Exhibit 10.116
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "First Amendment") is by and
among FLEET NATIONAL BANK, a national bank having offices at One Federal Street,
Boston, Massachusetts, (the "Lender") and SPECTRAN CORPORATION, a Delaware
corporation with a principal place of business at 50 Hall Road, Sturbridge,
Massachusetts ("SpecTran"), SPECTRAN SPECIALTY OPTICS COMPANY, a Delaware
corporation with a principal place of business at 55 Darling Drive, Avon,
Connecticut ("Optics"), APPLIED PHOTONIC DEVICES, INC., a Delaware corporation
with a principal place of business at 50 Hall Road, Sturbridge, Massachusetts
("Photonic") and SPECTRAN COMMUNICATION FIBER TECHNOLOGIES, INC., a Delaware
corporation with a principal place of business at 50 Hall Road, Sturbridge,
Massachusetts ("Communication") (SpecTran, Optics, Photonic and Communication
are sometimes collectively referred to herein as the "Borrowers").
WHEREAS, the Lender and the Borrowers are parties to that certain Loan
Agreement dated as of December 1, 1996 (the "Agreement"); and
WHEREAS, the Lender and the Borrowers desire to amend the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Lender and the Borrowers hereby amend the
Agreement as set forth hereinafter:
A. AMENDMENTS TO AGREEMENT
1. Amend Section 1.3 of the Agreement by adding the following sentence to the
end thereof:
The Borrowing Base will be reduced, dollar for dollar, to the extent the
outstanding balance of the Revolving Note is paid down with the proceeds of "an
Asset Disposition, the incurrence of Debt owing to any Person other than the
Bank or a holder of the Notes, or the issuance of equity interests" as
described in Section 10.8 of the Note Purchase Agreement.
2. Restate Section 1.4 of the Agreement as follows:
1.4 "Business Day" means any day on which commercial banks settle payments in
(a) London if the payment obligation is calculated by reference to any LIBOR (as
that term is defined in the Note) rate or (b) New York if the payment obligation
is calculated by reference to the Prime Rate, subject to adjustment in
accordance with Modified Following Business Day Convention. For purposes hereof
"Modified Following Business Day Convention" means the convention for adjusting
any relevant date if it would otherwise fall on a day that is not a Business Day
to the date that will be the first following day that is a Business Day.
3. Amend Section 1.6 of the Agreement by deleting ", prior to January 1,
2000," from the first line.
4. Restate Section 1.13 of the Agreement as follows:
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 computed on a
rolling twelve (12) month basis in accordance with GAAP.
5. Amend Section 1.15 of the Agreement by changing the upper case "O" at the
beginning of the word "Obligations" in subsections a, b, c, d, and e to a lower
case "o".
6. Restate Section 1.25 of the Agreement as follows:
1.25 "Control Percentage" means prior to January 1, 2000, 30% and on and
after January 1, 2000, 50%.
7. Restate Section 1.42 of the Agreement as follows:
1.42 "Revolving Note" means the Revolving Note substantially in the form of
Exhibit 1.42 attached to this Agreement, as amended by the First Amendment to
Revolving Note dated as of September 30, 1998 and as it may be further amended,
modified and/or restated from time to time.
8. Add a new Section 1.48 to the Agreement as follows:
1.48 "Accounts" and "Inventory" shall have the same respective meanings as are
given to those terms in the Uniform Commercial Code as presently adopted and in
effect in the Commonwealth of Massachusetts.
9. Add a new Section 1.49 to the Agreement as follows:
1.49 "Consolidated EBITDA" 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 computed for a particular
fiscal quarterly period (i.e. for the fiscal quarterly periods ending March 31,
June 30, September 30 and December 31).
10. Add a new Section 1.50 to the Agreement as follows:
1.50 "Consolidated Fixed Charge Coverage Ratio" means the ratio of Consolidated
EBITDA Cumulative minus the sum of (i) cash taxes and (ii) Consolidated Capital
Expenditures (excluding all Consolidated Capital Expenditures set forth in
Exhibit 1.50 attached hereto) to Consolidated Interest plus scheduled principal
repayments all computed on a rolling twelve (12) month basis.
