EXHIBIT 10.21
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[LOGO BANK OF AMERICA BUSINESS LOAN AGREEMENT
APPEARS NATIONAL TRUST AND SAVINGS ASSOCIATION
HERE]
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This Agreement dated as of September 30, 1997, is between Bank of America
National Trust and Savings Association (the "Bank") and E-Tek Dynamics, Inc.
(the "Borrower").
1. FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS
1.1 LINE OF CREDIT AMOUNT.
(a) During the availability period described below, the Bank will provide a
line of credit ("Facility No. 1") to the Borrower. The amount of the line
of credit (the "Facility No. 1 Commitment") is Ten Million Dollars
($10,000,000).
(b) This is a revolving line of credit providing for cash advances and letters
of credit. During the availability period, the Borrower may repay principal
amounts and reborrow them.
(c) The Borrower agrees not to permit the outstanding principal balance of
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 Facility No. 1 Commitment.
1.2 AVAILABILITY PERIOD. The line of credit is available between the date of
this Agreement and September 30, 1998 (the "Facility No. 1 Expiration Date")
unless the Borrower is in default.
1.3 INTEREST RATE.
(a) Unless the Borrower elects an optional interest rate as described below,
the interest rate computed on the principal balance outstanding from time
to time shall be the Bank's Reference Rate.
(b) The Reference Rate is the rate of interest publicly announced from time to
time by the Bank in San Francisco, California, as its Reference Rate. The
Reference Rate is set by the Bank based on various factors, including the
Bank's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans. The Bank
may price loans to its customers at, above, or below the Reference Rate.
Any change in the Reference Rate shall take effect at the opening of
business on the day specified in the public announcement of a change in the
Bank's Reference Rate.
1.4 REPAYMENT TERMS.
(a) The Borrower will pay interest on September 30, 1997, and then monthly
thereafter until payment in full of any principal outstanding under this
line of credit.
(b) The Borrower will repay in full all principal and any unpaid interest or
other charges outstanding under this line of credit no later than the
Facility No. 1 Expiration Date. Any interest period for any optional
interest rate (as described below) shall expire no later than the Facility
No. 1 Expiration Date.
1.5 OPTIONAL INTEREST RATES. Instead of the interest rate based on the Bank's
Reference Rate, the Borrower may elect the optional interest rates listed below
for this Facility No. 1 during interest periods agreed to by the Bank and the
Borrower. The optional interest rates shall be subject to the terms and
conditions described later in this Agreement. Any principal amount bearing
interest at an optional rate under this Agreement is referred to as a "Portion."
The following optional interest rates are available:
(a) the LIBOR Rate plus 1.5 percentage points.
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1.6 LETTERS OF CREDIT. This line of credit may be used for financing commercial
letters of credit with a maximum maturity of 120 days but not to extend more
than 120 days beyond the Facility No. 1 Expiration Date. Each commercial letter
of credit will require drafts payable at sight or up to 60 days after sight.
The Borrower agrees:
(a) any sum drawn under a letter of credit may, at the option of the Bank, be
added to the principal amount outstanding under this Agreement. The amount
will bear interest and be due as described elsewhere in this Agreement.
(b) if there is a default under this Agreement and the Borrower has failed to
cure the same within the cure period, if any, applicable to such default,
to immediately prepay and make the Bank whole for any outstanding letters
of credit upon the written request of the Bank.
(c) the issuance of any letter of credit and any amendment to a letter of
credit is subject to the Bank's written approval and must be in form and
content satisfactory to the Bank and in favor of a beneficiary acceptable
to the Bank.
(d) to sign the Bank's form Application and Agreement for Commercial Letter of
Credit.
(e) to pay any issuance and/or other reasonable fees that the Bank notifies the
Borrower will be charged for issuing and processing letters of credit for
the Borrower.
(f) to allow the Bank to automatically charge its checking account for
applicable fees, discounts, and other charges.
2. FACILITY NO. 2: TERM LOAN AMOUNT AND TERMS
2.1 LOAN AMOUNT. The Bank agrees to provide a term loan ("Facility No. 2") to
the Borrower in the amount of Three Million Dollars ($3,000,000) (the "Facility
No. 2 Commitment").
2.2 AVAILABILITY PERIOD. The loan is available in one disbursement from the
Bank between the date of this Agreement and September 30, 1997, unless the
Borrower is in default.
2.3 INTEREST RATE. Unless the Borrower elects an optional interest rate as
described below, the interest rate computed on the outstanding principal balance
of the loan shall be the Bank's Reference Rate.
2.4 REPAYMENT TERMS.
(a) The Borrower will pay all accrued but unpaid interest on October 31, 1997,
and then monthly thereafter and upon payment in full of the principal of
the loan.
(b) The Borrower will repay principal in 36 successive monthly installments of
Eight Thousand Three Hundred Thirty-Three and 33/100 Dollars ($8,333.33)
starting October 31, 1997. On September 30, 2000, the Borrower will repay
the remaining principal balance plus any interest then due.
(c) The Borrower may prepay the loan in full or in part at any time. The
prepayment will be applied to the most remote payment of principal due
under Paragraph 2.4(b) above.
2.5 OPTIONAL INTEREST RATES. Instead of the interest rate based on the Bank's
Reference Rate, the Borrower may elect the optional interest rates listed below
for this Facility No. 2 during interest periods agreed to by the Bank and the
Borrower. The optional interest rates shall be subject to the terms and
conditions described later in this Agreement. Any principal amount bearing
interest at an optional rate under this Agreement is referred to as a "Portion."
