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EXHIBIT 10.97
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LOAN AGREEMENT
THIS LOAN AGREEMENT is dated as of December 1, 1996 and is among SPECTRAN
CORPORATION ("SpecTran"), SPECTRAN SPECIALTY OPTICS COMPANY ("Optics"), APPLIED
PHOTONIC DEVICES, INC. ("Photonic"), SPECTRAN COMMUNICATION FIBER TECHNOLOGIES,
INC. ("Communication") and FLEET NATIONAL BANK (the "Lender"). Each of SpecTran,
Optics, Photonic and Communication are sometimes referred to as a "Borrower" and
collectively the "Borrowers".
W I T N E S S E T H:
BACKGROUND. The Borrowers have requested the Lender to lend up to the sum of
$20,000,000.00 (the "Loan") and the Lender is willing to do so upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises herein contained, and each
intending to be legally bound hereby, the parties agree as follows:
ARTICLE
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DEFINITIONS
As used herein:
1.1 "Affiliate" means, as to any Person, each other Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such Person.
1.2 "Agreement" means this Loan Agreement, as the same may from time to time be
amended or supplemented.
1.3 "Borrowing Base" means $20,000,000.00 minus the face amount of all
outstanding letters of credit issued by the Lender for the account of any
Borrower.
1.4 "Business Day" means a day other than a Saturday, a Sunday, or a day on
which commercial banks in Worcester, Massachusetts are authorized to close.
1.5 "Capital Leases" means capital leases, conditional sales contracts and other
title retention agreements relating to the purchase or acquisition of
Consolidated Capital Assets.
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1.6 "Change in Control" means, if, prior to January 1, 2000, any person (as such
term is used in Section 13(d) and Section 14(d)(2) of the Exchange Act as in
effect on the date of the Closing) or related persons constituting a group (as
such term is used in Rule 13d-5 under the Exchange Act), other than Current
Management, or a group of which Current Management is a part, become the
"beneficial owners" (as such term is used in Rule 13d-3 under the Exchange Act
as in effect on the date of the Closing), directly or indirectly, of more than
the Control Percentage of the total voting power of all classes then outstanding
of SpecTran's voting stock.
1.7 "Closing" has the meaning given to such term in Section 3.1.
1.8 "Collateral Documents" means the Mortgages, the Security Agreement, the
Trust Indenture, the Pledge Agreement, the Patent Collateral Assignment, the
Trademark Security Agreement and the documents, whether deliverable at or after
the Closing, referenced in Exhibit 3.1(q) attached hereto.
1.9 "Consolidated Assets" means all assets of the Borrowers, including without
limitation, all assets that should be classified as assets on the consolidated
balance sheet of the Borrowers prepared in accordance with GAAP.
1.10 "Consolidated Capital Assets" means Consolidated Assets of the Borrowers
that are required or permitted to be depreciated or amortized in accordance with
GAAP.
1.11 "Consolidated Capital Expenditures" means, for the applicable period, the
aggregate amount of the Borrowers' expenditures for the acquisition,
construction, improvement, replacement or purchase of Consolidated Capital
Assets, including but not limited to, expenditures funded under Capital Leases.
1.12 "Consolidated Earnings Available for Fixed Charges" means, for the
applicable period, Consolidated Net Income plus Consolidated Interest, income
tax expense and Consolidated Minimum Operating Lease Rentals to the extent
deducted in the determination of Consolidated Net Income for the applicable
period, determined on a consolidated basis for the applicable period, provided
that Consolidated Earnings Available for Fixed Charges for any period shall be
adjusted to reflect the effect of all acquisitions and dispositions of
Subsidiaries and the incurrence and disposition of Consolidated Indebtedness in
connection therewith, assuming for purposes of calculation but all such
acquisitions and dispositions that occurred during such period occurred on the
first day of such period.
1.13 "Consolidated EBITDA Cumulative" means, Consolidated Operating Income minus
income (based on the equity method of accounting in accordance with GAAP)
derived from unconsolidated Subsidiaries or other Persons plus Consolidated
Interest and consolidated taxes, depreciation and amortization determined on a
rolling four (4) quarters basis in accordance with GAAP.
1.14 "Consolidated Fixed Charges" means, for the applicable period, the sum of
Consolidated Minimum Operating Lease Rentals for such period plus Consolidated
Interest to the extent
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included in the determination of Consolidated Net Income for such period,
provided that Consolidated Fixed Charges for any period shall be adjusted to
reflect the effect of all acquisitions and dispositions of Subsidiaries and the
incurrence and disposition of Consolidated Indebtedness in connection therewith,
assuming for purposes of calculation that all such acquisitions and dispositions
that occurred during such period occurred on the first day of such period.
1.15 "Consolidated Indebtedness" means, as to the Borrowers:
(a) Obligations for borrowed money;
(b) Obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of the Borrowers' business payable on terms customary in the trade);
(c) Obligations, whether or not assumed, secured by liens;
(d) Obligations with respect to notes, acceptances, letters of
credit, guarantees or other instruments; and
(e) Obligations under Capital Leases.
1.16 "Consolidated Interest" means, for the applicable period, interest paid or
payable by the Borrowers, including but not limited to, interest paid or payable
on Consolidated Indebtedness determined in accordance with GAAP.
1.17 "Consolidated Interest Coverage Ratio" means, for the applicable period,
the ratio of Consolidated Earnings Available for Fixed Charges to Consolidated
Fixed Charges.
1.18 "Consolidated Leverage Ratio" means the ratio of Consolidated Liabilities
to Consolidated Tangible Net Worth.
1.19 "Consolidated Liabilities" means all liabilities of the Borrowers,
including without limitation, all liabilities that should be classified as
liabilities on a consolidated balance sheet of the Borrowers prepared in
accordance with GAAP.
1.20 "Consolidated Operating Lease Rentals" means, for the applicable period,
(a) all payments made by any Borrower during such period in respect of leases of
real and personal property other than Capital Leases, minus (b) the amount of
rental payments made to any Borrower by others in respect of fixed rental
payments under noncancelable subleases with a term of at least one (1) year on
properties of such Borrower subject to leases described in the immediately
preceding clause (a).
1.21 "Consolidated Net Income" means, for the applicable period, the Borrowers'
net income determined in accordance with GAAP.
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1.22 "Consolidated Operating Income" means, for the applicable period,
Consolidated Net Income less the sum of (a) extraordinary and non-recurring
gains and (b) gains from the sale of Consolidated Capital Assets plus the sum of
(x) extraordinary and non-recurring losses and (y) losses from the sale of
Consolidated Capital Assets.
1.23 "Consolidated Stockholders' Equity" means the aggregate of the following
accounts on the consolidated balance sheet of the Borrowers prepared in
accordance with GAAP: (a) the par or stated value of all outstanding capital
stock, (b) capital surplus and (c) retained earnings.
1.24 "Consolidated Tangible Net Worth" means Consolidated Stockholders' Equity,
less the sum of (a) any surplus resulting from any write up of Consolidated
Assets, (b) goodwill, including any amounts however designated on the
consolidated balance sheet of the Borrowers representing the excess of the
purchase price paid for assets or stock acquired over the value assigned thereto
on the books of any Borrower, (c) patents, trademarks, trade names, copyrights
and licenses, (d) any amount at which shares of capital stock of any Borrower
appear as an asset on the consolidated balance sheet of the Borrowers, (e) loans
and advances to Affiliates, stockholders, directors, officers or employees, (f)
deferred expenses, and (g) any other amount in respect of an intangible (except
for the tax intangible related to FASB 109) that should be classified as an
asset on a consolidated balance sheet of the Borrowers in accordance with GAAP.
1.25 "Control Percentage" means, prior to July 1, 2000, 30% and on and after
July 1, 2000, 50%.
1.26 "Current Management" means (a) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and (b)
individuals who were, at such time, officers or directors of SpecTran during the
proceeding period of twenty-four (24) consecutive months.
1.27 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
1.28 "Event of Default" has the meaning provided in Section 7.1.
1.29 "Financial Statements" means the audited, consolidated cash flow
statements, income statements and balance sheets of the Borrowers as of December
31, 1994 and December 31, 1995 and notes thereto certified by KPMG Peat Marwick,
LLP to present fairly the consolidated financial position and results of
operations of the Borrowers at such dates and for such periods in accordance
with GAAP and all other financial information delivered to the Lender from time
to time pursuant to Sections 6.01(b)(i), 6.01(b)(ii) and 6.01(b)(iii) of this
Agreement.
1.30 "GAAP" means generally accepted accounting principles applied consistently
with such changes or modifications thereto as may be approved in writing by the
Lender.
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1.31 "Intellectual Property" means trademarks, service marks, trade names, trade
styles, logos, goodwill, trade secrets, patents, and licenses acquired under any
statutory, common law or registration process in any state or nation at any time
or under any agreement executed with any Person at any time. The term "license"
refers not only to rights granted by agreement from the owner of patents,
trademarks, service marks and the like but also to rights granted by a
franchiser under a franchise or similar agreement. The foregoing enumeration is
not intended as a limitation of the meaning of the word "license".
1.32 "Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any government or political subdivision or
agency thereof or of any court or similar entity established by any thereof.
1.33 "Mortgages" means the Mortgage, Assignment of Rents and Security Agreement
covering Communication's real property in Sturbridge, Massachusetts and the
Open-End Mortgage, Assignment of Rents and Security Agreement covering Optic's
real property in Avon, Connecticut each granted to the Trustee (as defined in
the Trust Indenture) and each dated as of December 1, 1996, as from time to time
supplemented or amended.
1.34 "Obligations" is intended to be used in its most comprehensive sense and
means the obligations of the Borrowers:
(a) To pay the principal of, and interest on, the Revolving
Note in accordance with the terms thereof and to satisfy all other liabilities
to the Lender (including without limitation with respect to letters of credit
issued by the Lender for the account of any Borrower) whether hereunder or
otherwise, whether now existing or hereafter incurred, matured or unmatured,
direct or contingent, joint or several, including any extensions, modifications,
renewals thereof and substitutions therefor;
(b) To repay to the Lender all amounts advanced by the Lender
hereunder or otherwise on behalf of any Borrower, including, but without
limitation, advances for principal or interest payments to prior secured
parties, mortgagees, or lienors, or for taxes, levies, insurance, rent, or
repairs to, or maintenance or storage of, any of the Consolidated Assets; and
(c) To reimburse the Lender, on demand, for all of the
Lender's expenses and costs, including without limitation the reasonable fees
and expenses of its counsel, in connection with the preparation, administration,
amendment, modification, or enforcement of this Agreement and the documents
required hereunder, including, without limitation, any proceeding brought, or
threatened, to enforce payment of any of the obligations referred to in the
foregoing paragraphs (a) and (b).
1.35 "Offering" means any public and/or private offering of the capital stock of
SpecTran occurring after the date of this Agreement.
1.36 "Note Purchase Agreements" means the Note Purchase Agreements between
SpecTran and each of Massachusetts Life Insurance Company, CM Life Insurance
Company, Mutual Life
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Insurance Company of New York and Pacific Mutual Life Insurance Company each
dated as of December 1, 1996, as from time to time supplemented or amended.
1.37 "Patent Collateral Assignment" means, the Patent Collateral Assignment
among the Borrowers and the Trustee (as defined in the Trust Indenture) dated as
of December 1, 1996, as from time to time supplemented or amended.
1.38 "Person" means any individual, corporation, limited liability corporation,
partnership, limited liability partnership, association, joint-stock company,
trust, unincorporated organization, joint venture, court, or government or
political subdivision or agency thereof.
1.39 "Permitted Liens" means:
(a) Liens for taxes, assessments, statutory obligations or
similar charges, incurred in the ordinary course of business, that are not yet
due and payable or if overdue being contested in good faith by appropriate and
lawful proceedings, so long as levy and execution thereon have been stayed and
continue to be stayed and they do not, in the aggregate, materially detract from
the value of the property of any Borrower or materially impair the operation of
any Borrower's business;
(b) Pledges or deposits made in the ordinary course of
business to secure payment of worker's compensation, or to participate in any
fund in connection with worker's compensation, unemployment insurance, old-age
pensions or other social security programs;
(c) Liens of mechanics, materialmen, warehousemen, carriers or
other like liens, securing obligations incurred in the ordinary course of
business that are not yet due and payable;
(d) Encumbrances consented to by the Lender in writing
including zoning restrictions, easements, or other restrictions on the use of
real property, none of which materially impairs the use of such property by any
Borrower in the operation of its business, and none of which is violated in any
material respect by existing or proposed structures or land use;
(e) Purchase money security interests granted to secure the
purchase price of assets, the purchase of which does not violate the terms of
this Agreement;
(f) Liens consented to by the Lender in writing; and
(g) Liens evidenced by the Collateral Documents
1.40 "Pledge Agreement" means the Pledge Agreement among the Borrowers and the
Trustee (as defined in the Trust Indenture) dated as of December 1, 1996, as
from time to time supplemented or amended.
