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EXHIBIT 10.95
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OPEN-END MORTGAGE,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
THIS OPEN-END MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT (as amended, extended, renewed, consolidated, spread or otherwise
modified from time to time, this "MORTGAGE") is dated as of December 1, 1996, by
SPECTRAN SPECIALTY OPTICS COMPANY, a Delaware corporation whose address and
principal place of business is 150 Fisher Drive, Avon, Connecticut 06001
("GRANTOR"), to FLEET NATIONAL BANK, a national banking association, not
individually but solely as security trustee under a certain Trust Indenture (as
may be amended, restated or otherwise modified from time to time, the "TRUST
INDENTURE"), dated as of the date hereof, among the Grantor, Fleet National Bank
(in its capacity as such security trustee, and together with any successor or
co-security trustee that becomes such in accordance with the provisions of the
Trust Indenture, the "GRANTEE") and the other parties signatory thereto.
W I T N E S S E T H:
WHEREAS, Grantor, SpecTran Corporation, a Delaware corporation having
an address at 50 Hall Road, Sturbridge, Massachusetts 01566 (the "PARENT"),
SpecTran Communication Fiber Technologies, Inc. ("SCFT"), a Delaware corporation
having an address at 50 Hall Road, Sturbridge, Massachusetts 01566, and Applied
Photonic Devices, Inc. ("APD"), a Delaware corporation having an address at 300
Lake Road, Dayville, Connecticut 06241, and Fleet National Bank, a national
banking association as "LENDER," have entered into a certain Loan Agreement (as
amended from time to time, the "LOAN AGREEMENT") dated as of December 1, 1996, a
copy of which is attached hereto as SCHEDULE 1 and made a part hereof and the
terms of which are incorporated herein, which provides for the extension of
credit to Grantor, the Parent, SCFT and APD in the nature of a revolving line of
credit facility (the "FACILITY") in the face amount of $20,000,000, as evidenced
by a certain revolving promissory note in said principal amount, dated December
1, 1996, bearing interest and being payable as set forth therein and in the Loan
Agreement, and maturing on December 31, 1999, all as more particularly provided
therein and in the Loan Agreement (as presently constituted and as they
hereafter may be amended, extended, renewed or consolidated from time to time,
together with any and all promissory notes that may have been or may be
exchanged or given in substitution therefor from time to time, being
collectively referred to herein as the "REVOLVING CREDIT NOTES"), a copy of
which is attached hereto as SCHEDULE 2 and made a part hereof and the terms of
which are incorporated herein;
WHEREAS, the Facility is a "commercial revolving loan" and the Loan
Agreement is a "commercial revolving loan agreement," both within the meaning
and coverage of Section 49-2(c) of the Connecticut General Statutes, and this
Mortgage hereby permits advances and readvances.
AFTER RECORDING, PLEASE RETURN
THIS INSTRUMENT TO:
HEBB & GITLIN, A PROFESSIONAL CORPORATION
ONE STATE STREET
HARTFORD, CONNNECTICUT 06103
ATTENTION: THOMAS J. LOVE, ESQ.
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(including future advances and readvances) of proceeds available from time to
time in respect of the Facility, which advances and readvances shall be made
pursuant to the Loan Agreement;
WHEREAS, Grantor is primarily, unconditionally and jointly and
severally liable along with the Parent, SCFT and APD for the entire amount of
the indebtedness evidenced by the Revolving Credit Notes;
WHEREAS, the Parent has entered into certain Note Purchase Agreements
dated as of December 1, 1996 (as the same may be amended from time to time,
collectively, the "NOTE AGREEMENTS") with each of the persons listed on Schedule
A attached thereto (collectively, the "PURCHASERS"), pursuant to which the
Purchasers have agreed, subject to the terms and conditions contained in their
respective Note Agreements, to purchase one or more of the Parent's (i) 9.24%
Series A Senior Secured Notes due December 26, 2003 in the aggregate principal
amount of $16,000,000 (the "SERIES A NOTES"), or (ii) 9.39% Series B Senior
Secured Notes due December 26, 2004 in the aggregate principal amount of
$8,000,000 (the "SERIES B NOTES") (the Series A Notes and the Series B Notes, as
presently constituted and as they hereafter may be amended, extended, renewed or
consolidated from time to time, together with any and all promissory notes that
may have been or may be exchanged or given in substitution therefor from time to
time, being collectively referred to herein as the "TERM NOTES");
WHEREAS, each of the Term Notes is dated December 26, 1996, and each of
the Term Notes bears interest, provides for the payment of certain premiums
(including a Make-Whole Amount, as such term is defined therein) and other
amounts (including late charges, fees, reimbursements, costs, expenses and
indemnities) and is payable as set forth therein (with final maturity on the due
date thereof specified above);
WHEREAS, Grantor has guarantied, among other things, the due and
punctual payment of the principal (in the aggregate amount of $24,000,000) of,
and accrued and unpaid interest (including, without limitation, interest which
otherwise may cease to accrue by operation of any insolvency law, rule,
regulation or interpretation thereof) and the Make-Whole Amount on the Term
Notes and the due and punctual payment and performance by the Parent of all
other obligations of the Parent contained in the Term Notes and the Note
Agreements, all pursuant to a certain Guaranty Agreement of even date herewith
by Guarantor and the other parties signatory thereto (as amended from time to
time, the "GUARANTY AGREEMENT"), a copy of which is attached hereto as SCHEDULE
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WHEREAS, Grantor has not guarantied any obligations under the Guaranty
Agreement which would constitute "open-end loans" within the meaning and
coverage of Section 49-4b of the Connecticut General Statutes;
WHEREAS, all capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to such terms in the Trust Indenture; and
WHEREAS, as required by the Loan Agreement and the Note Agreements,
Grantor has agreed to execute and deliver this Mortgage to the Grantee as
security trustee for the benefit of the Beneficiaries as security for Grantor's
obligations from time to time evidenced by or arising in connection with the
Revolving Credit Notes, the Guaranty Agreement, the Trust Indenture or the other
Lending Documents (whether consisting of principal, interest, premiums, late
charges,
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fees, reimbursements, costs, expenses, indemnities or any other amounts
whatsoever) (said aggregate indebtedness and other obligations being hereinafter
referred to as the "SECURED INDEBTEDNESS") and as security for the keeping,
performance and observance of, and compliance with, all covenants, agreements,
conditions and other provisions required to be kept, performed, observed and
complied with by or on behalf of Grantor from time to time pursuant to the Trust
Indenture or the Lending Documents;
NOW THEREFORE, to secure the payment of the Secured Indebtedness and
the keeping, performance and observance of, and compliance with, all of such
covenants, agreements, conditions and other provisions, and in consideration of
the sum of Ten Dollars ($10) paid to Grantor and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, Grantor does hereby grant, bargain, sell,
alienate, remise, release, convey, assign, transfer, mortgage, hypothecate,
pledge, deliver, set over, warrant and confirm unto Grantee, its successors and
assigns, as security trustee as aforesaid, the following (collectively, the
"PROPERTY"):
THE PROPERTY
The land described in EXHIBIT A attached hereto and made a part hereof
(the "LAND"), together with (i) all buildings, structures and improvements now
or hereafter situated on the Land (collectively, the "BUILDING"), (ii) all
right, title and interest of Grantor, whether now owned or hereafter acquired,
in and to all fixtures, fittings, machinery, appliances, equipment, apparatus,
furnishings and other tangible personal property now or hereafter located in or
on, or attached to, and used or intended to be used in connection with the Land
or the Building or in connection with the operation thereof (collectively, the
"EQUIPMENT") (the Building and the Equipment being hereinafter collectively
referred to as the "IMPROVEMENTS"), (iii) all right, title and interest of
Grantor, whether now owned or hereafter acquired, in and to all streets, roads,
sidewalks, alleys, ways, passages, public places, vaults, water courses, strips
and gores adjoining or otherwise providing access to, or used or intended to be
used in connection with, the Land or any of the Improvements, and the land lying
in the bed thereof, and (iv) all proceeds, products, extensions, additions,
improvements, betterments, renewals, substitutions, replacements, accessions,
accretions and relictions of and to all or any part of the Property described
above;
TOGETHER WITH all easements, rights-of-way, estates, interests,
benefits, powers, rights (including lateral support, drainage, slope, riparian,
littoral, sewer, water, air, oil, gas, mineral and subsurface rights),
