Bridge Loan Facility

Exhibit 10.1


April 23, 1999


Coherent, Inc. 5100 Patrick Henry Drive Santa Clara, CA 95054 Attention: Dennis Bucek, Treasurer


Re: BRIDGE LOAN FACILITY


Ladies/Gentlemen:


Bank of America National Trust and Savings Association ("LENDER") is pleased to make available to Coherent, Inc., a Delaware corporation ("BORROWER") a bridge facility on the terms and subject to the conditions set forth below. Terms not defined herein have the meanings assigned to them in by reference in PARAGRAPH 4 hereof or in EXHIBIT A hereto.


1. THE FACILITY.


(a) THE COMMITMENT. Subject to the terms and conditions set forth
herein, Lender agrees to make available to Borrower a single
loan on the Closing Date (the "LOAN") in an aggregate
principal amount of $70,000,000, or such lesser amount as may
be requested by Borrower on the Closing Date (the
"COMMITMENT"). Once repaid or prepaid by Borrower, the Loan
may not be reborrowed.


(b) BORROWINGS, CONVERSIONS, CONTINUATIONS. Borrower may request
that the Loan be made as or converted to a Base Rate Loan or
Offshore Rate Loan by irrevocable notice to be received by
Lender not later than 8:00 a.m. on the Business Day of the
borrowing or conversion. If Borrower fails to give a notice of
conversion or continuation prior to the end of any Interest
Period in respect of any Offshore Rate Loan, Borrower shall be
deemed to have requested that such Loan be converted to a Base
Rate Loan on the last day of the applicable Interest Period.


Each Offshore Rate Loan shall be in a minimum principal amount
of $5,000,000 or a multiple of $100,000 in excess thereof.


(c) INTEREST. At the option of Borrower, the Loan or any part
thereof which is at least equal to the minimum amount set
forth above shall bear interest at a rate per annum equal to
(i) the Offshore Rate PLUS 1.50%; or (ii) the Base Rate.
Interest on Base Rate Loans when the Base Rate is determined
by Lender's "prime" or "reference" rate shall be calculated on
the basis of a year of 365 or 366 days and


actual days elapsed. All other interest hereunder shall be
calculated on the basis of a year of 360 days and actual days
elapsed.


Borrower promises to pay interest on the Loan on the Maturity
Date. If the time for any payment is extended by operation of
law or otherwise, interest shall continue to accrue for such
extended period.


After the date any principal amount of the Loan is due and
payable (whether on the Maturity Date, upon acceleration or
otherwise), or after any other monetary obligation hereunder
shall have become due and payable, Borrower shall pay, but
only to the extent permitted by law, interest (after as well
as before judgment) on such amounts at a rate per annum equal
to the Base Rate plus 3%. Such interest shall be payable on
demand.


In no case shall interest hereunder exceed the amount that
Lender may charge or collect under applicable law.


(d) EVIDENCE OF LOANS. The Loan and all payments thereon shall be
evidenced by Lender's loan accounts and records; PROVIDED,
HOWEVER, that upon the request of Lender, the Loan may be
evidenced by a grid promissory note in the form of EXHIBIT B
hereto, instead of or in addition to such loan accounts and
records. Such loan accounts, records and promissory note shall
be PRIMA FACIE evidence of the amount of the Loan and payments
thereon. Any failure to record any Loan or payment thereon or
any error in doing so shall not limit or otherwise affect the
obligation of Borrower to pay any amount owing with respect to
the Loan.


(e) REPAYMENT. Borrower promises to pay to Lender the principal
amount of all Loans then outstanding on the Maturity Date.


Borrower shall make all payments required hereunder on the
date of payment in same day funds in United States Dollars at
the office of Lender located at 1850 Gateway Boulevard,
Concord, CA 94520 or such other address as Lender may from
time to time designate in writing.


