EXHIBIT 10.6
[FIRST UNION LOGO]
LOAN AGREEMENT
First Union National Bank of Virginia
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Hereinafter referred to as the "Bank")
Optical Cable Corporation, a Virginia Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Individually and collectively "Borrower")
This Loan Agreement ("Agreement") is entered into April 25, 1997, by and between
Bank and Borrower.
Borrower has applied to Bank for a loan or loans (individually and collectively,
the "Loan") evidenced by one or more promissory notes (whether one or more, the
"Note") as follows:
Line of Credit - in the principal amount of $10,000,000.00 which is evidenced by
the Promissory Note of even date herewith ("Line of Credit Note 1"), under which
Borrower may borrow, repay, and reborrow, from time to time, so long as the
total indebtedness outstanding at any one time does not exceed the principal
amount. The Loan proceeds are to be used by Borrower solely to provide funding
for mergers, acquisitions and/or joint ventures of entities in a business
related to that of Borrower. Upon consummation of any of the above, Borrower
will provide Bank proforma financial statements on the resulting entity with
detail satisfactory to Bank. Bank's obligation to advance or readvance under the
Line of Credit Note 1 shall terminate if a default in the payment of the
Obligations occurs or the Borrower is in Default (as defined in the Loan
Documents) under any Loan Document, or in any event, on February 28, 1998 unless
renewed or extended by Bank in writing upon such terms then satisfactory to
Bank.
Line of Credit - in the principal amount of $5,000,000.00 which is evidenced by
the Promissory Note of even date herewith ("Line of Credit Note 2"), under which
Borrower may borrow, repay, and reborrow, from time to time, so long as the
total indebtedness outstanding at any one time does not exceed the principal
amount. The Loan proceeds are to be used by Borrower solely for working capital
and general corporate expenses. Bank's obligation to advance or readvance under
the Line of Credit Note 2 shall terminate if a default in the payment of the
Obligations occurs or the Borrower is in Default (as defined in the Loan
Documents) under any Loan Document, or in any event, on February 28, 1998 unless
renewed or extended by Bank in writing upon such terms then satisfactory to
Bank.
This Agreement also amends and restates in its entirety that certain Loan
Agreement dated March 13, 1996 and applies to govern all of the loans thereby.
This Agreement applies to the Loan and all Loan Documents. The terms "Loan
Documents" and "Obligations," as used in this Agreement, are defined in the
Note. The term "Borrower" shall include its Subsidiaries and Affiliates. As used
in this Agreement as to Borrower, "Subsidiary" shall mean any corporation of
which more than 50% of the issued and outstanding voting stock is owned directly
or indirectly by Borrower. As to Borrower, "Affiliate" shall have the meaning as
defined in 11 U.S.C. ss. 101, except that the term "debtor" therein shall be
substituted by the term "Borrower" herein.
Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:
REPRESENTATIONS. Borrower represents that from the date of this Agreement and
until final payment in full of the Obligations: ACCURATE INFORMATION. All
information now and hereafter furnished to Bank is and will be true, correct and
complete. Any such information relating to Borrower's financial condition will
accurately reflect Borrower's financial condition as of the date(s) thereof,
(including all contingent liabilities of every type), and Borrower further
represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. AUTHORIZATION; NON-CONTRAVENTION. The
execution, delivery and performance by Borrower and any guarantor, as
applicable, of this Agreement and other Loan Documents to which it is a party
are within its power, have been duly authorized by all necessary action taken by
the duly authorized officers of Borrower and any guarantors and, if necessary,
by making appropriate filings with any governmental agency or unit and are the
legal, binding, valid and enforceable obligations of Borrower and any
guarantors; and do not (i) contravene, or constitute (with or without the giving
of notice or lapse of time or both) a violation of any provision of applicable
law, a violation of the organizational documents of Borrower or any guarantor,
or a default under any agreement, judgment, injunction, order, decree or other
instrument binding upon or affecting Borrower or any guarantor, (ii) result in
the creation or imposition of any lien (other than the lien(s) created by the
Loan Documents) on any of Borrower's or guarantor's assets, or (iii) give cause
for the acceleration of any obligations of Borrower or any guarantor to any
other creditor. ASSET OWNERSHIP. Borrower has good and marketable title to all
of the properties and assets reflected on the balance sheets and financial
statements supplied Bank by Borrower, and all such properties and assets are
free and clear of mortgages, security deeds, pledges, liens, charges, and all
other encumbrances, except as otherwise disclosed to Bank by Borrower in writing
("Permitted Liens"). To Borrower's knowledge, no default has occurred under any
Permitted Liens and no claims or interests adverse to Borrower's present rights
in its properties and assets have arisen. DISCHARGE OF LIENS AND TAXES. Borrower
has duly filed, paid and/or discharged all taxes or other claims which may
become a lien on any of its property or assets, except to the extent that such
items are being appropriately contested in good faith and an adequate reserve
for the payment thereof is being maintained. SUFFICIENCY OF CAPITAL. Borrower is
not, and after consummation of this Agreement and after giving effect to all
indebtedness incurred and liens created by Borrower in connection with the Loan,
will not be, insolvent within the meaning of 11 U.S.C. ss. 101(32). COMPLIANCE
WITH LAWS. Borrower is in compliance in all respects with all federal, state and
local laws, rules and regulations applicable to its properties, operations,
business, and finances, including, without limitation, any federal or state laws
relating to liquor (including 18 U.S.C. ss. 3617, et seq.) or narcotics
(including 21 ▇.▇.▇.▇▇. 801, et seq.) and/or any commercial crimes; all
applicable federal, state and local laws and regulations intended to protect the
environment; and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), if applicable. ORGANIZATION AND AUTHORITY. Each corporate or limited
liability company Borrower and any guarantor, as applicable, is duly created,
validly existing and in good standing under the laws of the state of its
organization, and has all powers, governmental licenses, authorizations,
consents and approvals required to operate its business as now conducted. Each
corporate or limited liability company Borrower and any guarantor, if any, is
duly qualified, licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers, and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a material adverse effect on the business, financial position,
results of operations, properties or prospects of Borrower or any such
guarantor. NO LITIGATION. There are no pending or threatened suits, claims or
demands against Borrower or any guarantor that have not been disclosed to Bank
by Borrower in writing.
Page 2
AFFIRMATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will: BUSINESS CONTINUITY. Conduct its business in
substantially the same manner and locations as such business is now and has
previously been conducted. MAINTAIN PROPERTIES. Maintain, preserve and keep its
property in good repair, working order and condition, making all needed
replacements, additions and improvements thereto, to the extent allowed by this
Agreement. ACCESS TO BOOKS & RECORDS. Allow Bank, or its agents, during normal
business hours, access to the books, records and such other documents of
Borrower as Bank shall reasonably require, and allow Bank to make copies thereof
at Bank's expense. INSURANCE. Maintain adequate insurance coverage with respect
to its properties and business against loss or damage of the kinds and in the
amounts customarily insured against by companies of established reputation
