conditions of this Agreement, Bank agrees to make Advances to
Borrowers in an aggregate amount not to exceed Five Million
Dollars ($5,000,000), minus the sum of (i) the aggregate face
amount of all outstanding letters of credit (including drawn but
unreimbursed letters of credit), plus (ii) the Exchange Contracts
Reserve; plus (iii) Overdrafts. Subject to the terms and
conditions of this Agreement, amounts borrowed pursuant to this
Section 2.1 may be repaid and reborrowed at any time during the
term of this Agreement.
(b) Whenever a Borrower desires an Advance,
UC shall notify Bank by facsimile transmission or telephone no
later than 3:00 p.m. California time on the Business Day that the
Advance is to be made. Each such notification shall be promptly
confirmed by UC on Bank's form of loan disbursement order. Bank
is authorized to make Advances under this Agreement, based upon
instructions received from a Responsible Officer, or without such
instructions if in Bank's discretion such Advances are necessary
to meet Obligations which have become due and remain unpaid.
Bank shall be entitled to rely on any telephonic or other notice
given by a person whom Bank reasonably believes to be a
Responsible Officer, and Borrowers shall indemnify and hold Bank
harmless against any damages or loss (including legal fees and
costs) suffered by Bank as a result of such reliance or any act
or failure to act. Bank may, at its option, credit the amount of
Advances made under this Section 2.1 to the appropriate
Borrower's designated primary deposit account.
(c) Bank may decline to make any Advance, or
extend any other credit under this Agreement pending receipt of
such additional information as Bank may request.
(d) The Revolving Facility shall terminate
on the Maturity Date, at which time all Advances under this
Section 2.1.1 and all other Obligations (except reimbursement
obligations with respect to outstanding Letters of Credit) shall
be due and payable immediately. No letter of credit shall be
issued and no Exchange Contract shall be entered into after the
Maturity Date.
2.1.2 Letters of Credit.
(a) Subject to the terms and conditions of
this Agreement, Bank agrees to issue or cause to be issued
letters of credit for the account of a Borrower in an aggregate
face amount not to exceed Five Million Dollars ($5,000,000),
minus the sum of (i) the outstanding aggregate balance of the
Advances, plus (ii) the Exchange Contracts Reserve; plus (iii)
Overdrafts. Each letter of credit shall have an expiry date no
later than ninety (90) days after the Maturity Date; provided
that Bank shall retain its Lien on the Collateral to secure all
Obligations for so long as any letter of credit is outstanding.
Each letter of credit issued hereunder shall be, in form and
substance, and in favor of a beneficiary, acceptable to Bank in
its sole discretion. All drawn but unreimbursed letters of
credit shall bear interest in accordance with Section 2.2.
(b) Borrowers shall indemnify, defend and
hold Bank harmless from any loss, cost, expense or liability,
including, without limitation, reasonable attorneys' fees arising
out of or in connection with any letters of credit.
(c) With respect to each letter of credit
issued hereunder, the Borrower that is the customer, shall
execute an L/C Agreement. Each letter of credit shall be
governed by the applicable L/C Agreement and this Agreement. In
the event of any inconsistency, the L/C Agreement shall control.
Without limiting the terms of any L/C Agreement, Borrowers shall
pay all standard fees and charges of Bank with respect to the
letters of credit.
2.1.3 Foreign Exchange Contracts.
(a) Subject to the terms of this Agreement,
Bank shall sell to or purchase from a Borrower foreign currency
on a spot or future basis pursuant to foreign exchange contracts
executed by that Borrower and Bank (the "Exchange Contracts").
The Exchange Contracts Reserve shall not exceed Five Million
Dollars ($5,000,000), minus the sum of (i) the outstanding
aggregate balance of the Advances, plus (ii) the aggregate face
amount of all outstanding letters of credit issued hereunder
(including drawn but unreimbursed letters of credit); plus (iii)
Overdrafts. All Exchange Contracts shall provide for delivery or
settlement on or before the Maturity Date.
(b) In its discretion, Bank may terminate
any Exchange Contract at any time after an Event of Default. If
Bank terminates an Exchange Contract, Borrowers agree, without
limitation of any applicable indemnities, to reimburse Bank for
any and all fees, costs and expenses relating thereto or arising
in connection therewith.
(c) One of the Borrowers shall execute all
standard form applications and agreements of Bank in connection
with the Exchange Contracts. Without limiting any of the terms
of such applications and agreements, Borrowers shall pay all
standard fees and charges of Bank in connection with the Exchange
Contracts.
2.2 Interest Rates, Payments, and Calculations.
2.2.1 Interest Rates. Except as set forth in
Section 2.2.2, all Advances under the Revolving Facility shall
bear interest on the average Daily Balance thereof at the Prime
Rate.
2.2.2 Default Rate. All outstanding
Obligations shall bear interest, from and after the occurrence of
an Event of Default, at a rate equal to five percentage points
(5%) above the interest rate otherwise applicable under this
Agreement from time to time.
2.2.3 Interest Payments. All interest under this
Agreement shall be due and payable on the fifteenth (15th)
calendar day of each month until all Obligations hereunder have
been paid in full. Bank may, at its option, debit such interest
payments, all Bank Expenses, and all Periodic Payments against
any deposit account of any Borrower or charge such interest as an
Advance under the Revolving Facility, in which case such Advance
shall thereafter accrue interest at the rates applicable
hereunder. As part of the Obligations, any interest not paid
when due shall be compounded, and shall accrue interest at the
rates applicable hereunder.
2.2.4 Computation. As the Prime Rate is changed
from time to time, the applicable rates of interest hereunder
shall be increased or decreased effective as of 12:01 a.m. on the
day the Prime Rate is changed, by an amount equal to such change
in the Prime Rate. All interest under this Agreement shall be
computed on the basis of a three hundred sixty (360)-day year for
the actual number of days elapsed.