11. Amend Section 2.3 of the Agreement by deleting "December 31, 1999" from the
second line and inserting April 1, 2000.
12. Restate Section 2.7 of the Agreement as follows:
2.7 The Commitment Fee and the Modification Fee.
At the Closing, the Borrowers paid a commitment fee to the Lender in the
amount of $50,000.00. Simultaneously with the execution of the First Amendment
to Loan Agreement, the Lender shall charge the deposit account of the Borrowers
identified in Exhibit 2.2 a modification fee in the amount of $150,000.00.
13. Add a new Section 2.8 to the Agreement as follows:
2.8 Payment Due Dates.
The due dates of all payments required under this Agreement or under the
Revolving Note are subject to adjustment in accordance with the Modified
Following Business Day Convention.
14. Restate Section 6.1(b)(iv) of the Agreement as follows:
(iv) Contemporaneously with the year-end financial report required by
the foregoing paragraph (iii), 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 (the Borrowers must require
their certified public accountant to issue a management letter with the year-end
fiscal report);
15. Restate Section 6.1(b)(v) of the Agreement as follows:
(v) Contemporaneously with each quarterly and year-end financial report
required by the foregoing paragraphs (ii) and (iii) and on each occasion that
the Borrowers request an advance under the Loan that will result in the
outstanding balance of the Revolving Note to be greater that $12,500,000.00, 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, year or period through the end of the
most recently reported month, 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;
16. Amend Section 6.1(b)(vi) of the Agreement by deleting the "and" at the end
thereof.
17. Add a new Section 6.1(b)(viii) to the Agreement as follows:
(viii) As soon as available, but in any event within forty-five
(45) days after the close of each quarter of each fiscal year (i.e. March 31,
June 30, September 30 and December 31), in such form and detail as shall be
satisfactory to the Lender, an aging as of the end of such quarter of all
Accounts of the Borrowers certified by the chief financial officer of SpecTran
to be complete and correct; and
18. Add a new Section 6.1(b)(ix) to the Agreement as follows:
(ix) As soon as available, but in any event within forty-five
(45) days after the close of each quarter of each fiscal year (i.e. March 31,
June 30, September 30 and December 31), in such form and detail as shall be
satisfactory to the Lender, a listing as of the end of such quarter of all
Inventory of the Borrowers certified by the chief financial officer of SpecTran
to be complete and correct;
19. Delete Section 6.1(f)(i) of the Agreement and replace with the following:
(i) a Consolidated Fixed Charge Coverage Ratio of at least 1.25:
1.00 to be measured monthly and computed on a rolling twelve (12) month basis;
20. Restate Section 6.1(f)(ii) of the Agreement as follows:
(ii) a Consolidated Tangible Net Worth of at least (i)
$43,950,000.00 for the period from September 30, 1998 through December 30, 1998
and (ii) $48,000,000.00 at December 31, 1998; thereafter Consolidated Tangible
Net Worth must increase (x) 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 no reduction for a negative
number) and (y) after any Offering by an amount equal to the net proceeds of any
such Offering; Consolidated Tangible Net Worth to be measured monthly;
21. Add a new Section 6.1(f)(iii) to the Agreement as follows:
(iii) a Consolidated EBITDA of at least (i) $3,000,000.00 for the
quarterly period ended September 30, 1998, (ii) $3,500,000.00 for the quarterly
period ending December 31, 1998 and (iii) $2,700,000.00 for the quarterly period
ending March 31, 1999, to be measured as of each of the above dates;
22. Add a new Section 6.1(f)(iv) to the Agreement as follows:
(iv) a Consolidated EBITDA Cumulative of at least (i)
$12,000,000.00 for the twelve (12) month periods ending June 30, 1999, July 31,
1999, and August 31, 1999 (ii) $13,000,000.00 for the twelve (12) month periods
ending September 30, 1999, October 31, 1999, and November 30, 1999 and (iii)
$14,500,000.00 for the twelve (12) month period ending December 31, 1999 and
thereafter, to be measured monthly on a rolling twelve (12) month basis; and
23. Add a new Section 6.1(f)(v) to the Agreement as follows:
(v) a Consolidated Net Income of at least $1.00 for each fiscal
year to be measured as of December 31 of each fiscal year.