The following optional interest rates are available:
(a) the LIBOR Rate plus 1.7 percentage points.
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3. OPTIONAL INTEREST RATES
3.1 OPTIONAL RATES. Each optional interest rate is a rate per year. Interest
will be paid as follows: for Facility No. 1, on the last day of each interest
period, and, if the interest period is longer than one month, then on the last
day of each month during the interest period; for Facility No. 2, on the last
day of each interest period, and, if the interest period is longer than three
months, then on the last day of each quarter during the interest period. At the
end of any interest period, the interest rate will revert to the rate based on
the Reference Rate, unless the Borrower has designated another optional interest
rate for the Portion. No Portion will be converted to a different interest rate
during the applicable interest period. Upon the occurrence of an event of
default under this Agreement, the Bank may terminate the availability of
optional interest rates for interest periods commencing after the default
occurs.
3.2 LIBOR RATE. The election of LIBOR Rates shall be subject to the following
terms and requirements:
(a) For Facility No. 1, the interest period during which the LIBOR Rate will be
in effect will be one, two, or three months. For Facility No. 2, the
interest period during which the LIBOR Rate will be in effect will be two,
three or six months. The first day of the interest period must be a day
other than a Saturday or a Sunday on which the Bank is open for business in
California, New York and London and dealing in offshore dollars (a "LIBOR
Banking Day"). The last day of the interest period and the actual number of
days during the interest period will be determined by the Bank using the
practices of the London inter-bank market.
(b) Each LIBOR Rate Portion will be for an amount not less than Five Hundred
Thousand Dollars ($500,000).
(c) The "LIBOR Rate" means the interest rate determined by the following
formula, rounded upward to the nearest 1/100 of one percent. (All amounts
in the calculation will be determined by the Bank as of the first day of
the interest period.)
LIBOR Rate = London Inter-Bank Offered Rate
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(1.00 - Reserve Percentage)
Where,
(i) "London Inter-Bank Offered Rate" means the interest rate at which the
Bank's London Branch, London, Great Britain, would offer U.S. dollar
deposits for the applicable interest period to other major banks in
the London inter-bank market at approximately 11:00 a.m. London time
two (2) London Banking Days before the commencement of the interest
period. A "London Banking Day" is a day on which the Bank's London
Branch is open for business and dealing in offshore dollars.
(ii) "Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency Liabilities, as
defined in Federal Reserve Board Regulation D, rounded upward to the
nearest 1/100 of one percent. The percentage will be expressed as a
decimal, and will include, but not be limited to, marginal, emergency,
supplemental, special, and other reserve percentages.
(d) The Borrower shall irrevocably request a LIBOR Rate Portion no later than
12:00 noon San Francisco time on the LIBOR Banking Day preceding the day on
which the London Inter-Bank Offered Rate will be set, as specified above.
(e) The Borrower may not elect a LIBOR Rate with respect to any principal
amount which is scheduled to be repaid before the last day of the
applicable interest period.
(f) Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason of
acceleration or otherwise, will be accompanied by the amount of accrued
interest on the amount prepaid and a prepayment fee as described below. A
"prepayment" is a payment of an amount on a date earlier than the scheduled
payment date for such amount as required by this Agreement. The prepayment
fee shall be equal to the amount (if any) by which:
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(i) the additional interest which would have been payable during the
interest period on the amount prepaid had it not been prepaid, exceeds
(ii) the interest which would have been recoverable by the Bank by placing
the amount prepaid on deposit in the domestic certificate of deposit
market, the eurodollar deposit market, or other appropriate money
market selected by the Bank, for a period starting on the date on
which it was prepaid and ending on the last day of the interest period
for such Portion (or the scheduled payment date for the amount
prepaid, if earlier).
(g) The Bank will have no obligation to accept an election for a LIBOR Rate
Portion if any of the following described events has occurred and is
continuing:
(i) Dollar deposits in the principal amount, and for periods equal to the
interest period, of a LIBOR Rate Portion are not available in the
London inter-bank market; or
(ii) the LIBOR Rate does not accurately reflect the cost of a LIBOR Rate
Portion.
4. FEES AND EXPENSES
4.1 FEES. The Borrower agrees to pay a Thirty Thousand Dollar ($30,000) fee for
Facility No. 1 and a Thirty Thousand Dollar ($30,000) fee for Facility No. 2.
Both fees are due on or before the date of this Agreement.
4.2 EXPENSES. The Borrower agrees to immediately repay the Bank for reasonable
expenses that include, but are not limited to, filing, recording and search
fees, appraisal fees, title report fees and documentation fees.
4.3 REIMBURSEMENT COSTS. If there is a default under this Agreement and the
Borrower has failed to cure the same within the cure period, if any, applicable
to such default, the Borrower agrees to reimburse the Bank for the cost of
periodic audits and appraisals of the personal property collateral securing this
Agreement, at such intervals as the Bank may reasonably require after the
occurrence of the default and the expiration of the cure period (if any). The
audits and appraisals may be performed by employees of the Bank or by
independent appraisers.
5. COLLATERAL
5.1 PERSONAL PROPERTY. The Borrower's obligations to the Bank under this
Agreement will be secured by personal property the Borrower now owns or will own
in the future as listed below. The collateral is further defined in security
agreement(s) executed by the Borrower.