2.3 Crediting Payments. The receipt by Bank of any
wire transfer of funds, check, or other item of payment shall be
applied promptly to conditionally reduce Obligations, but shall
not be considered a payment on account unless such payment is of
immediately available federal funds and is made to the
appropriate deposit account of Bank or unless and until such
check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary provided
herein, any wire transfer or payment received by Bank after 11:00
a.m. California time shall be deemed to have been received by
Bank as of the opening of business on the immediately following
Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of
acceleration) on a date that is not a Business Day, such payment
shall instead be due on the next Business Day, and additional
fees or interest, as the case may be, shall accrue and be payable
for the period of such extension.
2.4 Fees and Expenses.
2.4.1 Fees. Borrowers shall pay to Bank the
following:
(a) Loan Commitment Fee. Upon the execution
of this Agreement, a loan commitment fee of Twenty Thousand
Dollars ($20,000). The loan commitment fee is in consideration
of Bank's entering into this Agreement and is refundable to
Borrowers only in the event the loan fails to close. In such
event, the loan commitment fee shall be refunded to Borrowers,
less the amount of Bank Expenses incurred to date.
(b) Financial Examination and Appraisal
Fees. Upon delivery by Bank of a statement to any Borrower,
Bank's customary fees and out-of-pocket expenses for Bank's
audits of the Accounts, and for each appraisal of Collateral and
financial analysis and examination of Borrowers performed from
time to time by Bank or its agents.
(c) Bank Expenses. Upon the date hereof,
all Bank Expenses incurred through the date hereof, including
reasonable attorneys' fees and expenses, and after the date
hereof, all Bank Expenses promptly upon delivery to any Borrower
of a statement therefor.
2.4.2 Additional Costs. Bank shall notify
Borrowers of, and Borrowers agree to pay to Bank, promptly upon
demand by Bank, the amount of any increase in cost, reduction in
income or additional expense to Bank associated with any law,
regulation, treaty or official directive or the interpretation or
application thereof by any court or any governmental authority
charged with the administration thereof or the compliance with
any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):
(a) that subjects Bank to any tax with
respect to payments of principal or interest or any other amounts
payable hereunder by any Borrower or otherwise with respect to
the transactions contemplated hereby (except for taxes on the
overall net income of Bank imposed by the United States of
America or any political subdivision thereof);
(b) that imposes, modifies or deems
applicable any deposit insurance, reserves special deposit or
similar requirement against assets held by Bank, or deposits in
or for the account of Bank, or loans by Bank; or
(c) that imposes upon Bank any other
condition with respect to its performance under this Agreement;
if the result of any of the foregoing is to
increase the cost to Bank, reduce the income receivable by Bank
or impose any expense upon Bank with respect to the Obligations.
Bank shall present a statement of the amount
of additional costs or reduction in income and set forth Bank's
calculation thereof, which statement shall be deemed true and
correct absent manifest error.
2.5 Overadvances. "Overadvance" means at any time the
excess over $5,000,000 of the sum of (a) aggregate outstanding
Advances, plus (b) the aggregate face amount of outstanding
letters of credit (including drawn but unreimbursed letters of
credit), plus (c) the Exchange Contracts Reserve, plus (d)
Overdrafts. Borrowers shall immediately pay to Bank in cash the
amount of any Overadvance. Alternatively, at its option, Bank
may debit the amount of any Overadvances against any deposit
account of any Borrower.
2.6 Term. Subject to the provisions of Sections
2.1.1(d), this Agreement shall become effective on the date
hereof and shall continue in full force and effect for a term
ending on the later of the date that all Obligations have been
satisfied or the Maturity Date. Notwithstanding the foregoing,
Bank's obligation to make Advances or to extend other credit
under this Agreement shall terminate immediately upon an Event of
Default. After an Event of Default, at Bank's election, all
Obligations shall become due and payable immediately.
Notwithstanding maturity or termination, Bank shall retain its
Lien on the Collateral to secure satisfaction of all Obligations.
3. CONDITIONS OF LOANS
3.1 Conditions Precedent to Initial Advance. The
obligation of Bank to make the initial Advance or other extension
of credit is subject to the condition precedent that Bank shall
have received, fully executed and in form and substance
satisfactory to Bank, each of the following:
(a) this Agreement;
(b) a certificate of the Secretary of Borrower
with respect to incumbency and resolutions authorizing the
execution and delivery of this Agreement;
(c) financing statements (Form UCC-1) for filing
with the California Secretary of State and all other
jurisdictions where necessary to perfect Bank's security
interests;
(d) an insurance certificate;
(e) proof of insurance, disbursement request and
authorization, loan disbursement orders and a compliance
certificate; and
(f) such other documents, and completion of such
other matters, as Bank may deem reasonably necessary or
appropriate.
As additional conditions precedent to the initial
Advance or other extension of credit under the Revolving
Facility, Bank shall have (i) received payment of all fees and
Bank Expenses then due as set forth in Section 2.4 hereof, and
(ii) completed its due diligence inquiry, including, without
limitation, its accounts receivable audit and its environmental
audit, and such inquiry resulted in the discovery of no facts or
circumstances which would negatively affect, or tend to
negatively affect, in Bank's sole discretion, the collectability
of the Obligations.
3.2 Conditions Precedent to all Advances. The
obligation of Bank to make each Advance, or other extension of
credit, including the initial one, is further subject to the
conditions that (a) the representations and warranties set forth
in Section 5 shall be true and correct in all material respects
on the effective date of each Advance or other extension of
credit as though made at and as of each such date; (b) Bank shall
have timely received the statements, reports and certificates
specified in Section 6.3; and (c) no Event of Default shall have
occurred and be continuing, or would exist immediately after
giving effect to such Advance or other extension of credit. The
request or acceptance of each Advance or other extension of
credit shall be deemed to be a representation and warranty by
each Borrower on the date of such request or acceptance as to the
accuracy of the facts referred to in this Section 3.2.