24. Amend Section 6.1(q) of the Agreement by deleting the "and" at the end
thereof.
25. Amend Section 6.1(r) of the Agreement by deleting the period at the end
thereof and adding "; and".
26. Add a new Section 6.1(s) to the Agreement as follows:
(s) The Borrowers will satisfy each of the conditions set forth on
Schedule A (a copy of which is attached hereto) on or before January 15, 1999,
such satisfaction to be determined by the Lender in its sole discretion.
27. Restate Section 6.2(p)(i) of the Agreement as follows:
(i) the Consolidated Leverage Ratio to exceed 1.15:1.00 through
September 30, 1999 and 1.00:1.00 thereafter, to be measured monthly;
28. Restate Section 6.2(p)(ii) of the Agreement as follows:
(ii) the ratio of Consolidated Indebtedness to Consolidated
EBITDA Cumulative to exceed (i) 3.75:1.00 from September 30, 1998 through June
29, 1999, (ii) 3.00:1.00 from June 30, 1999 through December 30, 1999 and (iii)
2.75:1.00 at December 31, 1999 and thereafter, to be measured on a rolling
twelve (12) month basis;
29. Amend Section 6.2(o) of the Agreement by deleting the "and" at the end
thereof.
30. Add a new Section 6.2(q) to the Agreement as follows:
(q) SpecTran will not declare or pay any dividends, or make any other
payment or distribution on account of its capital stock;
31. Add a new Section 6.2(r) to the Agreement as follows:
(r) No Borrower will make any prepayment of any Consolidated
Indebtedness (other than scheduled, mandatory prepayments under the Note
Purchase Agreements, as amended), except the Obligations or enter into or modify
any agreement as a result of which the terms of payment of any of the
Consolidated Indebtedness are waived or modified;
32. Add a new Section 6.2(s) to the Agreement as follows:
(s) No Borrower will make any payment with respect to Consolidated
Indebtedness, except the Obligations, after the occurrence of an Event of
Default;
33. Add a new Section 6.2(t) to the Agreement as follows:
(t) SpecTran will not enter into any amendments of the Note Purchase
Agreements without the prior written consent of the Lender.
34. Restate Section 8.3 of the Agreement as follows:
8.3 Lien, Set-off.
The Borrowers and any guarantor hereby grant to the Lender, a lien,
security interest and right of setoff as security for the Obligations, upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of the Lender or any entity under
the control of Fleet Financial Group, Inc., or in transit to any of them. At any
time, without demand or notice, the Lender may set off the same or any part
thereof and apply the same to any of the Obligations even though unmatured and
regardless of the adequacy of any other collateral securing the Obligations. ANY
AND ALL RIGHTS TO REQUIRE THE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO
EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF THE BORROWERS OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY
AND IRREVOCABLY WAIVED.
35. Restate Section 10.8(b) of the Agreement as follows:
(b) Fleet National Bank
Attention: John F. Lynch, V.P.
One Federal Street
Boston, MA 02110-2010
36. Restate Section 10.10 of the Agreement as follows:
10.10 Participations.
The Lender shall have the unrestricted right at any time and from time
to time, and without the consent of or notice to the Borrowers (the Lender will
endeavor to deliver notice to the Borrowers after any such participation), to
grant to one or more banks or other financial institutions (each a
"Participant") a participating interest in the Lender's obligation to lend
hereunder and the Loan held by the Lender hereunder. In the event of any such
grant by the Lender of a participating interest to a Participant, whether or not
upon notice to the Borrowers, the Lender shall remain responsible for the
performance of its obligations hereunder and the Borrowers shall continue to
deal solely and directly with the Lender in connection with the Lender's rights
and obligations hereunder. The Lender may furnish any information concerning the
Borrowers in its possession from time to time to prospective assignees and
Participants, provided that the Lender shall require any such prospective
assignee or Participant to agree in writing to maintain the confidentiality of
such information.