(a) Equipment.
(b) Inventory.
(c) Receivables.
6. DISBURSEMENTS, PAYMENTS AND COSTS
6.1 REQUESTS FOR CREDIT. Each request for an extension of credit will be made
in writing in a manner acceptable to the Bank, or by another means acceptable to
the Bank.
6.2 DISBURSEMENTS AND PAYMENTS. Each disbursement by the Bank and each payment
by the Borrower will be:
(a) made at the Bank's branch (or other location) selected by the Bank from
time to time;
(b) made for the account of the Bank's branch selected by the Bank from time to
time;
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(c) made in immediately available funds, or such other type of funds selected
by the Bank;
(d) evidenced by records kept by the Bank. In addition, the Bank may, at its
discretion, require the Borrower to sign one or more promissory notes.
6.3 TELEPHONE AND TELEFAX AUTHORIZATION.
(a) The Bank may honor telephone or telefax instructions for advances or
repayments or for the designation of optional interest rates and telefax
requests for the issuance of letters of credit given by any one of the
individuals authorized to sign loan agreements on behalf of the Borrower,
or any other individual designated by any one of such authorized signers.
(b) Advances will be deposited in and repayments will be withdrawn from the
Borrower's [account number] account number or such other of the Borrower's
accounts with the Bank as designated in writing by the Borrower.
(c) The Borrower indemnifies and excuses the Bank (including its officers,
employees, and agents) from all liability, loss, and costs in connection
with any act resulting from telephone or telefax instructions it reasonably
believes are made by any individual authorized by the Borrower to give such
instructions. This indemnity and excuse will not cover any such liability,
loss, or costs directly resulting from, and exclusively attributable to,
the Bank's gross negligence or wilFful misconduct and will survive this
Agreement's termination.
6.4 DIRECT DEBIT (PRE-BILLING).
(a) The Borrower agrees that the Bank will debit the Borrower's deposit account
number [account number] or such other of the Borrower's accounts with the
Bank as designated in writing by the Borrower (the "Designated Account") on
the date each payment of principal and interest and any fees from the
Borrower becomes due (the "Due Date"). If the Due Date is not a banking
day, the Designated Account will be debited on the next banking day.
(b) Approximately 3 days prior to each Due Date, the Bank will mail to the
Borrower a statement of the amounts that will be due on that Due Date (the
"Billed Amount"). The calculation will be made on the assumption that no
new extensions of credit or payments will be made between the date of the
billing statement and the Due Date, and that there will be no changes in
the applicable interest rate.
(c) The Bank will debit the Designated Account for the Billed Amount,
regardless of the actual amount due on that date (the "Accrued Amount").
If the Billed Amount debited to the Designated Account differs from the
Accrued Amount, the discrepancy will be treated as follows:
(i) If the Billed Amount is less than the Accrued Amount, the Billed
Amount for the following Due Date will be increased by the amount of
the discrepancy. The Borrower will not be in default by reason of any
such discrepancy.
(ii) If the Billed Amount is more than the Accrued Amount, the Billed
Amount for the following Due Date will be decreased by the amount of
the discrepancy.
Regardless of any such discrepancy, interest will continue to accrue based
on the actual amount of principal outstanding without compounding. The Bank
will not pay the Borrower interest on any overpayment.
(d) The Borrower will maintain sufficient funds in the Designated Account to
cover each debit. If there are insufficient funds in the Designated Account
on the date the Bank enters any debit authorized by this Agreement, the
debit will be reversed.
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6.5 BANKING DAYS. Unless otherwise provided in this Agreement, a banking day is
a day other than a Saturday or a Sunday on which the Bank is open for business
in California. All payments and disbursements which would be due on a day which
is not a banking day will be due on the next banking day. All payments received
on a day which is not a banking day will be applied to the credit on the next
banking day.
6.6 TAXES. If any payments to the Bank under this Agreement are made from
outside the United States, the Borrower will not deduct any foreign taxes from
any payments it makes to the Bank. If any such taxes are imposed on any payments
made by the Borrower (including payments under this paragraph), the Borrower
will pay the taxes and will also pay to the Bank, at the time interest is paid,
any additional amount which the Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such taxes had not been imposed.
The Borrower will confirm that it has paid the taxes by giving the Bank official
tax receipts (or notarized copies) within 30 days after the due date.
6.7 ADDITIONAL COSTS. The Borrower will pay the Bank, on demand, for the Bank's
costs or losses arising from any statute or regulation, or any request or
requirement of a regulatory agency which is applicable to all national banks or
a class of all national banks. The costs and losses will be allocated to the
loan in a manner determined by the Bank, using any reasonable method. The costs
include the following:
(a) any reserve or deposit requirements; and
(b) any capital requirements relating to the Bank's assets and commitments for
credit.
6.8 INTEREST CALCULATION. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in more interest or a higher fee
than if a 365-day year is used. Installments of principal which are not paid
when due under this Agreement shall continue to bear interest until paid.
6.9 DEFAULT RATE. Upon the occurrence and during the continuation of any
default under this Agreement, principal amounts outstanding under this Agreement
will at the option of the Bank bear interest at a rate which is 2.0 percentage
point(s) higher than the rate of interest otherwise provided under this
Agreement. This will not constitute a waiver of any default. This default rate
will become effective upon the Borrower's receipt of written notice from the
Bank.
