EXHIBIT 10
SECOND LOAN MODIFICATION AGREEMENT
This SECOND LOAN MODIFICATION AGREEMENT (this "Modification") is
entered into as of August 7, 1997, by and between FRANKLIN OPHTHALMIC
INSTRUMENTS CO., INC. ("Borrower") and SILICON VALLEY BANK ("Lender").
1. INDEBTEDNESS. Borrower is indebted to Lender pursuant to, among other
documents, an Amended and Restated Loan and Security Agreement, dated August
20, 1996, as amended by a Loan Modification agreement, dated as of April 7,
1997, and as otherwise amended from time to time (The "Loan Agreement").
As used herein, "Indebtedness" means all indebtedness owing by Borrower to
Lender. Repayment of the indebtedness is secured by the Collateral as
described in the Loan Agreement and is guaranteed by the "Guarantors"
(as defined in the Loan Agreement) pursuant to the "Guaranty" (as defined
in the Loan Agreement). As used herein, "Existing Loan Documents" means
the Loan Agreement (excluding this Modification only), the Guaranty, and
all other documents securing repayment of the Indebtedness. Unless
otherwise defined, all capitalized terms used in this Modification shall
have the meaning ascribed thereto in the Loan Agreement.
2. CHANGES.
A. The Revolving Maturity Date is hereby amended to be September 30, 1997.
Notwithstanding the foregoing, the Revolving Maturity shall be extended
to February 28, 1998 upon the written request of Borrower delivered to
Bank on or prior to September 30, 1997, provided that no such extension
shall be granted and the Revolving Maturity Date shall remain September
30, 1997 unless: (a) the $6,000.00 portion of the extension fee due and
payable by Borrower to Bank on September 30, 1997 pursuant to paragraph
2E below is timely paid, and (b) as of September 30, 1997, there does
not exist any Event of Default under and as defined in the Loan Agreement
or any default by Borrower of any obligation of Borrower contained in
this Modification.
B. Section 2.2(a) of the Loan Agreement is hereby amended to read in full
as follows:
"(a) Interest Rate. Except as set forth in Section 2.2(b), any Advance
shall bear interest, on the Average Daily Balance, at a rate equal to:
(i) three (3) percentage points above the Prime Rate through and including
December 31, 1997, and (ii) four (4) percentage points above the Prime
Rate from and after January 1, 1998."
C. It shall constitute an Event of Default under and as defined in the Loan
Agreement if Borrower fails to: (i) have a net profit of at least one
dollar ($1.00) for each of Borrower's fiscal quarters, commencing with
the fiscal quarter ending June 30, 1997, and (ii) have an operating profit
of at least one dollar ($1.00) for Borrower's fiscal year ending September
30, 1997.
D. Simultaneously with its execution of this Modification, Borrower shall
deliver to Bank either: (i) One Thousand Seven Hundred Sixty-Seven (1,767)
additional Exchange Shares, or (ii) the sum of Two Thousand Six Hundred
Eighty-Six and 82/100 Dollars ($2,686.82), representing payment of the
interest due and payable by Borrower on account of the Indebtedness as set
forth in that certain Letter from Bank to Borrower of December 30, 1996.
E. Borrower shall pay to Bank, as and for a non-refundable extension fee:
(i) Four Thousand and 00/100 Dollars ($4,000.00) simultaneously with
Borrower's execution of this Modification, (ii) Six Thousand and 00/100
Dollars ($6,000.00) on September 30, 1997, in the event that Borrower
elects to extend the Revolving Maturity Date to February 28, 1998, as
provided in paragraph 2A above, and (iii) Eight Thousand and 00/100
Dollars ($8,000.00) on January 1, 1998, in the event that there is any
Indebtedness outstanding as of January 1, 1998.
3. NO DEFENSES. Borrower (and each guarantor and pledgor signing below)
agrees that it has no defenses against the obligations to pay any amounts
under the Indebtedness.
4. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in entering into this Modification,
Lender is relying upon Borrower's representations, warranties, and
agreements, as set forth in the Existing Loan Documents. Except as
expressly modified pursuant to this Modification, the terms of the
Existing Loan Documents remain unchanged and in full force and effect.
Lender's agreement to modify the Loan Agreement pursuant to this
Modification in no way shall obligate Lender to make any future
modifications to the Loan Agreement or the Indebtedness. Nothing in
this Modification shall constitute a satisfaction of the Indebtedness.
It is the intention of Lender and Borrower to retain as liable parties
all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Lender in writing. No maker, endorser, or guarantor
will be released by virtue of this Modification. The terms of this
paragraph apply not only to this Modification, but also to all subsequent
loan modification agreements.
This Modification is executed as of the date first written above.
BORROWER: LENDER:
FRANKLIN OPHTHALMIC SILICON VALLEY BANK
INSTRUMENTS CO., INC.
/S/ /S/
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: President & CEO Title: Vice President
The undersigned hereby each consent to the modifications to the Loan
Agreement made pursuant to this Modification, hereby ratify all the
provisions of the Guaranty and confirm that all provisions of that document
are in full force and effect.
GUARANTOR: /S/
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Dated: August 14, 1997
GUARANTOR: /S/
___________________________
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Dated: August 14, 1997
GUARANTOR: /S/
___________________________
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Dated: August 14, 1997
Silicon Valley Bank
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August 13, 1997
Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President & Chief Financial Officer
Franklin Ophthalmic Instruments Co., Inc.
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RE: Second Loan Modification Agreement
Dear ▇▇▇▇▇:
Pursuant to your request, and with regard to that certain Second Loan
Modification Agreement dated as of August 7, 1997 (this "Modification"),
by and between Franklin Ophthalmic Instruments Co., Inc. ("Borrower") and
Silicon Valley Bank ("Bank"), paragraph 2(C) is hereby amended to read, in
its entirety, as follows:
- It shall constitute an Event of Default under and as defined in the Loan
Agreement if Borrower fails to have a net profit of at least one dollar
($1.00) for each of Borrower's fiscal quarters, commencing with the fiscal
quarter ending June 30, 1997, except that, with regard to Borrower's fiscal
quarter ending September 30, 1997, no Event of Default shall be deemed to
have occurred so long as (i) Borrower has an Operating Profit of at least
one dollar ($1.00) for that fiscal quarter, and (ii) Borrower has a net
profit of at least one dollar ($1.00) for the fiscal year ending September
30, 1997. For purposes of this Modification only, the term "Operating
Profit" shall be defined as Borrower's earnings before interest, taxes,
depreciation, and amortization.
If Borrower and Guarantors are in agreement with the above amendment,
please so indicate by executing this letter below and returning the original
to my attention.
Sincerely, Acknowledged and Agreed To:
Franklin Ophthalmic Instruments, Co., Inc.
/S/
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /S/
Vice President Title: President & CEO
Date: August 14, 1997
cc: ▇. ▇▇▇▇▇
Guarantors:
S/ Date:August 14, 1997
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/S/ Date:August 14, 1997
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/S/ Date:August 14, 1997
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