4. CREATION OF SECURITY INTEREST
4.1 Grant of Security Interest. Each Borrower grants
to Bank a continuing security interest in all presently existing
and hereafter acquired or arising Collateral in order to secure
prompt repayment of any and all Obligations and in order to
secure prompt performance by Borrowers of each of their covenants
and duties under the Loan Documents. Except for Permitted Liens,
such security interest constitutes a valid, first-priority
security interest in all presently existing Collateral, and will
constitute a valid, first-priority security interest in all
Collateral acquired after the date hereof.
4.2 Delivery of Additional Documentation Required.
Borrowers shall execute and deliver to Bank all financing
statements and other documents in form satisfactory to Bank that
Bank may reasonably request from time to time to perfect and
continue perfected Bank's security interests in the Collateral
and in order to fully consummate all of the transactions
contemplated under the Loan Documents.
4.3 Right to Inspect. Upon reasonable prior notice,
from time to time during usual business hours, Bank (through any
of its officers, employees, or agents) shall have the right to
inspect Borrower's Books and to make copies thereof and to
inspect, photograph, test, and appraise the Collateral in order
to verify Borrowers' financial condition or the amount, condition
of, or any other matter relating to the Collateral.
5. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Bank as
follows:
5.1 Due Organization and Qualification. Each Borrower
and each Subsidiary is a corporation duly existing and in good
standing under the laws of the jurisdiction of its incorporation,
and is qualified and licensed to do business in, and is in good
standing in, each jurisdiction in which the conduct of its
business or its ownership of property requires that it be so
qualified.
5.2 Due Authorization; No Conflict. The execution,
delivery, and performance of the Loan Documents are within
Borrowers' powers, have been duly authorized, and are not in
conflict with nor constitute a breach of any provision contained
in any Borrower's articles of incorporation or bylaws, nor will
they constitute an event of default under any material agreement
to which any Borrower is a party or by which any Borrower is
bound. No Borrower is in default under any instrument or
agreement to which it is a party or by which it is bound, which
default could have a Material Adverse Effect.
5.3 No Prior Encumbrances. Borrowers are the sole
owners of and have good and indefeasible title to all of
Borrower's Assets (except leased Equipment) free and clear of
Liens, except for Permitted Liens.
5.4 Bona Fide Accounts. The Accounts are bona fide
existing obligations of Borrowers' account debtors, created by
the sale, lease or licensing of property or the rendering of
services to account debtors in the ordinary course of Borrowers'
business, and are unconditionally owed to one of the Borrowers.
The property giving rise to the Accounts has been delivered to
the account debtor or to the account debtor's agent for immediate
shipment to and unconditional acceptance by the account debtor.
5.5 Merchantable Inventory. All Inventory is in
all material respects of good and marketable quality, free from
all material defects.
5.6 Name; Location of Chief Executive Office. No
Borrower has done business under any name other than those
specified on the signature page hereof. The chief executive
offices of Borrowers are located at the following addresses:
Uniphase Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Uniphase Telecommunications Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ultrapointe Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Uniphase Vertriebs GmbH
_________________________________________
_________________________________________
Uniphase Ltd.
_________________________________________
_________________________________________
5.7 Litigation. There are no actions or proceedings
pending by or against any Borrower or any Subsidiary before any
court or other forum in which an adverse decision would have a
Material Adverse Effect or a material adverse effect on
Borrowers' interest or Bank's security interest in the
Collateral. No Borrower has knowledge of any such pending or
threatened actions or proceedings.
5.8 No Material Adverse Change in Financial
Statements. All consolidated financial statements related to
Borrowers that have been delivered by any Borrower to Bank fairly
present in all material respects Borrowers' consolidated
financial condition as of the date thereof and Borrowers'
consolidated results of operations for the period then ended.
There has been no change that would have a Material Adverse
Effect on the consolidated financial condition of Borrowers since
the date of the most recent of such financial statements
submitted to Bank.
5.9 Solvency. Each Borrower is solvent and able to
pay its Indebtedness (including trade debts) as it matures.
5.10 Regulatory Compliance. Each Borrower and each
Subsidiary has met the minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA. No event
has occurred resulting from a failure to comply with ERISA that
is reasonably likely to result in any liability that could have a
Material Adverse Effect. No Borrower is an "investment company"
or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940. No Borrower is
engaged principally, or as one of the important activities, in
the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations G, T and
U of the Board of Governors of the Federal Reserve System). Each
Borrower has complied with all provisions of the Federal Fair
Labor Standards Act and has complied with all other statutes,
laws, ordinances, and government rules and regulations to which
it is subject, non-compliance with which could have a Material
Adverse Effect or a material adverse effect on the Collateral or
the priority of Bank's Lien on the Collateral.
5.11 Environmental Condition. No facilities,
properties or assets of any Borrower or any Subsidiary have been
used by them or by previous owners or operators in the disposal
of, or to produce, store, handle, treat, release, or transport,
any hazardous waste or hazardous substance other than in
accordance with applicable law. None of Borrowers' facilities,
properties or assets has ever been designated or identified in
any manner pursuant to any environmental protection statute as a
hazardous waste or hazardous substance disposal site, or a
candidate for closure pursuant to any environmental protection
statute; no lien arising under any environmental protection
statute has attached to any revenues or to any real or personal
property owned by Borrower or any Subsidiary; and no Borrower or
Subsidiary has received a summons, citation, notice, or directive
from the Environmental Protection Agency or any other federal or
state governmental agency concerning any action or omission by
any Borrower or any Subsidiary relating to the release or
disposal of hazardous waste or hazardous substances except in
each case where the failure of any of the foregoing to be true
and correct could not reasonably be expected to have a Material
Adverse Effect or a material adverse effect on the Collateral or
the priority of the Bank's Lien on the Collateral.