37. Add a new Section 10.17 to the Agreement as follows:
10.17 Pledge to the Federal Reserve.
The Lender may at any time pledge all or any portion of its rights under
the Agreement, the Revolving Note and the Collateral Documents to any of the
twelve (12) Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall
release the Lender from its obligations under such documents.
38. Add a new Section 10.18 to the Agreement as follows:
10.18 Usury Laws.
All agreements among the Borrowers and the Lender are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the Obligations or otherwise, shall the amount paid
or agreed to be paid to the Lender for the use or the forbearance of the
Obligations exceed the maximum permissible under applicable law. As used herein,
the term "applicable law" shall mean the law in effect as of the date hereof
provided, however that in the event there is a change in the law which results
in a higher permissible rate of interest, then the Obligations shall be governed
by such new law as of its effective date. In this regard, it is expressly agreed
that it is the intent of the Borrowers and the Lender in the execution, delivery
and acceptance of the Revolving Note to contract in strict compliance with the
laws of the Commonwealth of Massachusetts from time to time in effect. If, under
or from any circumstances whatsoever, fulfillment of any provision hereof or of
any of the loan documents at the time performance of such provision shall be
due, shall involve transcending the limit of such validity prescribed by
applicable law, then the obligation to be fulfilled shall automatically by
reduced to the limits of such validity , and if under or from circumstances
whatsoever the Lender should ever receive as interest an amount which would
exceed the highest lawful rate, such amount which would be excessive interest
shall be applied to the reduction of principal balance of the Revolving Note and
not to the payment of interest. This provision shall control every other
provision of all agreements among the Borrowers and the Lender.
39. Add a new Section 10.19 to the Agreement as follows:
10.19 Payments.
All payments shall be in lawful money of the United States in
immediately available funds.
40. Add a new Section 10.20 to the Agreement as follows:
10.20 Sale to Third Party.
The Lender shall have the unrestricted right at any time or from time
to time, and without the Borrowers' consent, to assign all or any portion of its
rights and obligations hereunder to one or more banks or other financial
institutions (each, an "Assignee"), and the Borrowers agree that they shall
execute, or cause to be executed, such documents, including without limitation,
amendments to the Agreement and to any other documents, instruments and
agreements executed in connection herewith as the Lender shall deem necessary to
effect the foregoing. In addition, at the request of the Lender and any such
Assignee, the Borrowers shall issue one or more new promissory notes, as
applicable, to any such Assignee and, if the Lender has retained any of its
rights and obligations hereunder following such assignment to the Lender, which
new promissory notes shall be issued in replacement of, but not in discharge of,
the liability evidenced by the promissory note held by the Lender prior to such
assignment and shall reflect the amount of the respective commitments and loans
held by such Assignee and the Lender after giving effect to such assignment.
Upon the execution and delivery of appropriate assignment documentation,
amendments and any other documentation required by the Lender in connection with
such assignment, and the payment by Assignee of the purchase price agreed to by
the Lender, and such Assignee, such Assignee shall be a party to this Agreement
and shall have all of the rights and obligations of the Lender hereunder (and
under any and all other guaranties, documents, instruments and agreements
executed in connection herewith) to the extent that such rights and obligations
have been assigned by the Lender pursuant to the assignment documentation
between the Lender and such Assignee, and the Lender shall be released from its
obligations hereunder and thereunder to a corresponding extent.
41. Add a new Section 10.21 to the Agreement as follows:
10.21 Application of Proceeds
All proceeds received by the Lender hereunder, including without
limitation, insurance proceeds, condemnation proceeds and proceeds received
pursuant to the Lender's exercise of its rights hereunder may be applied to the
Obligations in such order as determined by the Lender.
42. Add a new Section 10.22 to the Agreement as follows:
10.22 Replacement Documents.
Upon receipt of an affidavit of any officer of the Lender as to the
loss, theft, destruction or mutilation of the Agreement or any other document
which is not a public record, and, in the case of any such loss, theft,
destruction or mutilation, upon cancellation of this Agreement or other
document, the Borrowers will issue, in lieu thereof, a replacement agreement or
other document of like tenor.
B. REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Lender that:
1. The Borrowers are duly organized, validly existing and in
good standing in their respective jurisdictions of
incorporation.