privileges, claims, franchises, licenses, profits, tenements, hereditaments,
reversions, remainders and appurtenances in any way now or hereafter belonging,
relating to or appertaining to all or any part of the Property described above;
TOGETHER WITH all right, title and interest of Grantor (whether as
lessor, lessee or otherwise) in and to any and all leases, subleases, use,
occupancy and similar agreements now or hereafter relating to all or any part of
the Property described above (collectively, the "LEASES"), together with any and
all guaranties and security of, for or otherwise relating to any of the Leases,
and together with all rents, royalties, issues, profits, revenues, income and
other monetary benefits of and from the Property described above, whether now or
hereafter payable or accruing (collectively, the "RENTS"), including all rent
and other money now or hereafter payable or accruing under or in connection with
any of the Leases, and all rights of Grantor to collect and receive the same;
provided, however, that permission is hereby given to Grantor, so
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long as no Default (as hereinafter defined) shall have occurred, to collect and
use the Rents as, but not before, they become due and payable, which permission
shall terminate immediately, without the necessity of any action, upon the
occurrence of any Default;
TOGETHER WITH all judgments, settlements, claims, awards, insurance
proceeds and other proceeds and compensation, and interest thereon, now or
hereafter made or payable in connection with any casualty or other damage to any
Property described above, or in connection with any condemnation proceedings
affecting any such Property or any damage to or taking of any such Property or
any rights thereto or any interest therein in connection with any exercise of
the power of eminent domain (or any conveyance in lieu of or under threat of any
such taking), together with any and all refunds or rebates of, or with respect
to, any insurance premiums, utility charges, taxes or other impositions relating
to any such Property and interest thereon, and together with all accounts,
contract rights, general intangibles, actions and rights in action arising from
or relating to any such Property (including all rights of Grantor in and to
unearned or prepaid insurance premiums, utility charges, taxes or other
impositions relating to any such Property, any deposits with respect thereto and
any interest thereon); and
TOGETHER WITH all further or greater estate, right, title and interest
of Grantor, of whatever character (whether vested or contingent and whether now
owned or hereafter acquired), in and to any of the Property described above and
any rights or interests appurtenant thereto.
TO HAVE AND TO HOLD the Property unto Grantee, its successors and
assigns forever, to its and their own proper use and behoof, upon and subject to
the terms and conditions of this Mortgage.
Grantor covenants and agrees with Grantee and the Beneficiaries as
follows:
ARTICLE I
Section 1.1. Grantor, for itself and its successors and assigns
forever, hereby covenants with and warrants to Grantee, its successors and
assigns forever, that Grantor is well and lawfully seized of the Land, the
Building and all other parts of the Property constituting real property as a
good indefeasible estate in fee simple, that Grantor has good and absolute title
to the Equipment and all other parts of the Property constituting personal
property (except Equipment owned by any person, other than Grantor, leasing
space in the Building and Equipment leased by any such lessee from any person
other than Grantor), that Grantor has good right, full power and lawful
authority, without the joinder or consent of any person, to give, grant,
bargain, sell, assign and confirm the Property in manner and form as written
above, and that the Property is free and clear of all claims, demands, liens,
security interests, charges, encumbrances and exceptions to title whatsoever,
except as permitted by the Lending Documents (the "PERMITTED EXCEPTIONS").
Grantor hereby binds itself, and its successors and assigns forever, to WARRANT
and DEFEND the Property unto Grantee, its successors and assigns forever,
against the claims of all persons whomsoever claiming or who may claim the same
or any part thereof, subject, however, to the Permitted Exceptions.
Section 1.2. Grantor shall keep, perform, observe and comply with, or
shall cause to be kept, performed, observed and complied with, all covenants,
agreements, conditions and other provisions required to be kept, performed,
observed and complied with by or on behalf of
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Grantor from time to time pursuant this Mortgage, the Trust Indenture or the
other Lending Documents. Without limiting the generality of the immediately
preceding sentence, Grantor shall pay, when due, all Secured Indebtedness.
Section 1.3. Grantor shall pay, when due, any and all mortgage
recording, intangible property and documentary stamp taxes, all similar taxes,
and all filing, registration and recording fees, which are now or hereafter may
become payable in connection with the Secured Indebtedness, this Mortgage, the
Trust Indenture or any of the other Lending Documents. Grantor shall pay when
due any and all excise, transfer and conveyance taxes which are now or hereafter
may become payable in connection with the Secured Indebtedness, this Mortgage,
the Revolving Credit Notes, the Guaranty or any of the other Lending Documents.
Section 1.4. The assignment set forth in the section entitled "The
Property" shall not be deemed to impose upon Grantee or any of the Beneficiaries
any of the obligations, duties or liabilities of Grantor under or in respect of
any lease. To the extent permitted by law, such assignment shall constitute an
absolute and present assignment of the rents, royalties, issues, profits,
revenues, income and other benefits described in said paragraph, subject,
however, to the conditional permission given to Grantor to collect and use the
same as provided above. Neither the existence nor the exercise of such
conditional permission shall subordinate such assignment to any subsequent
assignment by Grantor. Grantee is hereby irrevocably authorized and empowered,
at its option, (a) to demand, collect, receive and enforce payment of any and
all such Rents after the occurrence of any Default, and to give receipts,
releases and satisfactions therefor, whether or not Grantee shall have taken, or
at any time shall take, possession of all or any part of the Land or the
Improvements, and (b) to notify all lessees, licensees, invitees, occupants and
other users of all or any part of the Property of Grantee's rights under this
Mortgage.
Section 1.5. Grantor (as Debtor) hereby grants to Grantee (as Secured
Party) a security interest in all personal property and fixtures described in
the above section entitled "The Property", and in any and all other personal
property and fixtures now or hereafter constituting part of the Property. This
Mortgage, when filed for record in the real estate records of the recording
jurisdiction in which the Land is situated, shall be effective as a financing
statement filed as a fixture filing with respect to all fixtures described in
the above section entitled "The Property". In addition to all rights and
remedies specified herein, Grantee shall have all the rights and remedies of a
secured party under the Uniform Commercial Code as in effect in the State in
which the Land is situated and under other applicable law. Any failure to file
any financing statement relating to this Mortgage shall not impair the validity
and enforceability of this Mortgage in any respect whatsoever.
Section 1.6. Upon request by Grantee or any Beneficiary, Grantor from
time to time shall make, execute and deliver, or cause to be made, executed and
delivered, to Grantee and the Beneficiaries, and where appropriate shall cause
to be recorded or filed, and from time to time thereafter to be re-recorded and
refiled at such times and in such offices and places as Grantee or any
Beneficiary shall reasonably deem desirable, any and all such further mortgages,
assignments, security agreements, financing statements, instruments of further
assurance, certificates and such other documents as Grantee or any Beneficiary
may reasonably consider necessary or desirable in order to effectuate, complete,
perfect, continue or preserve the
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obligations of Grantor under the Lending Documents or the lien of this Mortgage
upon all or any part of the Property.
Section 1.7. All money advanced by Grantee or by any of the
Beneficiaries pursuant to this Mortgage, the Trust Indenture or the other
Lending Documents, all money otherwise advanced by Grantee or by any of the
Beneficiaries to protect the security of this Mortgage and all costs, expenses
and liabilities paid or incurred by Grantee or by any of the Beneficiaries and
reimbursable or payable by Grantor pursuant to this Mortgage, the Trust
Indenture or the other Lending Documents, together with interest thereon at the
Default Interest Rate or as otherwise provided by law, shall be deemed to be a
part of the Secured Indebtedness and shall be secured by this Mortgage to the
extent permitted by applicable law.
