[LOGO OF BANK OF AMERICA] AMENDMENT TO DOCUMENTS
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AMENDMENT NO. 2 TO BUSINESS LOAN AGREEMENT
This Amendment No. 2 (the "Amendment") dated as of September 9, 1997 is
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between BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank") and
ORTEL CORPORATION (the "Borrower").
RECITALS
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A. The Bank and the Borrower entered into a certain Business Loan
Agreement dated as of June 2, 1995, as previously amended (the "Agreement").
B. The Bank and the Borrower desire to further amend the Agreement.
AGREEMENT
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1. DEFINITIONS. Capitalized terms used but not defined in the Amendment
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shall have the meaning given to them in the Agreement.
2. AMENDMENTS. The Agreement is hereby amended as follows:
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2.1 In Paragraph 1.2 of the Agreement, the date "SEPTEMBER 30, 1998"
is substituted for the date "JUNE 1, 1997."
2.2 Paragraph 1.6 of the Agreement is deleted in its entirety.
2.3 In Paragraph 1.7 of the Agreement, the "SHORT TERM BASE RATE PLUS
ONE AND ONE HALF (1.50) PERCENTAGE POINTS" is substituted for the
"SHORT TERM BASE RATE PLUS ONE AND THREE-QUARTERS (1.75)
PERCENTAGE POINTS."
2.4 Paragraph 1.8 of the Agreement is amended to read in its entirety
as follows:
"1.8 LIBOR RATE. The Borrower may elect to have all or portions of
the principal balance bear interest at the LIBOR Rate plus one and
one half (1.50) percentage points.
Designated of a LIBOR Rate portion is subject to the following
requirements:
(a) The interest period during which the LIBOR Rate will be in
effect will be one, two, or three weeks, or one, two, three,
four, five, six, seven, eight, nine, ten, eleven, or twelve
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) for interest periods
of one month or longer. For shorter maturities, each LIBOR
Rate portion will be for an amount which, when multiplied by
the number of days in the applicable interest period, is not
less than fifteen million (15,000,000) dollar-days.
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(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) Any portion of the principal balance already bearing interest at the
LIBOR Rate will not be converted to a different rate during its
interest period.
(g) 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:
(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).
(h) 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."
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2.5 Article 2 of the Agreement is deleted in its entirety. Any reference
in the Agreement to the terms "Facility No. 1 Commitment" and
"Facility No. 1 Expiration Date" shall mean the "Commitment" and the
"Expiration Date."
2.6 Paragraph 6.1 of the Agreement is amended to read in its entirety as
follows:
"6.1 USE OF PROCEEDS. To use the proceeds only for operating capital
and the issuance of letters of credit."
2.7 Subparagraph 6.2(c) of the Agreement is amended to read in its
entirety as follows:
"6.2(c) Copies of the Borrower's Form 10-K Annual Report within
120 days to include CPA audit opinion and Form 10-Q Quarterly
Report within 45 days after the date of filing with the Securities
and Exchange Commission."
2.8 Article 7 of the Agreement is amended to read in its entirety as
follows:
"7. HAZARDOUS WASTE INDEMNIFICATION. The Borrower will indemnify and
hold harmless the Bank from any loss or liability directly or
indirectly arising our 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."
2.9 Paragraph 9.6 of the Agreement is amended to read in its entirety as
follows:
"9.6 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 in connection with any 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 the Bank's in-house counsel."
3. CONDITIONS. This Amendment will be effective when the Bank receives the
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following items, in form and content acceptable to the Bank:
3.1 Statement of Purpose for an Extension of Credit Secured by Margin
Stock, duly executed by the Borrower and the Bank.
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4. EFFECT OF AMENDMENT. Except as provided in this Amendment, all of the
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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 Ortel Corporation
/s/ Stephen L. Nelson /s/ Wim Selders
X_____________________________________ X______________________________
By: Stephen L. Nelson, Vice President By: Wim H.J. Selders, President
and Chief Executive Officer
/s/ S.K. Workman
X______________________________
By: Stephen K. Workman,
Vice-President-Finance and
Chief Financial Officer
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FRU-1
[LOGO OF BANK OF AMERICA] O.M.B. No. 7100-0115
Approval Expires July 31, 1998
REPORTING BURDEN
Public reporting burden for this collection of information is estimated to
average 4.2 minutes (0.07 hours) per response, including the time for reviewing
instructions, searching existing data sources, gathering and maintaining the
data needed, and completing and reviewing the collection of information. Send
comments regarding this burden estimate, including suggestions for reducing this
burden, to Secretary, Board of Governors of the Federal Reserve System, 20th and
C Streets, N.W., Washington, D.C. 20551; and to the Office of Management and
Budget, Paperwork Reduction Project (7100-0115), Washington D.C. 20503.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
STATEMENT OF PURPOSE FOR AN EXTENSION OF CREDIT SECURED BY MARGIN STOCK
(FEDERAL RESERVE FORM U-1)
This form is required by law (15 U.S.C. (SS)78g and 78w; 12 CFR 221).