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1.41 "Records" means correspondence, memoranda, tapes, discs, papers, books and
other documents, or transcribed information of any type, whether expressed in
ordinary or machine readable language.
1.42 "Revolving Note" means the Revolving Note substantially in the form of
Exhibit 1.42 attached hereto.
1.43 "Security Agreement" means the Security Agreement among the Borrowers and
the Trustee (as defined in the Trust Indenture) dated as of December 1, 1996, as
from time to time supplemented or amended.
1.44 "Subsidiary" means any Affiliate (a) that is directly, or indirectly
through one or more intermediaries, controlled by any Borrower or (b) of which
not less than 50% of the voting capital stock is owned, directly or through one
or more intermediaries, by any Borrower.
1.45 "Trademark Security Agreement" means the Trademark Security Agreement among
the Borrowers and the Trustee (as defined in the Trust Indenture) dated as of
December 1, 1996, as from time to time supplemented or amended.
1.46 "Trust Indenture" means, the Trust Indenture among the Borrowers and the
Trustee (as defined therein) dated as of December 1, 1996 as from time to time
supplemented or amended.
1.47 Accounting. Accounting terms used and not otherwise defined in this
Agreement have the meanings determined by, and all calculations with respect to
accounting or financial matters unless otherwise provided herein shall be
computed in accordance with, GAAP.
ARTICLE
2
THE LOAN
2.1 General Terms.
Subject to the terms hereof, the Lender will lend the Borrowers the
principal sum of $20,000,000.00 on a revolving loan basis.
2.2 Disbursement.
The Lender will credit the proceeds of the Revolving Note to the Lender
to pay the existing Consolidated Indebtedness to the Lender in full and
thereafter, from time to time and subject to the terms hereof, to the Borrowers'
deposit account identified in Exhibit 2.2 attached hereto for working capital
and general corporate matters.
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2.3 Revolving Note.
Subject to the terms hereof, the Lender will lend the Borrowers, from
time to time until December 31, 1999 (the "Termination Date") or the occurrence
of an Event of Default, whichever occurs first, such sums in integral multiples
of $1,000.00 (pursuant to the terms of the Revolving Note, advances subject to
LIBOR interest rates must be in multiples of $500,000.00) as any Borrower may
request by reasonable same day notice to the Lender, received by the Lender not
later than 12:00 p.m. of such day, but which shall not exceed, in the aggregate
principal amount at any one time outstanding, the Borrowing Base. The
Termination Date may be extended by the Lender, as determined in its sole and
absolute discretion, by written notice to any Borrower. The Borrowers may
borrow, repay without penalty or premium (except for repayments of principal
subject to LIBOR interest rates prior to the expiration of the Index Period as
more fully set forth in the Revolving Note) and reborrow hereunder, from the
date of this Agreement until the Termination Date or the occurrence of an Event
of Default, whichever occurs first. It is the intention of the parties that the
outstanding principal amount of the Revolving Note will not exceed the Borrowing
Base, and if, at any time, an excess shall for any reason exist, the full amount
of such excess, together with accrued and unpaid interest thereon, shall be
immediately due and payable in full.
2.4 Interest Rate and Payments of Interest.
Interest on the principal balance of the Loan from time to time
outstanding shall accrue at the rates and be payable as set forth in the
Revolving Note.
2.5 Payment to the Lender.
The Borrowers have designated the deposit account identified in Exhibit
2.2 attached hereto as the account for all payments under the Revolving Note and
hereunder. Notwithstanding such designation, the Lender may charge against any
deposit account of any Borrower all or any part of any amount due under the
Revolving Note and hereunder.
2.6 The Unused Facility Fee.
From and after the date hereof until the Termination Date, the Borrower
shall pay an Unused Facility Fee of one quarter of one percent (0.25%) per annum
on the average daily undisbursed amount of the Loan. The Unused Facility Fee
shall be payable quarterly in arrears on the first Business Day of each April,
July, October and January.
2.7 The Commitment Fee.
At the Closing, the Borrowers shall pay a commitment fee to the Lender
in the amount of $50,000.00.
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ARTICLE
3
CONDITIONS PRECEDENT
The obligation of the Lender to make the Loan is subject to the following
conditions precedent:
3.1 Documents Required for the Closing.
The Borrowers shall have delivered to the Lender, prior to the initial
disbursement of the Loan (the "Closing"), the following:
(a) The Revolving Note duly executed by the Borrowers;
(b) Copies of the Mortgages, which shall have been duly
executed by all proper parties and recorded at the appropriate recording office,
with all recording fees therefor paid;
(c) The Financial Statements;
(d) A copy of the Security Agreement and/or the financing
statements and other instruments required thereunder, which shall have been duly
executed by all proper parties and filed at the appropriate filing office, with
all filing fees therefor paid;
(e) A copy of the Trust Indenture, which shall have been
executed by all proper parties;
(f) A copy of the Pledge Agreement and other instruments
required thereunder, which shall have been executed by all proper parties;
(g) A copy of the Patent Collateral Assignment which shall
have been duly executed by all proper parties and filed at the appropriate
filing office, with all filing fees therefor paid;
(h) A copy of the Trademark Security Agreement which shall
have been duly executed by all proper parties and filed at the appropriate
filing office, with all filing fees therefor paid;
(i) Evidence that the Note Purchase Agreements have been
executed and delivered and the proceeds delivered to SpecTran;
(j) A copy, certified as of the date of the Closing, of votes
of the boards of directors of each Borrower and shareholders (except for
SpecTran) of each Borrower, authorizing the execution, delivery, and performance
of this Agreement, the Revolving Note, the Collateral Documents and each other
document to be delivered pursuant hereto;
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(k) A copy, certified as of the date of the Closing, of the
bylaws of each Borrower;
(l) A certificate (dated the date of the Closing) of the
corporate clerk and/or secretary of each Borrower as to the incumbency and
signatures of the officers of each Borrower signing this Agreement, the
Revolving Note, the Collateral Documents and each other document to be delivered
pursuant hereto;
(m) A copy, certified as of the most recent date practicable
by the secretary of the state of incorporation, of the charter of each Borrower
and all amendments thereto, together with a certificate (dated the date of the
Closing) of the corporate clerk and/or secretary of each Borrower to the effect
that such charter has not been further amended since the date of the aforesaid
certification of the secretary of the state of incorporation;
(n) A certificate of good standing dated as of the most recent
date practicable, issued by the secretary of the state of incorporation as to
the legal existence, charter, and good legal standing of each Borrower;
(o) Certificates, as of the most recent dates practicable, of
the secretary of each state in which any Borrower is qualified as a foreign
corporation and, if applicable, of the department of revenue or taxation of each
of such states, as to the good tax standing of each Borrower;
(p) A written opinion of the law firm of Hackmyer & Nordlicht,
legal counsel for the Borrowers, dated the date of the Closing and addressed to
the Lender, in form and content satisfactory to the Lender and its counsel; and
(q) Each of the agreements and documents referred to in that
certain Closing Document Agenda and that certain Closing Agenda, copies of which
are attached hereto as Exhibit 3.1(q).
3.2 Documents Required for Subsequent Disbursements.
At the time of, and as a condition to, any disbursement of any part of
the Loan to be made by the Lender subsequent to the Closing, the Lender may
require the Borrowers to deliver to the Lender a certificate, dated the date on
which any such disbursement is to be made, signed by the chief financial officer
of SpecTran and to the effect that:
(a) As of the date thereof, no Event of Default has occurred
and is continuing, and no event has occurred and is continuing that, but for the
giving of notice or passage of time or both, would be an Event of Default;
(b) No material adverse change has occurred in the business
prospects,financial condition, or results of operations of any Borrower since
the date of the most recent Financial Statements delivered to the Lender in
accordance with this Agreement; and
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(c) Each of the representations and warranties contained
herein is true and correct in all respects as if made on and as of the date of
such disbursement.
3.3 Certain Events.
At the time of, and as a condition to, the Closing and each
disbursement of any part of the Loan to be made by the Lender at or subsequent
to the Closing:
(a) No Event of Default shall have occurred and be continuing,
and no event shall have occurred and be continuing that, with the giving of
notice or passage of time or both, would be an Event of Default;
(b) No material adverse change shall have occurred in the
financial condition, or results of operations of any Borrower since the date of
the most recent Financial Statements delivered to the Lender in accordance with
this Agreement; and
(c) All of the Collateral Documents shall have remained in
full force and effect.
3.4 Legal Matters.
At the time of the Closing and each subsequent disbursement, all legal
matters incidental thereto shall be reasonably satisfactory to ▇▇▇▇▇▇,
▇'▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP legal counsel to the Lender.
ARTICLE
4
SECURITY
4.1 Composition of the Security.
The Obligations of the Borrowers are secured by the Consolidated Assets
of the Borrowers as evidenced by the Collateral Documents. The Consolidated
Assets shall stand as one general, continuing collateral security for all
Obligations and may be retained by the Lender until all Obligations have been
satisfied in full.
4.2 Rights in Property Held by the Lender.
As security for the prompt satisfaction of all Obligations, each
Borrower hereby assigns, transfers, and sets over to the Lender all of its
right, title, and interest in and to, and grants the Lender a lien on and a
security interest in, all amounts that may be owing, from time to time, by the
Lender to any Borrower in any capacity, including, but without limitation, any
balance or share belonging to any Borrower, or any deposit or other account with
the Lender, which lien and
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security interest shall be independent of, and in addition to, any of the
Lender's rights of set-off.
4.3 Priority of Liens.
The liens evidenced by the Collateral Documents shall constitute first
priority liens.
4.4 Financing Statements.
(a) Each Borrower will:
(i) Execute such financing statements (including
amendments thereto and continuation statements thereof) in form satisfactory to
the Lender as the Lender, from time to time, may specify;
(ii) Pay, or reimburse the Lender for paying, all
costs and taxes of filing or recording the same in such public offices as the
Lender may designate; and
(iii) Take such other steps as the Lender, from time
to time, may direct, including the noting of the Lender's lien on the
Consolidated Assets and on any certificates of title therefor, all to perfect to
the satisfaction of the Lender the Lender's interest in the Consolidated Assets.
(b) In addition to the foregoing, and not in limitation
thereof: to the extent lawful, each Borrower hereby appoints the Lender as its
attorney-in-fact (without requiring the Lender to act as such) to execute any
financing statement in the name of any Borrower, and to perform all other acts
that the Lender deems appropriate to perfect and continue its security interest
in, and to protect and preserve, the Consolidated Assets.
4.5 Mortgagees', Landlords', and Warehousemen's Waivers.
Each Borrower will obtain from any mortgagee of real estate owned by
any Borrower, any landlord of premises leased by any Borrower, and any
warehouseman or other bailee on whose premises any of the Consolidated Assets
may be located, instruments, in form and substance satisfactory to the Lender,
by which such mortgagee, landlord or warehouseman or other bailee waives its
rights, if any, in and to the Consolidated Assets of the Borrowers.