5.12 Taxes. Each Borrower and each Subsidiary has
filed or caused to be filed all tax returns required to be filed,
and has paid, or has made adequate provision for the payment of,
all taxes reflected therein.
5.13 Subsidiaries. No Borrower owns any stock,
partnership interest or other equity securities of any Person,
except for Permitted Investments.
5.14 Government Consents. Each Borrower and each
Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and
given all notices to, all governmental authorities that are
necessary for the continued operation of each Borrower's business
as currently conducted except in each case where the failure of
any of the foregoing to be true and correct could not reasonably
be expected to have a Material Adverse Effect.
5.15 Full Disclosure. No representation, warranty,
disclosure, or other statement made by any Borrower in any
certificate, oral statement, or written statement furnished to
Bank is false, is misleading, contains any untrue statement of a
material fact, or omits to state a material fact as of the date
such representation, warranty, disclosure, or statement is made.
5.16 Mutual Benefit. Borrowers are engaged in a common
enterprise. UC, UCP and Ultrapointe design and manufacture
products which they, UV and UL market and sell. Each Borrower
depends on the vitality and success of the other. Each Borrower
will benefit by the extension of credit by Bank to the others.
6. AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, for so long as
Bank has any commitment to make an Advance hereunder, and until
payment in full of all outstanding Obligations, each Borrower
shall do all of the following:
6.1 Good Standing. Each Borrower shall maintain its
and each of its Subsidiaries' corporate existence and good
standing in its jurisdiction of incorporation and maintain
qualification in each jurisdiction in which the failure to so
qualify could have a Material Adverse Effect provided that each
Borrower and each of its Subsidiaries shall at all times be
permitted to merge with a Subsidiary (as long as one of the
Borrowers remains the surviving entity) and acquire substantially
all the assets of a Subsidiary, and the Borrowers shall at all
times be permitted to dissolve any inactive or dormant
Subsidiaries. Each Borrower shall maintain and shall cause each
of its Subsidiaries to maintain in force all licenses, approvals
and agreements, the loss of which could have a Material Adverse
Effect.
6.2 Government Compliance. Each Borrower shall meet,
and shall cause each Subsidiary to meet, the minimum funding
requirements of ERISA with respect to any employee benefit plans
subject to ERISA. No Borrower has withdrawn from, and no
termination or partial termination has occurred with respect to
any deferred compensation plan, and no Borrower has withdrawn
from any multi-employer plan under ERISA. Each Borrower shall
comply, and shall cause each Subsidiary to comply, with all
statutes, laws, ordinances and government rules and regulations
to which it is subject, noncompliance with which could have a
Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Bank's Lien on the Collateral.
6.3 Financial Statements, Reports, Certificates.
Borrowers shall maintain a standard system of accounting in
accordance with GAAP. UC shall deliver to Bank, prepared in
accordance with GAAP, each of the following:
(a) Within twenty (20) days after the end of each
month, when any Obligations are outstanding under this Agreement,
an aged listing of Accounts and accounts payable of each
Borrower, all in form and substance acceptable to Bank;
(b) Within fifty (50) days after the end of each
quarter a statement of the financial condition of Borrowers for
such quarter, including but not limited to, a balance sheet and
income statement, prepared by Borrowers and certified as accurate
by a Responsible Officer, together with its report to the
Securities and Exchange Commission on Form 10Q;
(c) Within ninety-five (95) days after the end of
each fiscal year, a consolidated statement of the financial
condition of Borrowers for such fiscal year, including but not
limited to a long-form balance sheet and profit and loss
statement, audited by certified public accountants acceptable to
Bank, and an unqualified opinion of such accountants with respect
to such statement, together with its report to the Securities and
Exchange Commission on Form 10K;
(d) Within five (5) days after they are filed or
sent to such holders, copies of all statements, reports and
notices sent or made available generally by each Borrower to its
securities holders or to any holders of Subordinated Debt;
(e) Within twenty (20) days after and as of the
end of each month, within fifty (50) days after and as of the end
of each quarter, and within ninety-five (95) days after and as of
the end of fiscal each year, a certificate of compliance signed
by a Responsible Officer in form and substance acceptable to Bank
which certifies that Borrowers have complied with the financial
reporting requirements in this Section 6.3;
(f) Promptly upon receipt of notice thereof, a
report of any legal actions pending or threatened against any
Borrower or any Subsidiary that could result either in injunctive
relief or in damages or costs to any Borrower or any Subsidiary
of One Hundred Thousand Dollars ($100,000) or more; and
(g) Such other budgets, reports, sales
projections, operating plans or other information as Bank may
reasonably request from time to time with respect to Borrower's
Assets or each Borrower's operations, financial condition or
performance.
Borrowers shall maintain as Bank's custodian
copies of their sales journals, customer purchase orders and
evidence of shipping arrangements, and shall deliver copies
thereof to Bank at Bank's request. Bank shall have a right from
time to time hereafter to conduct a field exam and to audit the
Accounts and Inventory at Borrowers' expense, provided that such
audits will be conducted no more often than every twelve (12)
months unless an Event of Default has occurred and is continuing.
Bank may destroy or otherwise dispose of any documents delivered
to Bank six (6) months after Bank's receipt thereof unless
Borrowers make written request therefor.
6.4 Inventory. Borrowers shall keep all Inventory in
good and marketable condition, free from all material defects.
Returns and allowances, if any, as between Borrowers and their
account debtors shall be on the same basis and in accordance with
the usual customary practices of Borrowers, as they exist at the
time of the execution and delivery of this Agreement. Borrowers
shall promptly notify Bank of all returns and recoveries and of
all disputes and claims, where the return, recovery, dispute or
claim involves more than Fifty Thousand Dollars ($50,000).
