Exhibit 10.1

 

AMENDED AND RESTATED LOAN AGREEMENT

 

THIS AMENDED AND RESTATED LOAN AGREEMENT (“Agreement”) is made and entered into
as of May 30, 2012 (the “Closing Date”) by and between COHERENT, INC., a
Delaware corporation (“Borrower”), and UNION BANK, N.A., a national banking
association, successor to Union Bank of California, N.A. (“Bank”).

 

SECTION 1. THE CREDIT

 

1.1          CREDIT FACILITIES

 

1.1.1       The Revolving Loan.  Bank will loan to Borrower an amount not to
exceed Fifty Million and 00/100 Dollars ($50,000,000.00) outstanding in the
aggregate at any one time (the “Revolving Loan”).  Revolving Loans will be
denominated in Dollars.  The proceeds of the Revolving Loan shall be used for
Borrower’s general working capital and corporate purposes.  Borrower may borrow,
repay and reborrow all or part of the Revolving Loan in amounts of not less than
One Million and 00/100 Dollars ($1,000,000.00) in accordance with the terms of
the Revolving Note (defined below).  All borrowings of the Revolving Loan must
be made before the Maturity Date, at which time all unpaid principal and
interest of the Revolving Loan shall be due and payable.  The Revolving Loan
shall be evidenced by Bank’s standard form of commercial promissory note (the
“Revolving Note”).  Bank shall enter each amount borrowed and repaid in Bank’s
records and such entries shall be deemed correct absent manifest error. 
Omission of Bank to make any such entries shall not discharge Borrower of its
obligation to repay in full with interest all amounts borrowed.  As of the date
of this Agreement, the principal amount outstanding under Borrower’s revolving
loan with Bank evidenced by the promissory note dated March 31, 2008 (“Old
Note”) shall be deemed the initial principal amount outstanding under the
Revolving Loan, and the Old Note is hereby cancelled and superceded by the
Revolving Note.

 

(a)           The Commercial L/C Sublimit.  As a sublimit under the Revolving
Loan, Bank shall issue, for the account of Borrower or its wholly-owned
Subsidiaries, one or more irrevocable commercial letters of credit
(individually, a “Commercial L/C”) with transport documents presented in a full
set to Bank (and, in case of airway bills, consigned to Bank).  The aggregate
amount available to be drawn under all outstanding Commercial L/Cs and the
aggregate amount of unpaid reimbursement obligations under drawn Commercial L/Cs
(collectively, the “Commercial L/C Exposure”) plus the Standby L/C Exposure (as
defined below) as of such time, shall not exceed Twenty Five Million and 00/100
Dollars ($25,000,000.00) and shall reduce, dollar for dollar, the maximum amount
available under the Revolving Loan.  All Commercial L/Cs shall be drawn on terms
and conditions acceptable to Bank and shall be governed by the terms of (and
Borrower agrees to execute and cause its wholly-owned Subsidiaries to execute,
as applicable) Bank’s standard form of commercial letter of credit application
and reimbursement agreement.  No Commercial L/C shall expire more than one
hundred twenty (120) days from the date of its issuance, and in no event later
than the Maturity Date, unless Bank agrees otherwise in its sole and absolute
discretion.

 

(b)           The Standby L/C Sublimit.  As a sublimit under the Revolving Loan,
Bank shall issue, for the account of Borrower or its wholly-owned Subsidiaries,
one or more irrevocable standby letters of credit (individually, a “Standby
L/C”).  The aggregate amount available to be drawn under all Standby L/Cs and
the aggregate amount of unpaid reimbursement obligations under drawn Standby
L/Cs (collectively, the “Standby

 

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L/C Exposure”) plus the Commercial L/C Exposure as of such time, shall not
exceed Twenty Five Million and 00/100 Dollars ($25,000,000.00) and shall reduce,
dollar for dollar, the maximum amount available under the Revolving Loan.  All
Standby L/Cs shall be drawn on terms and conditions acceptable to Bank and shall
be governed by the terms of (and Borrower agrees to execute and cause its
wholly-owned Subsidiaries to execute, as applicable) Bank’s standard form of
standby letter of credit application and reimbursement agreement.  No Standby
L/C shall expire more than three hundred sixty-five (365) days from the date of
its issuance, and in no event later than the Maturity Date, unless Bank agrees
otherwise in its sole and absolute discretion.

 

(c)           Letters of Credit for Subsidiaries; Cash Collateral.

 

(i)            Obligations Absolute.  The obligation of Borrower to reimburse
Bank for each drawing under each L/C shall be absolute, unconditional and
irrevocable, and under all circumstances, shall be paid strictly in accordance
with the terms of this Agreement and the related L/C documentation. 
Notwithstanding that an L/C issued or outstanding is in support of any
obligations of, or is for the account of, a Subsidiary (each a “Subsidiary
L/C”), Borrower shall be obligated to reimburse Bank for any and all drawings
under each such L/C.  Borrower hereby acknowledges that the issuance of L/C’s
for the account of Subsidiaries inures to the direct and material benefit of
Borrower, and that Borrower’s business derives substantial benefits from the
businesses of such Subsidiaries.  Bank shall not be under any obligation to
issue any L/C if the L/C is to be denominated in a currency other than Dollars. 
Prior to and as a condition precedent to Bank’s obligation to issue any
Subsidiary L/C under which a Subsidiary is the applicant, Borrower shall, if
requested by Bank, execute a separate continuing guaranty of the obligations of
its Subsidiaries under or in respect of such Subsidiary L/C, including
reimbursement obligations and obligations with respect to fees (the “Subsidiary
L/C Obligations”) which guaranty shall be in form satisfactory to Bank in its
good faith credit judgment.

 

(ii)           Certain Waivers.  With respect to the Subsidiary L/C Obligations,
Borrower authorizes Bank, without notice and without affecting Borrower’s
liability with respect thereto, from time to time, to (a) renew, compromise,
extend, accelerate, release, subordinate, waive, amend and restate, or otherwise
amend or change, the interest rate, time or place for payment or any other terms
of all or any part of the Subsidiary L/C Obligations; (b) accept delinquent or
partial payments on the Subsidiary L/C Obligations; (c) take or not take
security or other credit support for all or any part of the Subsidiary L/C
Obligations, and exchange, enforce, waive, release, subordinate, fail to enforce
or perfect, sell, or otherwise dispose of any such security or credit support;
(d) apply proceeds of any such security or credit support and direct the order
or manner of its sale or enforcement as Bank, at its sole discretion, may
determine; and (e) release or substitute any Person liable on the Subsidiary L/C
Obligations.  To the maximum extent permitted by law, Borrower waives (a) all
rights to require Bank to proceed against any Subsidiary, or any other
guarantor, or proceed against, enforce or exhaust any security for the
Subsidiary L/C Obligations or to marshal assets or to pursue any other remedy in
Bank’s power whatsoever; (b) all defenses arising by reason of any disability or
other defense of any Subsidiary, the cessation for any reason of the liability
of any Subsidiary, any defense that any other indemnity, guaranty or security
was to be obtained, any claim that Bank has made Borrower’s obligations more
burdensome or more burdensome than the applicable Subsidiary’s obligations, and
the use of any proceeds of the Subsidiary

 