ARTICLE
5
REPRESENTATIONS AND WARRANTIES
5.1 Original.
To induce the Lender to enter into this Agreement, the Borrowers
jointly and severally represent and warrant to the Lender as follows:
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(a) Each Borrower is a corporation duly organized, validly
existing, and in good standing under the Laws of the state of its incorporation;
no Borrower has any Subsidiaries, except as set forth in Exhibit 5.1(a) attached
hereto; each Borrower has the lawful power to own its properties and to engage
in the business it conducts and is duly qualified and in good standing as a
foreign corporation in the jurisdictions wherein the nature of the business
transacted by it or property owned by it makes such qualification necessary; the
states in which each Borrower is qualified to do business are set forth in
Exhibit 5.1(a); the identity of each shareholder of each Borrower (except for
SpecTran) and the number of shares owned by each is set forth in Exhibit 5.1(a);
and the addresses of all places of business of each Borrower are as set forth in
Exhibit 5.1(a);
(b) No Borrower is directly or indirectly controlled by, or
acting on behalf of, any Person which is an "Investment Company", within the
meaning of the Investment Company Act of 1940, as amended;
(c) No Borrower is in default with respect to any of its
existing Consolidated Liabilities, and the making and performance of this
Agreement, the Revolving Note and the Collateral Documents will not (immediately
or with the passage of time, the giving of notice, or both):
(i) Violate the charter or by-laws of any Borrower,
or violate any Laws or result in a default under any contract, agreement, or
instrument to which any Borrower is a party or by which any Borrower or its
property is bound; or
(ii) Result in the creation or imposition of any
security interest in, or lien or encumbrance upon, any of the Consolidated
Assets of any Borrower, except as set forth in the Collateral Documents;
(d) Each Borrower to the extent applicable to it, has the
power and authority to enter into and perform this Agreement, the Revolving Note
and the Collateral Documents, and to incur the obligations herein and therein
provided for, and has taken all actions necessary to authorize the execution,
delivery, and performance of this Agreement, the Revolving Note and the
Collateral Documents;
(e) This Agreement, the Revolving Note and the Collateral
Documents are, or when delivered will be, valid, binding, and enforceable in
accordance with their respective terms, except to the extent enforceability is
subject to the exercise of judicial discretion in accordance with general
equitable principles and to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws for the relief of debtors heretofore or hereafter
enacted;
(f) Except as disclosed on Exhibit 5.1(f) attached hereto,
there is no pending order, notice, claim (other than claims arising in the
ordinary course of business for amounts not exceeding $25,000.00 individually or
$100,000.00 in the aggregate), litigation, proceeding, or investigation against
or affecting any Borrower, whether or not covered by insurance;
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(g) Each Borrower has good and marketable title to all of its
Consolidated Assets, none of which is subject to any security interest,
encumbrance or lien, or claim of any third Person, except for Permitted Liens;
(h) The Financial Statements, including any schedules and
notes pertaining thereto, have been prepared in accordance with GAAP, and fully
and fairly present the financial condition of the Borrowers at the dates thereof
and the results of operations for the periods covered thereby, and there have
been no material adverse changes in the financial condition or business of any
Borrower from the date of the most recent Financial Statements to the date
hereof;
(i) As of the date hereof, the Borrowers have no Consolidated
Indebtedness of any nature, except as disclosed on Exhibit 5.1(i) attached
hereto;
(j) Each Borrower has filed all federal, state, and local tax
returns and other reports required by any applicable Laws to have been filed
prior to the date hereof, has paid or caused to be paid all taxes, assessments,
and other governmental charges that are due and payable prior to the date
hereof, and has made adequate provision for the payment of such taxes,
assessments, or other charges accruing but not yet payable; no Borrower has
knowledge of any deficiency or additional assessment in a materially important
amount in connection with any taxes, assessments, or charges not provided for on
its books;
(k) Except to the extent that the failure to comply would not
materially interfere with the conduct of the business of any Borrower, each
Borrower has complied with all applicable Laws with respect to (i) any
restrictions, specifications, or other requirements pertaining to products that
it manufactures or sells or to the services it performs, (ii) the conduct of its
business and (iii) the use, maintenance, and operation of the real and personal
properties owned or leased by it in the conduct of its business;
(l) No representation or warranty by or with respect to any
Borrower contained herein or in any certificate or other document furnished by
any Borrower pursuant hereto contains any untrue statement of a material fact or
omits to state a material fact necessary to make such representation or warranty
not misleading in light of the circumstances under which it was made;
(m) Each consent, approval or authorization of, or filing,
registration or qualification with, any Person required to be obtained or
effected by any Borrower in connection with the execution and delivery of this
Agreement, the Revolving Note and the Collateral Documents or the undertaking or
performance of any obligation hereunder or thereunder has been duly obtained or
effected;
(n) To the best of each Borrower's knowledge, the Borrowers
and all other parties to all material leases, contracts, and other commitments
to which any Borrower is a party have all complied in all material respects with
the provisions of such leases, contracts, and other
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commitments and no party is in default under any thereof and no event has
occurred which, but for the giving of notice or the passage of time, or both,
would constitute a default;
(o) No Borrower has made any agreement or taken any action
which may cause anyone to become entitled to a commission or finder's fee as a
result of or in connection with the making of the Loan;
(p) Each Borrower's federal tax returns for all years of
operation, including the year ended December 31, 1995, have been filed with the
Internal Revenue Service and have not been challenged;
(q) Any Employee Pension Benefit Plans, as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), of any
Borrower meet, as of the date hereof, the minimum funding standards of 29
U.S.C.A. 1082 (Section 302 of ERISA), and no Reportable Event or Prohibited
Transaction, as defined in ERISA, has occurred with respect to any Employee
Benefit Plans, as defined in ERISA, of any Borrower;
(r) SpecTran has filed all registration statements, forms and
other reports with the Securities and Exchange Commission required by any
applicable Laws to have been filed prior to the date hereof; and
(s) The liens created pursuant to the Collateral Documents and
Section 4.2 of this Agreement are in all cases first priority liens.
5.2 Survival.
All of the representations and warranties set forth in Section 5.1
shall survive until all Obligations are satisfied in full and there remain no
outstanding commitments hereunder.
ARTICLE
6
COVENANTS OF THE BORROWERS
6.1 Affirmative Covenants.
The Borrowers do hereby jointly and severally covenant and agree with
the Lender that, so long as any of the Obligations remain unsatisfied or any
commitments hereunder remain outstanding, the Borrowers will comply at all times
with the following affirmative covenants:
(a) The Borrowers will use the proceeds of the Loan only for
working capital and general corporate purposes, and will furnish the Lender such
evidence as it may reasonably require with respect to such use;
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(b) SpecTran will furnish the Lender:
(i) As soon as available, but in any event within
thirty (30) days after the close of each calendar month in each fiscal year: (1)
consolidated and consolidating statements of cash flows of the Borrower for such
month, (2) consolidated and consolidating income statements of the Borrowers for
such month and (3) consolidated and consolidating balance sheets of the
Borrowers as of the end of such month-all such statements and balance sheets to
be in reasonable detail, including all supporting schedules and comments,
subject to normal year-end audit adjustments and certified by the chief
financial officer of SpecTran to have been prepared in accordance with GAAP and
to present fairly the financial position and results of operations of the
Borrowers;
(ii) As soon as available, but in any event within
forty-five (45) days after the close of each of the initial three quarterly
accounting periods in each fiscal year (i.e. March 31, June 30 and September 30)
a copy of SpecTran's Form 10-Q, and management's: (1) consolidated and
consolidating statements of cash flows of the Borrowers for such quarter, (2)
consolidated and consolidating income statements of the Borrowers for such
quarter and (3) consolidated and consolidating balance sheets of the Borrowers
as of the end of such quarter-all such statements and balance sheets to be in
reasonable detail, including all supporting schedules and comments, subject to
normal year-end audit adjustments and certified by the chief financial officer
of SpecTran to have been prepared in accordance with GAAP and to present fairly
the financial position and results of operations of the Borrowers;
(iii) As soon as available, but in any event within
ninety (90) days after the close of each fiscal year, a copy of SpecTran's Form
10-K and Annual Report (including the audited consolidated financial statements
prepared by KPMG Peat Marwick, LLP or another independent certified public
accountant selected by SpecTran and reasonably acceptable to the Lender) and
management's: (1) consolidated and consolidating statements of cash flows for
the Borrowers for such fiscal year, (2) consolidated and consolidating income
statements of the Borrowers for such fiscal year and (3) consolidated and
consolidating balance sheets of the Borrowers as of the end of such fiscal
year-all such statements and balance sheets to be in reasonable detail,
including all supporting schedules and comments; the consolidated statements and
balance sheets included in the Form 10-K and Annual Report to be audited by KPMG
Peat Marwick, LLP or another independent certified public accountant selected by
SpecTran and reasonably acceptable to the Lender and certified by such
accountants to have been prepared in accordance with GAAP and to present fairly
the financial position and results of operations of the Borrower; in addition,
SpecTran will obtain from such independent certified public accountants and
deliver to the Lender, within ninety (90) days after the close of each fiscal
year, their written statement that in making the examination necessary to their
certification they have obtained no knowledge of any Event of Default by the
Borrowers, or disclosing all Events of Default of which they have obtained
knowledge (it being understood and agreed by the Lender that in making their
examination, such accountants shall not be required to go beyond the bounds of
generally accepted auditing procedures for the purpose of certifying financial
statements); the Lender shall have the right, from time to time to discuss the
affairs of any Borrower directly with
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such independent certified public accountants after notice to SpecTran and
opportunity of SpecTran to be represented at any such discussions;
(iv) Contemporaneously with the year-end financial
report required by the foregoing paragraph (3), a copy of the management letter
issued to SpecTran by KPMG Peat Marwick or another certified public accountant
selected by SpecTran and reasonably acceptable to the Lender;
(v) Contemporaneously with each quarterly and
year-end financial report required by the foregoing paragraphs (2) and (3) a
certificate of the chief financial officer of SpecTran substantially in the form
of Exhibit 6.1(b)(v) attached hereto stating that he has individually reviewed
the provisions of this Agreement and that a review of the activities of the
Borrowers during such quarterly period or year, as the case may be, has been
made by him or under his supervision, with a view to determining whether the
Borrowers have fulfilled all of their obligations under this Agreement, and
that, to the best of his knowledge, the Borrowers have observed and performed
each undertaking contained in this Agreement and are not in default in the
observance or performance of any of the provisions hereof or, if the Borrowers
shall be so in default, specifying all such defaults and events of which he may
have knowledge;
(vi) As soon as available but in no event later than
thirty (30) days prior to the commencement of the next fiscal year, management
prepared financial projections, including (1) consolidated and consolidating
statements of cash flow, (2) consolidated and consolidating income statements
and (3) consolidated and consolidating balance sheets; and
(vii) Promptly after the sending or making available
or filing of the same, copies of all reports, proxy statements and financial
statements that any Borrower sends or makes available to its stockholders and
all registration statements and reports that any Borrower files with the
Securities and Exchange Commission or any successor Person;
(c) Each Borrower will maintain its Consolidated Assets in
good condition and repair (normal wear and tear excepted), and will pay and
discharge or cause to be paid and discharged, when due, the cost of repairs to,
or maintenance of, the same to the extent it is commercially reasonable for such
repairs to be made or maintenance to be performed, and will pay or cause to be
paid in a timely manner all rental or mortgage payments due on any real estate.
Each Borrower hereby agrees that, in the event it fails to pay or cause to be
paid any such payment, it will promptly notify the Lender thereof, and the
Lender may, in its discretion, do so and on demand be reimbursed therefor by the
Borrowers;
(d) Each Borrower will maintain public liability insurance and
fire and extended coverage insurance on all Consolidated Assets that are of a
character usually insured by corporations engaged in the same or similar
businesses, all in form and amount sufficient to indemnify each Borrower for
100% of the appraised value of any Asset lost or damaged subject to any
deductible customary in the industry. Each Borrower will cause all such
insurance policies to be payable to the Lender. Such policies shall contain a
provision whereby they cannot be canceled except after thirty (30) days' written
notice to the Lender. Each Borrower will
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furnish to the Lender such evidence of insurance as the Lender may reasonably
require. Each Borrower hereby agrees that, in the event it fails to pay or cause
to be paid the premium on any such insurance when due, the Lender, in its
discretion, may do so and be reimbursed by the Borrowers therefor. Each Borrower
hereby assigns to the Lender any returned or unearned premiums that may be due
any Borrower upon cancellation by the insurer of any such policy for any reason
whatsoever and directs any such insurer to pay the Lender any amounts so due.