engaged in the same or similar businesses including, without limitation,
commercial general liability insurance, workers compensation insurance, and
business interruption insurance; all acquired in such amounts and from such
companies as Bank may reasonably require. NOTICES. Promptly notify Bank in
writing of (i) any material adverse change in its financial condition or its
business; (ii) any default under any material agreement, contract or other
instrument to which it is a party or by which any of its properties are bound,
or any acceleration of the maturity of any indebtedness owing by Borrower; (iii)
any material adverse claim against or affecting Borrower or any part of its
properties; (iv) the commencement of, and any material determination in, any
litigation with any third party or any proceeding before any governmental agency
or unit affecting Borrower; and (v) at least 30 days prior thereto, any change
in Borrower's name or address as shown above, and/or any change in Borrower's
structure. COMPLIANCE WITH OTHER AGREEMENTS. Comply with all terms and
conditions contained in this Agreement, and any other Loan Documents, and swap
agreements, if applicable, as defined in the Note. PAYMENT OF DEBTS. Pay and
discharge when due, and before subject to penalty or further charge, and
otherwise satisfy before maturity or delinquency, all obligations, debts, taxes,
and liabilities of whatever nature or amount, except those which Borrower in
good faith disputes. REPORTS AND PROXIES. Deliver to Bank, promptly, a copy of
all financial statements, reports, notices, and proxy statements, sent by
Borrower to stockholders, and all regular or periodic reports required to be
filed by Borrower with any governmental agency or authority. OTHER FINANCIAL
INFORMATION. Deliver promptly such other information regarding the operation,
business affairs, and financial condition of Borrower which Bank may reasonably
request. ESTOPPEL CERTIFICATE. Furnish, within 15 days after request by Bank, a
written statement duly acknowledged of the amount due under the Loan and whether
offsets or defenses exist against the Obligations. CHANGE OF CONTROL. Ensure
that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ maintains at least a 51% ownership interest in Borrower.
LIFE INSURANCE. Maintain no less than $2.0 million of life insurance on ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇.
NEGATIVE COVENANTS. Borrower agrees that from the date of this Agreement and
until final payment in full of the Obligations, unless Bank shall otherwise
consent in writing, Borrower will not: NONPAYMENT; NONPERFORMANCE. Fail to pay
or perform the Obligations or Default (as defined in the Loan Documents) under
any of the Loan Documents. CROSS DEFAULT. Default in payment or performance of
any obligation under any other loans, contracts or agreements of Borrower, any
Subsidiary or Affiliate of Borrower ("Affiliate" shall have the meaning as
defined in 11 U.S.C. ss. 101, except that the term "debtor" therein shall be
substituted by the term "Borrower" herein; "Subsidiary" shall mean any
corporation of which more than 50% of the issued and outstanding voting stock is
owned directly or indirectly by Borrower), any general partner of or the
holder(s) of the majority ownership interests of Borrower with Bank or its
affiliates; MATERIAL CAPITAL STRUCTURE OR BUSINESS ALTERATION. Materially alter
the type or kind of Borrower's business or that of its Subsidiaries or
Affiliates, if any; or suffer or permit the acquisition of substantially all of
Borrower's business or assets, or a material portion (10% or more) of such
business or assets if such a sale is outside Borrower's ordinary course of
business, or more than 50% of its outstanding stock or voting power in a single
transaction or a series of transactions; or acquire substantially all of the
business or assets or more than 50% of the outstanding stock or voting power of
any other entity; or enter into any merger or consolidation without prior
written consent of Bank. DEFAULT ON OTHER
Page 3
CONTRACTS OR OBLIGATIONS. Default on any material contract with or obligation
when due to a third party or default in the performance of any obligation to a
third party incurred for money borrowed in an amount in excess of $100,000.00.
JUDGMENT ENTERED. Permit the entry of any monetary judgment or the assessment
against, the filing of any tax lien against, or the issuance of any writ of
garnishment or attachment against any property of or debts due Borrower in an
amount in excess of $50,000.00 and that is not discharged or execution is not
stayed within Thirty (30) days of entry. GOVERNMENT INTERVENTION. Permit the
assertion or making of any seizure, vesting or intervention by or under
authority of any government by which the management of Borrower or any guarantor
is displaced of its authority in the conduct of its respective business or such
business is curtailed or materially impaired. PREPAYMENT OF OTHER DEBT. Retire
any long-term debt entered into prior to the date of this Agreement at a date in
advance of its legal obligation to do so. RETIRE OR REPURCHASE CAPITAL STOCK.