6.5 Taxes. Borrowers shall make, and shall cause each
Subsidiary to make, due and timely payment or deposit of all
federal, state, and local taxes, assessments, and contributions
required by law, and shall execute and deliver to Bank, on
demand, appropriate certificates attesting to the payment or
deposit thereof; and Borrowers shall make, and shall cause each
Subsidiary to make, timely payment or deposit of all withholding
taxes required by applicable laws, including, but not limited to,
those laws concerning F.I.C.A., F.U.T.A., state disability, and
local, state, and federal income taxes, and shall, upon request,
furnish Bank with proof satisfactory to Bank indicating that each
Borrower and Subsidiary has made such payments or deposits;
provided that such payments need not be made if the amount or
validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent
required by GAAP) by Borrowers.
6.6 Insurance. Borrowers, at their expense, shall
keep the Borrower's Assets other than Accounts insured against
loss or damage by fire, theft, explosion, sprinklers, and such
other hazards and risks, and in such amounts, as are ordinarily
insured against by similar businesses conducted in the locations
where Borrowers' business is conducted. Borrowers shall also
maintain liability, workers' compensation and other insurance
relating to Borrowers' business and the ownership of Borrower's
Assets (other than Accounts) in amounts and of a type that are
customary to similar businesses.
All such policies of insurance shall insure against
such risks, shall be in such form, with such companies, and in
such amounts as reasonably satisfactory to Bank. All such
policies of property insurance shall contain a lender's loss
payable endorsement, in a form satisfactory to Bank, showing Bank
as an additional loss payee thereof and all liability insurance
policies shall show the Bank as an additional insured, and shall
specify that the insurer must give at least twenty (20) days
notice to Bank before canceling its policy for any reason.
Borrowers shall deliver to Bank certified copies of such policies
of insurance and evidence of the payments of all premiums
therefor. All proceeds payable under any such policy shall, at
the option of Bank, be payable to Bank to be applied on account
of the Obligations.
6.7 Principal Depository. Until all Obligations have
been fully satisfied, UC, UTP and Ultrapointe shall maintain
their primary depository and operating accounts with Bank and
shall designate a primary deposit account from which interest
payments shall be debited automatically by Bank pursuant to
Section 2.2.2 of this Agreement.
6.8 Financial Covenants.
(a) Profitability. Borrowers shall be profitable
on an annual basis, and, on a rolling four-quarter basis,
Borrowers shall not incur a loss in more than one quarter.
Expenses related to acquisitions shall not be included in the
determination of profitability.
(b) Debt-Net Worth Ratio. Borrowers shall have,
on the last day of each quarter commencing with the quarter
ending March 31, 1997, a ratio of Total Liabilities to Tangible
Net Worth of not more than 1.0 to 1.0.
(c) Tangible Net Worth. Borrowers shall have, on
the last day of each quarter commencing with the quarter ending
March 31, 1997, a Tangible Net Worth of not less than Forty
Million Dollars ($40,000,000).
(d) Quick Ratio. Borrowers shall have, on the
last day of each quarter commencing with the quarter ending March
31, 1997, a ratio of Quick Assets to Current Liabilities of at
least 1.5 to 1.0.
6.9 Further Assurances. At any time and from time to
time Borrowers shall execute and deliver such further instruments
and take such further action as may reasonably be requested by
Bank to effect the purposes of this Agreement.
7. NEGATIVE COVENANTS
Each Borrower covenants and agrees that for so long as
Bank may have any commitment to make any Advances or to extend
any other credit, and until payment in full of the outstanding
Obligations, no Borrower shall do any of the following without
the express written consent of Bank:
7.1 Dispositions. Convey, sell, lease, transfer or
otherwise dispose of (collectively, a "Transfer"), or permit any
of its Subsidiaries to Transfer, all or any material part of its
business or property, other than (a) Transfers of Inventory in
the ordinary course of business, and (b) Transfers of Equipment
that has become worn out or obsolete or which is being replaced
promptly, and (c) other Transfers of Borrower's Assets outside
the ordinary course of business in an aggregate amount not to
exceed Fifty Thousand Dollars ($50,000) in any fiscal year,
provided that no Borrower shall Transfer any Accounts.
7.2 Change in Business. Suspend or go out of
business, engage in any business, or permit any of its
Subsidiaries to engage in any business, other than the businesses
currently engaged in by Borrowers and any business substantially
similar or related thereto (or incidental thereto), or suffer a
material change in any Borrower's ownership. No Borrower will,
without thirty (30) days prior written notification to Bank,
relocate its chief executive office.
7.3 Mergers or Acquisitions. Except as provided in
Section 6.1 above, merge or consolidate, or permit any of its
Subsidiaries to merge or consolidate, with or into any other
business organization, or acquire, or permit any of its
Subsidiaries to acquire, all or a substantial portion of the
capital stock or property of another Person.
7.4 Indebtedness. Create, incur, guarantee, assume or
be or remain liable with respect to any Indebtedness, or permit
any Subsidiary so to do, other than Permitted Indebtedness.
7.5 Encumbrances. Except for Permitted Liens, create,
incur, assume or suffer to exist any Lien on any of Borrower's
Assets, or assign or otherwise convey any right to receive
income, including any sale of any Accounts, or permit any of its
Subsidiaries to do any of the foregoing.
7.6 Distributions. Pay any dividends or make any
other distribution or payment on account of or in redemption,
retirement or purchase of any capital stock of any Borrower or
any Subsidiary.
7.7 Investments. Directly or indirectly acquire or
own, or make any Investment in or to any Person, or permit any of
its Subsidiaries so to do, other than Permitted Investments.
7.8 Transactions with Affiliates. Directly or
indirectly enter into or permit to exist any material transaction
with any Affiliate of any Borrower except for transactions that
are in the ordinary course of that Borrower's business, and are
upon fair and reasonable terms that are no less favorable to that
Borrower than would be obtained in an arm's length transaction
with a nonaffiliated Person.