The Lender is hereby appointed the attorney-in-fact of each Borrower (without
requiring the Lender to act as such) to endorse any check which may be payable
to any Borrower, to collect any premiums or the proceeds of such insurance
(other than proceeds of public liability insurance) and any amount so collected
may be applied by the Lender toward satisfaction of any of the Obligations
whether due or not yet due;
(e) Each Borrower will pay when due, all taxes, assessments,
and charges or levies imposed upon it or on any of its property or which it is
required to withhold and pay except where contested in good faith by appropriate
proceedings with adequate reserves therefor having been set aside on its books;
provided, however, that each Borrower shall pay or cause to be paid all such
taxes, assessments, charges or levies forthwith whenever foreclosure on any lien
that may have attached (or security therefor) appears imminent;
(f) The Borrowers will maintain on a consolidated basis:
(i) a Consolidated Interest Coverage Ratio of at
least 3.00:1.00 to be measured quarterly on a rolling four (4) quarters basis
(i.e. as of March 31, June 30, September 30, December 31);
(ii) a Consolidated Tangible Net Worth of at least
$18,500,000.00 as of the Closing; thereafter Consolidated Tangible Net Worth
must increase (1) as of December 31 of each fiscal year by an amount equal to
seventy-five percent (75%) of that fiscal year's Consolidated Net Income (to be
added only if a positive number) and (2) after any Offering by an amount equal
to the net proceeds of any such Offering; Consolidated Tangible Net Worth to be
measured quarterly (i.e. as of March 31, June 30, September 30, December 31);
(g) Each Borrower will, when requested to do so, make
available for inspection by duly authorized representatives of the Lender any of
its books and Records and will furnish the Lender any information regarding its
business affairs and financial condition within a reasonable time after written
request therefor, provided that any confidential information disclosed to the
Lender shall not be disclosed by the Lender to any unauthorized Person and
further provided that SpecTran may require the Lender to provide a certificate
of an officer of the Lender stating that the confidential information will not
be disclosed to any unauthorized Person;
(h) Each Borrower will (i) carry on and conduct its business
in substantially the same manner and in substantially the same fields of
expertise as presently conducted, (ii) do all things necessary to remain duly
incorporated, validly existing and in good standing in its state of
incorporation, (iii) maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted and where the failure to
maintain authority would have a
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materially adverse effect on any of the Borrowers and (iv) comply in all
material respects with all present and future Laws applicable to it in the
operation of its business and all material agreements to which it is subject;
(i) Each Borrower will collect its accounts and sell its
inventory only in the ordinary course of business;
(j) Each Borrower will keep accurate and complete Records of
its accounts, inventory and equipment consistent with sound business practices;
(k) Each Borrower will give immediate notice to the Lender of
any litigation or proceeding in which it is a party;
(l) Within ten (10) days after the filing thereof, each
Borrower will furnish the Lender with copies of federal income tax returns filed
by any Borrower;
(m) Each Borrower will pay when due (or within applicable
grace periods) all of its Consolidated Liabilities, except when the amount
thereof is being contested in good faith by appropriate proceedings and with
adequate reserves therefor being set aside on its books and as otherwise
disclosed in Exhibit 6.1(m) attached hereto. If default be made by any Borrower
in the payment of any of its Consolidated Liabilities, the Lender shall have the
right, in its discretion, to pay such amount for the account of any Borrower and
be reimbursed by the Borrowers therefor, except for Consolidated Liabilities
being contested in good faith by appropriate and lawful proceedings, so long as
levy and execution thereon have been stayed and continue to be stayed and they
do not, in the aggregate, materially detract from the value of the property of
the Borrowers or materially impair the use thereof in the operation of their
businesses and for which adequate reserves have been established;
(n) Each Borrower will notify the Lender immediately if it
becomes aware of the occurrence of any Event of Default or of any fact,
condition, or event that with the giving of notice or passage of time or both,
could become an Event of Default or if it becomes aware of any material adverse
change in the business prospects, financial condition (including, without
limitation, proceedings in bankruptcy, insolvency, reorganization, or the
appointment of a receiver or trustee), or results of operations of any Borrower,
or of the failure of any Borrower to observe any undertakings hereunder or under
the Collateral Documents;
(o) Each Borrower will notify the Lender thirty (30) days in
advance of any change in the location of any of its places of business or of the
establishment of any new or the discontinuance of any existing, place of
business;
(p) Each Borrower will (i) fund any of its Employee Pension
Benefit Plans in accordance with no less than the minimum funding standards of
29 U.S.C.A. 1082 (Section 302 of ERISA), (ii) furnish the Lender, promptly after
the filing of the same, with copies of any reports or other statements filed
with the United States Department of Labor or the Internal Revenue Service with
respect to any such Plan and (iii) promptly advise the Lender of the
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occurrence of any Reportable Event or Prohibited Transaction with respect to any
Employee Benefit Plan;
(q) SpecTran will file all registration statements, forms and
other reports with the Securities and Exchange Commission required by any
applicable Law to be filed; and
(r) The Borrowers will each maintain all of their principal
depository accounts with the Lender and the Lender's Affiliates and the Lender
and the Lender's Affiliates will continue to manage the Borrowers' cash;
notwithstanding the foregoing, the Borrowers may maintain depository accounts
with other financial institutions for convenience only provided the aggregate
amount of all such deposit accounts does not exceed $250,000.00.
6.2 Negative Covenants.
The Borrowers do hereby jointly and severally covenant and agree with
the Lender that, so long as any of the Obligations remain unsatisfied or any
commitments hereunder remain outstanding, the Borrowers will comply at all times
with the following negative covenants:
(a) No Borrower will change its name, enter into any merger,
consolidation, reorganization or recapitalization, or reclassify its capital
stock;
(b) The Borrowers will not, in the aggregate, sell, transfer,
lease, or otherwise dispose of Consolidated Assets (except in the ordinary
course of business) having a value in excess of $500,000.00 during the term of
this Agreement;
(c) No Borrower will sell or otherwise dispose of, or for any
reason cease operating, any of its divisions, franchises, or lines of business;
(d) No Borrower will mortgage, pledge, grant, or permit to
exist a security interest in, or a lien upon, any of its assets of any kind, now
owned or hereafter acquired, except for Permitted Liens;
(e) The Borrowers will not, in the aggregate, become liable,
directly or indirectly, as guarantor or otherwise for any obligation of any
other Person, except for (i) the endorsement of commercial paper for deposit or
collection in the ordinary course of business, (ii) liabilities not to exceed
$250,000.00 during the term of this Agreement and (iii) the obligations of any
Borrower to the extent otherwise permitted hereunder;
(f) No Borrower will incur, create, assume, or permit to exist
any liabilities except: (i) the Loan, (ii) Consolidated Indebtedness of the
Borrowers listed on Exhibit 5.1(i) to the extent shown on such Exhibit 5.1(i) to
be permitted to exist after the Closing, (iii) liabilities to any Borrower and
(iv) trade liabilities incurred in the ordinary course of business (provided,
however, that no Borrower may acquire inventory other than for cash or on open
account except as expressly approved in writing and in advance by the Lender);
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(g) No Borrower will make any assignment or transfer of
accounts, or, other than in the ordinary course of business, of inventory;
(h) The Borrowers will not, in the aggregate, form any
Subsidiary (except for wholly owned Subsidiaries which are capitalized with less
than $100.00), make any investment in (including any assignment of inventory or
other property), or make any loan in the nature of an investment to, any Person,
except for investments up to $500,000.00 during the term of this Agreement and
investments in or loans to any Borrower;
(i) The Borrowers will not make any loan or advance to any
Person, except for (i) business travel and similar temporary advances in the
ordinary course of business, (ii) in the aggregate, up to $100,000.00 during the
term of this Agreement and (iii) loans or advances to any Borrower;
(j) No Borrower will purchase or otherwise invest in or hold
securities, nonoperating real estate, or other nonoperating Consolidated Assets,
except for investments meeting the parameters set forth in Section 6.2(h) hereof
and Exhibit 6.2 (j) attached hereto;
(k) No Borrower will enter into any sale-leaseback
transaction;
(l) No Borrower will acquire or agree to acquire any stock in,
or all or substantially all of the assets of, any Person;
(m) The Borrowers will not, in the aggregate, pay or commit to
pay during any one fiscal year (commencing with the current fiscal year), lease
obligations (including without limitation Capital Leases and operating leases)
in excess of $500,000.00;
(n) No Borrower will furnish the Lender any certificate or
other document that will contain any untrue statement of material fact or that
will omit to state a material fact necessary to make it not misleading in light
of the circumstances under which it was furnished;
(o) No Borrower will directly or indirectly apply any part of
the proceeds of the Loan to the purchasing or carrying of any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, or any regulations, interpretations, or rulings thereunder; and
(p) The Borrowers will not permit on a consolidated basis:
(i) the Consolidated Leverage Ratio to exceed
1.50:1.00 to be measured quarterly (i.e. as of March 31, June 30, September 30,
December 31); after any Offering, the Consolidated Leverage Ratio may not exceed
1.00:1.00;
(ii) the ratio of Consolidated Indebtedness to
Consolidated EBITDA Cumulative to exceed 3.25:1.00, to be measured quarterly on
a rolling four (4) quarters basis (i.e.
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as of March 31, June 30, September 30, December 31); as of December 31, 1997 and
thereafter the ratio may not exceed 3.00:1.00; and
(iii) aggregate Consolidated Capital Expenditures to
exceed $20,000,000.00 during the fiscal year ending December 31, 1996;
$59,000,000.00 during the two (2) consecutive fiscal year period ending December
31, 1997; $77,000,000.00 during the three (3) consecutive fiscal year period
ending December 31, 1998; and for each fiscal year thereafter, commencing with
the fiscal year ending December 31, 1999, the Borrowers may incur, in the
aggregate, Consolidated Capital Expenditures up to but not to exceed
$7,000,000.00.
ARTICLE
7
DEFAULT
7.1 Events of Default.
The occurrence of any one or more of the following events shall
constitute an Event of Default hereunder:
(a) Any Borrower shall fail to pay when due any of its
Obligations to the Lender;
(b) Any Borrower shall fail to observe or perform any of the
obligations set forth in Section 6.1(b), Section 6.1(d), Section 6.1(k), Section
6.1(l) and Section 6.1(o) of this Agreement and such failure shall continue for
ten (10) days after (i) notice of such failure from the Lender; or (ii) the
Lender is notified of such failure or should have been so notified pursuant to
the provisions of Section 6.1(n), whichever is earlier;
(c) Any Borrower shall fail to observe or perform any one of
the obligations set forth in Section 6.1(c), Section 6.1(e) and Section
6.1(h)(ii) of this Agreement and such failure shall continue for thirty (30)
days after (i) notice of such failure from the Lender; or (ii) the Lender is
notified of such failure or should have been so notified pursuant to the
provisions of Section 6.1(n), whichever is earlier, provided, it shall not be an
Event of Default hereunder if any of the Borrowers has commenced taking action
to cure the default within the time period set forth in this Section 7.1(c) and
such cure could not reasonably be completed within such time period and
continues to diligently attempt to cure such default; at no time will the cure
period exceed sixty (60) days;
(d) Any Borrower shall fail to observe or perform any other
obligation to be observed or performed by it hereunder;
(e) Any Borrower shall fail to pay any Consolidated
Indebtedness due any third Persons (except as disclosed in Exhibit 6.1(m)
attached hereto), or any Borrower shall suffer to exist any other event of
default beyond any applicable cure period under any agreement binding any
Borrower, except for a failure to pay or an event of default which is being
contested in good
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faith by appropriate and lawful proceedings, so long as levy and execution
thereon have been stayed and continue to be stayed and such failure to pay or
event of default does not materially detract from the value of the property of
any Borrower or materially impair the use thereof in the operation of any of
their businesses, provided further that such failure to pay or event of default
shall continue for ten (10) days after (i) notice of such failure or event of
default from the Lender; or (ii) the Lender is notified of such failure or event
of default or should have been so notified pursuant to the provisions of Section
6.1(n), whichever is earlier;
(f) Any financial statement, representation, warranty, or
certificate made or furnished by or with respect to any Borrower to the Lender
in connection with this Agreement, or as inducement to the Lender to enter into
this Agreement, or in any separate statement or document to be delivered to the
Lender hereunder, shall be materially false, incorrect, or incomplete when made;
(g) Any Borrower shall admit its inability to pay its debts as
they mature or shall make an assignment for the benefit of itself or any of its
creditors;
(h) Proceedings in bankruptcy, or for reorganization of any
Borrower for the readjustment of any of its debts under the Bankruptcy Code, as
amended, or any part thereof, or under any other Laws, whether state or federal,
for the relief of debtors, now or hereafter existing, shall be commenced against
or by any Borrower and, except with respect to any such proceedings instituted
by any Borrower, shall not be discharged within sixty (60) days of their
commencement;
(i) A receiver or trustee shall be appointed for any Borrower
or for any substantial part of its Consolidated Assets, or any proceedings shall
be instituted for the dissolution or the full or partial liquidation of any
Borrower, and except with respect to any such appointments requested or
instituted by any Borrower, such receiver or trustee shall not be discharged
within sixty (60) days of his appointment, and except with respect to any such
proceedings instituted by any Borrower, such proceedings shall not be discharged
within sixty (60) days of their commencement, or any Borrower shall discontinue
business or materially change the nature of its business;
(j) Any Borrower shall suffer final judgments for payment of
money and shall not discharge the same within a period of sixty (60) days
unless, pending further proceedings, execution has not been commenced or, if
commenced, has been effectively stayed;
(k) A judgment creditor of any Borrower shall obtain
possession of any of the Consolidated Assets by any means, including (without
implied limitation) levy, distraint, replevin, or self-help;
(l) The occurrence of an Event of Default under (and as
defined in) either of the Mortgages;
(m) The occurrence of an Event of Default under (and as
defined in) the Security Agreement;
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(n) The occurrence of an Event of Default under (and as
defined in) the Pledge Agreement;
(o) The occurrence of an Event of Default under (and as
defined in) the Patent Collateral Assignment;
(p) The occurrence of an Event of Default under (and as
defined in) the Trademark Security Agreement;
(q) The occurrence of an Event of Default under (and as
defined in) the Trust Indenture;
(r) The occurrence of an Event of Default under (and as
defined in) any one or more of the Note Purchase Agreements; or
(s) The occurrence of a Change in Control.