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L/C Obligations other than as intended or understood by Bank or Borrower;
(c) all presentments, demands for performance, notices of nonperformance,
protests, notices of dishonor, notices of acceptance; (d) all rights to file a
claim in connection with the Subsidiary L/C Obligations in an case or proceeding
under any Debtor Relief Law filed by or against any Subsidiary; (e) all rights
to require Bank to enforce any of its remedies with respect to Subsidiary L/C
Obligations; and (f) until the Subsidiary L/C Obligations are satisfied or fully
paid with such payment not subject to return: (i) all rights of subrogation,
contribution, indemnification or reimbursement, (ii) all rights of recourse to
any assets or property of such Subsidiaries, or to any collateral or credit
support for the Subsidiary L/C Obligations, (iii) all rights to participate in
or benefit from any security or credit support Bank may have or acquire with
respect to the Subsidiary L/C Obligations, and (iv) all rights, remedies and
defenses Borrower may have or acquire against the applicable Subsidiary. 
Borrower warrants having established with each Subsidiary adequate means of
obtaining, on an ongoing basis, such information as Borrower may require
concerning all matters bearing on the risk of nonpayment or nonperformance of
the Subsidiary L/C Obligations.  Borrower assumes sole, continuing
responsibility for obtaining such information from sources other than from
Bank.  Bank has no duty to provide any information to Borrower regarding any
Subsidiary.

 

(c)           Cash Collateral.  If, on the date that is thirty (30) days prior
to the Maturity Date, there are any outstanding L/C’s with expirations after the
Maturity Date, then on such date Borrower shall provide to Bank cash collateral
in an amount equal to 105% of the face amount of all such L/C’s, to secure all
of the Obligations relating to such L/C’s.

 

1.2          Terminology.  The following words and phrases, whether used in
their singular or plural form, shall have the meanings set forth below:

 

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.

 

“Applicable Debt Amount” means, as applicable: (a) with respect to any Funded
Debt that is secured by a Lien, Five Million Dollars ($5,000,000), and (b) with
respect to any Funded Debt that is unsecured, Ten Million Dollars ($10,000,000).

 

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the purchase or
acquisition of all or substantially all of the property or assets of a Person,
or of any line of business, business unit or division of a Person, or (b) the
purchase or acquisition of in excess of 50% of the capital stock, partnership
interests, membership interests or equity interests of any Person, or otherwise
causing any Person to become a Subsidiary, in each case, whether as a result of
a merger, consolidation or any other combination with another Person or
otherwise.

 

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. §§ 101 et
seq.), as now and hereafter in effect, or any successor statute.

 

“Business Day” means any day on which Bank is open for business for the funding
of corporate loans (other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the State of California)

 

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and with respect to the rate of interest based on the LIBOR Rate (as defined in
the Revolving Note), on which dealings in Dollar deposits outside of the United
States of America may be carried on by Bank.

 

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. 
“Controlling” and “Controlled” have meanings correlative thereto.  Without
limiting the generality of the foregoing, a Person shall be deemed to be
Controlled by another Person if such other Person possesses, directly or
indirectly, power to vote 10% or more of the securities having ordinary voting
power for the election of directors, managing general partners or the
equivalent.

 

“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

 

“Dollar” and “$” mean lawful money of the United States.

 

“EBITDA” has the meaning given in Section 4.8.

 

“ERISA” has the meaning given in Section 3.10.

 

“Funded Debt” has the meaning given in Section 4.8.

 

“GAAP” means generally accepted accounting principles and practices consistently
applied.  Accounting terms used in this Agreement but not otherwise expressly
defined have the meanings given them by GAAP.

 

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra national bodies such as the European Union or the European Central Bank).

 

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

“L/C” means the Commercial L/Cs or the Standby L/Cs, or both, as the context may
require.

 

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“Lien” means any voluntary or involuntary security interest, mortgage, pledge,
encumbrance, title retention agreement, or third party interest, covering all or
any part of the property of Borrower.

 

“Loan Documents” means this Agreement, the Note, each guaranty (if any), and all
other documents, instruments, certificates, opinions and agreements required by
Bank and executed in connection with this Agreement, the Note, the Revolving
Loans and any L/Cs.

 

“Maturity Date” means May 31, 2014.

 

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, Borrower arising under any Loan Document or otherwise
with respect to any Revolving Loan or L/C, whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Borrower or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.

 

“Original Loan Agreement” means that certain Loan Agreement dated as of
March 31, 2008 by and between Borrower and Bank, as amended from time to time
prior to the Closing Date.

 

“Permitted Liens” means the Liens permitted pursuant to Section 5.1 below.

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Pro Forma Basis” means, for purposes of calculating the financial covenants set
forth herein, that (a) any Restricted Payment shall be deemed to have occurred
on the last day of the recently ended fiscal quarter or fiscal year, as
applicable, preceding the date of such transaction for which Borrower was
required to deliver financial statements pursuant to Section 4.5, and (b) any
Acquisition effected shall be deemed to have occurred on the first day of the
most recent four consecutive quarter period ended on or before the occurrence of
such transaction for which Borrower was required to deliver financial statements
pursuant to Section 4.5.  In connection with the foregoing, (i) with respect to
any Acquisition, income statement items attributable to the Person or property
acquired shall be included to the extent relating to any period applicable in
such calculations to the extent (A) such items are not otherwise included in
such income statement items for Borrower and its Subsidiaries in accordance with
GAAP and (B) such items are supported by financial statements or other
information satisfactory to Bank, and (ii) with respect to any indebtedness
incurred, deemed incurred, or assumed by Borrower or any Subsidiary (including
any Person or property acquired by Borrower or a Subsidiary) (A) such
indebtedness shall be deemed to have been incurred as of the first day of the
applicable period and (B) if such indebtedness has a floating or formula rate,
shall have an implied rate of interest for the applicable period for purposes of
this definition determined by utilizing the rate which is or would be in effect
with respect to such indebtedness as at the relevant date of determination.

 

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“Pro Forma Compliance Certificate” means with respect to any transaction, event
or action with respect to which a certification is required under this
Agreement, a certificate of Borrower’s chief financial officer, in form
reasonably satisfactory to Bank, certifying that Borrower is in actual
compliance with the financial covenants in Sections 4.6, 4.7 and 4.8 as of the
end of the fiscal quarter for which financial statements were required to be
delivered, and would be in compliance with such financial covenants on a Pro
Forma Basis after giving effect to such transaction, event or action.  Each Pro
Forma Compliance Certificate, except those delivered in connection with an
Acquisition in which the Total Consideration is less than Fifty Million Dollars
($50,000,000), shall include reasonably detailed and sufficient back-up,
calculations and other information supporting such certifications (it being
understood that the information with respect to the target of any Acquisition
that is used to calculate Pro Forma compliance as set forth in the Pro Forma
Compliance Certificate shall be the information that is available to Borrower on
the date the Pro Forma Compliance Certificate is required to be delivered).

 

“Restricted Payment” has the meaning given in Section 5.5.

 

“Revolving Note” means the Amended and Restated Promissory Note, dated as of the
date hereof, described above and any other promissory note(s) that may from time
to time evidence the obligations of Borrower under this Agreement, each as
amended, modified, supplemented extended or restated from time to time.

 

“Revolving Loan” has the meaning given to such term in Section 1.1.1 above.