2. The Borrowers have the power to enter into this First
Amendment and to perform their obligations hereunder.
3. This First Amendment has been duly authorized by all
necessary action on the part of the Borrowers, and this
First Amendment constitutes the legal, valid and binding
obligation of each of the Borrowers enforceable against each
Borrower in accordance with its terms, except as such
enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally, and
(ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4. Neither the execution or delivery by the Borrowers of this First
Amendment nor the performance by the Borrowers of their obligations will:
(i) require the taking of any action or the giving of any
consent or approval by, or the making or any registration or filing with, any
Person other than such actions, consents, approvals, registrations and filings
as have heretofore been taken, given or made (as the case may be);
(ii) violate any provision of any organizational documents of
the Borrowers, or any provision of any law, rule, regulation, order or decree of
any governmental authority applicable to the Borrowers; or
(iii) violate or constitute a default under any material
agreement to which any Borrower is a party or by which the Borrowers' properties
or assets are or may be bound, or will result in the creation or imposition of
any lien on the properties or assets of the Borrowers.
5. (i) Neither this First Amendment nor any certificate furnished in
connection herewith nor any other document or statement furnished to the Lender
in connection with the amendments contemplated hereby contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading; and
(ii) There is no fact known to the Borrowers that has had or,
so far as the Borrowers can now reasonably foresee, could reasonably be expected
to have, a material adverse effect on the Borrowers that has not been publicly
disclosed.
6. Immediately after the effectiveness hereof and after giving
effect hereto, there exists no Event of Default and the Borrowers have
performed all of their obligations to be performed to date under the
Agreement.
C. SCOPE AND EFFECT OF FIRST AMENDMENT
1. The terms of this First Amendment shall not operate as or constitute a
waiver by the Lender, other otherwise prejudice any of the Lender's rights,
remedies or powers under, the Agreement, or under applicable law. Except as
expressly provided herein,
(i) no terms or provisions of the Agreement are modified or
changed by this First Amendment, and
(ii) the terms and provisions of the Agreement continue in
full force and effect.
2. The Borrowers hereby acknowledge, confirm, reaffirm and ratify all of their
obligations and duties under the Agreement and all agreements related thereto.
This First Amendment does not constitute an agreement or obligation by the
Lender to give its consent to any future amendment of the Agreement or to any
future transaction that would, absent consent of the Lender, constitute an Event
of Default under the Agreement. This First Amendment shall not extinguish,
terminate or impair any of the obligations of the Borrowers under the Agreement
or any of the financing instruments. In addition, this First Amendment shall not
release or impair the priority of any security interests or liens held by the
Lender on any assets of the Borrowers. This First Amendment may not be
contradicted by evidence of any actual or alleged prior, contemporaneous or
subsequent understandings or agreements of the parties, written or oral, express
or implied, other than a writing which expressly amends or supersedes this First
Amendment or the Agreement. Upon the effectiveness of this First Amendment, each
reference to the Agreement shall mean and be a reference to the Agreement as
amended hereby.
D. MISCELLANEOUS
1. All capitalized terms used herein and not defined herein shall have
the meanings ascribed in the Agreement.
2. The Lender acknowledges and agrees that the payments due Lucent
Technologies Inc. in connection with that certain Patent License Agreement
effective as of October 1, 1998 will not be characterized as Consolidated
Indebtedness for purposes of the Agreement.
WITNESS, the execution hereof as an instrument under seal as of this
30th day of September, 1998.
SPECTRAN CORPORATION
____________________________ By:_____________________________
Witness Its Duly Authorized Officer
SPECTRAN SPECIALTY OPTICS
COMPANY
____________________________ By:_____________________________
Witness Its Duly Authorized Officer
APPLIED PHOTONIC DEVICES, INC.
____________________________ By:_____________________________
Witness Its Duly Authorized Officer
SPECTRAN COMMUNICATION FIBER
TECHNOLOGIES, INC.
____________________________ By:_____________________________
Witness Its Duly Authorized Officer
FLEET NATIONAL BANK
____________________________ By:____________________________
Witness Its Duly Authorized Officer