All payments by Borrower to Lender hereunder shall be made to
Lender in full without set-off or counterclaim and free and
clear of and exempt from, and without deduction or withholding
for or on account of, any present or future taxes, levies,
imposts, duties or charges of whatsoever nature imposed by any
government or any political subdivision or taxing authority
thereof. Borrower shall reimburse Lender for any taxes imposed
on or withheld from such payments (other than taxes imposed on
Lender's income, and franchise taxes imposed on Lender, by the
jurisdiction under the laws of which Lender is organized or
any political subdivision thereof).


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(g) PREPAYMENTS. Borrower may, upon same-day notice, prepay the
Loan or a portion thereof on any Business Day; PROVIDED that
Borrower pays all Breakage Costs (if any) associated with such
prepayment on the date of such prepayment. Prepayments of
Offshore Rate Loans must be accompanied by a payment of
interest on the amount so prepaid. Prepayments of Offshore
Rate Loans must be in a principal amount of (i) at least
$5,000,000 or a multiple of $1,000,000 in excess thereof, or
(ii) if less, the entire amount of the outstanding Loan.


2. CONDITIONS PRECEDENT TO THE LOAN. As a condition precedent to
making the Loan hereunder, the following must have occurred:


(i) Lender shall have received from Borrower the enclosed
duplicate of this Agreement duly executed and
delivered on behalf of Borrower;


(ii) Lender shall have received from Borrower in form
satisfactory to Lender: (x) a certified borrowing
resolution or other evidence of Borrower's authority
to borrow; (y) a certificate of incumbency; and (z)
such other documents (including legal opinions) as
Lender may reasonably request;


(iii) If requested by Lender, Lender shall have received
from Borrower a promissory note as contemplated in
PARAGRAPH 1(d) above;


(iv) Borrower shall have paid to Lender a closing fee in
the amount agreed to by Borrower and Lender in a
letter agreement dated on or about April 20, 1999;


(v) Borrower and Lender shall have entered into an
amendment to the Credit Agreement in form and
substance satisfactory to Lender;


(vi) Borrower must furnish Lender with a notice of
borrowing in form and substance reasonably
satisfactory to Lender;


(vii) each representation and warranty set forth in
PARAGRAPH 3 below shall be true and correct in all
material respects as if made on the date of such
borrowing;


(viii) no Default or Event of Default shall have occurred
and be continuing on the date of such borrowing; and


(ix) the Closing Date shall have occurred on or before
April 23, 1999.


The notice of borrowing shall be deemed a representation and
warranty by Borrower that the conditions referred to in
clauses (vii) and (viii) above have been met.


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3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants that:


(a) EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS. It
is a corporation duly organized or formed, validly existing
and in good standing under the laws of the state of its
organization or formation, has the power and authority and the
legal right to own and operate its properties, to lease the
properties it operates and to conduct its business, is duly
qualified and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such
qualification, and is in compliance with all applicable laws
except to the extent that noncompliance does not have a
Material Adverse Effect.


(b) POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The execution,
delivery and performance of this Agreement and the other Loan
Documents by Borrower are within its powers and have been duly
authorized by all necessary action, and this Agreement is and
the other Loan Documents, when executed, will be, legal, valid
and binding obligations of Borrower, enforceable in accordance
with their respective terms. The execution, delivery and
performance of this Agreement and the other Loan Documents are
not in contravention of law or of the terms of Borrower's
organic documents and will not result in the breach of or
constitute a default under, or result in the creation of a
lien under any indenture, agreement or undertaking to which
Borrower is a party or by which it or its property may be
bound or affected.


(c) FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT. The audited
consolidated balance sheet and statements of earnings and cash
flow of Borrower and its Subsidiaries as of September 26,
1998, present fairly the consolidated financial condition of
Borrower and its Subsidiaries as of such date, and since such
date, there has been no event or circumstance that has a
Material Adverse Effect.


(d) NO MATERIAL LITIGATION. No litigation or governmental
proceeding is pending or, to the best knowledge of Borrower,
threatened by or against Borrower which, if adversely
determined, has a Material Adverse Effect.