 

“Solvent” means, with respect to any Person on any date of determination, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such
Person, (b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person’s ability to pay such debts and liabilities as they mature,
(d) such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person’s property would
constitute an unreasonably small capital and (e) such Person is able to pay its
debts and liabilities, contingent obligations and other commitments as they
mature in the ordinary course of business. The amount of contingent liabilities
at any time shall be computed as the amount that, in the light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person.  Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
Borrower.

 

“Tangible Net Worth” has the meaning given in Section 4.7.

 

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“Total Consideration” means, with respect to any transaction or series of
related transactions, the aggregate cash and non-cash consideration paid or
payable by Borrower or any of its Subsidiaries (other than consideration
consisting of common stock of Borrower) in any such transaction, including
upfront cash payments, deferred purchase price, assumption of indebtedness and
earn-out obligations; provided that with respect to any amount of consideration
that is not determinable prior to closing of a transaction, such amount shall be
a reasonable estimate of such amount by Borrower calculated in the same manner
that Borrower’s liability for such amount would be determined for inclusion on
Borrower’s consolidated balance sheet in accordance with GAAP.

 

1.3          Prepayment; Payments.  The Revolving Loan may be prepaid in full or
in part but only in accordance with the terms of the Note, and any such
prepayment shall be subject to any prepayment fee provided for therein.  In the
event of a principal prepayment on any term indebtedness, the amount prepaid
shall be applied to the scheduled principal installments due in the reverse
order of their maturity on the loan being prepaid.  All payments to be made by
Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff.  Except as otherwise expressly provided herein,
all payments by Borrower shall be made to Bank and immediately available funds
not later than 2:00 p.m. on the date specified herein or in the Revolving Note. 
If at any time the total aggregate outstanding amount of the Revolving Loans
together with the aggregate face amount of all L/C’s (including the amount of
all drawn but unreimbursed L/C obligations) at such time exceed the maximum
amount of the Revolving Loan then in effect, then, Borrower shall immediately
prepay the Revolving Loans and/or cash collateralize to the satisfaction of Bank
the obligations in respect of L/Cs in an aggregate amount sufficient to
completely eliminate such excess.

 

1.4          Interest.  The unpaid principal balance of the Revolving Loan shall
bear interest at the rate or rates provided in the Note.

 

1.5          Commitment Fee.  On the last calendar day of each calendar quarter
(commencing June 30, 2012), Borrower shall pay to Bank a fee of thirty
one-hundredths of one percent (0.30%) per year on the unused portion of the
Revolving Loan for the calendar quarter then ended (or portion thereof during
which this Agreement is in effect), computed on the basis of a 360 day year for
actual days elapsed.

 

1.6          Disbursement.  Bank shall disburse the proceeds of the Revolving
Loan as provided in Bank’s standard form Authorization(s) to Disburse executed
by Borrower.

 

1.7          Rounding.  Any financial ratios required to be maintained by
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding up if
there is no nearest number).

 

1.8          Times of Day.  Unless otherwise specified, all references herein to
times of day shall be references to Pacific time (daylight or standard, as
applicable).

 

1.9          Reduction or Termination of Revolving Loan Facility.  Upon five
(5) Business Days’ notice (which may be conditioned on the effectiveness of the
replacement credit agreement or

 

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other similar document or the effectiveness of another transaction requiring the
termination of this Agreement, and may be revoked by Borrower if such condition
is not satisfied), Borrower may terminate, or from time to time permanently
reduce, Bank’s commitment to make the Revolving Loan; provided that: (a) any
such reduction shall be in an integral multiple of $1,000,000 and in a minimum
amount of $5,000,000, and (b) Borrower may not terminate or reduce the Revolving
Loan if, after giving effect thereto and any concurrent prepayments hereunder,
the total outstanding principal amount of the Revolving Loan (including the
Commercial L/C Exposure and the Standby L/C Exposure) would exceed the Bank’s
commitment to make Revolving Loans hereunder.  All fees accrued until the
effective date of any reduction or termination of the Revolving Loan commitment
shall be paid on the effective date of such reduction or termination.

 

SECTION 2. CONDITIONS PRECEDENT

 

Bank shall not be obligated to disburse all or any portion of the Revolving Loan
or issue any L/Cs unless at or prior to the time of each such disbursement or
issuance, the following conditions have been fulfilled to Bank’s satisfaction:

 

2.1                               Compliance.  Borrower shall have performed and
complied with all terms and conditions required by this Agreement to be
performed or complied with, and shall have executed and delivered to Bank the
Note and all other Loan Documents.

 

2.2                               Authorization to Obtain Credit.  Borrower
shall have provided Bank with an executed copy of Bank’s form Authorization to
Obtain Credit with certified copies of resolutions duly adopted by Borrower’s
board of directors and in form satisfactory to Bank, authorizing the execution,
delivery and performance of this Agreement and the other Loan Documents.  Such
resolutions shall also designate the persons who are authorized to act on
Borrower’s behalf in connection with this Agreement to do the things required of
Borrower pursuant to this Agreement.

 

2.3                               Continuing Compliance.  At the time any
disbursement is to be made and immediately thereafter, there shall not exist any
Event of Default (as hereinafter defined) or any event, condition, or act which
with notice or lapse of time, or both, would constitute an Event of Default.

 

SECTION 3. REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants that:

 

3.1                               Business Activity.  Borrower’s principal
business is the manufacture of lasers and the design and manufacture of photonic
solutions for a multitude of laser-based applications.

 

3.2                               Solvency.  As of the Closing Date, Borrower
is, individually and taken together with its Subsidiaries, Solvent.

 

3.3                               Organization and Qualification.  Borrower is
duly organized and existing under the Laws of the state of its organization, is
duly qualified and in good standing in any jurisdiction where such qualification
is required except to the extent that a failure to qualify could not reasonably
be expected to result in a material adverse effect upon Borrower or its
financial condition, and has the power and authority to carry on the business in
which it is engaged and/or proposes to engage.

 

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3.4                               Power and Authorization.  Borrower has the
power and authority to enter into this Agreement and to execute and deliver the
Note and all other Loan Documents.  This Agreement and all things required by
this Agreement and the other Loan Documents have been duly authorized by all
requisite action of Borrower.

 

3.5                               Authority to Borrow.  The execution, delivery
and performance of this Agreement, the Note and all other Loan Documents are not
in contravention of any of the terms of any material indenture, agreement or
undertaking to which Borrower is a party or by which it or any of its property
is bound or affected.

 

3.6                               Compliance with Laws.  Borrower is in
compliance with all applicable Laws, rules, ordinances or regulations which
materially affect the operations or financial condition of Borrower except to
the extent that the failure to be in compliance could not reasonably be expected
to result in a material adverse effect upon Borrower or its financial condition.

 

3.7                               Title.  Except for assets which may have been
disposed of in the ordinary course of business, Borrower has good and marketable
title to all property reflected in its financial statements delivered to Bank
and to all property acquired by Borrower since the date of said financial
statements, free and clear of all Liens, except Liens specifically referred to
in said financial statements and Permitted Liens.

 

3.8                               Financial Statements.  Borrower’s financial
statements, including its unaudited balance sheet as at March 31, 2012, and its
unaudited statement of operation, unaudited statement of stockholders equity,
and unaudited statement of cash flows for its three fiscal months ended March
31, 2012, each prepared on a consolidated basis, have heretofore been furnished
to Bank, and fairly present in all material respects Borrower’s financial
condition and results of operations for the period covered thereby.  Since
October 1, 2011, there has been no material adverse change in Borrower’s
financial condition or operations.