Retire or otherwise acquire any of its capital stock. ENCUMBRANCES. Create,
assume, or permit to exist any mortgage, security deed, deed of trust, pledge,
lien, charge or other encumbrance on any of its assets, whether now owned or
hereafter acquired, other than: (i) security interests required by the Loan
Documents; (ii) liens for taxes contested in good faith; (iii) liens accruing by
law for employee benefits; or (iv) Permitted Liens.
FINANCIAL COVENANTS. Borrower, on a consolidated basis, agrees to the following
provisions from the date of this Agreement and until final payment in full of
the Obligations, unless Bank shall otherwise consent in writing: DEPOSIT
RELATIONSHIP. Borrower shall maintain its primary depository account and cash
management account with Bank.
ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 120 days
after the close of each fiscal year, audited financial statements reflecting its
operations during such fiscal year, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting
schedules; all on a consolidated and consolidating basis and in reasonable
detail, prepared in conformity with generally accepted accounting principles,
applied on a basis consistent with that of the preceding year. All such
statements shall be examined by an independent certified public accountant
acceptable to Bank. The opinion of such independent certified public accountant
shall not be acceptable to Bank if qualified due to any limitations in scope
imposed by Borrower or its Subsidiaries, if any. Any other qualification of the
opinion by the accountant shall render the acceptability of the financial
statements subject to Bank's approval.
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank unaudited
management-prepared quarterly financial statements, including, without
limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules, as soon as available and in any event within
45 days after the close of each such period; all in reasonable detail and
prepared in conformity with generally accepted accounting principles, applied on
a basis consistent with that of the preceding year. Such statements shall be
certified as to their correctness by a principal financial officer of Borrower.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
CONDITIONS PRECEDENT. The obligations of Bank to make the Loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
ADDITIONAL DOCUMENTS. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request.
Page 4
IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal, AND THIS AGREEMENT IS
DEEMED EFFECTIVE AS OF FEBRUARY 28, 1997.
Optical Cable Corporation, a Virginia Corporation
Taxpayer Identification Number: ▇▇-▇▇▇▇▇▇▇
CORPORATE By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SEAL ---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
First Union National Bank of Virginia
CORPORATE By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
SEAL ---------------------------------------
Title: Vice President
-------------------------------------
Page 5
MODIFICATION NUMBER ONE
TO THE LOAN AGREEMENT
Optical Cable Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Individually and collectively, "Borrower")
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Hereinafter referred to as the "Bank")
THIS AGREEMENT is entered into as of March 5, 1998 by and between Bank and
Borrower.
WHEREAS, Bank is the holder of a Promissory Note executed and delivered by
Borrower, dated April 25, 1997, in the original principal amount of
$10,000,000.00 (the "Note Number 1"); and Bank is the holder of a Promissory
Note executed and delivered by Borrower, dated April 25, 1997, in the original
principal amount of $5,000,000.00 (the "Note Number 2");
WHEREAS, in connection with execution of the Note, Borrower also executed and
delivered to Bank certain other Loan Documents, including a Loan Agreement,
dated April 25, 1997 (the "Loan Agreement"); and
WHEREAS, Borrower and Bank have agreed to modify the terms of the Loan
Agreement.
NOW, THEREFORE, in consideration of the premises contained herein and other good
and valuable consideration, receipt and sufficiency of which is acknowledged,
the parties agree as follows:
OUTSTANDING BALANCE. The total outstanding unpaid principal balance under the
Note Number 1 as of March 6, 1998 is $0.00 and total outstanding unpaid
principal balance under the Note Number 2 as of March 6, 1998 is $0.00. The
parties acknowledge that interest on the obligations under Note 1 and Note
Number 2 are paid through March 6, 1998.
MODIFICATIONS.