Section 1.8. This Mortgage as it relates to the Facility is an OPEN-END
MORTGAGE, and Grantee shall have all rights, powers and protections authorized
and allowed by Section 49-2 of the Connecticut General Statutes or by other
statutes and applicable law, subject only to such limitations as are imposed by
law. Grantee is specifically permitted, at its option and in its discretion, to
make additional loans or advancements in respect of the Facility under this
Mortgage, as permitted by Section 49-2(c) of the Connecticut General Statutes
(but only at the request of Grantor or as otherwise contemplated by the Loan
Agreement). In addition to advances and readvances of proceeds available from
time to time in respect of the Facility (which advances and readvances shall be
made pursuant to the Loan Agreement as contemplated by this Mortgage), such
loans or advancements also may include loans or advancements in respect of the
Facility otherwise contemplated by Section 49-2(c). Each and every such loan or
advancement shall be secured by this Mortgage equally with, and with the same
priority as, the proceeds initially advanced in respect of the Facility;
provided, however, that (a) each such loan or advancement in respect of the
Facility which is not evidenced by the Revolving Credit Notes shall be evidenced
by a promissory note reciting that it is secured by this Mortgage, (b) no such
loan or advancement shall cause the maximum principal amount of the indebtedness
evidenced by the Revolving Credit Notes to exceed $20,000,000 (and in no event
shall the maximum principal amount of the indebtedness guarantied pursuant to
the Guaranty exceed $24,000,000), and (c) the time of repayment of such loans or
advancements shall not extend the time of repayment of the Revolving Credit
Notes beyond the maturity of the original indebtedness evidenced by the
Revolving Credit Notes.
ARTICLE II
DEFAULTS AND REMEDIES
Section 2.1. The term "DEFAULT", as used herein, means the occurrence
of any Event of Default under the Trust Indenture, as well as any failure of
Grantor to perform punctually and properly any agreement or condition contained
in this Mortgage.
Section 2.2. At any time during the continuance of any Default, Grantee
may, at Grantee's option, to the extent permitted by law, (i) take any one or
more of the actions and exercise and enforce any one or more of the rights and
remedies provided in this Mortgage, the Trust Indenture or any other Lending
Document, or (ii) pursue any other right, power or remedy available to Grantee,
at law or in equity. Grantee may take such actions and exercise and enforce such
rights and remedies, at Grantee's option, separately or concurrently and in such
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order as Grantee may desire, either with or without entry in or on or taking
possession of all or any part of the Property and whether or not all or any part
of the Secured Indebtedness shall have been declared to be immediately due and
payable or shall otherwise be due and payable.
Section 2.3. Without limiting the foregoing, at any time during the
continuance of any Default, Grantee may, at its option, proceed by any
appropriate judicial or non-judicial action or proceeding to (i) foreclose this
Mortgage and sell or cause the sale of the Property, as an entirety or in
separate portions, pursuant to the judgment, order or decree of any court of
competent jurisdiction or pursuant to any power of sale now or hereafter
available to Grantee under applicable law, or (ii) to the extent permitted by
law, pursue the partial foreclosure of this Mortgage for any part of the Secured
Indebtedness then due and payable, subject to the continuing encumbrance of this
Mortgage as security for the balance of the Secured Indebtedness not then due
and payable.
Section 2.4. Without limiting the foregoing, at any time during the
continuance of any Default, Grantee, to the extent permitted by law and without
regard to the value or adequacy of the Property or any other security for the
Secured Indebtedness or the solvency of Grantor, shall be entitled as a matter
of right and without notice, if it so elects, to the appointment of a receiver
to enter upon and take possession of the Property, collect the Rents and apply
the Rents so collected as the court making such appointment may direct or as
otherwise permitted by law. Grantor hereby specifically and irrevocably consents
to such appointment. The receiver shall have all rights and powers permitted
under law and such other rights and powers as the court making such appointment
shall confer. The receiver shall be liable to account only for Rents actually
received by the receiver.
Section 2.5. Without limiting the foregoing, at any time during the
continuance of any Default, Grantee, to the extent permitted by law and without
regard to the value or adequacy of the Property or any other security for the
Secured Indebtedness or the solvency of Grantor, shall have the right, power and
authority, if it so elects, with or without taking possession of all or any part
of the Property, in Grantee's own name or otherwise, demand, collect, receive,
sue for, attach and levy the Rents, give proper receipts, releases and
acquittances therefor and, after deducting all necessary and reasonable expenses
of collection (including reasonable attorneys' fees), apply the net proceeds
thereof, together with any funds of Grantor or any other person deposited with
Grantee, toward payment of the Secured Indebtedness, in such order and priority
as Grantee may determine. Collection and application of the Rents as
contemplated in this Section shall not cure or waive any Default, waive, modify
or affect any notice of default under the terms of any of the Lender Documents
or this Mortgage, or invalidate any act done pursuant to any such notice, and
any exercise of Grantee's right to collect and apply the Rents shall continue
for so long as Grantee shall elect, notwithstanding that such collection and
application of the Rents may have cured for a time the original Default. If,
after exercising rights under this Section, Grantee shall thereafter elect to
discontinue the exercise of such right, the same or any other right under this
Section may be reasserted at any time and from time to time following any
subsequent Default.
Section 2.6. Neither Grantee nor any Beneficiary shall be obligated to
perform or discharge any obligation, duty or liability under any of the Leases
or under or by reason of this Mortgage. Grantor shall, and does hereby agree to,
defend and indemnify Grantee and each of the Beneficiaries, and hold each of
them harmless, from and against (i) any and all liability, loss
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or damage which may or might be incurred by any or all of them under any of the
Leases or under or by reason of this Mortgage or in any manner related to the
Property or the use thereof or to the operation of any enterprise on or related
to the Property, and (ii) any and all claims and demands whatsoever which may or
might be asserted against any or all of them by reason of any alleged
obligations or undertakings on its or their part to perform or discharge any of
the terms, covenants or agreements contained in any of the Leases or under or by
reason of this Mortgage. It is further understood that this Mortgage shall not
operate to place responsibility upon Grantee or the Beneficiaries, or any of
them, for the control, care, management or repair of the Property or for the
carrying out of any of the terms and conditions of any of the Leases; nor shall
this Mortgage operate to make Grantee or the Beneficiaries, or any of them,
responsible or liable for any act or omission by any lessee under any of the
Leases or by Grantor, or for any waste committed on the Property by any such
lessee or by Grantor or any other person, or for any dangerous, defective or
illegal condition of the Property, or for any negligence in the management,
upkeep, repair or control of the Property resulting in loss, injury or death to
any lessee, licensee, invitee, occupant, user, employee or stranger, and Grantor
shall, and does hereby agree to, defend and indemnify Grantee and the
Beneficiaries, and hold each of them harmless, from and against the same.
ARTICLE III
MISCELLANEOUS
Section 3.1. To the extent any term or provision of this Mortgage is
irreconcilably inconsistent with any provision of any Lender Document, such
inconsistent provision of the Lending Document shall control only as between
Grantor and each party to the Lending Documents but not any person which is not
a party thereto. All covenants, agreements conditions and other provisions of
this Mortgage shall run with the Land and shall bind and inure to the benefit of
Grantor, Grantee, the Beneficiaries and their respective successors and assigns,
whether so expressed or not. Any and all rights granted to the Grantee under
this Mortgage are to be held and exercised by the Grantee as security trustee
for the benefit of the Beneficiaries, pursuant to the provisions of the Trust
Indenture. To the extent set forth in the Lending Documents and any other
document or instrument creating or evidencing any Secured Indebtedness, each of
the Beneficiaries shall be a beneficiary of the terms of this Mortgage. Any and
all obligations of Grantor under this Mortgage, and the rights and indemnities
granted to the Grantee under this Mortgage, are created and granted subject to,
and in furtherance (and not in limitation) of, the terms of the Trust Indenture.
Nothing in this Mortgage expressed or implied is intended or shall be construed
to give to any Person other than the Grantor, the Beneficiaries and the Grantee
any legal or equitable right, remedy or claim under or in respect of this
Mortgage or any covenant, condition or provision herein contained, and all such
covenants, conditions and provisions are and shall be held to be for the sole
and exclusive benefit of the Grantor, the Beneficiaries and the Grantee.