 

3.9                               Litigation.  Except as disclosed in Borrower’s
public filings with the Securities and Exchange Commission, there is no
litigation or proceeding pending or threatened against Borrower or any of its
property which could reasonably be expected to result in a material adverse
effect upon Borrower or its financial condition.

 

3.10                        ERISA.  Borrower’s defined benefit pension plans (as
defined in the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”)), meet, as of the date hereof, the minimum funding standards of
Section 302 of ERISA, and no Reportable Event or Prohibited Transaction as
defined in ERISA has occurred with respect to any such plan, except to the
extent that any such event could not reasonably be expected to result in a
material adverse effect upon Borrower or its financial condition.

 

3.11                        Regulation U.  No action has been taken or is
currently planned by Borrower, or any agent acting on its behalf, which would
cause this Agreement or the Note to violate Regulation U or any other regulation
of the Board of Governors of the Federal Reserve System, or to violate the
Securities and Exchange Act of 1934, in each case as in effect now or as the
same may hereafter be in effect.  Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock as one
of its important activities and, except as may be expressly agreed to and
documented between Borrower and Bank or as permitted under Section 5.5, none of
the proceeds of the Revolving Loan, nor any L/C, will be used

 

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directly or indirectly for such purpose.  Following the application of the
proceeds of each borrowing or drawing under each L/C, not more than 25% of the
value of the assets (either of Borrower only or of Borrower and its Subsidiaries
on a consolidated basis) subject to the provisions of Sections 4 or 5 hereof or
subject to any restriction contained in any agreement or instrument between
Borrower and Bank or any affiliate of Bank relating to indebtedness within the
scope of Section 6.13 will be margin stock.

 

3.12                        No Event of Default.  Borrower is not now in default
in the payment of any of its material obligations, and there exists no Event of
Default, and no condition, event or act which with notice or lapse of time, or
both, would constitute an Event of Default.

 

3.13                        Continuing Representations and Warranties.  The
foregoing representations and warranties shall be considered to have been made
again at and as of the date of each and every Revolving Loan disbursement and
every L/C issuance and shall be true and correct in all material respects as of
each such date.

 

SECTION 4. AFFIRMATIVE COVENANTS

 

Until all sums payable pursuant to this Agreement, the Note and the other Loan
Documents have been paid in full (which with respect to any L/C that remains
outstanding shall include the delivery to Bank of cash collateral acceptable to
Bank in an amount equal to not less than one hundred five percent (105%) of the
outstanding face amount thereof) and Bank has no further obligations to make
Revolving Loans or issue or permit to remaining outstanding any L/C, unless Bank
otherwise consents in writing, Borrower agrees that:

 

4.1                               Use of Proceeds.  Borrower will use the
proceeds of the Revolving Loan and any L/C that is issued only as provided in
Section 1 above.

 

4.2                               Payment of Obligations.  Borrower will pay and
discharge promptly all material taxes, assessments and other governmental
charges and claims levied or imposed upon it or its property, or any part
thereof; provided, however, that Borrower shall have the right in good faith to
contest any such taxes, assessments, charges or claims and, pending the outcome
of such contest, to delay or refuse payment thereof provided that adequately
funded reserves are established by it to pay and discharge any such taxes,
assessments, charges and claims.

 

4.3                               Maintenance of Existence.  Borrower will
maintain and preserve its existence, and all material rights, franchises,
licenses and other authority necessary for the conduct of its business, and will
maintain and preserve its property and assets, equipment and facilities in good
order, condition and repair (ordinary wear and tear excepted) except to the
extent that a failure to do so could not reasonably be expected to result in a
material adverse effect upon Borrower or its financial condition; provided,
however, that subject to any other provisions of this Agreement or the other
Loan Documents, Borrower shall retain the right to dispose of property, assets,
equipment and facilities if Borrower deems it to be in the best interests of its
business.

 

4.4                               Records.  Borrower will keep and maintain full
and accurate accounts and records of its operations in accordance with GAAP and
will permit Bank, at Borrower’s expense, to have access thereto, to make
examination and photocopies thereof, and to make audits of Borrower’s accounts
and records during regular business hours; provided, however, that Borrower
shall have the right to deny access to Bank and its representatives to any
documents or information that are subject to attorney-client privilege, so long
as Borrower makes reasonable efforts to provide Bank or its representatives any
non-privileged documents or information included therein.

 

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4.5                               Information Furnished.  Borrower will furnish
to Bank:

 

(a)                                 Within forty-five (45) days after the close
of each fiscal quarter, except for the final quarter of each fiscal year, its
unaudited balance sheet as of the close of such fiscal quarter, and its
unaudited statement of operation, unaudited statement of stockholders equity,
and unaudited statement of cash flows for that fiscal quarter, each prepared on
a consolidated basis, with year-to-date totals and supportive schedules, all
prepared in accordance with GAAP.

 

(b)                                 Within ninety (90) days after the close of
each fiscal year, a copy of its balance sheet as of the close of such fiscal
year, and its statement of operation, statement of stockholders equity, and
statement of cash flows for that fiscal year, each prepared on a consolidated
basis, examined and prepared on an audited basis by independent certified public
accountants selected by Borrower and reasonably satisfactory to Bank, in
accordance with GAAP along with any management letter provided by such
accountants.

 

(c)                                  As soon as available, copies of any Form
10-Q quarterly reports, Form 10-K annual reports, and any other material filings
(such as a Form 8-K current report regarding any material occurrence) made by
Borrower with the SEC or any other federal or state regulatory authority. 
Anything required to be delivered pursuant to Sections 4.5(a) or 4.5(b) above or
this 4.5(c) (to the extent any such financial statements, reports or proxy
statements are included in materials otherwise filed with the SEC) may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date on which Borrower posts such reports, or provides a link
thereto, on Borrower’s website on the Internet.

 

(d)                                 Within forty-five (45) days after the close
of each fiscal quarter (except for the final quarter of each fiscal year, in
which case within ninety (90) days after the close of such fiscal year), a
certification of compliance with all covenants under this Agreement, executed by
Borrower’s chief financial officer or other duly authorized officer, in form
acceptable to Bank.

 

(e)                                  Prompt written notice to Bank of any Event
of Default, any litigation which could reasonably be expected to have a material
adverse effect on Borrower’s financial condition, and any other matter which has
resulted in, or could reasonably be expected to result in, a material adverse
change in Borrower’s financial condition or operations.

 

(f)                                   Written notice to Bank reasonably promptly
(and in any case within four (4) business days) of any change in Borrower’s
executive officers, Borrower’s name or Borrower’s state of organization.

 

(g)                                 Within fifteen (15) days after Borrower
knows that any Reportable Event or Prohibited Transaction (as defined in ERISA)
has occurred with respect to any defined benefit pension plan of Borrower, a
statement of an authorized officer of Borrower describing such event or
condition and the action, if any, which Borrower proposes to take with respect
thereto.

 

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(h)                                 Such other financial statements and
information as Bank may reasonably request from time to time; provided, however,
that no information will be provided to the extent that such information is
subject to attorney-client privilege, so long as Borrower makes reasonable
efforts to provide Bank or its representatives any non-privileged documents or
information included therein.