1. The section entitled FINANCIAL STATEMENTS of the Loan Agreement is
hereby amended by deleting the subparagraph(s) entitled PERIODIC FINANCIAL
STATEMENTS and adding the following in its place and stead:
PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank unaudited
management-prepared quarterly financial statements, including, without
limitation, a balance sheet, profit and loss statement and statement of
cash flows, with supporting schedules, as soon as available and in any
event within 60 days after the close of each such period; all in reasonable
detail and prepared in conformity with generally accepted accounting
principles, applied on a basis consistent with that of the preceding year.
Such statements shall be certified as to their correctness by a principal
financial officer of Borrower.
2. The section entitled NEGATIVE COVENANTS of the Loan Agreement is hereby
amended by deleting the subparagraph(s) entitled Retire or Repurchase
Capital Stock and adding the following in its place and stead:
Page 1 of 4
RETIRE OR REPURCHASE CAPITAL STOCK. Retire or otherwise acquire its capital
stock in an amount greater than $5,000,000.00. Any such acquisition of
capital stock must be paid for from available cash on hand.
3. The section entitled NEGATIVE COVENANTS of the Loan Agreement is hereby
amended by adding the subparagraph(s) entitled Guarantees:
GUARANTEES. Guarantee or otherwise become responsible for obligations of
any other person or persons other than the endorsement of check and drafts
for collection in the ordinary course of business.
4. The section entitled AFFIRMATIVE CONVENANTS of the Loan Agreement is
hereby amended by deleting the subparagraph(s) entitled Change of Control
and adding the following it its place and stead as a Negative Covenant
paragraph.
CHANGE OF CONTROL. Make a material change of ownership that effectively
changes control of Borrower.
ACKNOWLEDGEMENTS. Borrower acknowledges and represents that the Note and other
Loan Documents, as amended hereby, are in full force and effect and are binding
upon it, its successors, assigns, administrators and heirs without any defense,
counterclaim, right or claim of set-off or of other sum due; that, after giving
effect to this Agreement, no default or event that with the passage of time or
giving of notice would constitute a default under the Loan Documents has
occurred; that all representations and warranties contained in the Loan
Documents are true and correct as of this date; that there have been no changes
in the ownership of any collateral pledged to secure the Obligations since the
dates of the instruments originally pledging such collateral; and that Borrower
has taken all necessary action (corporate or otherwise) to authorize the
execution and delivery of this Agreement. This Agreement constitutes only a
modification of an existing obligation owing by Borrower to Bank, and is not a
novation.
LIENS. Borrower acknowledges and confirms the extent, validity and priority of
the Bank's security interests and liens in the collateral pledged, if any,
pursuant to the Loan Documents, and agrees that such security interest and liens
shall secure the Borrower's Obligations to Bank, including any modification of
the Note or Loan Agreement, and all future modifications, extensions, renewals
and/or replacements of the Loan Documents.
MISCELLANEOUS. This Agreement shall be construed in accordance with and governed
by the laws of the applicable state as originally provided in the Loan
Documents, without reference to the state's conflicts of laws principles. This
Agreement and the other Loan Documents constitute the sole agreement of the
parties with respect to the subject matter thereof and supersede all oral
negotiations and prior writings with respect to the subject matter thereof. No
amendment of this Agreement, and no waiver of any one or more of the provisions
hereof shall be effective unless set forth in writing and signed by the parties
hereto. The illegality, unenforceability or inconsistency of any provision of
this Agreement shall not in any way affect or impair the legality,
enforceability or consistency of the remaining provisions of this Agreement or
the other Loan Documents. This Agreement and the other Loan Documents are
intended to be consistent. However, in the event of any inconsistencies among
this Agreement and by any of the Loan Documents, the terms of this Agreement,
and then the Note, shall control. This Agreement may be executed in any number
of counterparts and by the different parties on separate counterparts. Each such
counterpart shall be deemed an original, but all such counterparts shall
together constitute one and the same agreement.