6.10 INTEREST COMPOUNDING. At the Bank's sole option in each instance, any
interest, fees or costs which are not paid when due under this Agreement shall
bear interest from the due date at an annual rate equal to the Bank's Reference
Rate plus 1.00 percentage point. This may result in compounding of interest.
7. CONDITIONS
The Bank must receive the following items, in form and content acceptable to the
Bank, before it is required to extend any credit to the Borrower under this
Agreement:
7.1 AUTHORIZATIONS. Evidence that the execution, delivery and performance by
the Borrower of this Agreement and any instrument or agreement required under
this Agreement have been duly authorized.
7.2 GOVERNING DOCUMENTS. A copy of the Borrower's articles of incorporation.
7.3 SECURITY AGREEMENTS. Signed original security agreements, assignments,
financing statements and fixture filings (together with collateral in which the
Bank requires a possessory security interest), which the Bank requires.
7.4 EVIDENCE OF PRIORITY. Evidence that security interests and liens in favor
of the Bank are valid, enforceable, and prior to all others' rights and
interests, except those the Bank consents to in writing.
7.5 INSURANCE. Evidence of insurance coverage, as required in the "Covenants"
section of this Agreement.
7.6 OTHER ITEMS. Any other items that the Bank reasonably requires.
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8. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewed representation.
8.1 ORGANIZATION OF BORROWER. The Borrower is a corporation duly formed and
existing under the laws of the state where organized.
8.2 AUTHORIZATION. This Agreement, and any instrument or agreement required
hereunder, are within the Borrower's powers, have been duly authorized, and do
not conflict with any of its organizational papers.
8.3 ENFORCEABLE AGREEMENT. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
8.4 GOOD STANDING. In each state in which the Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.
8.5 NO CONFLICTS. This Agreement does not conflict with any law, agreement, or
obligation by which the Borrower is bound.
8.6 FINANCIAL INFORMATION. All financial and other information that has been or
will be supplied to the Bank is:
(a) sufficiently complete to give the Bank accurate knowledge of the Borrower's
financial condition.
(b) in compliance with all government regulations that apply.
8.7 LAWSUITS. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower, which, if lost, would impair the Borrower's
financial condition or ability to repay the loan, except as have been disclosed
in writing to the Bank.
8.8 COLLATERAL. All collateral required in this Agreement is owned by the
grantor of the security interest free of any title defects or any liens or
interests of others.
8.9 PERMITS, FRANCHISES. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged.
8.10 OTHER OBLIGATIONS. The Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.
8.11 INCOME TAX MATTERS. The Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year, except as have been
disclosed in writing to the Bank.
8.12 NO EVENT OF DEFAULT. There is no event which is, or with notice or lapse of
time or both would be, a default under this Agreement.
8.13 LOCATION OF BORROWER. The Borrower's place of business (or, if the Borrower
has more than one place of business, its chief executive office) is located at
the address listed under the Borrower's signature on this Agreement.
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9. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:
9.1 USE OF PROCEEDS. To use the proceeds of Facility No. 1 only for financing
inventory and receivables and to use the proceeds of Facility No. 2 only to
repay the total amount advanced to the Borrower under the 1995 Agreement (as
defined in Paragraph 12.11 below) that was used by the Borrower to purchase the
Ringwood Property (as defined in Paragraph 9.8 below), which amount is
outstanding under Facility No. 1.
9.2 FINANCIAL INFORMATION. To provide the following financial information and
statements in form and content acceptable to the Bank, and such additional
information as reasonably requested by the Bank from time to time:
(a) Within 90 days of the Borrower's fiscal year end, the Borrower's annual
financial statements. These financial statements must be audited (with an
opinion satisfactory to the Bank) by a Certified Public Accountant ("CPA")
acceptable to the Bank.
(b) Within 30 days of the period's end, the Borrower's monthly financial
statements. These financial statements may be Borrower prepared.
9.3 TANGIBLE NET WORTH. To maintain tangible net worth equal to at least Thirty
Five Million Dollars ($35,000,000).
"Tangible net worth" means the gross book value of the Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, capitalized or deferred
research and development costs, deferred marketing expenses, deferred
receivables, and other like intangibles) less total liabilities, including but
not limited to accrued and deferred income taxes, and any reserves against
assets.
9.4 TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO. To maintain a ratio of total
liabilities to tangible net worth not exceeding 1.10:1.0.
"Total liabilities" means the sum of current liabilities plus long term
liabilities.
9.5 CASH FLOW RATIO. To maintain a cash flow ratio of at least 1.25:1.0.
"Cash flow ratio" means the ratio of cash flow to the sum of lease payments made
under capital leases plus principal payments made on long term liabilities plus
interest expense. "Cash flow" is defined as net income from operations and
investments, before taxes, plus interest expense, plus depreciation, depletion,
amortization and other non-cash charges. This ratio will be calculated at the
end of each fiscal year.
9.6 PROFITABILITY. To maintain a positive net income after taxes and
extraordinary items for each quarterly accounting period.
9.7 OTHER DEBTS. Not to have outstanding or incur any direct or contingent
liabilities or lease obligations (other than those to the Bank), or become
liable for the liabilities of others without the Bank's written consent. This
does not prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade credit.
(b) Endorsing negotiable instruments received in the usual course of business.