7.2 Acceleration.
At its option, and at any time, whether immediately or otherwise, the
Lender may, upon the occurrence of any Event of Default, declare all Obligations
immediately due payable without further action of any kind, including without
notice, demand or presentment. Notwithstanding the foregoing, if at any time
after the Obligations have been declared due and payable and before any judgment
with respect thereto has been entered, every Event of Default has been made good
or cured, then the Lender may, by written instrument delivered to SpecTran,
rescind and annul such declaration and its consequences; but no such rescission
shall extend to or effect any subsequent default or Event of Default or impair
any rights of the Lender.
ARTICLE
8
THE LENDER'S RIGHTS AND REMEDIES
8.1 The Lender's Rights Upon Default
Upon the occurrence of an Event of Default and at any time thereafter,
the Lender, without presentment, demand, notice, protest or advertisement of any
kind, will have all rights under the Uniform Commercial Code and all Laws,
including without limitation all of the rights set forth in the Collateral
Documents and hereafter.
8.2 Notification of Default to Third Parties
Upon the occurrence of an Event of Default and at any time thereafter,
the Lender may notify any of the Borrower's suppliers, account debtors and other
third parties of the default and
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of any and all decisions made and actions taken by the Lender with respect to
this Agreement, the Obligations or the Consolidated Assets, without liability of
any kind. The Lender will provide written notice of such action to SpecTran.
Failure to provide such notice will not impair the Lender's rights.
8.3 Right of Set-Off.
Upon the occurrence of an Event of Default and at any time thereafter,
the Lender may, and is hereby authorized by each Borrower, to the fullest extent
permitted by applicable Laws, without advance notice to any Borrower (any such
notice being expressly waived by the Borrowers), set-off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and any other indebtedness at any time owing by the Lender to, or for the
credit or the account of, any Borrower against any or all of the Obligations of
the Borrowers, now or hereafter existing, whether or not such Obligations have
matured and irrespective of whether the Lender has exercised any other rights
that it has or may have with respect to such Obligations, including without
limitation any acceleration rights. The Lender agrees promptly to notify the
applicable Borrower after any such set-off and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Lender hereunder are in addition to the other
rights and remedies (including, without limitation, other rights of set-off)
which the Lender may have.
8.4 Cumulative Rights and Remedies
All rights and remedies of the Lender, whether provided for herein or
in other agreements, instruments or documents or conferred by Law, are
cumulative and may be exercised alone or simultaneously.
ARTICLE
9
ATTORNEY-IN-FACT
9.1 Attorney-In-Fact
Each Borrower hereby irrevocably appoints the Lender, or its designee,
as each Borrower's true and lawful attorney-in-fact, with full power, after the
occurrence of an Event of Default, as follows: (i) to endorse the name of any
Borrower on any assignments, notes, checks, drafts, money orders, or other
instruments of payment for Consolidated Assets; (ii) to sign or endorse the name
of any Borrower on any negotiable instrument, invoice, freight or express ▇▇▇▇,
▇▇▇▇ of lading, storage or warehouse receipts, drafts, assignments,
verifications and notices in connection with accounts, (iii) to obtain, adjust,
settle and cancel, in any Borrower's name, insurance policies as required herein
and to sign any Borrower's name on settlement checks or drafts, (iv) in any
Borrower's name, to do any act which this Agreement requires any Borrower to do
and (v) to give notice to the United States Post Office to effect changes of
address so that mail
25
27
addressed to any Borrower may be delivered directly to the Lender. In exercising
this power-of-attorney, the Lender shall not be liable to the extent that it
acts in good faith.
ARTICLE
10
MISCELLANEOUS
10.1 Connecticut Waiver.
TO THE EXTENT ANY ASSETS AND/OR REAL ESTATE IS LOCATED IN CONNECTICUT,
THE BORROWERS ACKNOWLEDGE THAT THIS AGREEMENT AND EACH TRANSACTION RELATED TO IT
IS A "COMMERCIAL TRANSACTION" WITHIN THE MEETING OF CHAPTER 903A OF THE
CONNECTICUT GENERAL STATUTES, AS AMENDED. THE BORROWERS HEREBY WAIVE ANY RIGHT
WHICH THEY MIGHT HAVE TO NOTICE IN A HEARING OR A PRIOR COURT ORDER, UNDER SAID
CHAPTER 903A OR AS OTHERWISE PROVIDED UNDER ANY APPLICABLE FEDERAL OR STATE LAW,
IN THE EVENT THE LENDER SEEKS ANY PREJUDGMENT REMEDY AT ANY TIME PRIOR TO FINAL
JUDGMENT IN ANY LITIGATION INSTITUTED IN CONNECTION WITH THIS AGREEMENT WHETHER
BY WAY OF ATTACHMENT, FOREIGN ATTACHMENT, GARNISHMENT OR REPLEVIN.
10.2 Appraisals/Audit.
The Lender may perform, at the Borrowers' expense, periodic appraisals
of any Borrower's equipment and real estate and the cost of each appraisal will
be borne by the Borrowers. The Lender agrees that appraisals will not be
required more frequently than annually unless required by applicable Laws or
after the occurrence of an Event of Default. The Lender may perform, at the
Borrowers' expense, periodic audits of any Borrower at any time and the cost of
each audit will be borne by the Borrowers.
10.3 Joint and Several.
All Obligations of the Borrowers hereunder are the joint and several
obligations of each of SpecTran, Optics, Photonic and Communications.
10.4 Construction.
The provisions of this Agreement shall be in addition to those of any
guaranty, pledge or security agreement, note, or other evidence of liability now
or hereafter held by the Lender, all of which shall be construed as
complementary to each other. Nothing herein contained shall prevent the Lender
from enforcing any or all other guaranty, pledge or security agreements, notes,
or other evidences of liability in accordance with their respective terms.
26
28
10.5 Further Assurance.
From time to time, each Borrower will execute and deliver to the Lender
such additional documents and will provide such additional information as the
Lender may reasonably require to carry out the terms of this Agreement and be
informed of the status and affairs of each Borrower.
10.6 Enforcement and Waiver by the Lender.
The Lender shall have the right at all times to enforce the provisions
of this Agreement and the Collateral Documents in strict accordance with the
terms hereof and thereof, notwithstanding any conduct or custom on the part of
the Lender in refraining from so doing at any time or times. The failure of the
Lender at any time or times to enforce its rights under such provisions,
strictly in accordance with the same, shall not be construed as having created a
custom in any way or manner contrary to specific provisions of this Agreement or
as having in any way or manner modified or waived the same. All rights and
remedies of the Lender are cumulative and concurrent and the exercise of one
right or remedy shall not be deemed a waiver or release of any other right or
remedy.
10.7 Expenses of the Lender.
The Borrowers will, on demand, reimburse the Lender for all expenses,
including the reasonable fees and expenses of legal counsel for the Lender,
incurred by the Lender in connection with the preparation, administration,
amendment, modification, or enforcement of this Agreement and the Collateral
Documents and the collection or attempted collection of any of the Obligations.
10.8 Notices.
Any notices, requests or consents required or permitted by this
Agreement shall be in writing and shall be deemed delivered if delivered in
person or if sent by certified mail, postage prepaid, return receipt requested,
facsimile or telegraph, as follows, unless such address is changed by written
notice hereunder:
(a) If to the Borrowers:
SpecTran Corporation
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, C.F.O.
▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
27
29
(b) If to the Lender:
Fleet National Bank
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, V.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
10.9 Waiver and Release by the Borrowers.
To the maximum extent permitted by applicable Laws, each Borrower:
(a) Waives (i) protest of all commercial paper at any time
held by the Lender on which any Borrower is in any way liable, (ii) except as
the same may herein be specifically granted, notice of acceleration and of
intention to accelerate and (iii) notice and opportunity to be heard before
exercise by the Lender of the remedies of self-help, set-off, or of other
summary procedures permitted by any applicable Laws or by any agreement with any
Borrower, and, except where required hereby or by any applicable Laws, notice of
any other action taken by the Lender (the Lender agrees to provide notice to
SpecTran of acceleration of the Obligations and such notice will reference a
Section or Sections of this Agreement under which a default has occurred,
failure to send such notice will not impair the Lender's rights hereunder); and
(b) Releases the Lender and its officers, attorneys, agents,
and employees from all claims for loss or damage caused by any act or omission
on the part of any of them except willful misconduct.
10.10 Participation.
Notwithstanding any other provision of this Agreement, each Borrower
understands that the Lender may at any time enter into participation agreements
with one or more participating banks whereby the Lender will allocate certain
percentages of its commitment to them. Each Borrower acknowledges that, for the
convenience of all parties, this Agreement is being entered into with the Lender
only and that its obligations under this Agreement are undertaken for the
benefit of, and as an inducement to, any such participating bank as well as the
Lender, and each Borrower hereby grants to each such participating bank, to the
extent of its participation in the Loan, the right to set off deposit accounts
maintained by any Borrower with such bank subject to the terms of this
Agreement. The Lender agrees to provide SpecTran with five (5) days prior
written notice of any such participation. The Lender will also provide five (5)
days prior written notice of any pledge or assignment of any of the Revolving
Note, except in connection with an acquisition of the Lender.
10.11 Applicable Law.
This Agreement is entered into and performable in the Commonwealth of
Massachusetts and shall be subject to and construed and enforced in accordance
with the laws of the Commonwealth of Massachusetts.
28
30
10.12 Consent to Jurisdiction.
EACH OF THE BORROWERS HEREBY CONSENTS TO THE JURISDICTION OF THE COURTS
OF THE COMMONWEALTH OF MASSACHUSETTS AND THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF MASSACHUSETTS, AS WELL AS TO THE JURISDICTION OF ALL COURTS FROM
WHICH AN APPEAL MAY BE TAKEN FROM THE AFORESAID COURTS, FOR THE PURPOSE OF ANY
SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF ANY OF THE BORROWERS'
OBLIGATIONS UNDER OR WITH RESPECT TO THIS AGREEMENT, AND EXPRESSLY WAIVES ANY
AND ALL OBJECTIONS ANY OF THE BORROWERS MAY HAVE AS TO VENUE IN ANY OF SUCH
COURTS.
10.13 Binding Effect, Assignment, and Entire Agreement.
This Agreement shall inure to the benefit of, and shall be binding
upon, the respective successors and permitted assigns of the parties hereto. No
Borrower has the right to assign any of its rights or obligations hereunder
without the prior written consent of the Lender. This Agreement, including the
Exhibits hereto, all of which are hereby incorporated herein by reference, and
the documents executed and delivered pursuant hereto, constitute the entire
agreement between the parties and may be amended only by a writing signed on
behalf of each party.
10.14 Severability.
If any provision of this Agreement shall be held invalid under any
applicable Laws, such invalidity shall not affect any other provision of this
Agreement that can be given effect without the invalid provision, and, to this
end, the provisions hereof are severable.