7.9 Inventory. Store the Inventory with a bailee,
warehouseman, or similar party unless Bank has received a pledge
of the warehouse receipt covering such inventory. Except for
Inventory sold in the ordinary course of business, Borrowers
shall keep the Inventory only at the locations set forth in
Section 5.6 hereof and such other locations of which Borrowers
gives Bank prior written notice, except for Inventory on
consignment not to exceed Two Hundred Fifty Thousand Dollars
($250,000) in aggregate cost value and Inventory at customer sites
on demonstration status not to exceed Seven Hundred Fifty Thousand
Dollars ($750,000) in aggregate cost value, provided that in each
case Borrower has signed and filed a financing statement or other
document where needed to perfect Bank's security interest.
7.10 Compliance. Become an "investment company",
become controlled by an "investment company," within the meaning
of the Investment Company Act of 1940, or become principally
engaged in, or undertake as one of its important activities, the
business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for
such purpose. Fail to meet the minimum funding requirements of
ERISA, permit a Reportable Event or Prohibited Transaction, as
defined in ERISA, to occur, permit any condition to exist that
would entitle any Person to obtain a decree adjudicating that any
Plan under ERISA must be terminated, fail to comply with the
Federal Fair Labor Standards Act or violate any law or
regulation, which violation could have a Material Adverse Effect
or a material adverse effect on the Collateral or the priority of
Bank's Lien on the Collateral, or permit any of its Subsidiaries
to do any of the foregoing.
8. EVENTS OF DEFAULT
Any one or more of the following events shall
constitute an Event of Default by Borrowers under this Agreement:
8.1 Payment Default. Any Borrower shall fail to pay
any of the Obligations when due and payable;
8.2 Covenant Default. Any Borrower shall fail or
neglect to perform, keep, or observe any other term, provision,
condition, covenant, or agreement contained in this Agreement, in
any of the Loan Documents, or in any other present or future
agreement between that Borrower and Bank;
8.3 Material Adverse Effect. There shall occur an
event that has a Material Adverse Effect or a material impairment
of the value of the Collateral or the validity or priority of
Bank's security interest in the Collateral;
8.4 Attachment. Any material portion of Borrower's
Assets shall be attached, seized, subjected to a writ or distress
warrants or levied upon, or come into the possession of any
trustee, receiver or person acting in a similar capacity and such
attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or
any Borrower shall be enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any
part of its business affairs, or if a judgment or other claim
becomes a lien or encumbrance upon any portion of Borrower's
Assets, or a notice of lien, levy, or assessment shall be filed
of record with respect to any of Borrower's Assets by any
government or by any department, agency, or instrumentality
thereof, and the same is not paid within ten (10) days after any
Borrower receives notice thereof, (provided that Bank shall not
be obligated to make any Advances or other extensions of credit
during such cure period);
8.5 Insolvency. An Insolvency Proceeding shall be
commenced by any Borrower, or an Insolvency Proceeding shall be
commenced against any Borrower and is not dismissed or stayed
within ten (10) days (provided that Bank shall not be obligated
to make any Advances or other extensions of credit prior to the
dismissal of such Insolvency Proceeding);
8.6 Other Agreements. A default shall occur under any
agreement to which any Borrower is a party with any Person
resulting in a right by that Person, whether or not exercised, to
accelerate the maturity of any Indebtedness in an amount in
excess of Two Hundred Thousand Dollars ($200,000), or which default
could reasonably be expected to have a Material Adverse Effect;
8.7 Judgments. A judgment or judgments for the
payment of money in an amount, individually or in the aggregate,
of at least Two Hundred Fifty Thousand Dollars ($250,000) shall
be rendered against any Borrower and shall remain unsatisfied
and unstayed for a period of thirty (30) days (provided that Bank
shall not be obligated to make any Advances or other extensions
of credit prior to the satisfaction of such judgment); or
8.8 Misrepresentations. Any material
misrepresentation or misstatement shall exist now or hereafter in
any warranty, representation, or statement set forth herein or in
any certificate delivered to Bank by any Borrower or to induce
Bank to enter into this Agreement or any other Loan Document.
9. BANK'S RIGHTS AND REMEDIES
9.1 Rights and Remedies. Upon the occurrence and
during the continuance of an Event of Default, Bank may at its
election do any one or more of the following, all of which are
authorized by each Borrower:
(a) Accelerate and declare all Obligations,
whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable (provided
that upon the occurrence of an Event of Default described in
Section 8.5, all Obligations shall become immediately due and
payable without any action by Bank);
(b) Cease advancing money or extending credit to
or for the benefit of any Borrower under this Agreement, any
other Loan Document, or any other agreement between any Borrower
and Bank;
(c) Settle or adjust disputes and claims directly
with account debtors for amounts, upon terms and in whatever
order, that Bank reasonably considers advisable;
(d) Make such payments and do such acts as Bank
considers reasonable or necessary to protect its security
interest in the Collateral. Each Borrower agrees to assemble the
Collateral if Bank so requires, and to make the Collateral
available to Bank as Bank may designate. Each Borrower
authorizes Bank to enter the premises where the Collateral is
located, to take and maintain possession of the Collateral, or
any part of it, and to pay, purchase, contest, or compromise any
encumbrance, charge, or lien which in Bank's determination
appears to be prior or superior to its security interest and to
pay all expenses incurred in connection therewith. Each Borrower
hereby grants Bank a license to enter into possession of any of
Borrowers' facilities or premises and to occupy the same, without
charge, in order to exercise any of Bank's rights or remedies
provided herein, at law, in equity, or otherwise;
(e) Set off and apply to the Obligations any and
all (i) deposits or other property of any Borrower held by Bank,
or (ii) Indebtedness at any time owing to or for the credit or
the account of any Borrower held by Bank;
(f) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell
(in the manner provided for herein) any Collateral. Bank is
hereby granted a license or other right, solely pursuant to the
provisions of this Section 9.1, to use, without charge, each
Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service names,
service marks, and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral
and, in connection with Bank's exercise of its rights under this
Section 9.1, each Borrower's rights under all licenses and all
franchise agreements shall inure to Bank's benefit;
(g) Sell the Collateral at either a public or
private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such
places (including, without limitation, Bank's or any Borrower's
premises) as Bank determines is reasonable; and
(h) Credit bid and purchase at any public sale.