INSTRUCTIONS:
(1) This form must be completed when a bank extends credit in excess of $100,000
secured directly or indirectly, in whole or in part, by any margin stock.
(2) The term "margin stock" is defined in Regulation U (12 CFR 221) and
includes, principally: (1) stocks that are registered on a national
securities exchange or that are on the Federal Reserve Board's List of
Marginable OTC Stocks; (2) debt securities (bonds) that are convertible into
margin stocks; and (3) any over-the-counter security designated as qualified
for trading in the National Market System under a designation plan approved
by the Securities and Exchange Commission (NMS security); and (4) shares of
mutual funds, unless 95 per cent of the assets of the fund are continuously
invested in U.S. government, agency, state, or municipal obligations.
(3) Please print or type (if space is inadequate, attach separate sheet).
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PART I To be completed by borrower(s):
(1) What is the amount of the credit being extended? $5,000,000
(2) Will any part of this credit be used to purchase or carry margin stock?
[_] Yes [X] No
If the answer is "no," describe the specific purpose of the credit:
TO PROVIDE FOR OPERATING CAPITAL AND THE ISSUANCE OF LETTERS OF CREDIT
I (we) have read this form and certify that to the best of my (our) knowledge
and belief the information given is true, accurate, and complete, and that the
margin stock and any other securities collateralizing this credit are authentic,
genuine, unaltered, and not stolen, forged or counterfeit.
Date: 9-9-97
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Ortel Corporation
x /s/ Wim H.J. Selders
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By: Wim H.J. Selders, President/Chief Executive Officer
x /s/ Stephen K. Workman
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By: Stephen K. Workman, Vice President-Finance/Chief Financial Officer
THIS FORM SHOULD NOT BE SIGNED IF BLANK
A BORROWER WHO FALSELY CERTIFIES THE PURPOSE OF A CREDIT ON THIS FORM
OR OTHERWISE WILLFULLY OR INTENTIONALLY EVADES THE PROVISIONS OF REGULATION U
WILL ALSO VIOLATE FEDERAL RESERVE REGULATION X,
"BORROWERS OF SECURITIES CREDIT."
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PART II To be completed by bank only if the purpose of the credit is to
purchase or carry margin stock
(Part 1(2) answered "yes")
(1) List the margin stock securing this credit: do not include debt securities
convertible into margin stock. The maximum loan value of margin stock is
____ per cent of its current market value under the current Supplement to
Regulation U.
DATE AND SOURCE
MARKET PRICE OF VALUATION TOTAL MARKET
NO. OF SHARES ISSUE PER SHARE (SEE NOTE BELOW) VALUE PER ISSUE
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(2) List the debt securities convertible into margin stock securing this
credit. The maximum loan value of such debt securities is ____ per cent of
the current value under the current Supplement to Regulation U.
DATE AND SOURCE
PRINCIPAL OF VALUATION TOTAL MARKET
AMOUNT ISSUE MARKET PRICE (SEE NOTE BELOW) VALUE PER ISSUE
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(3) List other collateral including non-margin stock securing this credit.
DATE AND SOURCE
OF VALUATION GOOD FAITH
DESCRIBE BRIEFLY MARKET PRICE (SEE NOTE BELOW) LOAN VALUE
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NOTE: Bank need not complete "Date and source of valuation" if the market value
was obtained from regularly published information in a journal of general
circulation.
PART III To be signed by a bank officer in all instances
I am a duly authorized officer of the bank and understand that this credit
secured by margin stock may be subject to the credit restrictions of Regulation
U. I have read this form and any attachments, and I have accepted the customer's
statement in Part I in good faith as required by Regulation U**, and I certify
that to the best of my knowledge and belief, all the information given is
true, accurate and complete. I also certify that if any securities that
directly secure the credit are not or will not be registered in the name of the
borrower or its nominee, I have or will cause to have examined the written
consent of the registered owner to pledge such securities. I further certify
that any securities that have been or will be physically delivered to the bank
in connection with this credit have been or will be examined, that all
validation procedures required by bank policy and the Securities Exchange Act of
1934 (section 17(f), as amended) have been or will be performed, and that I am
satisfied to the best of my knowledge and belief that such securities are
genuine and not stolen or forged and their faces have not been altered.
Signed:
Date: 9-9-97
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x /s/ Stephen L. Nelson
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for Stephen L. Nelson, Vice President
** To accept the customer's statement in good faith, the officer of the bank
must be alert to the circumstances surrounding the credit and, if in possession
of any information that would cause a prudent person not to accept the statement
without inquiry, must have investigated and be satisfied that the statement is
truthful. Among the facts which would require such investigation are receipt of
the statement through the mail or from a third party.
THIS FORM MUST BE RETAINED BY THE BANK FOR AT LEAST THREE YEARS
AFTER THE CREDIT IS EXTINGUISHED
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