10.15 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute but one and the same instrument.
10.16 Waiver of Jury Trial
THE LENDER AND THE BORROWERS AGREE THAT THEY (INCLUDING ANY ASSIGNEE OR
SUCCESSOR) SHALL NOT SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM,
OR ANY OTHER LITIGATION PROCEDURE BASED UPON, OR ARISING OUT OF, THIS AGREEMENT,
ANY RELATED INSTRUMENTS, ANY ASSETS OR THE DEALINGS OR THE RELATIONSHIP AMONG
ANY OF THEM. THEY SHALL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF
THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE
29
31
LENDER AND THE BORROWERS AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.
THEY HAVE NOT AGREED WITH OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF
THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as a
sealed instrument as of the day and year first above written.
BORROWERS:
SPECTRAN CORPORATION
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ [illegible]
------------------------------ -----------------------------
Witness Its Duly Authorized Officer
SPECTRAN SPECIALTY OPTICS
COMPANY
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ [illegible]
------------------------------ -----------------------------
Witness Its Duly Authorized Officer
APPLIED PHOTONIC DEVICES, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ [illegible]
------------------------------ -----------------------------
Witness Its Duly Authorized Officer
SPECTRAN COMMUNICATION FIBER
TECHNOLOGIES, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ [illegible]
------------------------------ -----------------------------
Witness Its Duly Authorized Officer
30
32
LENDER:
FLEET NATIONAL BANK
/s/ [illegible] By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇, VP
------------------------------ -----------------------------
Witness Its Duly Authorized Officer
31
33
REVOLVING NOTE
$20,000,000.00 As of December 1, 1996
Worcester, Massachusetts
FOR VALUE RECEIVED, SPECTRAN CORPORATION, a Delaware corporation with a
principal place of business at ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
("SpecTran"), SPECTRAN SPECIALTY OPTICS COMPANY, a Delaware corporation with a
principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ("Optics"),
APPLIED PHOTONIC DEVICES, INC., a Delaware corporation with a principal place of
business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ("Photonic") and SPECTRAN
COMMUNICATION FIBER TECHNOLOGIES, INC., a Delaware corporation with a principal
place of business at ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ("Communication")
(SpecTran, Optics, Photonic and Communication are sometimes collectively
referred to herein as the "Borrowers"), jointly and severally promise to pay to
FLEET NATIONAL BANK, a national banking association having an office located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Lender"), or order, at the
Lender's offices, the principal sum of TWENTY MILLION and 00/100 DOLLARS
($20,000,000.00), in lawful money of the United States of America, with interest
on the unpaid balance hereof at the rates and in the manner hereafter provided.
The unpaid principal of this Note from time to time outstanding shall
bear interest, payable quarterly in arrears, computed on the basis of the actual
number of days elapsed over a year assumed to have 360 days, at a rate per annum
to be selected by the Borrowers from time to time. Subject to the terms hereof,
the Borrowers shall have the right to select, from time to time, any of the
rates set forth below to be used in computing the rate of interest to be paid on
the unpaid principal balance hereof. Such rate shall be selected in advance by
the Borrowers by written notice to the Lender, or the holder hereof, specifying
the rate selected, the effective date of such selection, and the portion, in
$500,000.00 increments (except for amounts subject to interest at the rate
stated in clause (i) below which may be in any amount), of the unpaid principal
balance to which such rate selection shall apply (the "Rate Selection"). The
Rate Selection must be received by the Lender, or the holder hereof, not less
than three (3) banking days prior to the effective date of the Rate Selection.
If the Borrowers select a rate based on a one (1), three (3), or six (6) month
index (clauses (ii), (iii) and (iv) below), the Rate Selection shall not be
changed until the period of time specified in the rate index, i.e., one (1)
month, three (3) months and six (6) months (the "Index Period"), has elapsed
from the effective date of the Rate Selection. If a new Rate Selection has not
been made in accordance with the terms hereof, then the Rate Selection will be
as stated in clause (i) below. The Borrowers may, subject to the terms and
conditions hereof, designate more than one Rate Selection for incremental
portions of the unpaid principal balance.
Pursuant to the foregoing paragraph, the Borrowers shall select from
the following rates of interest:
34
(i) a rate equal to the Lender's Prime Rate of interest established
from time to time by the Lender (the "Prime Rate"), such interest rate to be
adjusted from time to time on the effective date of any change in the Prime Rate
announced by the Lender. The Prime Rate shall be that rate of interest announced
by the Lender as its Prime Rate;
(ii) a rate equal to the LIBOR (defined below) 1-month index rate plus
one hundred fifty (150) basis points;
(iii) a rate equal to the LIBOR 3-months index rate plus one hundred
fifty (150) basis points; or
(iv) a rate equal to the LIBOR 6-months index rate plus one hundred
fifty (150) basis points.
The term "LIBOR" shall mean, the rate as determined on the basis of the
offered rates for deposits in U.S. dollars for an Index Period which appears on
the Telerate page 3750 or ▇▇▇▇▇▇'▇ ▇▇▇▇ page as of 11:00 a.m. London time on the
day that is two London banking days preceding the effective date of the Rate
Selection. If such rate does not appear on the Telerate page 3750, the rate for
that date will be determined on the basis of the offered rates for deposits in
U.S. dollars for an Index Period which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. London time, on the day that
is three banking days preceding the effective date of the Rate Selection. The
principal London office of each of the four major London banks will be requested
to provide a quotation of its U.S. dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted for loans
in U.S. dollars to leading European banks for the applicable Index Period
offered by major banks in New York City at approximately 11:00 a.m. New York
City time, on the day that is three banking days preceding the effective date of
the Rate Selection. In the event that the Lender is unable to obtain any such
quotation as provided above, the Rate Selection will be as stated in clause (i)
above.
If the Borrowers fail to select an interest rate for all or any portion
of the unpaid principal balance, or if the LIBOR interest rates become
unavailable, then the rate of interest will be as stated in clause (i) above.
If at any time (i) the Lender reasonably determines that maintenance of
that portion of the outstanding principal balance hereof which bears interest
based on a LIBOR rate would violate any applicable law, rule, regulation or
directive, whether or not having the force of law, the Lender shall suspend the
availability of the LIBOR interest rates and require all outstanding principal
amounts bearing interest at a LIBOR interest rate to be repaid immediately, or
(ii) if the Lender reasonably determines that (a) deposits of a type and
maturity appropriate to match fund a LIBOR interest rate are not available, the
Lender shall suspend the availability of LIBOR interest rates, or (b) the LIBOR
interest rates do not accurately reflect the cost of making available or
maintaining such LIBOR interest rates, then the Lender shall suspend the
availability of LIBOR interest rates.
2
35
If any payment of principal bearing interest at a LIBOR interest rate
is made on a date which is not the last day of the Index Period, whether because
of acceleration, prepayment or otherwise, the Borrowers will indemnify the
Lender for all losses or costs (including lost profits) incurred by it resulting
therefrom; provided, however, the provisions of this paragraph will not apply to
a prepayment resulting from the Lender's suspension of LIBOR interest rates as
set forth in the immediately preceding paragraph.
Interest shall be payable quarterly in arrears, the first such payment
of interest to be due and payable beginning on the first banking day of January
1997 and thereafter on the first banking day of each succeeding quarter, i.e.
the first banking day of each April, July, October and January. If not sooner
paid, all indebtedness evidenced by this Note is due and payable on December 31,
1999.
Each payment made hereunder shall be applied first to interest then due
on the unpaid balance of principal and then to principal. Whenever any payment
of principal or interest due under this Note shall not be paid within ten (10)
days of its due date, the Borrowers shall pay in addition thereto as a late
charge five percent (5%) of the amount of such payment.
This Note is issued pursuant to a certain Loan Agreement among the
Borrowers and the Lender of even date herewith (the "Agreement"), and is subject
to all of the terms and conditions contained in the Agreement. Subject to the
terms and conditions of the Agreement, through and including the earlier of
December 31, 1999 or the occurrence of an Event of Default under the Agreement,
the Borrowers may borrow, repay (subject to prepayment fees for amounts subject
to LIBOR interest rates paid before the end of the applicable Index Period) and
reborrow amounts under this Note from time to time as provided in the Agreement.
In no event will outstanding indebtedness hereunder exceed the Borrowing Base as
defined in the Agreement.
An Event of Default under the Agreement shall also constitute an Event
of Default hereunder. At its option, and at any time, whether immediately or
otherwise, the Lender may, upon the occurrence of an Event of Default, declare
all obligations of the Borrowers to the Lender (including all amounts hereunder)
immediately due and payable without further action of any kind, including
without notice, demand or presentment. Notwithstanding anything to the contrary
contained herein, ON AND AFTER THE EARLIER OF DECEMBER 31, 1999 OR ACCELERATION
OF ALL OUTSTANDING OBLIGATIONS HEREUNDER, THE INTEREST RATE AS TO ALL SUCH
OUTSTANDING OBLIGATIONS WILL BE THE PRIME RATE PLUS FOUR PERCENT (4.00%) PER
ANNUM.
Any deposits or other sums at any time credited by or due from the
holder to any of the Borrowers, any endorser or guarantor hereof, may at all
times be held and treated as collateral for the payment of this Note and any and
all other liabilities (direct or indirect, absolute or contingent, sole, joint
or several, secured or unsecured, due or to become due, now existing or
hereafter arising) of any such maker to the holder. The holder may apply or
set-off such deposits or other sums against such liabilities at any time in the
case of any of the Borrowers but only with respect to matured liabilities in the
case of endorsers and guarantors.
3
36
Each of the Borrowers and each guarantor, endorser or other person now
or hereafter liable for the payment of any of the indebtedness evidenced by this
Note, severally agrees, by making, guaranteeing or endorsing this Note or by
making any agreement to pay any of the indebtedness evidenced by this Note, to
waive presentment for payment, protest and demand, notice of protest, demand and
of dishonor and nonpayment of this Note, and consents, on one or more occasions,
without notice of further assent (a) to the substitution, exchange or release of
the collateral securing this Note or any part thereof at any time, (b) to the
acceptance or release by the holder or holders hereof at any time of any
additional collateral or security for or other guarantors of this Note, (c) to
the modification or amendment, at any time and from time to time, of this Note,
the Agreement or any instrument securing this Note at the request of any person
liable hereon, (d) to the granting by the holder hereof of any extension of time
with respect to the payment of this Note or for the performance of the
agreements, covenants and conditions contained in this Note, the Agreement or
any other instrument securing this Note, at the request of any person liable
hereon, and (e) to any and all forbearances and indulgences whatsoever. Such
consent shall not alter nor diminish the liability of any person.
The Borrowers agree to pay all reasonable expenses or costs, including
attorneys' fees and costs of collection, which may be incurred by the holder
hereof in connection with the enforcement of any obligations hereunder or
representation with respect to bankruptcy or insolvency proceedings.
The Borrowers' obligations hereunder are secured by all assets of each
of the Borrowers as provided in the Agreement and the Collateral Documents (as
defined in the Agreement).
This Note constitutes the joint and several obligation of each of
SpecTran, Optics, Photonic and Communication.
Executed as a sealed instrument as of the 1st day of December, 1996.
SPECTRAN CORPORATION
___________________________ By:______________________________
Witness Its Duly Authorized Officer
SPECTRAN SPECIALTY OPTICS COMPANY
___________________________ By:______________________________
Witness Its Duly Authorized Officer
4
37
APPLIED PHOTONIC DEVICES, INC.
___________________________ By:______________________________
Witness Its Duly Authorized Officer
SPECTRAN COMMUNICATION FIBER
TECHNOLOGIES, INC.
___________________________ By:______________________________
Witness Its Duly Authorized Officer
5
38
Exhibit 2.2
DEPOSIT ACCOUNT
Account No. ▇▇▇▇▇▇▇▇
33
39
Counsel for Bank: Counsel for Borrower:
▇▇▇▇ ▇. ▇'▇▇▇▇▇, Esquire ▇▇▇▇▇ ▇▇▇▇, Esquire
▇▇▇▇▇▇, ▇'▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Hackmyer & Nordlicht
& ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ ("H&N")
("MODL")
FLEET NATIONAL BANK
(the "Bank")
$20,000,000.00 LOAN
TO
SPECTRAN CORPORATION
("SpecTran")
and
SPECTRAN SPECIALTY OPTICS COMPANY
("Optics")
and
APPLIED PHOTONIC DEVICES, INC.