 

4.6                               Quick Ratio.  Borrower, on a consolidated
basis, will at all times maintain a ratio of cash, accounts receivable and
marketable securities to current liabilities (including for purposes of this
calculation the outstanding amount of the Revolving Loan) of not less than
1.25:1.00.

 

4.7                               Total Liabilities to Tangible Net Worth. 
Borrower, on a consolidated basis, will at all times maintain a ratio of (a)
total liabilities as set forth on Borrower’s balance sheet in accordance with
GAAP (plus any amount of Funded Debt that is not included in the determination
of total liabilities including, without limitation, obligations and liabilities
with respect to issued letters of credit and obligations arising with respect to
bank guaranties or equivalents as customarily issued in countries outside of the
United States) to (b) Tangible Net Worth of not greater than 1.00:1.00. 
“Tangible Net Worth” means Borrower’s consolidated net worth increased, to the
extent included as a liability in the calculation of consolidated net worth, by
indebtedness subordinated to Bank and decreased by patents, licenses,
trademarks, trade names, goodwill and other similar intangible assets and, to
the extent included as an asset in the calculation of consolidated net worth,
monies due from Affiliates and monies due from officers and directors to the
extent required to be listed as a separate line-item on Borrower’s balance sheet
or separately noted in the footnotes thereto.

 

4.8                               Funded Debt to EBITDA.  Borrower, on a
consolidated basis, will maintain as of the last day of each fiscal quarter a
ratio of Funded Debt to EBITDA of not greater than 2.00:1.00.  “Funded Debt”
means, without duplication: (a) all indebtedness for borrowed money (including
indebtedness arising under the Loan Documents) or for the deferred purchase
price of property or services (excluding obligations to trade creditors incurred
in the ordinary course of business and not more than 180 days past due and
excluding deferred taxes); (b) all obligations evidenced by notes, bonds,
debentures or similar instruments; (c) all reimbursement and all other
obligations with respect to surety bonds, letters of credit, bank guarantees or
equivalents as customarily issued in countries outside of the United States and
bankers’ acceptances, in each case whether or not matured; (d) all indebtedness
created or arising under any conditional sale or other title retention
agreements with respect to property acquired (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property); (e) all capitalized lease
obligations; (f) guaranties of indebtedness and obligations described in clauses
(a) through (e) above; (g) all indebtedness referred to in clauses (a), (b),
(c), (d), (e) or (f) above secured by (or for which the holder of such
indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property owned by it, even though it has not assumed or
become liable for the payment of such indebtedness; and (h) all liabilities
under Title IV of ERISA.  “EBITDA” means earnings before interest, taxes,
depreciation and amortization, plus non-cash stock compensation and other
non-cash charges, for the four (4) fiscal quarters preceding the date of
calculation.

 

4.9                               Insurance.  Borrower will keep all of its
insurable property, whether real, personal or mixed, adequately insured by good
and responsible companies against fire and such other risks for damages to
persons and property as are customarily insured against by companies conducting
similar business with respect to like properties.  Borrower will maintain
adequate worker’s compensation insurance.

 

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4.10                        Maintenance of Account for Payment of Amounts Due to
Bank.  Borrower will at all times (a) maintain with Bank a deposit account that
Bank is authorized to charge for any amounts then due to Bank from borrower
under this Agreement, the Note or any other Loan Documents, including interest,
principal, fees, costs, expenses or other amounts due to Bank hereunder or
thereunder, and (b) ensure that such account has immediately available funds
sufficient to pay any such amounts payable to Bank as and when they become due
and payable.

 

4.11                        Additional Requirements.  Upon Bank’s demand,
Borrower will promptly take such further action and execute all such additional
documents and instruments in connection with this Agreement and the other Loan
Documents as Bank in its reasonable discretion deems necessary, and promptly
supply Bank with such other information concerning its affairs as Bank may
reasonably request from time to time; provided, however, that no information
will be provided to the extent that such information is subject to
attorney-client privilege, so long as Borrower makes reasonable efforts to
provide Bank or its representatives any non-privileged documents or information
included therein.

 

4.12                        Litigation and Attorneys’ Fees.  Upon Bank’s demand,
Borrower will promptly pay to Bank reasonable attorneys’ fees, including the
reasonable estimate of the allocated costs and expenses of in-house legal
counsel and staff, and all costs and other reasonable expenses paid or incurred
by Bank in collecting, modifying or compromising the Revolving Loan or in
enforcing or exercising its rights or remedies created by, connected with or
provided for in this Agreement and the other Loan Documents.  If any judicial
action, arbitration or other proceeding is commenced, only the prevailing party
shall be entitled to attorneys’ fees and court costs.

 

4.13                        Bank Expenses.  Upon Bank’s request, Borrower will
pay or reimburse Bank for all reasonable costs, expenses and fees incurred by
Bank in preparing and documenting this Agreement and the Revolving Loan and any
L/C, and all amendments and modifications to any Loan Documents, including but
not limited to all filing and recording fees, costs of appraisals, insurance and
reasonable attorneys’ fees, including the reasonable estimate of the allocated
costs and expenses of in-house legal counsel and staff.

 

SECTION 5. NEGATIVE COVENANTS

 

Until all sums payable pursuant to this Agreement, the Note and the other Loan
Documents have been paid in full (which with respect to any L/C that remains
outstanding shall include the delivery to Bank of cash collateral acceptable to
Bank in an amount equal to not less than one hundred five percent (105%) of the
outstanding face amount thereof) and Bank has no further obligations to make
Revolving Loans or issue or permit to remaining outstanding any L/C, unless Bank
otherwise consents in writing, Borrower agrees that:

 

5.1                               Liens.  Borrower will not create, assume or
suffer to exist, any Lien on any of its property, whether real, personal or
mixed, now owned or hereafter acquired, or upon the income or profits thereof,
except for the following:

 

(a)                                 Liens, if any, in favor of Bank,

 

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(b)                                 Liens for taxes not delinquent and taxes and
other items being contested in good faith,

 

(c)                                  minor encumbrances and easements on real
property which do not affect its market value in any material respect,

 

(d)                                 existing Liens as of the date hereof on
Borrower’s personal property,

 

(e)                                  purchase money security interests and
security interests under capital leases encumbering only the personal property
purchased or leased and the proceeds thereof,

 

(f)                                   judgment Liens that do not constitute an
Event of Default under this Agreement,

 

(g)                                 the interests of lessors under operating
leases and capital leases encumbering only the property leased and the proceeds
thereof,

 

(h)                                 Liens on property of an entity existing at
the time such entity is merged into or consolidated with Borrower; provided that
such Liens were not created in contemplation of such merger, consolidation or
acquisition and do not extend to any assets other than those of the entity so
merged into or consolidated with Borrower,

 

(i)                                    Liens in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of Borrower’s business and not in connection with the
borrowing of money,

 

(j)                                    Liens on amounts deposited in connection
with obtaining worker’s compensation or other unemployment insurance,

 

(k)                                 Liens on amounts deposited in connection
with the making or entering into of bids, tenders, or leases in the ordinary
course of business and not in connection with the borrowing of money,

 

(l)                                    Liens on amounts deposited as security
for surety or appeal bonds in connection with obtaining such bonds in the
ordinary course of business,

 

(m)                             bankers’ Liens, rights of set-off and similar
rights and remedies arising by Law or contract in favor of banks, brokerage
firms and other such financial institutions with respect to cash and securities
deposited with such banks, brokerage firms and other such financial institutions
to the extent such Liens, rights and remedies secure or extend solely to amounts
due as a result of the administration or maintenance of such deposited cash and
securities,

 

(n)                                 Liens securing the payment of insurance
premiums financed by an insurance financing company to the extent such Liens
extend solely to returned premiums on the insurance policies so financed,

 

(o)                                 licenses of property granted in the ordinary
course of business,

 

(p)                                 customary Liens granted in favor of a
trustee to secure fees and other amounts owing to such trustee under an
indenture or other agreement, and

 

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(q)                                 other Liens securing obligations in an
aggregate principal amount not to exceed Five Million Dollars ($5,000,000) at
any time outstanding.