Section 3.2. Grantor agrees, to the extent permitted by law, that
neither Grantor nor any person at any time claiming through or under Grantor or
who hereafter may otherwise acquire any interest in or title to all or any part
of the Property or any other security for the Secured Indebtedness shall set up,
claim or seek to take advantage of any law now or hereafter in force pertaining
to the rights of sureties or providing for any appraisement, valuation, stay,
notice of election to accelerate maturity or to declare the Secured Indebtedness
due, extension,
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redemption, moratorium, homestead or exemption from execution or sale, in order
to prevent or hinder the foreclosure of this Mortgage during the continuance of
any Default, the final and absolute sale of all or any part of the Property or
the final and absolute putting into possession thereof, immediately after any
such sale, of the purchaser or purchasers at such sale or the enforcement of any
other rights or remedies of Grantee or any of the Beneficiaries under this
Mortgage, the Trust Indenture or any of the other Lending Documents. Grantor,
for itself and for any and all persons who may at any time claim through or
under Grantor or who hereafter may otherwise acquire any interest in or title to
all or any part of the Property or any other security for the Secured
Indebtedness, hereby irrevocably waives and releases, to the extent permitted by
law, all benefit of any and all such laws, any and all rights of redemption from
sale pursuant to any judgment, order or decree of foreclosure of this Mortgage
or any power of sale now or hereafter available to Grantee under applicable law,
and any and all right to have the assets constituting the Property or any other
security for the Secured Indebtedness marshalled upon any foreclosure or other
enforcement of this Mortgage. Neither Grantee nor any of the Beneficiaries shall
be required to accept the Property, any part or parts thereof or any other
security for the Secured Indebtedness in satisfaction of all or any part of the
Secured Indebtedness. Neither Grantee nor any of the Beneficiaries shall be
required to accept any apportionment of the Secured Indebtedness to or among any
part or parts of the Property or any other security for the Secured
Indebtedness. If any law now in force of which Grantor might take advantage
despite this Section shall be repealed or shall cease to be in force after the
date hereof, then such law shall not thereafter be deemed to preclude the
application of this Section.
Section 3.3. If any provision of this Mortgage is held to be illegal,
invalid, or unenforceable under present or future laws effective during the term
of this Mortgage, the legality, validity, and enforceability of the remaining
provisions of this Mortgage shall not be affected thereby, and in lieu of each
such illegal, invalid or unenforceable provision there shall be added
automatically as a part of this Mortgage a provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible and be legal,
valid, and enforceable. If the rights and liens created by this Mortgage shall
be invalid or unenforceable as to any part of the Secured Indebtedness, then the
unsecured portion of the Secured Indebtedness shall be completely paid prior to
the payment of the remaining and secured portion of the Secured Indebtedness,
and all payments made on the Secured Indebtedness shall be considered to have
been paid on and applied first to the complete payment of the unsecured portion
of the Secured Indebtedness.
Section 3.4. Whenever this Mortgage requires or permits any consent,
approval, notice (except for notice of a foreclosure which shall be given in the
manner required by law), request, or demand from one party to another, the
consent, approval, notice, request, or demand must be in writing to be effective
and shall be deemed to have been given when sent or delivered in accordance with
the provisions of the Trust Indenture.
Section 3.5. The substantive laws of the State of Connecticut and of
the United States of America shall govern the validity, construction,
enforcement and interpretation of this Mortgage, to the extent required by
principles of conflicts of laws recognized in such State or in the United States
of America; otherwise, the laws of the Commonwealth of Massachusetts shall
govern.
Section 3.6. Time is of the essence of this Mortgage.
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Section 3.7. Nothing contained in this Mortgage or the other Lending
Documents shall be construed to create a relationship of principal and agent,
partnership, or joint venture between Grantor, on the one hand, and Grantee and
the Beneficiaries, on the other.
Section 3.8. Each reference in this Mortgage to any gender shall be
deemed also to include any other gender, and the use in this Mortgage of the
singular shall be deemed also to include the plural and vice versa, unless the
context clearly requires otherwise. As used in this Mortgage, the term "PERSON"
means any and all individuals, sole proprietorships, partnerships, joint
ventures, associations, trusts, estates, business trusts, limited liability
companies, corporations (non-profit or otherwise), financial institutions,
governments (and agencies, instrumentalities and political subdivisions
thereof), and other entities, authorities and organizations of every type. As
used in this Mortgage, unless the context clearly requires otherwise, (i) the
words "herein," "hereof," "hereunder," "hereinafter" and "hereto" and words of
similar import shall be deemed to refer to this Mortgage as a whole and not to
any particular Article, Section, subsection, paragraph, subparagraph, Exhibit
or Schedule, and (ii) the words "include" and "including" shall be deemed to be
followed by the words "but not limited to."
Section 3.9. GRANTOR ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS
MORTGAGE IS A PART IS A COMMERCIAL TRANSACTION, AND, TO THE EXTENT ALLOWED UNDER
SECTIONS 52-278a THROUGH 52-278n, INCLUSIVE, OR BY OTHER APPLICABLE LAW, GRANTOR
HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT
REMEDY THAT GRANTEE, ANY OF THE BENEFICIARIES OR ANY OF THEIR RESPECTIVE
SUCCESSORS OR ASSIGNS, MAY DESIRE TO USE.
Section 3.10. Grantor or certain affiliates of Grantor have heretofore
executed and delivered, and may hereafter execute and deliver, to Grantee
certain other mortgages, deeds of trust and other documents and instruments
encumbering certain other property of Grantor and such affiliates located in
various States of the United States of America as additional security for the
Secured Indebtedness or for the obligations of such affiliates under certain
guaranties of the Secured Indebtedness. The holder of any such security or any
such guaranty, whether acting as a fiduciary or otherwise, may foreclose or
otherwise enforce such security or such guaranty or otherwise enforce its
rights, powers and remedies with respect to, and realize upon, such security or
guaranty, either before or concurrently with or after a foreclosure or other
enforcement of this Mortgage, any other such security or guaranty or any of the
Lending Documents, all without being deemed to have waived any rights, benefits,
liens or security interests evidenced by or arising under or in connection with
this Mortgage, any other such security or guaranty or any of the Lending
Documents and without being deemed to have made an election thereby or to have
accepted the benefits of such security or guaranty (or the proceeds thereof) in
full settlement of the Secured Indebtedness and of its rights with respect
thereto. No judgment, order or decree with respect to any such other security or
guaranty or any of the Lending Documents, whether rendered in the State in which
the Land is situated or elsewhere, shall in any manner affect the security of
this Mortgage, and any deficiency or other debt represented by any such
judgment, order or decree shall, to the extent permitted by law, be secured by
this Mortgage to the same extent that the Secured Indebtedness shall have been
secured by this Mortgage prior to the rendering of such judgment, order or
decree. Grantor, for itself and for any and all persons who may at any time
claim through or under Grantor or who hereafter may otherwise acquire any
interest in or title to all or any part of the Property or any other security
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for the Secured Indebtedness, hereby irrevocably waives and releases, to the
extent permitted by law, all benefit of any and all laws that would limit or
prohibit the effectiveness of anything set forth in this Section.
Section 3.11. If all or any part of any payment on account of the
Secured Indebtedness shall be invalidated, set aside, declared or found to be
void or voidable or required to be repaid to Grantor or to any trustee,
custodian, receiver, conservator, master, liquidator or other person pursuant to
any present or future law relating to bankruptcy, reorganization, arrangement,
composition, readjustment, liquidation, dissolution or insolvency or pursuant to
any common law or equitable cause, then, to the extent of such invalidation, set
aside, voidness, voidability or required repayment, neither the Secured
Indebtedness nor the lien or security of this Mortgage shall be deemed to have
been paid, satisfied, released or discharged, and, to the extent of such
invalidation, set aside, voidness, voidability or required repayment, the
Secured Indebtedness and the lien and security of this Mortgage shall be
immediately and automatically revived without the necessity of any action by
Grantor, Grantee or any of the Beneficiaries, and the lien and security of this
Mortgage shall continue in full force and effect thereafter until all of the
Secured Indebtedness shall have been fully, finally and indefeasibly paid.