Any deficiency that exists after disposition of
the Collateral as provided above will be paid immediately by
Borrowers.
9.2 Power of Attorney. Each Borrower hereby
irrevocably appoints Bank (and any of Bank's designated officers,
or agents) as that Borrower's true and lawful attorney to: (a)
send requests for verification of Accounts or notify account
debtors of Bank's security interest in the Accounts; (b) endorse
each Borrower's name on any checks or other forms of payment or
security that may come into Bank's possession; (c) sign each
Borrower's name on any invoice or ▇▇▇▇ of lading relating to any
Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices
to account debtors; (d) make, settle, and adjust all claims under
and decisions with respect to each Borrower's policies of
insurance; and (e) settle and adjust disputes and claims
respecting the Accounts directly with account debtors, for
amounts and upon terms which Bank determines to be reasonable;
provided Bank may exercise such power of attorney to sign the
name of Borrower on any of the documents described in Section 4.2
regardless of whether an Event of Default has occurred. The
appointment of Bank as each Borrower's attorney in fact, and each
and every one of Bank's rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations have been
fully repaid and performed, and Bank's obligation to provide
Advances hereunder is terminated.
9.3 Accounts Collection. At any time on or after the
date of this Agreement, Bank may notify any Person owing funds to
any Borrower of Bank's security interest in such funds. Upon
such notification, each Borrower shall collect all amounts owing
to that Borrower for Bank, receive in trust all payments as
Bank's trustee, and immediately deliver such payments to Bank in
their original form as received from the account debtor, with
proper endorsements for deposit.
9.4 Bank Expenses. If any Borrower fails to pay any
amounts or furnish any required proof of payment due to third
persons or entities, as required under the terms of this
Agreement, then Bank may do any or all of the following: (a) make
payment of the same or any part thereof; (b) set up such reserves
under the Revolving Facility as Bank deems necessary to protect
Bank from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type discussed in Section 6.6
of this Agreement, and take any action with respect to such
policies as Bank deems prudent. Any amounts so paid or deposited
by Bank shall constitute Bank Expenses, shall be immediately due
and payable, and shall bear interest at the applicable rate
provided in Section 2.2, and shall be secured by the Collateral.
Any payments made by Bank shall not constitute an agreement by
Bank to make similar payments in the future or a waiver by Bank
of any Event of Default under this Agreement.
9.5 Bank's Liability for Collateral. So long as Bank
complies with reasonable banking practices, Bank shall not in any
way or manner be liable or responsible for: (a) the safekeeping
of the Collateral; (b) any loss or damage thereto occurring or
arising in any manner from any cause; (c) any diminution in the
value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person
whomsoever. All risk of loss, damage or destruction of the
Collateral shall be borne by Borrowers.
9.6 Remedies Cumulative. Bank's rights and remedies
under this Agreement, the Loan Documents, and all other
agreements shall be cumulative. Bank shall have all other rights
and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by Bank of one right or
remedy shall be deemed an election, and no waiver by Bank of any
Event of Default on the part of any Borrower shall be deemed a
continuing waiver. No delay by Bank shall constitute a waiver,
election, or acquiescence by Bank. No waiver by Bank shall be
effective unless in writing.
9.7 Demand; Protest; Application. Each Borrower
waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments,
chattel paper, and guaranties at any time held by Bank on which
any Borrower may in any way be liable. Each Borrower waives any
right to direct the application of any amount received by Bank.
10. NOTICES
Unless otherwise provided in this Agreement, all
notices or demands by any party relating to this Agreement or any
of the Loan Documents shall be in writing and (except for
financial statements and similar documents which may be sent by
first class mail, postage prepaid) shall be personally delivered;
or sent by a recognized, overnight delivery service; or by
certified mail, postage prepaid, return receipt requested; or by
facsimile confirmed by first class mail; in each case addressed
as follows:
If to any Borrower: Uniphase Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇,
Chief Financial Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Bank: Bank of the West
Technology Industries Group
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇
P.O. Box 1000, 7-064-2
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇
Vice President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The parties may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing
manner given to the other. Borrowers acknowledge and agree that
Bank may give all notices under this Agreement to UC alone, and
that such notice is sufficient to both Borrowers. UC represents
and warrants to Bank and to the other Borrowers that it will
promptly convey to the other Borrowers.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California,
without regard to principles of conflicts of law. Each of
Borrower and Bank hereby submits to the exclusive jurisdiction of
the state and Federal courts located in the County of Santa
▇▇▇▇▇, State of California. EACH BORROWER AND BANK HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR
ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON
LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT
THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO
ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS
THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT
IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS
12.1 Successors and Assigns. This Agreement shall bind
and inure to the benefit of the respective successors and
permitted assigns of each of the parties; provided, however, that
neither this Agreement nor any rights hereunder may be assigned
by any Borrower without Bank's prior written consent, which
consent may be granted or withheld in Bank's sole discretion.
Bank shall have the right without the consent of or notice to any
Borrower to sell, transfer, negotiate, or grant participations in
all or any part of, or any interest in, Bank's obligations,
rights and benefits hereunder.