(c) Obtaining surety bonds in the usual course of business.
(d) Liabilities and leases in existence on the date of this Agreement disclosed
in writing to the Bank.
(e) Additional debts and lease obligations for the acquisition of fixed or
capital assets permitted under Paragraph 9.9 of this Agreement.
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(f) Additional debts and lease obligations for ordinary business purposes.
9.8 OTHER LIENS. Not to create, assume, or allow any security interest or lien
(including judicial liens) on property the Borrower now or later owns including,
without limitation, the Borrower's real property located at Ringwood Court, San
Jose, CA (APN 244-19-029) (the "Ringwood Property"), except:
(a) Deeds of trust and security agreements in favor of the Bank.
(b) Liens for taxes not yet due.
(c) Liens outstanding on the date of this Agreement disclosed in writing to the
Bank.
Neither the Bank nor the Borrower intend that an equitable mortgage or similar
lien be created on the Ringwood Property or that the obligations of the Borrower
to the Bank under this Agreement be secured by the Ringwood Property.
9.9 CAPITAL EXPENDITURES. Not to spend or incur obligations (including the
total amount of any capital leases) for more than Ten Million Dollars
($10,000,000) in any single fiscal year to acquire fixed or capital assets.
9.10 DIVIDENDS AND DISTRIBUTIONS. Not to make any distributions or pay any
dividends on any of its shares except dividends payable in capital stock of the
Borrower, and not to purchase, redeem or otherwise acquire for value any of its
shares, or create any sinking fund in relation thereto.
9.11 LOANS TO OFFICERS. Not to make any loans, advances or other extensions of
credit to any of the Borrower's executives, officers, directors or shareholders
(or any relatives of any of the foregoing).
9.12 CHANGE OF OWNERSHIP. Not to cause, permit, or suffer any change, direct or
indirect, in the Borrower's capital ownership.
9.13 OUT OF DEBT PERIOD (FACILITY NO. 1). To repay any advances in full, and not
to draw any additional advances on its revolving line of credit, for a period of
at least 30 consecutive days in each line-year. "Line-year" means the period
between the date of this Agreement and September 30, 1998, and each subsequent
one-year period (if any). For the purposes of this paragraph, "advances" does
not include undrawn amounts of outstanding letters of credit.
9.14 NOTICES TO BANK. To promptly notify the Bank in writing of:
(a) any lawsuit over Three Hundred Thousand Dollars ($300,000) against the
Borrower.
(b) any substantial dispute between the Borrower and any government authority.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's business condition (financial
or otherwise), operations, properties or prospects, or ability to repay the
credit.
(e) any change in the Borrower's name, legal structure, place of business, or
chief executive office if the Borrower has more than one place of business.
9.15 BOOKS AND RECORDS. To maintain adequate books and records.
9.16 AUDITS. To allow the Bank and its agents to inspect the Borrower's
properties (including taking and removing samples for environmental testing) and
examine, audit and make copies of books and records at any reasonable time and
upon reasonable advance notice; provided, however, that such notice is not
required during any period when a default has occurred under this Agreement and
has not been cured by the last day of the cure period, if any, applicable to
such default. If any of the Borrower's properties, books or records are in the
possession of a third party, the Borrower authorizes that third party to permit
the Bank or its agents to have
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access to perform inspections or audits and to respond to the Bank's requests
for information concerning such properties, books and records. The Bank has no
duty to inspect the Borrower's properties or to examine, audit or copy books and
records and the Bank shall not incur any obligation or liability by reason of
not making any such inspection or inquiry. In the event that the Bank inspects
the Borrower's properties or examines, audits or copies books and records, the
Bank will be acting solely for the purposes of protecting the Bank's security
and preserving the Bank's rights under this Agreement. Neither the Borrower nor
any other party is entitled to rely on any inspection or other inquiry by the
Bank. The Bank owes no duty of care to protect the Borrower or any other party
against, or to inform the Borrower or any other party of, any adverse condition
that may be observed as affecting the Borrower's properties or premises, or the
Borrower's business. In the event that the Bank has a duty or obligation under
applicable laws, regulations or legal requirements to disclose any report or
findings made as a result of, or in connection with, any site visit, observation
or testing by the Bank, the Bank may make such a disclosure to the Borrower or
any other party.
9.17 COMPLIANCE WITH LAWS. To comply with the laws (including any fictitious
name statute), regulations, and orders of any government body with authority
over the Borrower's business.
9.18 PRESERVATION OF RIGHTS. To maintain and preserve all rights, privileges,
and franchises the Borrower now has.
9.19 MAINTENANCE OF PROPERTIES. To make any repairs, renewals, or replacements
to keep the Borrower's properties in good working condition.
9.20 PERFECTION OF LIENS. To help the Bank perfect and protect its security
interests and liens, and reimburse it for related costs it incurs to protect its
security interests and liens.
9.21 COOPERATION. To take any action reasonably requested by the Bank to carry
out the intent of this Agreement.
9.22 INSURANCE.
(a) INSURANCE COVERING COLLATERAL. To maintain all risk property damage
insurance policies covering the tangible property comprising the
collateral. Each insurance policy must be in an amount acceptable to the
Bank. The insurance must be issued by an insurance company acceptable to
the Bank and must include a lender's loss payable endorsement in favor of
the Bank in a form acceptable to the Bank.