THE CONDITION OF THIS DEED is such that whereas Grantor is indebted to
the Beneficiaries pursuant to the Revolving Credit Note, the Guaranty, the Trust
Indenture and the other Lending Documents in a principal amount of up to
FORTY-FOUR MILLION DOLLARS ($44,000,000), and this Mortgage is also made to
secure the keeping, performance and observance of, and compliance with, all
covenants, agreements, conditions and other provisions required to be kept,
performed, observed and complied with by or on behalf of Grantor from time to
time pursuant to the Trust Indenture or the other Lending Documents;
NOW, THEREFORE, if the Secured Indebtedness shall be paid in full and
if Grantor shall keep, perform, observe and comply all such covenants,
agreements, conditions and other provisions, then, subject to Section 3.11, this
Mortgage shall be null and void and of no further force and effect, but
otherwise shall remain in full force and effect.
[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE AND
ACKNOWLEDGMENT PAGE FOLLOWS]
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IN WITNESS WHEREOF, Grantor has executed this Mortgage as of the date
and year first above written.
Signed and Delivered SPECTRAN SPECIALTY OPTICS COMPANY
in the presence of:
/s/ By: /s/ Bruce A. Cannon
- ------------------------------- --------------------------------------
Name: Name: Bruce A. Cannon
Title: Secretary
/s/ Ellen M. Grace
- -------------------------------
Name: Ellen M. Grace
[OPEN-END MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
OF SPECTRAN SPECIALTY OPTICS COMPANY]
14
STATE OF CONNECTICUT )
) ss. December 26, 1996
COUNTY OF HARTFORD )
Personally appeared Bruce A. Cannon, Secretary of
SPECTRAN SPECIALTY OPTICS COMPANY, a Delaware corporation, signer of the
foregoing instrument, and acknowledged the same to be his/her free act and deed
as such Secretary and the free act and deed of such corporation, before
me.
/s/ Lori L. Bridwell
--------------------------------------
Notary Public in and for said State
[Affix Seal] Print Name: Lori L. Bridwell
--------------------------
My Commission Expires: Nov. 30, 2000
---------------
[OPEN-END MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
OF SPECTRAN SPECIALTY OPTICS COMPANY]
15
EXHIBIT A
Legal Description
A certain piece or parcel of land with the buildings and improvements
thereon and appurtenances thereto situated on the northwesterly side of Darling
Drive in the Town of Avon, County of Hartford and State of Connecticut, shown
as "Parcel 18 Area - 13.85 Acres" on a map entitled: "Plan of Subdivision -
Parcel 18 Land Owned by Avon Park Properties Darling Drive Avon, Connecticut
Scale 1"=40' May 1981 Certified substantially correct in accordance with Class
A-2 of the Code of Recommended Practice for Accuracy of Survey & Maps, Edward
F. Reuber, Surveyor, Hodge Surveying Associates P.C." and being more
particularly bounded and described as follows:
Commencing at a point in the northwesterly line of Darling Drive, which
point is marked by a monument set at the southeasterly corner of land now or
formerly of The Avon Volunteer Fire Department Inc. as shown on said map; thence
in a southwesterly and westerly direction along a curve to the right having a
radius of 285.26 feet, 351.71 feet to a monument; thence S 82(degrees) 03' 30"
W, 336.20 feet to a point; the last two courses being along said northwesterly
line of Darling Drive; thence N 15(degrees) 02' 16" W, 693.50 feet to a point;
thence N 20(degrees) 27' 10" E, 72.42 feet to a point, the last two courses
being along land now or formerly of Colbert & Pariseleti; thence N 02(degrees)
45' 22" W along land now or formerly of Darworth Inc., 227.84 feet to a point;
thence N 80(degrees) 06' 46" E, 460.94 feet to a point; thence S 36(degrees) 22'
07" E, 419.47 feet to a point, the last two courses being along land now or
formerly of Avon Park Properties; thence S 14(degrees) 57' 34" W, 457.13 feet to
a point; thence S 74(degrees) 50' 30" E, 161.97 feet to a point or place of
beginning, the last two courses being along said land now or formerly of The
Avon Volunteer Fire
Exhibit A-1
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SCHEDULE 1
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
1
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) Raymond E. Jaeger, Glenn E. Moore, Bruce A.
Cannon, John E. Chapman, William B. Beck and Crawford L. Cutts 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
5
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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 Mirick,
O'Connell, DeMallie & Lougee, 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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35
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 bill,
bill 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
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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.
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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: Bruce Cannon, C.F.O.
50 Hall Road
Sturbridge, MA 01566
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(b) If to the Lender:
Fleet National Bank
Attention: John F. Lynch, V.P.
370 Main Street
Worcester, MA 01608
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.
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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
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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/ John F. Lynch By: /s/ [illegible]
- ------------------------------ -----------------------------
Witness Its Duly Authorized Officer
SPECTRAN SPECIALTY OPTICS
COMPANY
/s/ John F. Lynch By: /s/ [illegible]
- ------------------------------ -----------------------------
Witness Its Duly Authorized Officer
APPLIED PHOTONIC DEVICES, INC.
/s/ John F. Lynch By: /s/ [illegible]
- ------------------------------ -----------------------------
Witness Its Duly Authorized Officer
SPECTRAN COMMUNICATION FIBER
TECHNOLOGIES, INC.
/s/ John F. Lynch By: /s/ [illegible]
- ------------------------------ -----------------------------
Witness Its Duly Authorized Officer
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LENDER:
FLEET NATIONAL BANK
/s/ [illegible] By: /s/ John F. Lynch, VP
- ------------------------------ -----------------------------
Witness Its Duly Authorized Officer
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Exhibit 1.42
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 50 Hall Road, Sturbridge, Massachusetts
("SpecTran"), SPECTRAN SPECIALTY OPTICS COMPANY, a Delaware corporation with a
principal place of business at 150 Fisher Drive, Avon, Connecticut ("Optics"),
APPLIED PHOTONIC DEVICES, INC., a Delaware corporation with a principal place of
business at 50 Tiffany Street, Brooklyn, Connecticut ("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"), jointly and severally promise to pay to
FLEET NATIONAL BANK, a national banking association having an office located at
370 Main Street, Worcester, Massachusetts 01608 (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:
48
(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 Reuter's LIBO 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.
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49
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.
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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
51
APPLIED PHOTONIC DEVICES, INC.
___________________________ By:______________________________
Witness Its Duly Authorized Officer
SPECTRAN COMMUNICATION FIBER
TECHNOLOGIES, INC.
___________________________ By:______________________________
Witness Its Duly Authorized Officer
5
52
Exhibit 2.2
DEPOSIT ACCOUNT
Account No. 00792489
33
53
Exhibit 3.1(q)
Counsel for Bank: Counsel for Borrower:
Paul J. D'Onfro, Esquire Brian Hand, Esquire
Mirick, O'Connell, DeMallie Hackmyer & Nordlicht
& Lougee 645 Fifth Avenue
1700 Bank of Boston Tower New York, NY 10022
Worcester, MA 01608-1477 (212) 421-6500
(508) 799-0541 ("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:
54
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
55
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
56
Exhibit 3.1(q)
CLOSING AGENDA
SPEC TRAN 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: Hebb & Gitlin ("H&G")
- --------------------------------------------------------------------------------
Company's Counsel: Hackmyer & Nordlicht ("H&N")
- --------------------------------------------------------------------------------
Security Trustee: [Fleet National Bank]
- --------------------------------------------------------------------------------
Security Trustee's [Mirick O'Connell]
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
- --------------------------------------------------------------------------------
57
==============================================================================================================
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
58
================================================================================
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 McGraw-Hill, 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 Mirick O'Connell, Exhibit B2 to the final, [ ]
Note Purchase Agreement, as required by
Section 4.4(b) of the Note Purchase Agreement
- --------------------------------------------------------------------------------
25. OPINION OF HEBB & GITLIN H&G
Opinion of Hebb & Gitlin, 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
59
Exhibit 5.1(a)
Name and Addresses Jurisdiction Foreign
of Borrower: of Incorporation: Qualifications: Shareholders:
- ------------ ----------------- --------------- -------------
SpecTran Corporation Delaware Massachusetts N/A
50 Hall Road
Sturbridge, MA 01566
69-70 Hall Road
Sturbridge, MA 01566
SpecTran Communication Delaware Massachusetts SpecTran
Fiber Technologies, Inc. Corporation
50 Hall Road 10 shares
Sturbridge, MA 01566 Comm. Stock
69-70 Hall Road
Sturbridge, MA 01566
SpecTran Specialty Optics Delaware Connecticut SpecTran
Company Corporation
150 Fisher Drive 10 shares
Avon, CT 06001* Comm. Stock
18 Parkside Lane
Avon, CT 06001
*SpecTran Specialty Optics Company will be moving its principal offices to 55
Darling Drive, Avon, CT 06001.