("Photonic")
and
SPECTRAN COMMUNICATION FIBER TECHNOLOGIES, INC.
("COMMUNICATION")
(SpecTran, Optics, Photonic and Communication
are collectively referred to as the "Borrowers")
CLOSING DOCUMENT AGENDA
Responsible
Party
MODL 1. Loan Agreement among the Borrowers and the Bank
MODL 2. Borrowers' $20,000,000.00 Revolving Note
H&N 3. Federal and State Tax Lien Searches for SpecTran
H&N 4. Composite Certificate of Secretary of SpecTran with attached:
40
a) Certificate of Incorporation with all amendments
(certified to by the Delaware Secretary of State)
b) By-Laws
c) Votes
H&N 5. Certificate of Legal Existence and Good Standing for SpecTran
issued by the Delaware Secretary of State
H&N 6. Certificate of Qualification To Do Business in Massachusetts
for SpecTran issued by the Massachusetts Secretary of State
H&N 7. Certificate of Good Tax Standing for SpecTran issued by the
Massachusetts Department of Revenue
H&N 8. Federal and State Tax Lien Searches for Optics
H&N 9. Composite Certificate of Secretary of Optics with attached:
a) Certificate of Incorporation with all amendments
(certified to by the Delaware Secretary of State)
b) By-Laws
c) Votes
H&N 10. Certificate of Legal Existence and Good Standing for Optics
issued by the Delaware Secretary of State
H&N 11. Certificate of Qualification To Transact Business in
Connecticut for Optics issued by the Connecticut Secretary of
State
H&N 12. Accountant's letter regarding filing of tax returns and payment
of taxes
H&N 13. Federal and State Tax Lien Searches for Photonic
H&N 14. Composite Certificate of Secretary of Photonic with attached:
a) Certificate of Incorporation with all amendments
(certified to by the Delaware Secretary of State)
b) By-Laws
c) Votes
H&N 15. Certificate of Legal Existence and Good Standing for Photonic
issued by the Delaware Secretary of State
H&N 16. Certificate of qualification To Transact Business in
Connecticut for Photonic issued by the Connecticut Secretary
of State
H&N 17. Accountant's letter regarding filing of tax returns and payment
of taxes
41
H&N 18. Federal and State Tax Lien Searches for Communication
H&N 19. Composite Certificate of Secretary of Communication with attached:
a) Certificate of Incorporation with all amendments (certified to
by the Delaware Secretary of State)
b) By-Laws
c) Votes
H&N 20. Certificate of Legal Existence and Good Standing for
Communication issued by the Delaware Secretary of State
H&N 21. Certificate of Qualification To Do Business in Massachusetts for
Communication issued by the Massachusetts Secretary of State
H&N 22. Certificate of Good Tax Standing for Communication issued by the
Massachusetts Department of Revenue
H&N 23. Opinion of Counsel to Borrowers regarding due execution,
authority, and enforceability
MODL 24. Disbursement Authorization
H&N 25. Discharge of Mortgage
42
Exhibit 3.1(q)
CLOSING AGENDA
SPEC ▇▇▇▇ CORPORATION
$16,000,000 9.24% SERIES A SENIOR SECURED NOTES DUE DECEMBER 1, 2003
$8,000,000 9.39% SERIES B SENIOR SECURED NOTES DUE DECEMBER 1, 2004
================================================================================
Closing Date: [December , 1996]
--------------------------------------------------------------------------------
Closing Location: [ ]
--------------------------------------------------------------------------------
Purchasers' Counsel: ▇▇▇▇ & ▇▇▇▇▇▇ ("H&G")
--------------------------------------------------------------------------------
Company's Counsel: Hackmyer & Nordlicht ("H&N")
--------------------------------------------------------------------------------
Security Trustee: [Fleet National Bank]
--------------------------------------------------------------------------------
Security Trustee's [▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇]
Counsel:
================================================================================
================================================================================
Description Procurement/
Drafting
Responsibility
================================================================================
1. NOTE PURCHASE AGREEMENT H&G
--------------------------------------------------------------------------------
2. TRUST INDENTURE H&G
Exhibit C to the Note Purchase Agreement, as required
by Section 4.10(a) of the Note Purchase Agreement.
--------------------------------------------------------------------------------
3. SECURITY AGREEMENT H&G
Exhibit D to the Note Purchase Agreement, as required
by Section 4.10(b) of the Note Purchase Agreement.
--------------------------------------------------------------------------------
4. PATENT COLLATERAL ASSIGNMENT H&G
Exhibit E to the Note Purchase Agreement, as required
by Section 4.10(c) of the Note Purchase Agreement,
duly recorded with the United States Patent and Trademark
Office.
--------------------------------------------------------------------------------
5. TRADEMARK SECURITY AGREEMENT H&G
Exhibit F to the Note Purchase Agreement, as required
by Section 4.10(d) of the Note Purchase Agreement,
duly recorded with the United States Patent and Trademark
Office; together with a Trademark Assignment, separately
executed by each of the Company and its Subsidiaries,
substantially in the form of Exhibit 1 to the Trademark
Security Agreement, as required by Section 4.10(d) to the
Note Purchase Agreement.
--------------------------------------------------------------------------------
6. PLEDGE AGREEMENT H&G
Exhibit G to the Note Purchase Agreement, as required
by Section 4.10(f) of the Note Purchase Agreement.
--------------------------------------------------------------------------------
7. STOCK CERTIFICATES Company
Stock certificates and undated stock powers executed in
blank to be delivered to the Security Trustee as
required by Section 4.10(f) of the Note Purchase
Agreement.
--------------------------------------------------------------------------------
8. OFFICER'S CERTIFICATE draft H&G;
Officer's Certificate of the Company, as required by final,
Section 4.3(a) of the Note Purchase Agreement. Company
--------------------------------------------------------------------------------
43
==============================================================================================================
Description Procurement/
Drafting
Responsibility
==============================================================================================================
9. SECRETARY'S CERTIFICATE - COMPANY draft, H&G;
As required by Section 4.3(b) of the Note Purchase Agreement setting forth the final,
following attachments: a. Resolutions, Company
b. By-laws of the Company,
c. Specimen signatures of officers of the Company,
d. Long Form Good Standing Certificate.
-------------------------------------------------------------------------------------------------------------
10. SECRETARY'S CERTIFICATE - SUBSIDIARIES draft H&G;
As required by Section 4.3(c) of the Note Purchase Agreement setting forth the final,
following attachments: a. Resolutions, Company
b. By-laws of the Subsidiary,
c. Specimen signatures of officers of the Subsidiary,
d. Long Form Good Standing Certificate.
-------------------------------------------------------------------------------------------------------------
11. FOREIGN QUALIFICATION AND GOOD STANDING CERTIFICATES Company
For the Company and each Subsidiary, foreign corporate good standing certificates,
from each jurisdiction where each of the Company or such Subsidiary conducts
significant business activities as a foreign corporation.
-------------------------------------------------------------------------------------------------------------
12. UCC SEARCHES Company
UCC and fixture filing searches in the jurisdictions listed on Exhibit A attached hereto.
-------------------------------------------------------------------------------------------------------------
13. UCC FINANCING STATEMENTS H&G
Uniform Commercial Code Financing Statements by each of the Company and its
Subsidiaries in favor of the Security Trustee, duly recorded in the appropriate filing
jurisdictions, as required by Section 4.10(g) of the Note Purchase Agreement.
-------------------------------------------------------------------------------------------------------------
14. UCC FIXTURE FINANCING STATEMENTS H&G
Uniform Commercial Code Financing Statements by each of the Company and its
Subsidiaries in favor of the Security Trustee, duly recorded in the appropriate real
property filing jurisdictions, as required by Section 4.10(g) of the Note Purchase
Agreement.
-------------------------------------------------------------------------------------------------------------
15. TERMINATION AND ASSIGNMENT OF EXISTING LIENS Company
The filing of all appropriate Uniform Commercial Code assignment statements, the
recording of all appropriate mortgage releases, and patent and trademark releases, as
required by Section 4.10(h) of the Note Purchase Agreement.
-------------------------------------------------------------------------------------------------------------
16. MORTGAGE H&G
Exhibit H to the Note Purchase Agreement, as required by Section 4.10(i) of the Note
Purchase Agreement, duly filed in the appropriate recording offices.
-------------------------------------------------------------------------------------------------------------
17. LEASEHOLDS Company
A copy of each lease in respect of any leasehold interest of the Company or any
Subsidiary in any real property, certified as true and correct, as required by Section
4.10(i) of the Note Purchase Agreement.
-------------------------------------------------------------------------------------------------------------
18. SUBSIDIARY GUARANTY H&G
Exhibit I to the Note Purchase Agreement, as required by Section 4.11 of the Note
Purchase Agreement for each Subsidiary.
-------------------------------------------------------------------------------------------------------------
19. OFFEREE LETTER H&G
Offeree Letter of Fleet Corporate Finance regarding the manner of the offering of the
Notes.
-------------------------------------------------------------------------------------------------------------
2
44
================================================================================
Description Procurement/
Drafting Responsibility
================================================================================
20. PRIVATE PLACEMENT NUMBERS H&G
Documentation of private placement numbers for
the Series A Notes and the Series B Notes, in
each case, from CUSIP Service Bureau of Standard
& Poor's, a division of ▇▇▇▇▇▇-▇▇▇▇, Inc., as
required by Section 4.8 of the Note Purchase
Agreement.
--------------------------------------------------------------------------------
21. NOTES H&G
Series A Notes and Series B Notes as set forth on
Schedule A to the Note Purchase Agreement, in the
form of Exhibit A1 and Exhibit A2, respectively,
to the Note Purchase Agreement.
--------------------------------------------------------------------------------
22. CROSS-RECEIPT H&G
Cross-Receipt for the Notes and the wire transfers
in payment thereof.
--------------------------------------------------------------------------------
23. OPINION OF COMPANY'S COUNSEL draft, H&G;
Opinion of Hackmyer & Nordlicht, Exhibit B1 to final, H&N
the Note Purchase Agreement, as required by
Section 4.4(a) of the Note Purchase Agreement
--------------------------------------------------------------------------------
24. OPINION OF SECURITY TRUSTEE'S COUNSEL draft, H&G;
Opinion of ▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇, Exhibit B2 to the final, [ ]
Note Purchase Agreement, as required by
Section 4.4(b) of the Note Purchase Agreement
--------------------------------------------------------------------------------
25. OPINION OF ▇▇▇▇ & ▇▇▇▇▇▇ H&G
Opinion of ▇▇▇▇ & ▇▇▇▇▇▇, Exhibit B3 to the Note
Purchase Agreement, as required by Section 4.4(c)
of the Note Purchase Agreement
--------------------------------------------------------------------------------
26. EXPENSES Company
Evidence of the payment of all fees and
disbursements required to be paid pursuant to
Section 4.7 of the Note Purchase Agreement.
================================================================================
3
45
Exhibit 5.1(a)
Name and Addresses Jurisdiction Foreign
of Borrower: of Incorporation: Qualifications: Shareholders:
------------ ----------------- --------------- -------------
SpecTran Corporation Delaware Massachusetts N/A
▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SpecTran Communication Delaware Massachusetts SpecTran
Fiber Technologies, Inc. Corporation
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ shares
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Comm. Stock
▇▇-▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SpecTran Specialty Optics Delaware Connecticut SpecTran
Company Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ 10 shares
▇▇▇▇, ▇▇ ▇▇▇▇▇* Comm. Stock
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
*SpecTran Specialty Optics Company will be moving its principal offices to ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇.
Applied Photonic Devices, Inc. Delaware Connecticut SpecTran
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Comm. Stock
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
35
46
Exhibit 5.1(f)
LITIGATION
None
36
47
Exhibit 5.1(i)
CONSOLIDATED INDEBTEDNESS
$24,000,000.00 principal amount of Senior Secured Notes due 2006, as provided
for in the Note Purchase Agreement as defined in the Agreement.