 

Borrower shall not agree or consent to any restriction on Borrower’s ability to
create, assume or suffer to exist any Lien on any of its property to secure its
obligations under this Agreement or the other Loan Documents to which it may
from time to time be a party, except (i) agreements in favor of the Bank or
(ii) prohibitions or conditions under (A) any purchase money debt or capital
lease obligation solely to the extent that the agreement or instrument governing
such purchase money debt or capital lease obligation prohibits a Lien on the
property acquired with the proceeds of such purchase money debt or capital lease
and the proceeds thereof, (B) customary provisions in joint venture agreements
and other similar agreements applicable to joint ventures entered into in the
ordinary course of business, (C) customary provisions contained in leases or
licenses of intellectual property and other similar agreements entered into in
the ordinary course of business, (D) customary provisions restricting subletting
or assignment of any lease governing a leasehold interest, (E) customary
provisions restricting assignment of any agreement entered into in the ordinary
course of business, (F) customary restrictions and conditions contained in any
agreement relating to the sale of any asset pending the consummation of such
sale, including any sale structured as a merger or consolidation of a Subsidiary
of Borrower, (G) any transaction in which a condition to consummating such
transaction is that all obligations under this Agreement be paid in full and
that the commitment of Bank hereunder is terminated, or (H) customary
restrictions and conditions contained in the document relating to any Lien, so
long as (1) such Lien is permitted under Section 5.1 and such restriction or
conditions relate only to the specific asset subject to such Lien, and (2) such
restrictions and conditions are not created for the specific purpose of avoiding
the restrictions imposed by this paragraph.

 

5.2                               Borrowings.  Borrower will not sell, discount
or otherwise transfer any account receivable or any note, draft or other
evidence of indebtedness, except to Bank or except to a financial institution at
face value for deposit or collection purposes and discounting of account
receivables with customers in the ordinary course of business, and without any
fees other than the financial institution’s normal fees for such services. 
Borrower will not incur Funded Debt, except (a) pursuant to agreements with
Bank, (b) indebtedness pursuant to transactions entered into with Borrower’s
Subsidiaries in the ordinary course of business as currently conducted to the
extent otherwise permitted hereunder, (c) capital leases and purchase money
obligations for fixed or capital assets within the limitations set forth in
Section 5.1(e), and (d) other indebtedness of Borrower for borrowed money (other
than the Revolving Loans) in an aggregate outstanding amount that does not at
any time exceed Ten Million Dollars ($10,000,000).

 

5.3                               Acquisitions, Sale of Assets, Liquidation.

 

(a)                                 Acquisitions.  Borrower will not make any
Acquisitions, unless:

 

(i) Borrower is the surviving entity (if a party to such transaction),

 

(ii) the assets so acquired will not be subject to any Lien following the
effective date of such combination, except for Liens that are otherwise
permitted pursuant to Section 5.1,

 

(iii) no Event of Default shall have occurred and be continuing or shall result
therefrom,

 

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(iv) the property acquired (or the property of the person acquired) in such
Acquisition is used or useful in the same, similar, complementary or a related
line of business as Borrower and its Subsidiaries were engaged in on the Closing
Date (or any reasonable extensions or expansions thereof),

 

(v) unless the consideration for such Acquisition is comprised solely of
Borrower’s common stock, the board of directors (or other comparable governing
body) of the person being acquired, merged or consolidated shall have duly
approved such acquisition, merger or consolidation,

 

(vi) Borrower shall have delivered financial statements and other information
relating to the person being acquired as Bank may reasonably request,

 

(vii) immediately prior to, and after giving pro forma effect to such
Acquisition, Borrower is and remains in compliance on an actual and Pro Forma
Basis with the financial covenants in Sections 4.6, 4.7 and 4.8 hereof, and

 

(viii) with respect to any single Acquisition (or series or related
Acquisitions) in which the Total Consideration is greater than or equal to
Twenty-Five Million Dollars ($25,000,000), Borrower shall have provided to Bank,
not later than two (2) Business Days prior to the earlier of the date of public
announcement of such Acquisition, or the closing of such Acquisition:

 

(A) written notice of such its intent to consummate such Acquisition, including
(x) the Total Consideration paid or payable for such Acquisition, and (y) a
summary as to the material terms and conditions of such Acquisition, and

 

(B) a Pro Forma Compliance Certificate with respect thereto, which shall
include, in addition to the requirements set forth in the definition of Pro
Forma Compliance Certificate, a certification that no Event of Default shall
have occurred and be continuing or would result from such Acquisition.

 

(b)                                 Fundamental Changes.  Borrower will not
liquidate, dissolve or consummate any consolidation, merger, or other business
combination, or convey, sell, license or lease all or the greater part of its
assets or business; provided, however, that so long as no Event of Default then
exists or would result therefrom: (i) a Subsidiary may merge with and into
Borrower (with the Borrower being the surviving Person), and (ii) Borrower may
merge or consolidate with any Person as necessary to consummate Acquisitions
permitted hereunder (provided that Borrower shall be the surviving Person).

 

5.4                               Loans, Advances and Guaranties.  Borrower will
not except in the ordinary course of business as currently conducted, make any
loans or advances, or become a guarantor or surety.  This Section 5.4 shall not
prohibit any intercompany sales transactions in the ordinary course of
Borrower’s business, between or among Borrower and its Subsidiaries in
connection with transfer pricing, cost-sharing and similar arrangements.

 

5.5                               Redemption of Stock.  Borrower will not
repurchase, redeem or retire any share of its capital stock for value or make
any dividends or distributions on account thereof (each, a “Restricted
Payment”); except for (a) dividends or distributions payable solely in shares of
capital stock; (b) the repurchase of stock awards or options necessary to
satisfy tax withholding obligations, and non-cash repurchases of capital stock
deemed to occur upon exercise of stock

 

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options if such capital stock represents all or a portion of the exercise price
of the option; (c) repurchases of fractional shares in connection with the
conversion of any convertible securities; and (d) other Restricted Payments so
long as (i) Borrower has given bank at least one (1) Business Day’s prior
written notice thereof, (ii) no Event of Default has occurred and is continuing
at such time, or would exist upon giving effect to such action, (iii) Borrower
is Solvent both prior to and after giving effect to such action, (iv)
immediately prior to, and after giving pro forma effect to, such Restricted
Payment, Borrower is and remains in compliance on an actual and Pro Forma Basis
with the financial covenants in Sections 4.6, 4.7 and 4.8 hereof, and (v) such
action is permitted under and is made in compliance with all applicable Laws,
including Sections 170 and 173 of the Delaware General Corporation Law. 
Borrower shall deliver to Bank a Pro Forma Compliance Certificate within five
(5) Business Days after any transaction under clause (d) above.