Applied Photonic Devices, Inc. Delaware Connecticut SpecTran
300 Lake Road Corporation
Dayville, CT 06241 Comm. Stock
50 Tiffany Street
Brooklyn, CT 06259
35
60
Exhibit 5.1(f)
LITIGATION
None
36
61
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
62
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
63
Exhibit 6.1(m)
APD has a dispute with the landlord of its facility at 300 Lake Road, Dayville,
Connecticut, 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
64
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
65
SCHEDULE 2
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 50 Hall Road, Sturbridge, Massachusetts
("SpecTran"), SPECTRAN SPECIALTY OPTICS COMPANY, a Delaware corporation with a
principal place of business at 150 Fisher Drive, Avon, Connecticut ("Optics"),
APPLIED PHOTONIC DEVICES, INC., a Delaware corporation with a principal place of
business at 50 Tiffany Street, Brooklyn, Connecticut ("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"), jointly and severally promise to pay to
FLEET NATIONAL BANK, a national banking association having an office located at
370 Main Street, Worcester, Massachusetts 01608 (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:
66
(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 Reuter's LIBO 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
67
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
68
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
69
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
70
SCHEDULE 3
================================================================================
SPECTRAN COMMUNICATION FIBER TECHNOLOGIES, INC.
SPECTRAN SPECIALTY OPTICS COMPANY
APPLIED PHOTONIC DEVICES, INC.
---------------------
GUARANTY AGREEMENT
---------------------
DATED AS OF DECEMBER 1, 1996
================================================================================
71
TABLE OF CONTENTS PAGE
1. PRELIMINARY STATEMENTS................................................................................. 1
2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS............................................................. 2
2.1 Guarantied Obligations........................................................................ 2
2.2 Payments and Performance...................................................................... 2
2.3 Waivers and Other Agreements.................................................................. 3
2.4 Nature of Guaranty............................................................................ 4
2.5 Obligations Absolute.......................................................................... 4
2.6 No Investigation by Noteholder................................................................ 5
2.7 Indemnity..................................................................................... 5
2.8 Subordination, Subrogation, Etc............................................................... 5
2.9 Waiver........................................................................................ 6
2.10 Limitation on Guarantied Obligations.......................................................... 6
2.11 Marshaling.................................................................................... 6
2.12 Setoff, Counterclaim or Other Deductions...................................................... 6
2.13 No Election of Remedies by Noteholders........................................................ 6
2.14 Separate Action; Other Enforcement Rights..................................................... 7
2.15 Noteholder Setoff............................................................................. 7
2.16 Delay or Omission; No Waiver.................................................................. 7
2.17 Restoration of Rights and Remedies............................................................ 7
2.18 Cumulative Remedies........................................................................... 7
3. INTERPRETATION OF THIS GUARANTY AGREEMENT.............................................................. 8
3.1 Terms Defined................................................................................. 8
3.2 Headings; Independent Construction............................................................ 9
3.3 Separate Agreements........................................................................... 9
3.4 Partial Invalidity............................................................................ 9
3.5 Governing Law................................................................................. 10
4. WARRANTIES AND REPRESENTATIONS......................................................................... 10
5. GENERAL COVENANTS...................................................................................... 10
5.1 Undertakings in Note Purchase Agreement....................................................... 10
5.2 Further Assurances............................................................................ 10
6. MISCELLANEOUS.......................................................................................... 10
6.1 Communications................................................................................ 10
6.2 Amendment..................................................................................... 11
6.3 Successors and Assigns........................................................................ 11
6.4 Survival...................................................................................... 11
6.5 Joinder Agreement............................................................................. 11
6.6 Expense....................................................................................... 12
6.7 Benefits of Guaranty Restricted to Noteholders................................................ 12
6.8 Entire Agreement.............................................................................. 12
6.9 Connecticut Waiver............................................................................ 13
6.10 Counterparts.................................................................................. 13
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GUARANTY AGREEMENT
GUARANTY AGREEMENT (as may be amended, restated or otherwise modified
from time to time, this "AGREEMENT"), dated as of December 1, 1996, by SPECTRAN
COMMUNICATION FIBER TECHNOLOGIES, INC. ("SCFT"), a Delaware corporation,
SPECTRAN SPECIALTY OPTICS COMPANY ("SSOC"), a Delaware corporation, and APPLIED
PHOTONIC DEVICES, INC. ("APD"), a Delaware corporation (SCFT, SSOC and APD,
together with each other Person that becomes a party hereto from time to time by
execution and delivery of a Joinder Agreement, and including their respective
successors and assigns, the "GUARANTORS"), in favor of each of the Noteholders
(as such term is hereinafter defined).
1. PRELIMINARY STATEMENTS
1.1 Spectran Corporation (together with its successors and assigns, the
"COMPANY"), a Delaware corporation, has authorized the issuance of
(a) its 9.24% Series A Senior Secured Notes due 2003 (as may
be amended, restated or otherwise modified from time to time, the
"SERIES A NOTES"), in the aggregate principal amount of $16,000,000,
and
(b) its 9.39% Series B Senior Secured Notes due 2004 (as may
be amended, restated or otherwise modified from time to time, the
"SERIES B NOTES," and collectively with the Series A Notes and any and
all other notes for which such notes, or any successor notes, may be
substituted or exchanged, all as may be amended, restated or otherwise
modified from time to time, the "NOTES"), in the aggregate principal
amount of $8,000,000,
pursuant to the separate Note Purchase Agreements (collectively, as may be
amended, restated or otherwise modified from time to time, the "NOTE PURCHASE
AGREEMENT"), each dated as of December 1, 1996, with each of the purchasers
named on Schedule A thereto (the "PURCHASERS").
1.2 In order to induce the Purchasers to purchase the Notes, each of
SCFT, SSOC and APD has agreed to become a Guarantor hereunder and the Company
has agreed, pursuant to the Note Purchase Agreement, that each other Person that
at any time becomes a direct or indirect Subsidiary will be required to become a
Guarantor hereunder.
1.3 The Guarantors and the Company are operated as part of one
consolidated business entity. The Guarantors are directly dependent upon the
Company for and in connection with their respective business activities and
their respective financial resources. Each Guarantor will receive direct and
indirect economic and financial benefits from the indebtedness incurred under
the Note Purchase Agreement and the Notes by the Company, and under this
Agreement, and the incurrence of such indebtedness is in the best interests of
such Guarantor.
1.4 All acts and proceedings required by law and by the constitutive
documents of each Guarantor necessary to constitute this Agreement a valid and
binding agreement for the uses and purposes set forth herein, in accordance with
its terms, have been done and taken, and the execution and delivery hereof has
been in all respects duly authorized.