12.2 Indemnification. Each Borrower shall defend,
indemnify and hold harmless Bank and its Affiliates, employees,
and agents against: (a) all obligations, demands, claims, and
liabilities claimed or asserted by any other party in connection
with the transactions contemplated by this Agreement; and (b) all
losses or Bank Expenses in any way suffered, incurred, or paid by
Bank as a result of or in any way arising out of, following, or
consequential to transactions between Bank and any Borrower
whether under this Agreement, or otherwise (including, without
limitation, reasonable attorneys' fees and expenses), except for
losses caused by Bank's gross negligence or willful misconduct.
12.3 Waivers, Etc.
(a) Each Borrower waives any right to require
Bank to: (i) proceed against any person, including any of the
other Borrowers; (ii) proceed against or exhaust any Collateral
or other security held from any of the Borrowers or any other
person; (iii) give notice of the terms, time and place of any
public or private sale of personal property security held from
any of the Borrowers or any other person, or otherwise comply
with any other provisions of Section 9504 of the California
Commercial Code; (iv) pursue any other remedy in Bank's power; or
(v) make any presentment, demands for performance, or give any
notices of nonperformance, protests, notices of protest or
notices of dishonor in connection with any of the Obligations or
Loan Documents, except as expressly required thereby.
(b) Each Borrower waives any defense arising by
reason of: (i) any disability or other defense of any of the
other Borrowers or any other person; (ii) the cessation from any
cause whatsoever, other than payment in full, of the Obligations
or any Indebtedness of any of the other Borrowers or any other
person; (iii) any lack of authority of any officer, director,
partner, agent or any other person acting or purporting to act on
behalf of any of the Borrowers which is a corporation,
partnership or other type of entity, or any defect in the
formation of any such Borrower; (iv) the application by any of
the Borrowers of any Advance for purposes other than the purposes
represented by any Borrower to Bank or intended or understood by
Bank or any other Borrower; (v) any act or omission by Bank which
directly or indirectly results in or aids the discharge of any
Borrowers or any Obligations by operation of law or otherwise; or
(vi) any modification of the Obligations or the Loan Documents,
in any form whatsoever, including without limitation the renewal,
extension, acceleration or other change in time for payment of
the Obligations or the Loan Documents, or other change in the
terms thereof, including increase or decrease of the rate of
interest thereon. Until all Obligations shall have been paid in
full, no Borrower shall have any right of subrogation and each
Borrower waives any defense it may have based upon an election of
remedies by Bank which destroys subrogation rights or its rights
to proceed against any of the other Borrowers for reimbursement.
Until all Obligations shall have been paid in full, each Borrower
further waives any right to enforce any remedy which Bank now has
or may hereafter have against any of the other Borrowers or any
other person, and waives any benefit of, or any right to
participate in any security whatsoever now or hereafter held by
Bank.
(c) Each Borrower authorizes Bank without notice
or demand and without affecting its other liability hereunder,
from time to time to: (i) alter, compromise, renew, extend,
accelerate or otherwise change the time for payment of, or
otherwise change the terms of the Obligations or the Loan
Documents or any part hereof, including increase or decrease of
the rate of interest thereon; (ii) take and hold security, other
than the Collateral, for the payment of the Obligations or any
part thereof and exchange, enforce, waive and release the
Collateral, or any part thereof, or any such other security;
(iii) apply the Collateral or any other security and direct the
order or manner of sale thereof, including without limitation, a
non-judicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Bank in its discretion
may determine; (iv) release or substitute any one or more
endorsers or guarantors; and (v) apply payments received by Bank
from any of the Borrowers to any Obligations of any of the
Borrowers to Bank, in such order as Bank shall determine in its
sole discretion, whether or not such Obligations are covered by
this Agreement, and each Borrower hereby waives any provision of
law regarding application of payments which specifies otherwise.
Bank may without notice assign this Agreement in whole or in
part.
12.4 Time of Essence. Time is of the essence for
the performance of all obligations set forth in this Agreement.
12.5 Severability of Provisions; Headings. Each
provision of this Agreement shall be severable from every other
provision of this Agreement for the purpose of determining the
legal enforceability of any specific provision. Headings are set
forth in this Agreement for convenience only.
12.6 Amendments in Writing, Integration. This
Agreement cannot be changed or terminated orally. All prior
agreements, understandings, representations, warranties, and
negotiations between the parties hereto with respect to the
subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
12.7 Counterparts. This Agreement may be executed in
any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall
be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement.
12.8 Survival. All covenants, representations and
warranties made in this Agreement shall continue in full force
and effect so long as any Obligations remain outstanding. The
obligations of each Borrower to indemnify Bank with respect to
the expenses, damages, losses, costs and liabilities described in
Section 12.2 shall survive until all applicable statute of
limitations periods with respect to actions that may be brought
against Bank have run.
12.9 Renewal. This Agreement renews and supersedes the
existing Loan And Security Agreement between UC and Bank. All
Obligations shall continue to be secured by the security interest
granted by UC to Bank under that agreement.
12.10 Joint and Several. The obligations of
Borrowers under this Agreement and the other Loan Documents are
joint and several.
IN WITNESS WHEREOF, Borrower and Bank have executed this
Agreement as of the date first set forth above.
BANK OF THE WEST,
a California banking corporation
By: \s\ ▇▇▇▇▇ ▇▇▇
Title: Vice President
UNIPHASE CORPORATION,
a California corporation
By: \s\ ▇▇▇ ▇▇▇▇▇▇
Title: CFO
UNIPHASE TELECOMMUNICATIONS PRODUCTS, INC.,
a California corporation
By: \s\ ▇▇▇ ▇▇▇▇▇▇
Title: CFO
ULTRAPOINTE CORPORATION,
a California corporation
By: \s\ ▇▇▇ ▇▇▇▇▇▇
Title: CFO
UNIPHASE VERTRIEBS GMBH,
By: \s\ ▇▇▇ ▇▇▇▇▇▇
Title: CFO
UNIPHASE LTD.
By: \s\ ▇▇▇ ▇▇▇▇▇▇
Title: CFO