 

5.6                               Affiliate Transactions.  Borrower will not
transfer any property to any Affiliate of Borrower, except for value received in
the normal course of business and for an amount, including any management or
service fee(s), and on terms substantially as favorable terms to Borrower as
would be obtainable by Borrower at the time in a comparable arm’s length
transaction with a Person other than an Affiliate, except that the following in
any event shall be permitted:

 

(a)                                 transactions between Borrower and its
Subsidiaries and between its Subsidiaries in the ordinary course of business as
currently conducted;

 

(b)                                 the payment of reasonable fees,
compensation, or employee benefit arrangements to, and any indemnity provided
for the benefit of, officers, employees, and directors;

 

(c)                                  loans or advances to employees in the
ordinary course of business; and

 

(d)                                 dividends and distributions to Affiliates
expressly permitted under Section 5.5 hereof.

 

5.7                               Post-Closing Matters.  Not later than June 6,
2012, Borrower shall deliver, or cause to be delivered, to Bank duly executed
favorable legal opinions of the General Counsel of the Borrower and Wilson
Sonsini Goodrich & Rosati, counsel to Borrower, addressed to Bank, as to such
matters concerning Borrower and the Loan Documents as Bank may reasonably
request.

 

SECTION 6. EVENTS OF DEFAULT

 

Any one or more of the following events shall constitute an event of default
(each an “Event of Default”) under this Agreement:

 

6.1                               Borrower shall default in the due and punctual
payment of the principal of or the interest on the Note, or the commitment fee
pursuant to Section 1.5 above, and such failure shall continue for five
(5) business days, or on any other amounts owing under any of the Loan Documents
and such failure shall continue for ten (10) business days.

 

6.2                               Borrower shall default in the due performance
or observance of Sections 4.1, 4.5, 4.6, 4.7, 4.8, 4.10, or Section 5 of this
Agreement.

 

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6.3                               Borrower shall default in the due performance
or observance of any covenant or condition of the Loan Documents (other than
Sections 4.1, 4.5, 4.6, 4.7, 4.8, 4.10, or Section 5 of this Agreement) and such
failure shall continue for 30 days after written notice from Bank to Borrower of
such default.

 

6.4                               Any representation or warranty made by
Borrower in any Loan Document or by Borrower (or any of its officers) in
connection with this Agreement or any other Loan Document shall prove to have
been incorrect in any material respect when made or deemed made.

 

6.5                               The insolvency of Borrower or the failure of
Borrower generally to pay Borrower’s debts as such debts become due.

 

6.6                               The commencement as to Borrower of any
voluntary or involuntary proceeding under any Laws relating to bankruptcy,
insolvency, reorganization, arrangement, debt adjustment or debtor relief (and
with respect to any involuntary proceeding, either such proceeding shall remain
undismissed or unstayed and in effect for a period of sixty (60) days or the
court shall have entered a decree or order granting the relief sought in such
proceeding).

 

6.7                               Borrower shall make a general assignment for
the benefit of its creditors.

 

6.8                               The appointment, or commencement of any
proceedings for the appointment, of a receiver, trustee, custodian or similar
official for all or substantially all of Borrower’s property.

 

6.9                               The commencement by Borrower of any proceeding
for the dissolution or liquidation of Borrower.

 

6.10                        The termination of existence of Borrower.

 

6.11                        The revocation of any guaranty or subordination
agreement given in connection with this Agreement.

 

6.12                        Judgments or orders for the payment of money in
excess of $15,000,000 in the aggregate shall be rendered against Borrower and
either (i) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order or (ii) there shall be any period of 30 consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect or such judgment or order
shall not have been satisfied; provided, however, there shall not be an Event of
Default under this Section 6.12 if and for so long as the amount of such
judgment or order is fully covered (subject to customary deductibles) by
insurance under which the carrier has acknowledged coverage.

 

6.13                        Borrower shall fail to pay any principal or interest
on any borrowed money that is outstanding in an aggregate principal amount in
excess of the Applicable Debt Amount when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace period,
if any, specified in the agreement or instrument relating to such borrowed
money; or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such borrowed money and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such borrowed money; or any such
borrowed money shall be declared to be due and payable.

 

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6.14                        If any material portion of Borrower’s assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
and the same is not discharged before the earlier of 30 days after the date it
first arises.

 

Upon the occurrence and during the continuance of an Event of Default, Bank
(i) may, by notice to Borrower, terminate its obligation to make Revolving Loans
and issue L/Cs, and (ii)  may, by notice to Borrower, (A) declare the Revolving
Loans, all interest thereon and all other amounts payable under this Agreement
to be immediately due and payable, whereupon the Revolving Loans, all such
interest and all such amounts shall become and be immediately due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by Borrower and (B) require the delivery to Bank of
cash collateral acceptable to Bank in an amount equal to not less than one
hundred five percent (105%) of the outstanding face amount of all outstanding
L/C; provided, however, that upon the occurrence of an Event of Default
described in Sections 6.6, 6.7, 6.8 or 6.9 above, (i) Bank’s obligation to make
Revolving Loans and issue L/Cs shall automatically terminate, (ii) the Revolving
Loans, all interest thereon and all other amounts payable under this Agreement
shall automatically become immediately due and payable, and (iii) Borrower shall
automatically be required to deliver to Bank cash collateral acceptable to Bank
in an amount equal to not less than one hundred five percent (105%) of the
outstanding face amount of all outstanding L/C.

 

SECTION 7. GENERAL PROVISIONS

 

7.1                               Additional Remedies.  The rights, powers and
remedies given to Bank hereunder shall be cumulative and not alternative and
shall be in addition to all rights, powers and remedies given to Bank by Law
against Borrower or any other person or entity, including but not limited to
Bank’s rights of setoff and banker’s lien.

 

7.2                               Nonwaiver.  Any forbearance or failure or
delay by Bank in exercising any right, power or remedy hereunder shall not be
deemed a waiver thereof and any single or partial exercise of any right, power
or remedy shall not preclude the further exercise thereof.  No waiver shall be
effective unless it is in writing and signed by an officer of Bank.

 

7.3                               Inurement.  The benefits of this Agreement and
the other Loan Documents shall inure to the successors and assigns of Bank and
the permitted successors and assigns of Borrower, but any attempted assignment
by Borrower without Bank’s prior written consent shall be null and void.

 

7.4                               Applicable Law.  THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE INTERNAL LAWS
OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT
STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS, AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

 

7.5                               Severability.  Should any one or more
provisions of this Agreement or any other Loan Document be determined to be
illegal or unenforceable, all other provisions of such document shall
nevertheless be effective.

 

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7.6                               Controlling Document.  In the event of any
inconsistency between the terms of this Agreement and any other Loan Document,
the terms of the other Loan Document shall prevail.

 

7.7                               Construction.  The section and subsection
headings herein are for convenient reference only and shall not limit or
otherwise affect the interpretation of this Agreement.

 

7.8                               Amendments.  This Agreement may be amended
only in writing signed by all parties hereto.