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2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
2.1 GUARANTIED OBLIGATIONS.
Each Guarantor, in consideration of the execution and delivery of the
Note Purchase Agreement, the purchase of the Notes by the Purchasers and other
consideration, hereby irrevocably, unconditionally, absolutely, jointly and
severally guarantees to each Noteholder, as and for each such Guarantor's own
debt:
(a) the due and punctual payment of the principal of and
accrued and unpaid interest (including, without limitation, interest
which otherwise may cease to accrue by operation of any insolvency law,
rule, regulation or interpretation thereof) and Make-Whole Amount on
the Notes and the due and punctual payment of all other obligations of
the Company to the Noteholders under the Note Purchase Agreement, the
Notes and the other Financing Documents when due, whether by mandatory
or optional prepayment, acceleration or otherwise, all in accordance
with the terms thereof, including, without limitation, overdue
interest, indemnification payments and all reasonable costs and
expenses incurred by the Noteholders and the Trustee in connection with
enforcing any obligations of the Company under the Note Purchase
Agreement, the Notes and the other Financing Documents, including,
without limitation, the reasonable fees and disbursements of
Noteholders' special counsel;
(b) the punctual and faithful performance, keeping,
observance, and fulfillment by the Company of all duties, agreements,
covenants and obligations of the Company contained in the Note Purchase
Agreement, the Notes and the other Financing Documents to be performed
or observed on the part of the Company; and
(c) the prompt and complete payment, on demand, of any and all
reasonable costs and expenses incurred by the Noteholders in connection
with enforcing the obligations of such Guarantor hereunder, including,
without limitation, the reasonable fees and disbursements of the
Noteholders' special counsel.
All of the obligations set forth in clauses (a), (b) and (c) of this Section 2.1
are referred to herein as the "GUARANTIED OBLIGATIONS" and the guaranty thereof
contained herein is a primary, original and immediate obligation of each
Guarantor and is an absolute, unconditional, continuing and irrevocable guaranty
of payment and performance and shall remain in full force and effect until the
full, final and indefeasible payment of the Guarantied Obligations.
2.2 PAYMENTS AND PERFORMANCE.
If for any reason any duty, agreement or obligation of the Company
contained in the Note Purchase Agreement or any other Financing Document shall
not be performed or observed by the Company as provided therein, or if any
amount payable under or in connection with the Note Purchase Agreement, the
Notes or any other Financing Document shall not be paid in full when the same
becomes due and payable, each Guarantor undertakes to perform or cause to be
performed promptly each of such duties, agreements and obligations and to pay
forthwith each
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2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
such amount to the Noteholders regardless of any defense or setoff or
counterclaim which the Company may have or assert, and regardless of any other
condition or contingency.
2.3 WAIVERS AND OTHER AGREEMENTS.
Each Guarantor hereby unconditionally:
(a) waives any requirement that the Noteholders, upon the
occurrence of an Event of Default, first make demand upon, or seek to
enforce remedies against, the Company before demanding payment under or
seeking to enforce the obligations of such Guarantor under this
Agreement;
(b) agrees that the obligations of such Guarantor under this
Agreement will not be discharged except by complete performance of all
obligations of the Company contained in the Note Purchase Agreement,
the Notes and the other Financing Documents;
(c) agrees that the obligations of such Guarantor under this
Agreement shall remain in full force and effect without regard to, and
shall not be affected or impaired, without limitation, by any
invalidity, irregularity or unenforceability in whole or in part of the
Note Purchase Agreement, the Notes or any other Financing Document, or
any limitation on the liability of any Guarantor under this Agreement,
or any limitation on the method or terms of payment under the Note
Purchase Agreement, the Notes or any other Financing Document which may
at any time be caused or imposed in any manner whatsoever (including,
without limitation, usury laws);
(d) waives diligence, presentment and protest with respect to,
and any notice of default or dishonor in the payment of any amount at
any time payable by the Company under or in connection with the Note
Purchase Agreement, the Notes or any other Financing Document, and
further waives any requirement of notice of acceptance of, or other
formality relating to, the obligations of such Guarantor under this
Agreement; and
(e) agrees that to the extent the Company makes a payment or
payments to any Noteholder, which payment or payments or any part
thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required, for any of the foregoing reasons
or for any other reason, to be repaid or paid over to a custodian,
trustee, receiver or any other party or officer under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, state or federal
law, or any common law or equitable cause, then to the extent of such
payment or repayment, the obligation or part thereof intended to be
satisfied shall be revived and continued in full force and effect as if
said payment had not been made and each Guarantor shall be primarily
liable for such obligation.
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2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
2.4 NATURE OF GUARANTY.
The obligations of each Guarantor under this Agreement constitute an
absolute and unconditional and irrevocable guaranty of payment and not a
guaranty of collection and are wholly independent of and in addition to other
rights and remedies of the Noteholders and are not contingent upon the pursuit
by the Noteholders of any such rights and remedies, such pursuit being hereby
waived by such Guarantor. Notwithstanding anything to the contrary set forth in
the Note Purchase Agreement, the Notes or any other Financing Document, the
obligations of each Guarantor under this Agreement are joint and several with
the obligations of each other Guarantor and any other guarantor of all or any
part of the Guarantied Obligations.
2.5 OBLIGATIONS ABSOLUTE.
The obligations, covenants, agreements and duties of each Guarantor
under this Agreement shall not be released, affected or impaired by any of the
following, whether or not undertaken with notice to or consent of such
Guarantor:
(a) any assignment or transfer, in whole or in part, of any
Note although made without notice to or consent of such Guarantor; or
(b) any waiver by any Noteholder, or by any other Person, of
the performance or observance by the Company of any of the agreements,
covenants, terms or conditions contained in the Note Purchase Agreement
or in any other Financing Document; or
(c) any indulgence in or the extension of the time for payment
by the Company of any amounts payable under or in connection with the
Note Purchase Agreement, the Notes or any other Financing Document, or
of the time for performance by the Company of any other obligations
under or arising out of the Note Purchase Agreement, the Notes or any
other Financing Document, or the extension or renewal thereof; or
(d) the modification, amendment or waiver (whether material or
otherwise) of any duty, agreement or obligation of the Company set
forth in the Note Purchase Agreement, the Notes or any other Financing
Document (the modification, amendment or waiver from time to time of
the Note Purchase Agreement, the Notes and the other Financing
Documents being expressly authorized without further notice to or
consent of such Guarantor); or
(e) the voluntary or involuntary liquidation, sale or other
disposition of all or substantially all of the assets of the Company or
any receivership, insolvency, bankruptcy, reorganization or other
similar proceedings affecting the Company or any of its assets; or
(f) the merger or consolidation of the Company or any
Guarantor with any other Person; or
(g) the release or discharge of the Company from the
performance or observance of any agreement, covenant, term or condition
contained in the Note
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2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
Purchase Agreement, the Notes or any other Financing Document, by
operation of law; or
(h) any other cause, whether similar or dissimilar to the
foregoing, that would release, affect or impair the obligations,
covenants, agreements or duties of any Guarantor under this Agreement.
2.6 NO INVESTIGATION BY NOTEHOLDER.
Each Guarantor hereby waives unconditionally any obligation that, in
the absence of such provision, the Noteholders might otherwise have to
investigate or to assure that there has been compliance with the law of any
jurisdiction with respect to the Guarantied Obligations, recognizing that, to
save both time and expense, such Guarantor has requested that the Noteholders
not undertake such investigation. Each Guarantor hereby expressly confirms that
the obligations of such Guarantor hereunder shall remain in full force and
effect without regard to compliance or noncompliance with any such law and
irrespective of any investigation or knowledge of any such law by any
Noteholder.
2.7 INDEMNITY.
As a separate, additional and continuing obligation, each Guarantor
unconditionally and irrevocably undertakes and agrees with the Noteholders that,
should the Guarantied Obligations not be recoverable from such Guarantor for any
reason whatsoever (including, without limitation, by reason of any provision of
the Note Purchase Agreement, the Notes, any other Financing Document or any
other agreement or instrument executed in connection therewith being or becoming
void, unenforceable or otherwise invalid under any applicable law) then,
notwithstanding any knowledge thereof by any Noteholder at any time, such
Guarantor as sole, original and independent obligor, upon demand by the Required
Holders, will make payment of the Guarantied Obligations to the Noteholders by
way of a full indemnity in such currency and otherwise in such manner as is
provided in the Note Purchase Agreement and the Notes.