(e) NO DEFAULT. No Default or Event of Default has occurred and is
continuing.


(f) USE OF PROCEEDS. The proceeds of the Loans will be used solely
to finance the acquisition of all of the shares or assets of
Star Medical Technologies, Inc. in compliance with the
provisions of the Loan Documents and of Regulation U of the
Board of Governors of the Federal Reserve Bank and any other
requirement of applicable law.


(g) ERISA. Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code, and other
Federal or state law, including all requirements under the
Code or ERISA for filing reports, and benefits have been


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paid in accordance with the provisions of such Plan except
where the failure to be in compliance in all material respects
does not have a Material Adverse Effect.


(h) ENVIRONMENTAL MATTERS. All facilities owned or leased by
Borrower or its Subsidiaries have been and continue to be in
material compliance with all material environmental laws and
regulations.


(i) YEAR 2000. On the basis of a comprehensive review and
assessment of the Borrower's and its subsidiaries' systems and
equipment and inquiry made of the Borrower's and its
subsidiaries' material suppliers and vendors, the Borrower
reasonably believes that the Borrower's "Year 2000 problem"
(that is, the inability of computers, as well as embedded
microchips in non-computing devices, to perform properly
date-sensitive functions with respect to certain dates prior
to and after December 31, 1999), including costs of
remediation, will not result in a Material Adverse Effect. The
Borrower and its subsidiaries have developed feasible
contingency plans adequately to ensure uninterrupted and
unimpaired business operation in the event of failure of their
own or, to the extent reasonably foreseeable, a third party's
systems or equipment due to the Year 2000 problem, including
those of vendors and suppliers.


(j) FULL DISCLOSURE. No written statement made by Borrower to
Lender in connection with this Agreement, or in connection
with any Loan, contains any untrue statement of a material
fact or omits a material fact necessary to make the statement
made not misleading in any material respect.


4. COVENANTS. So long as principal of and interest on any Loan or any
other amount payable hereunder or under any other Loan Document remains
unpaid or unsatisfied or the Commitment has not been terminated,
Borrower shall comply with all the covenants and agreements applicable
to it contained in Articles 6 (Affirmative Covenants) and 7 (Negative
Covenants) of the Credit Agreement, it being agreed that such covenants
and agreements shall survive any termination, cancellation, discharge
or replacement of the Credit Agreement. Unless otherwise provided in
this Agreement or unless the context otherwise requires, all
capitalized terms used in such Articles 6 and 7 shall have the meanings
set forth in the Credit Agreement. The covenants and agreements of
Borrower contained in such Articles 6 and 7 (including all exhibits,
schedules and defined terms referred to therein) are hereby
incorporated herein by reference with appropriate substitutions,
including the following:


(a) all references to "this Agreement" shall be deemed to be
references to this Agreement;


(b) all references to "Bank" shall be deemed to be references to
Lender;


(c) all references to "Default" and "Event of Default" shall be
deemed to be references to a Default and an Event of Default,
respectively; and


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(d) all references to "Loans" shall be deemed to be references to
the Loan.


Borrower further covenants to Lender that it will give notice to Lender
of the occurrence of the Private Placement on the date thereof.


5. EVENTS OF DEFAULT. The following are "EVENTS OF DEFAULT:"


(a) Borrower fails to pay any principal of the Loan, or any other
amount payable hereunder or under any other Loan Document, as
and on the date when due; or


(b) Borrower fails to pay any interest on the Loan, or any
commitment fees due hereunder, or any portion thereof, within
three days after the date when due; or Borrower fails to pay
any other fees or amount payable to Lender under any Loan
Document, or any portion thereof, within five days after the
date due; or


(c) Any representation or warranty in any Loan Document or in any
certificate, agreement, instrument or other document made or
delivered by Borrower pursuant to or in connection with any
Loan Document proves to have been incorrect in any material
respect when made or deemed mad ...