(b) GENERAL BUSINESS INSURANCE. To maintain insurance satisfactory to the Bank
as to amount, nature and carrier covering property damage (including loss
of use and occupancy) to any of the Borrower's properties, public liability
insurance including coverage for contractual liability, product liability
and workers' compensation, and any other insurance which is usual for the
Borrower's business.
(c) EVIDENCE OF INSURANCE. Upon the request of the Bank, to deliver to the Bank
a copy of each insurance policy, or, if permitted by the Bank, a
certificate of insurance listing all insurance in force.
9.23 ADDITIONAL NEGATIVE COVENANTS. Not to, without the Bank's written consent:
(a) engage in any business activities substantially different from the
Borrower's present business.
(b) liquidate or dissolve the Borrower's business.
(c) enter into any consolidation, merger, or other combination, or become a
partner in a partnership, a member of a joint venture, or a member of a
limited liability company.
(d) sell, assign, lease, transfer or otherwise dispose of any assets for less
than fair market value, or enter into any agreement to do so.
(e) sell, assign, lease, transfer or otherwise dispose of all or a substantial
part of the Borrower's business or the Borrower's assets except in the
ordinary course of the Borrower's business.
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-10-
(f) enter into any sale and leaseback agreement covering any of its fixed or
capital assets.
(g) acquire or purchase a business or its assets.
10. HAZARDOUS WASTE INDEMNIFICATION
The Borrower will indemnify and hold harmless the Bank from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply whether
the hazardous substance is on, under or about the Borrower's property or
operations or property leased to the Borrower. The indemnity includes but is not
limited to attorneys' fees (including the reasonable estimate of the allocated
cost of in-house counsel and staff). The indemnity extends to the Bank, its
parent, subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. "Hazardous substances" means any substance,
material or waste that is or becomes designated or regulated as "toxic,"
"hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation
of such, including without limitation petroleum or natural gas. This indemnity
will survive repayment of the Borrower's obligations to the Bank.
11. DEFAULT
If any of the following events occurs, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit
available to the Borrower, and require the Borrower to repay its entire debt
immediately and without prior notice. If an event of default occurs under the
paragraph entitled "Bankruptcy," below, with respect to the Borrower, then the
entire debt outstanding under this Agreement will automatically be due
immediately.
11.1 FAILURE TO PAY. The Borrower fails to make a payment under this Agreement
within 5 days after the date when due.
11.2 LIEN PRIORITY. The Bank fails to have an enforceable first lien (except for
any prior liens to which the Bank has consented in writing) on or security
interest in any property given as security for this Agreement. If, in the Bank's
opinion, the failure is capable of being remedied, it will not be considered an
event of default under this Agreement for a period of 10 days after the earlier
of (a) the date the Borrower knew or should have known of such failure or (b)
the date on which the Bank gives written notice of such failure to the Borrower;
provided however, that the Bank will not be obligated to extend any additional
credit to the Borrower during that period.
11.3 FALSE INFORMATION. The Borrower has given the Bank materially false or
misleading information or representations.
11.4 BANKRUPTCY. The Borrower files a bankruptcy petition, a bankruptcy petition
is filed against the Borrower or the Borrower makes a general assignment for the
benefit of creditors.
11.5 RECEIVERS. A receiver or similar official is appointed for the Borrower's
business, or the business is terminated.
11.6 LAWSUITS. Any lawsuit or lawsuits are filed on behalf of one or more trade
creditors against the Borrower in an aggregate amount of Five Hundred Thousand
Dollars ($500,000) or more in excess of any insurance coverage.
11.7 JUDGMENTS. Any judgments or arbitration awards are entered against the
Borrower, or the Borrower enters into any settlement agreements with respect to
any litigation or arbitration, in an aggregate amount of Five Hundred Thousand
Dollars ($500,000) or more in excess of any insurance coverage.
11.8 GOVERNMENT ACTION. Any government authority takes action that the Bank
reasonably believes materially adversely affects the Borrower's financial
condition or ability to repay.
11.9 MATERIAL ADVERSE CHANGE. A material adverse change occurs in the Borrower's
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit.
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11.10 CROSS-DEFAULT. Any default occurs under any agreement in connection with
any credit the Borrower has obtained from anyone else or which the Borrower has
guaranteed in the amount of Five Hundred Thousand Dollars ($500,000) or more in
the aggregate if the default consists of failing to make a payment when due or
gives the other lender the right to accelerate the obligation.
11.11 DEFAULT UNDER RELATED DOCUMENTS. Any guaranty, subordination agreement,
security agreement, deed of trust, or other document required by this Agreement
is violated or no longer in effect unless such document is no longer in effect
because it has been renewed on substantially the same terms and conditions.
11.12 OTHER BANK AGREEMENTS. The Borrower fails to meet the conditions of, or
fails to perform any obligation under any material term of any other agreement
the Borrower has with the Bank or any affiliate of the Bank.
11.13 OTHER BREACH UNDER AGREEMENT. The Borrower fails to meet the conditions
of, or fails to perform any obligation under, any material term of this
Agreement not specifically referred to in this Article. This includes any
failure or anticipated failure by the Borrower to comply with any financial
covenants set forth in this Agreement, whether such failure is evidenced by
financial statements delivered to the Bank or is otherwise known to the Borrower
or the Bank.
12. ENFORCING THIS AGREEMENT; MISCELLANEOUS
12.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.