37
48
Exhibit 6.1(b)(v)
Section Covenant Limit Actual
------- -------- ----- ------
6.01
f(i) Consolidated Interest Coverage Ratio 3.00:1.00
f(ii) Consolidated Tangible Net Worth $18,500,000(*)
Section
-------
6.02
p(i) Consolidated Leverage Ratio 1.50:1.00
p(ii) Consolidated Indebtedness to
Consolidated EBITDA Cumulative 3.25:1.00
p(iii) Consolidated Capital Expenditures 20,000,000.00(**)
*to step-up as set forth in the Agreement
**changes annually as set forth in the Agreement
I, the undersigned officer of SpecTran hereby certify that I have read the Loan
Agreement among the Borrowers and the Lender dated as of December 1, 1996, and
to the best of my knowledge and belief, as of ______________________, the
Borrowers are in compliance with all the covenants, terms and provisions
contained in the Loan Agreement and no Event of Default exists thereunder.
SPECTRAN CORPORATION
By:_______________________________
Its Chief Financial Officer
38
49
Exhibit 6.1(m)
APD has a dispute with the landlord of its facility at ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, arising from (i) the landlord's failure to pay utility costs
resulting in the gas company turning off the heat to the facility and (ii) the
failure of the landlord to make necessary repairs to the roof of the facility,
resulting in leaks. The landlord's actions have caused damage to the facility
and the loss of work days due to the lack of heat in the facility. APD has
notified the landlord that it is withholding November rent and all future rent
payments pending the landlord's reimbursement of APD for these damages.
39
50
Exhibit 6.2(j)
The investment objective will be to maximize total return within the
confines of a short to average overall maturity framework. The fund will utilize
US Governments, domestic corporates, asset-backed paper (AAA rated), Govt Agency
mortgage-backed paper including short term CMO's and Govt Agency backed
short-term floating rate paper. Positions required for liquidity needs will be
held in high grade short-term or money market balances. The horizon on these
corporate funds will be approximately 1/3 for immediate liquidity needs (if
necessary), approximately 1/3 to be used for intermediate term purposes, and the
remaining approximately third for long term expansion purposes. SpecTran will
have full authority and discretion on all investment changes.
40
51
REVOLVING NOTE
$20,000,000.00 As of December 1, 1996
Worcester, Massachusetts
FOR VALUE RECEIVED, SPECTRAN CORPORATION, a Delaware corporation with a
principal place of business at ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
("SpecTran"), SPECTRAN SPECIALTY OPTICS COMPANY, a Delaware corporation with a
principal place of business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ("Optics"),
APPLIED PHOTONIC DEVICES, INC., a Delaware corporation with a principal place of
business at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ("Photonic") and SPECTRAN
COMMUNICATION FIBER TECHNOLOGIES, INC., a Delaware corporation with a principal
place of business at ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ("Communication")
(SpecTran, Optics, Photonic and Communication are sometimes collectively
referred to herein as the "Borrowers"), jointly and severally promise to pay to
FLEET NATIONAL BANK, a national banking association having an office located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Lender"), or order, at the
Lender's offices, the principal sum of TWENTY MILLION and 00/100 DOLLARS
($20,000,000.00), in lawful money of the United States of America, with interest
on the unpaid balance hereof at the rates and in the manner hereafter provided.
The unpaid principal of this Note from time to time outstanding shall
bear interest, payable quarterly in arrears, computed on the basis of the actual
number of days elapsed over a year assumed to have 360 days, at a rate per annum
to be selected by the Borrowers from time to time. Subject to the terms hereof,
the Borrowers shall have the right to select, from time to time, any of the
rates set forth below to be used in computing the rate of interest to be paid on
the unpaid principal balance hereof. Such rate shall be selected in advance by
the Borrowers by written notice to the Lender, or the holder hereof, specifying
the rate selected, the effective date of such selection, and the portion, in
$500,000.00 increments (except for amounts subject to interest at the rate
stated in clause (i) below which may be in any amount), of the unpaid principal
balance to which such rate selection shall apply (the "Rate Selection"). The
Rate Selection must be received by the Lender, or the holder hereof, not less
than three (3) banking days prior to the effective date of the Rate Selection.
If the Borrowers select a rate based on a one (1), three (3), or six (6) month
index (clauses (ii), (iii) and (iv) below), the Rate Selection shall not be
changed until the period of time specified in the rate index, i.e., one (1)
month, three (3) months and six (6) months (the "Index Period"), has elapsed
from the effective date of the Rate Selection. If a new Rate Selection has not
been made in accordance with the terms hereof, then the Rate Selection will be
as stated in clause (i) below. The Borrowers may, subject to the terms and
conditions hereof, designate more than one Rate Selection for incremental
portions of the unpaid principal balance.
Pursuant to the foregoing paragraph, the Borrowers shall select from
the following rates of interest:
52
(i) a rate equal to the Lender's Prime Rate of interest established
from time to time by the Lender (the "Prime Rate"), such interest rate to be
adjusted from time to time on the effective date of any change in the Prime Rate
announced by the Lender. The Prime Rate shall be that rate of interest announced
by the Lender as its Prime Rate;
(ii) a rate equal to the LIBOR (defined below) 1-month index rate plus
one hundred fifty (150) basis points;
(iii) a rate equal to the LIBOR 3-months index rate plus one hundred
fifty (150) basis points; or
(iv) a rate equal to the LIBOR 6-months index rate plus one hundred
fifty (150) basis points.
The term "LIBOR" shall mean, the rate as determined on the basis of the
offered rates for deposits in U.S. dollars for an Index Period which appears on
the Telerate page 3750 or ▇▇▇▇▇▇'▇ ▇▇▇▇ page as of 11:00 a.m. London time on the
day that is two London banking days preceding the effective date of the Rate
Selection. If such rate does not appear on the Telerate page 3750, the rate for
that date will be determined on the basis of the offered rates for deposits in
U.S. dollars for an Index Period which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. London time, on the day that
is three banking days preceding the effective date of the Rate Selection. The
principal London office of each of the four major London banks will be requested
to provide a quotation of its U.S. dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted for loans
in U.S. dollars to leading European banks for the applicable Index Period
offered by major banks in New York City at approximately 11:00 a.m. New York
City time, on the day that is three banking days preceding the effective date of
the Rate Selection. In the event that the Lender is unable to obtain any such
quotation as provided above, the Rate Selection will be as stated in clause (i)
above.
If the Borrowers fail to select an interest rate for all or any portion
of the unpaid principal balance, or if the LIBOR interest rates become
unavailable, then the rate of interest will be as stated in clause (i) above.
If at any time (i) the Lender reasonably determines that maintenance of
that portion of the outstanding principal balance hereof which bears interest
based on a LIBOR rate would violate any applicable law, rule, regulation or
directive, whether or not having the force of law, the Lender shall suspend the
availability of the LIBOR interest rates and require all outstanding principal
amounts bearing interest at a LIBOR interest rate to be repaid immediately, or
(ii) if the Lender reasonably determines that (a) deposits of a type and
maturity appropriate to match fund a LIBOR interest rate are not available, the
Lender shall suspend the availability of LIBOR interest rates, or (b) the LIBOR
interest rates do not accurately reflect the cost of making available or
maintaining such LIBOR interest rates, then the Lender shall suspend the
availability of LIBOR interest rates.
2
53
If any payment of principal bearing interest at a LIBOR interest rate
is made on a date which is not the last day of the Index Period, whether because
of acceleration, prepayment or otherwise, the Borrowers will indemnify the
Lender for all losses or costs (including lost profits) incurred by it resulting
therefrom; provided, however, the provisions of this paragraph will not apply to
a prepayment resulting from the Lender's suspension of LIBOR interest rates as
set forth in the immediately preceding paragraph.
Interest shall be payable quarterly in arrears, the first such payment
of interest to be due and payable beginning on the first banking day of January
1997 and thereafter on the first banking day of each succeeding quarter, i.e.
the first banking day of each April, July, October and January. If not sooner
paid, all indebtedness evidenced by this Note is due and payable on December 31,
1999.
Each payment made hereunder shall be applied first to interest then due
on the unpaid balance of principal and then to principal. Whenever any payment
of principal or interest due under this Note shall not be paid within ten (10)
days of its due date, the Borrowers shall pay in addition thereto as a late
charge five percent (5%) of the amount of such payment.
This Note is issued pursuant to a certain Loan Agreement among the
Borrowers and the Lender of even date herewith (the "Agreement"), and is subject
to all of the terms and conditions contained in the Agreement. Subject to the
terms and conditions of the Agreement, through and including the earlier of
December 31, 1999 or the occurrence of an Event of Default under the Agreement,
the Borrowers may borrow, repay (subject to prepayment fees for amounts subject
to LIBOR interest rates paid before the end of the applicable Index Period) and
reborrow amounts under this Note from time to time as provided in the Agreement.
In no event will outstanding indebtedness hereunder exceed the Borrowing Base as
defined in the Agreement.
An Event of Default under the Agreement shall also constitute an Event
of Default hereunder. At its option, and at any time, whether immediately or
otherwise, the Lender may, upon the occurrence of an Event of Default, declare
all obligations of the Borrowers to the Lender (including all amounts hereunder)
immediately due and payable without further action of any kind, including
without notice, demand or presentment. Notwithstanding anything to the contrary
contained herein, ON AND AFTER THE EARLIER OF DECEMBER 31, 1999 OR ACCELERATION
OF ALL OUTSTANDING OBLIGATIONS HEREUNDER, THE INTEREST RATE AS TO ALL SUCH
OUTSTANDING OBLIGATIONS WILL BE THE PRIME RATE PLUS FOUR PERCENT (4.00%) PER
ANNUM.
Any deposits or other sums at any time credited by or due from the
holder to any of the Borrowers, any endorser or guarantor hereof, may at all
times be held and treated as collateral for the payment of this Note and any and
all other liabilities (direct or indirect, absolute or contingent, sole, joint
or several, secured or unsecured, due or to become due, now existing or
hereafter arising) of any such maker to the holder. The holder may apply or
set-off such deposits or other sums against such liabilities at any time in the
case of any of the Borrowers but only with respect to matured liabilities in the
case of endorsers and guarantors.
3
54
Each of the Borrowers and each guarantor, endorser or other person now
or hereafter liable for the payment of any of the indebtedness evidenced by this
Note, severally agrees, by making, guaranteeing or endorsing this Note or by
making any agreement to pay any of the indebtedness evidenced by this Note, to
waive presentment for payment, protest and demand, notice of protest, demand and
of dishonor and nonpayment of this Note, and consents, on one or more occasions,
without notice of further assent (a) to the substitution, exchange or release of
the collateral securing this Note or any part thereof at any time, (b) to the
acceptance or release by the holder or holders hereof at any time of any
additional collateral or security for or other guarantors of this Note, (c) to
the modification or amendment, at any time and from time to time, of this Note,
the Agreement or any instrument securing this Note at the request of any person
liable hereon, (d) to the granting by the holder hereof of any extension of time
with respect to the payment of this Note or for the performance of the
agreements, covenants and conditions contained in this Note, the Agreement or
any other instrument securing this Note, at the request of any person liable
hereon, and (e) to any and all forbearances and indulgences whatsoever. Such
consent shall not alter nor diminish the liability of any person.
The Borrowers agree to pay all reasonable expenses or costs, including
attorneys' fees and costs of collection, which may be incurred by the holder
hereof in connection with the enforcement of any obligations hereunder or
representation with respect to bankruptcy or insolvency proceedings.
The Borrowers' obligations hereunder are secured by all assets of each
of the Borrowers as provided in the Agreement and the Collateral Documents (as
defined in the Agreement).
This Note constitutes the joint and several obligation of each of
SpecTran, Optics, Photonic and Communication.
Executed as a sealed instrument as of the 1st day of December, 1996.
SPECTRAN CORPORATION
/s/ ILLEGIBLE By: /s/ ILLEGIBLE
---------------------------- ------------------------------
Witness Its Duly Authorized Officer
SPECTRAN SPECIALTY OPTICS COMPANY
/s/ ILLEGIBLE By: /s/ ILLEGIBLE
---------------------------- ------------------------------
Witness Its Duly Authorized Officer
4
55
APPLIED PHOTONIC DEVICES, INC.
/s/ ILLEGIBLE By: /s/ ILLEGIBLE
---------------------------- ------------------------------
Witness Its Duly Authorized Officer
SPECTRAN COMMUNICATION FIBER
TECHNOLOGIES, INC.
/s/ ILLEGIBLE By: /s/ ILLEGIBLE
---------------------------- ------------------------------
Witness Its Duly Authorized Officer
5