 

7.9                               Counterparts.  Borrower and Bank may execute
one or more counterparts to this Agreement, each of which shall be deemed an
original, but all such counterparts when taken together, shall constitute one
and the same agreement.

 

7.10                        Notices.  Any notices or other communications
provided for or allowed hereunder shall be effective only when given by one of
the following methods and addressed to the parties at their respective addresses
and shall be considered to have been validly given (a) upon delivery, if
delivered personally, (b) upon receipt, if mailed, first class postage prepaid,
with the United States Postal Service, (c) on the next business day, if sent by
overnight courier service of recognized standing, or (d) upon telephoned
confirmation of receipt, if telecopied or e-mailed.  The addresses to which
notices or demands are to be given may be changed from time to time by notice
delivered as provided above.

 

7.11                        Integration Clause.  Except for the other Loan
Documents, this Agreement constitutes the entire agreement between Bank and
Borrower regarding the Revolving Loan and any L/Cs, and all prior oral or
written communications between Borrower and Bank shall be of no further effect
or evidentiary value.

 

7.12                        Disputes.  TO THE EXTENT PERMITTED BY LAW, IN
CONNECTION WITH ANY CLAIM, CAUSE OF ACTION, PROCEEDING OR OTHER DISPUTE
CONCERNING THE LOAN DOCUMENTS (EACH A “CLAIM”), THE PARTIES TO THIS AGREEMENT
EXPRESSLY, INTENTIONALLY, AND DELIBERATELY WAIVE ANY RIGHT EACH MAY OTHERWISE
HAVE TO TRIAL BY JURY.  IN THE EVENT THAT THE WAIVER OF JURY TRIAL SET FORTH IN
THE PREVIOUS SENTENCE IS NOT ENFORCEABLE UNDER THE LAW APPLICABLE TO THIS
AGREEMENT, THE PARTIES TO THIS AGREEMENT AGREE THAT ANY CLAIM, INCLUDING ANY
QUESTION OF LAW OR FACT RELATING THERETO, SHALL, AT THE WRITTEN REQUEST OF ANY
PARTY, BE DETERMINED BY JUDICIAL REFERENCE PURSUANT TO THE STATE LAW APPLICABLE
TO THIS AGREEMENT.  THE PARTIES SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO SHALL
BE A RETIRED STATE OR FEDERAL JUDGE.  IN THE EVENT THAT THE PARTIES CANNOT AGREE
UPON A REFEREE, THE COURT SHALL APPOINT THE REFEREE.  THE REFEREE SHALL REPORT A
STATEMENT OF DECISION TO THE COURT.  NOTHING IN THIS PARAGRAPH SHALL LIMIT THE
RIGHT OF ANY PARTY AT ANY TIME TO EXERCISE SELF-HELP REMEDIES, FORECLOSE AGAINST
COLLATERAL OR OBTAIN PROVISIONAL REMEDIES.  THE PARTIES SHALL BEAR THE FEES AND
EXPENSES OF THE REFEREE EQUALLY, UNLESS THE REFEREE ORDERS OTHERWISE.  THE
REFEREE SHALL ALSO DETERMINE ALL ISSUES RELATING TO THE
APPLICABILITY, INTERPRETATION, AND ENFORCEABILITY OF THIS PARAGRAPH.  THE
PARTIES ACKNOWLEDGE THAT IF A REFEREE IS SELECTED TO DETERMINE THE CLAIMS, THEN
THE CLAIMS WILL NOT BE DECIDED BY A JURY.

 

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7.13                        Patriot Act Notice.  Bank is subject to the USA
PATRIOT Improvement and Reauthorization Act of 2005 (the “Patriot Act”) and
hereby notifies Borrower that, pursuant to the requirements of the Patriot Act,
Bank is required to obtain, verify and record information that identifies
Borrower, which information includes the name and address of Borrower and other
information that will allow Bank to identify Borrower in accordance with the
Patriot Act.

 

7.14                        Confidentiality.  Bank agrees that material,
non-public information regarding Borrower and its Subsidiaries (or a Person to
be acquired about which confidential information is delivered pursuant to
Section 5.3), their operations, assets, and existing and contemplated business
plans shall be treated by Bank in a confidential manner, and shall not be
disclosed by Bank to persons or entities who are not parties to this Agreement,
except:  (i) to attorneys for and other advisors, accountants, auditors, and
consultants to the Bank, (ii) to subsidiaries and affiliates of the Bank,
provided that any such Subsidiary or affiliate shall have agreed to receive such
information hereunder subject to the terms of this Section 7.14, (iii) as may be
required by statute, decision, or judicial or administrative order, rule, or
regulation, (iv) as requested or required by any governmental authority pursuant
to any subpoena or other legal process, (v) as to any such information that is
or becomes generally available to the public (other than as a result of
prohibited disclosure by Bank), (vi) in connection with any assignment or
participation of Bank’s interest under this Agreement, provided that any such
assignee or participant shall have agreed in writing to receive such information
hereunder subject to the terms of this Section 7.14, and (vii) in connection
with any litigation or other adversary proceeding involving parties hereto which
such litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents.  The
provisions of this Section 7.14 shall survive the payment in full of the
obligations under this Agreement.

 

7.15                        Amendment and Restatement.  This Agreement is
intended to and does completely amend, restate, supercede and replace, without
novation, the Original Loan Agreement.  The execution and delivery of this
Agreement shall not, in any manner or circumstance, be deemed to be a novation
of or to have terminated, released, extinguished, or discharged any of
Borrower’s obligations, indebtedness, duties or liabilities under the Original
Loan Agreement or any Liens granted to Bank in connection therewith or the other
Loan Documents, all of which are hereby ratified and confirmed.

 

7.16                        Indemnification.  Borrower unconditionally agrees to
pay and protect, defend and indemnify Bank and Bank’s employees, officers,
directors, shareholders, affiliates, correspondents, agents and representatives
against, and hold Bank and each such other party harmless from, all claims,
actions, proceedings, liabilities, damages, losses, expenses (including without
limitation attorney’s fees and costs) and other amounts incurred by Bank and
each such other party, arising from the Revolving Loan and the transactions
contemplated by this Agreement and the other Loan Documents, except to the
extent caused by Bank’s gross negligence or willful misconduct.

 

[Signature page follows]

 

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THIS AGREEMENT is executed on behalf of the parties by their duly authorized
representative(s) as of the date first above written.

 

 

COHERENT, INC.

 

 

 

 

 

/s/ John Ambroseo

 

By:

John Ambroseo

 

Title:

President & CEO

 

 

 

 

 

 

 

/s/ Helene Simonet

 

By:

Helene Simonet

 

Title:

EVP & CFO

 

 

 

Address:
5100 Patrick Henry Drive
Santa Clara, CA 95054
Attention: Chief Financial Officer and General Counsel
Telecopier: (408) 764-4928
Telephone: (408) 764-4000

 

 

 

 

 

UNION BANK, N.A.

 

 

 

 

 

/s/ James B. Goudy

 

By:

James B. Goudy

 

Title:

Vice President

 

 

 

Address:
99 Almaden Boulevard, Suite 200
San Jose, California 95113
Attention: James B. Goudy
Telecopier: (408) 280-7163
Telephone: (408) 279-7714

 

 

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