12.2 CALIFORNIA LAW. This Agreement is governed by California law.
12.3 SUCCESSORS AND ASSIGNS. This Agreement is binding on the Borrower's and
the Bank's successors and assignees. The Borrower agrees that it may not
voluntarily assigns this Agreement without the Bank's prior consent. The Bank
may sell participations in or assign this loan, and may, upon prior written
notice to the Borrower, exchange financial information about the Borrower with
actual or potential participants or assignees. If a participation is sold or the
loan is assigned, the purchaser will have the right of set-off against the
Borrower.
12.4 ARBITRATION.
(a) This paragraph concerns the resolution of any controversies or claims
between the Borrower and the Bank, including but not limited to those
that arise from:
(i) This Agreement (including any renewals, extensions or
modifications of this Agreement);
(ii) Any document, agreement or procedure related to or delivered in
connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business conducted
between the Borrower and the Bank, including claims for injury to
persons, property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United
States Arbitration Act. The United States Arbitration Act will apply even
though this Agreement provides that it is governed by California law.
(c) Arbitration proceedings will be administered by the American Arbitration
Association and will be subject to its commercial rules of arbitration.
(d) For purposes of the application of the statute of limitations, the filing
of an arbitration petition or the initiation of an arbitration by any
other means pursuant to this paragraph is the equivalent of the filing of
a lawsuit, and any claim or controversy which may be arbitrated under
this paragraph is subject to any
--------------------------------------------------------------------------------
-12-
applicable statute of limitations. The arbitrators will have the authority
to decide whether any such claim or controversy is barred by the statute of
limitations and, if so, to dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the arbitrators
will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be submitted
to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the controversy or claim,
at the time of the proposed submission to arbitration, arises from or
relates to an obligation to the Bank secured by real property located in
California. In this case, both the Borrower and the Bank must consent to
submission of the claim or controversy to arbitration. If both parties do
not consent to arbitration, the controversy or claim will be settled as
follows:
(i) The Borrower and the Bank will designate a referee (or a panel of
referees) selected under the auspices of the American Arbitration
Association in the same manner as arbitrators are selected in
Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees) will be appointed
by a court as provided in California Code of Civil Procedure Section
638 and the following related sections;
(iii) The referee (or the presiding referee of the panel) will be an
active attorney or a retired judge; and
(iv) The award that results from the decision of the referee (or the
panel) will be entered as a judgment in the court that appointed the
referee, in accordance with the provisions of California Code of
Civil Procedure Sections 644 and 645.
(h) This provision does not limit or expand the right of the Borrower or the
Bank to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property collateral;
or
(iii) act in a court of law, before, during or after the arbitration
proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank, including
the suing party, to submit the controversy or claim to arbitration if the
other party contests the lawsuit. However, if the controversy or claim
arises from or relates to an obligation to the Bank which is secured by
real property located in California at the time of the proposed submission
to arbitration, this right is limited according to the provision above
requiring the consent of both the Borrower and the Bank to seek resolution
through arbitration.
(j) If the Bank forecloses against any real property securing this Agreement,
the Bank has the option to exercise the power of sale under the deed of
trust or mortgage, or to proceed by judicial foreclosure.
12.5 SEVERABILITY; WAIVERS. If any part of this Agreement is not enforceable,
the rest of the Agreement may be enforced. The Bank retains all rights, even if
it makes a loan after default. If the Bank waives a default, it may enforce a
later default. Any consent or waiver under this Agreement must be in writing.
12.6 ATTORNEYS' FEES. The Borrower shall reimburse the Bank for any reasonable
costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and including
any
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-13-
amendment, waiver, "workout" or restructuring under this Agreement. In the event
of a lawsuit or arbitration proceeding, the prevailing party is entitled to
recover costs and reasonable attorneys' fees incurred in connection with the
lawsuit or arbitration proceeding, as determined by the court or arbitrator. In
the event that any case is commenced by or against the Borrower under the
Bankruptcy Code (Title 11, United States Code) or any similar or successor
statute, the Bank is entitled to recover costs and reasonable attorneys' fees
incurred by the Bank related to the preservation, protection, or enforcement of
any rights of the Bank in such a case. As used in this paragraph, "attorneys'
fees" includes the allocated costs of in-house counsel.
12.7 ONE AGREEMENT. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between the Bank
and the Borrower concerning this credit; and
(b) replace any prior oral or written agreements between the Bank and the
Borrower concerning this credit; and
(c) are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
12.8 NOTICES. All notices required under this Agreement shall be personally
delivered or sent by first class mail, postage prepaid, to the addresses on the
signature page of this Agreement, or to such other addresses as the Bank and the
Borrower may specify from time to time in writing.
12.9 HEADINGS. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.
12.10 COUNTERPARTS. This Agreement may be executed in as many counterparts as
necessary or convenient, and by the different parties on separate counterparts
each of which, when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same agreement.
12.11 PRIOR AGREEMENT SUPERSEDED. This Agreement supersedes the Business Loan
Agreement entered into as of September 29, 1995, between the Bank and the
Borrower, as amended (the "1995 Agreement"), and any credit outstanding
thereunder shall be deemed to be outstanding under this Agreement.
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-14-
This Agreement is executed as of the date stated at the top of the first page.
[LOGO]
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION E-TEK DYNAMICS, INC.