DEFINITIONS. The term "Loan Documents" used in this Agreement and other Loan
Documents refers to all documents, agreements, and instruments executed in
connection with any of the Obligations (as defined herein), and may include,
without limitation, modification agreements, a commitment letter that survives
closing, a loan agreement, any note, guaranty agreements, security agreements,
security instruments, financing statements, mortgage instruments, letters of
credit and any renewals or modifications, whenever any of the foregoing are
executed, but does not include swap agreements (as defined in 11 U.S.C. ss.
101). The term "Obligations" used in this Agreement refers to any and all
indebtedness and other obligations of every kind and description of the Borrower
to the Bank or to any Bank affiliate, whether or not under the Loan Documents,
and whether such debts or obligations are primary or secondary, direct or
indirect, absolute or contingent, sole, joint or several, secured or unsecured,
due or to become due, contractual, including, without limitation, swap
agreements (as defined in 11 U.S.C. ss. 101), arising by tort, arising by
operation of law, by overdraft or otherwise, or now or hereafter existing,
including, without limitation, principal, interest, fees, late fees, expenses,
attorneys' fees and costs that have been or may hereafter be contracted or
Page 2 of 4
incurred. Terms used in this Agreement which are capitalized and not otherwise
defined herein shall have the meanings ascribed to such terms in the Note and/or
other Loan Documents.
ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement and other Loan
Documents ("Disputes") between or among parties to this Agreement shall be
resolved by binding arbitration as provided herein. Institution of judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitations, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration, claims
brought as class actions, claims arising from Loan Documents executed in the
future, or claims arising out of or connected with the transaction reflected by
this Agreement.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA") and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in the city in which the office of Bank first stated above is
located. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000.00. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of the state where
the hearing will be conducted or if such person is not available to serve, the
single arbitrator may be a licensed attorney. Notwithstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements.
PRESERVATION AND LIMITATION OF REMEDIES. Notwithstanding the preceding binding
arbitration provisions, Bank and Borrower agree to preserve, without diminution,
certain remedies that any party hereto may employ or exercise freely,
independently or in connection with an arbitration proceeding or after an
arbitration action is brought. Bank and Borrower shall have the right to proceed
in any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any real
or personal property or other security by exercising a power of sale granted
under Loan Documents or under applicable law or by judicial foreclosure and
sale, including a proceeding to confirm the sale; (ii) all rights of self-help
including peaceful occupation of real property and collection of rents, set-off,
and peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
Borrower and Bank agree that they shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
IN WITNESS WHEREOF, the undersigned have signed and sealed this agreement the
day and year first above written.
Optical Cable Corporation
Taxpayer Identification Number: ▇▇-▇▇▇▇▇▇▇
Page 3 of 4
CORPORATE By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SEAL --------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
First Union National Bank
CORPORATE By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
SEAL --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
Page 4 of 4
MODIFICATION NUMBER TWO
TO THE LOAN AGREEMENT
Optical Cable Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Individually and collectively, "Borrower")
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(Hereinafter referred to as the "Bank")
THIS AGREEMENT is entered into as of August 11, 1998 by and between Bank and
Borrower.
RECITALS
WHEREAS, Bank is the holder of a Promissory Note executed and delivered by
Borrower, dated April 25, 1997, in the original principal amount of
$10,000,000.00 (the "Note Number 1"); and Bank is the holder of a Promissory
Note executed and delivered by Borrower, dated April 25, 1997, in the original
principal amount of $5,000,000.00 (the "Note Number 2").
WHEREAS, in connection with execution of Note Number 1 and Note Number 2,
Borrower also executed and delivered to Bank certain other Loan Documents,
including a Loan Agreement, dated April 25, 1997 and all modification thereafter
(the "Loan Agreement"); and
Borrower and Bank have agreed to modify the terms of the Loan Agreement.
In consideration of Bank's continued extension of credit and the agreements
contained herein, the parties agree as follows:
AGREEMENT
ACKNOWLEDGMENT OF BALANCE. Borrower acknowledges that the most recent Commercial
Loan Invoice sent to Borrower with respect to the Obligations under the Note is
correct.