X /s/ XXXXXX XXXXXXX X /s/ XXXXXXX XXXXX PAN
---------------------------- ------------------------------
BY: XXXXXX XXXXXXX BY: XXXXXXX XXXXX PAN
TITLE: VICE PRESIDENT TITLE: PRESIDENT
ADDRESS WHERE NOTICES TO THE BANK ADDRESS WHERE NOTICES TO THE BORROWER
ARE TO BE SENT: ARE TO BE SENT:
International Trade Banking Office #1768
P.O. Box 37000 0000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
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[LOGO] BANK OF AMERICA AMENDMENT TO DOCUMENTS
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AMENDMENT NO. 1 TO BUSINESS LOAN AGREEMENT
This Amendment No. 1 (the "Amendment") dated as of 10/3 1997, is between
Bank of America National Trust and Savings Association (the "Bank") and E-Tek
Dynamics, Inc. (the "Borrower").
RECITALS
--------
A. The Bank and the Borrower entered into a certain Business Loan
Agreement dated as of September 30, 1997 (the "Agreement").
B. The Bank and the Borrower desire to amend the Agreement.
AGREEMENT
---------
1. DEFINITIONS. Capitalized terms used but not defined in this Amendment
------------
shall have the meaning given to them in the Agreement.
2. AMENDMENTS. The Agreement is hereby amended as follows:
----------
2.1 Paragraph 2.2 is amended by substituting "October 30, 1997" for
"September 30, 1997".
3. EFFECT OF AMENDMENT. Except as provided in this Amendment, all of the
-------------------
terms and conditions of the Agreement shall remain in full force and effect.
This Amendment is executed as of the date stated at the beginning of
this Amendment.
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION E-Tek Dynamics, Inc.
X /s/ XXXXXX XXXXXXX X /s/ XXXXXXX XXXXX PAN
----------------------------------- --------------------------------
BY: XXXXXX XXXXXXX, VICE PRESIDENT BY: XXXXXXX XXXXX PAN, PRESIDENT
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[LOGO] BANK OF AMERICA AMENDMENT TO DOCUMENTS
--------------------------------------------------------------------------------
AMENDMENT NO. 2 TO BUSINESS LOAN AGREEMENT
This Amendment No. 2 (the "Amendment") dated as of MARCH 12, 1998, is
between Bank of America National Trust and Savings Association (the "Bank") and
E-Tek Dynamics, Inc. (the "Borrower").
RECITALS
--------
A. The Bank and the Borrower entered into a certain Business Loan
Agreement dated as of September 30, 1997, as previously amended (the
"Agreement").
B. The Bank and the Borrower desire to further amend the Agreement.
AGREEMENT
---------
1. DEFINITIONS. Capitalized terms used but not defined in this Amendment
-----------
shall have the meaning given to them in the Agreement.
2. AMENDMENTS. The Agreement is hereby amended as follows:
----------
2.1 In Paragraph 1.1(a), the amount "Fifteen Million Dollars
($15,000,000)" is substituted for the amount "Ten Million Dollars
($10,000,000)".
2.2 A new Paragraph 9.24 is added to the Agreement which reads in its
entirety as follows:
9.24 QUICK RATIO. To maintain as of the end of each fiscal
quarter a ratio of quick assets to current liabilities of at
least 1.25:1.0.
"Quick assets" means cash, short-term cash investments, net trade
receivables and marketable securities not classified as long-term
investments.
3. EFFECT OF AMENDMENT. Except as provided in this Amendment, all of the
-------------------
terms and conditions of the Agreement shall remain in full force and effect.
This Amendment is executed as of the date stated at the beginning of
this Amendment.
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION E-TEK DYNAMICS, INC.
X /s/ XXXXXXXX XXXX X /s/ [SIGNATURE]
---------------------------------- -----------------------------
BY: XXXXXXXX XXXX, VICE PRESIDENT BY: C.F.O
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[LOGO] BANK OF AMERICA AMENDMENT TO DOCUMENTS
--------------------------------------------------------------------------------
AMENDMENT NO. 3 TO
BUSINESS LOAN AGREEMENT
This Amendment No. 3 (the "Amendment") dated as of _______________, 1998,
is between Bank of America National Trust and Savings Association (the "Bank")
and E-Tek Dynamics, Inc. (the "Borrower").
RECITALS
--------
A. The Bank and the Borrower entered into a certain Business Loan
Agreement dated as of September 30, 1997, as previously amended (the
"Agreement").
B. The Bank and the Borrower desire to further amend the Agreement.
AGREEMENT
---------
1. DEFINITIONS. Capitalized terms used but not defined in this Amendment
-----------
shall have the meaning given to them in the Agreement.
2. AMENDMENTS. The Agreement is hereby amended as follows:
----------
2.1 Paragraph 9.2(b) is amended to read in its entirety as follows:
(b) Within 30 days of the period's end, the Borrower's quarterly
financial statements. These financial statements may be
Borrower prepared.
3. EFFECT OF AMENDMENT. Except as provided in this Amendment, all of the
-------------------
terms and conditions of the Agreement shall remain in full force and effect.
This Amendment is executed as of the date stated at the beginning of
this Amendment.
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION E-TEK DYNAMICS, INC.
X X /s/ [SIGNATURE]
________________________________ --------------------------------
BY: XXXXXXXX XXXX, VICE PRESIDENT BY:
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-1-