MODIFICATIONS.
1. The Section entitled NEGATIVE COVENANTS of the Loan Agreement is
hereby amended by deleting the subparagraph(s) entitled Retire or
Repurchase Capital Stock and adding the following in its place and
stead:
NEGATIVE COVENANTS. Borrower agrees that from the date hereof and
until final payment in full of the Obligations, unless Bank shall
otherwise consent in writing, Borrower will not: RETIRE OR REPURCHASE
CAPITAL STOCK. Retire or otherwise acquire its capital stock in an
amount greater than $10,000,000.00. Any such acquisition of capital
stock must be paid for from working capital or other sources deemed
appropriate by the officers of the corporation.
ACKNOWLEGMENTS. Borrower acknowledges and represents that the Note and other
Loan Documents, as amended hereby, are in full force and effect without any
defense, counterclaim, right or claim of set-off; that, after giving effect to
this Agreement, no default or event that with the passage of time or giving of
notice would constitute a default under the Loan Documents has occurred; that
all representations and warranties contained in the
Page 1 of 2
Loan Documents are true and correct as of this date; that Borrower has taken all
necessary action to authorize the execution and delivery of this Agreement; and
that this Agreement is a modification of an existing obligation and is not a
novation.
COLLATERAL. The Borrower acknowledges and confirms that there have been no
changes in the ownership of any collateral pledged to secure the Obligations
(the "Collateral") since the Collateral was originally pledged; that the Bank
has existing, valid first priority security interests and liens in the
Collateral; and that such security interests and liens shall secure the
Borrower's Obligations to Bank, including any modification of the Note or Loan
Agreement, and all future modifications, extension, renewals and/or replacements
of the Loan Documents.
MISCELLANEOUS. This Agreement shall be construed in accordance with and governed
by the laws of the applicable state as originally provided in the Loan
Documents, without reference to that state's conflicts of laws principles. This
Agreement and the other Loan Documents constitute the sole agreement of the
parties with respect to the subject matter thereof and supersede all oral
negotiations and prior writings with respect to the subject matter thereof. No
amendment of this Agreement, and no waiver of any one or more of the provisions
hereof shall be effective unless set forth in writing and signed by the parties
hereto. The illegality, unenforceability or inconsistency of any provision of
this Agreement shall not in any way affect or impair the legality,
enforceability or consistency of the remaining provisions of this Agreement or
the other Loan Documents. This Agreement and the other Loan Documents are
intended to be consistent. However, in the event of any inconsistencies among
this Agreement and any of the Loan Documents, the terms of this Agreement, and
then the Note, shall control. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts. Each such
counterpart shall be deemed an original, but all counterparts shall together
constitute one and the same agreement. Terms used in this Agreement which are
capitalized and not otherwise defined herein shall have the meanings ascribed to
such terms in the Loan Documents.
IN WITNESS WHEREOF, the undersigned have signed and sealed this Agreement the
day and year first above written.
Optical Cable Corporation
CORPORATE By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SEAL --------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
First Union National Bank
CORPORATE By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
SEAL --------------------------------
▇▇▇▇▇ ▇▇▇▇▇, Vice President
Page 2 of 2
First Union National Bank
of ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
[FIRST UNION LOGO]
January 25, 1999
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
McGuire, Woods, Battle & ▇▇▇▇▇▇, LLP
One ▇▇▇▇▇ Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
RE: Optical Cable Corporation
Dear ▇▇. ▇▇▇▇▇▇:
Please accept this letter as confirmation that the Loan Agreement between
Optical Cable Corporation and First Union National Bank dated April 27, 1997 has
been extended as described in the Commitment Letter dated February 25, 1998.
Specifically, advances under the two referenced lines of credit in the amounts
of $10,000,000 and $5,000,000 are permitted through February 28, 1999.
Please call me at (▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇ if you need additional
information.
Sincerely,
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President