2.8 SUBORDINATION, SUBROGATION, ETC.
Each Guarantor agrees that any present or future indebtedness,
obligations or liabilities of the Company to such Guarantor shall be fully
subordinate and junior in right and priority of payment to any present or future
indebtedness, obligations or liabilities of the Company to the Noteholders. Each
Guarantor waives any right of subrogation to the rights of the Noteholders
against the Company or any other Person obligated for payment of the Guarantied
Obligations and any right of reimbursement, contribution or indemnity whatsoever
(including, without limitation, any such right as against any other Guarantor)
arising or accruing out of any payment that such Guarantor may make pursuant to
this Agreement, and any right of recourse to security for the debts and
obligations of the Company, unless and until the entire amount of the Guarantied
Obligations shall have been paid in full.
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2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
2.9 WAIVER.
To the extent that it lawfully may, each Guarantor agrees that it will
not at any time insist upon or plead, or in any manner whatsoever claim or take
any benefit or advantage of, any applicable present or future stay, extension or
moratorium law, which may affect observance or performance of the provisions of
this Agreement, the Note Purchase Agreement, the Notes or any other Financing
Document; nor will it claim, take or insist upon any benefit or advantage of any
present or future law providing for the evaluation or appraisal of any security
for its obligations hereunder or the Company under the Note Purchase Agreement,
the Notes or any other Financing Document prior to any sale or sales thereof
which may be made under or by virtue of any instrument governing the same; nor
will it, after any such sale or sales, claim or exercise any right, under any
applicable law, to redeem any portion of such security so sold.
2.10 LIMITATION ON GUARANTIED OBLIGATIONS.
Notwithstanding anything in Section or elsewhere in this Agreement, the
Note Purchase Agreement, the Notes or any other Financing Document to the
contrary, the obligations of each Guarantor under this Agreement shall at each
point in time be limited to an aggregate amount equal to the greatest amount
that would not result in such obligations being subject to avoidance, or
otherwise result in such obligations being unenforceable, at such time under
applicable law (including, without limitation, to the extent, and only to the
extent, applicable to any such Guarantor, Section 548 of the Bankruptcy Code of
the United States of America and any comparable provisions of the law of any
other jurisdiction, any capital preservation law of any jurisdiction and any
other law of any jurisdiction that at such time limits the enforceability of the
obligations of such Guarantor under this Agreement).
2.11 MARSHALING.
Neither any Noteholder nor any Person acting for the benefit of any
Noteholder shall be under any obligation to marshal any assets in favor of any
Guarantor or against or in payment of any or all of the Guarantied Obligations.
2.12 SETOFF, COUNTERCLAIM OR OTHER DEDUCTIONS.
Except as otherwise required by law, each payment by each Guarantor
shall be made without setoff, counterclaim or other deduction.
2.13 NO ELECTION OF REMEDIES BY NOTEHOLDERS.
No election to proceed in one form of action or proceeding, or against
any party, or on any obligation, shall constitute a waiver of such Noteholder's
right to proceed in any other form of action or proceeding or against other
parties unless such Noteholder has expressly waived such right in writing.
Specifically, but without limiting the generality of the foregoing, no action or
proceeding by any Noteholder against the Company or any Guarantor under any
document or instrument evidencing obligations of the Company or any Guarantor to
such Noteholder shall serve to diminish the liability of any Guarantor under
this Agreement, except to the extent that
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2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
such Noteholder finally and unconditionally shall have realized payment by such
action or proceeding in respect of the Guarantied Obligations.
2.14 SEPARATE ACTION; OTHER ENFORCEMENT RIGHTS.
Each of the rights and remedies granted under this Agreement to each
Noteholder in respect of the Notes held by such Noteholder may be exercised by
such Noteholder without notice by such Noteholder to, or the consent of or any
other action by, any other Noteholder. Each Noteholder may proceed to protect
and enforce this Agreement by suit or suits or proceedings in equity, at law or
in bankruptcy, and whether for the specific performance of any covenant or
agreement contained herein or in execution or aid of any power herein granted or
for the recovery of judgment for the obligations hereby guarantied or for the
enforcement of any other proper, legal or equitable remedy available under
applicable law.
2.15 NOTEHOLDER SETOFF.
Each Noteholder shall have, to the fullest extent permitted by law and
this Agreement, a right of set-off against any and all credits and any and all
other property of each Guarantor now or at any time whatsoever, with or in the
possession of such Noteholder, or anyone acting for such Noteholder, to ensure
the full performance of any and all obligations of each Guarantor hereunder.
2.16 DELAY OR OMISSION; NO WAIVER.
No course of dealing on the part of any Noteholder and no delay or
failure on the part of any such Person to exercise any right hereunder shall
impair such right or operate as a waiver of such right or otherwise prejudice
such Person's rights, powers and remedies hereunder. Every right and remedy
given by this Agreement or by law to any Noteholder may be exercised from time
to time as often as may be deemed expedient by such Person.
2.17 RESTORATION OF RIGHTS AND REMEDIES.
If any Noteholder shall have instituted any proceeding to enforce any
right or remedy under this Agreement or under any Note held by such Noteholder,
and such proceeding shall have been dismissed, discontinued or abandoned for any
reason, or shall have been determined adversely to such Noteholder, then and in
every such case each such Noteholder, the Company and each Guarantor shall,
except as may be limited or affected by any determination (including, without
limitation, any determination in connection with any such dismissal) in such
proceeding, be restored severally and respectively to its respective former
positions hereunder and thereunder, and thereafter, subject as aforesaid, the
rights and remedies of such Noteholders shall continue as though no such
proceeding had been instituted.
2.18 CUMULATIVE REMEDIES.
No remedy under this Agreement, the Note Purchase Agreement, the Notes
or any other Financing Document is intended to be exclusive of any other remedy,
but each and every remedy
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2. GUARANTY AND OTHER RIGHTS AND UNDERTAKINGS
shall be cumulative and in addition to any and every other remedy given pursuant
to this Agreement, the Note Purchase Agreement, the Notes or any other Financing
Document.
3. INTERPRETATION OF THIS GUARANTY AGREEMENT
3.1 TERMS DEFINED.
For purposes of this Agreement, the following terms have the meanings
specified below or provided for in the section of this Agreement referred to
immediately following such term (such definitions to be equally applicable to
both the singular and plural forms of the terms defined) or, if not defined
herein, then as defined in the Trust Indenture.
COMPANY -- Section 1.1.
DEFAULT -- has the meaning assigned to such term in the Note Purchase
Agreement.
EVENT OF DEFAULT -- has the meaning assigned to such term in the Note
Purchase Agreement.
GUARANTIED OBLIGATIONS -- Section 2.1.
GUARANTORS -- has the meaning assigned to such term in the introductory
paragraph hereof.
JOINDER AGREEMENT -- Section 6.5.
LIEN -- has the meaning assigned to such term in the Note Purchase
Agreement.
NOTE PURCHASE AGREEMENT -- Section 1.1(b).
NOTEHOLDER -- means, at any time, each Person that is the holder of any
Note at such time.
NOTES -- has the meaning assigned to such term in Preliminary Statement
A.
PERSON -- means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
PURCHASERS -- Section 1.1(b).
PROPERTY -- means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.
REQUIRED HOLDERS -- has the meaning assigned to such term in the Note
Purchase Agreement.
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3. INTERPRETATION OF THIS GUARANTY AGREEMENT
SERIES A NOTES -- Section 1.1(a), 1.1(a), 1.1(b).
SERIES B NOTES -- Section 1.1(b).
SUBSIDIARY -- has the meaning assigned to such term in the Note
Purchase Agreement.
TRUSTEE -- has the meaning assigned to such term in the Trust
Indenture, dated as of December 1, 1996, among the Company, the Guarantors,
Fleet National Bank as trustee, and the other parties signatory thereto, as
amended, modified or supplemented from time to time.
3.2 HEADINGS; INDEPENDENT CONSTRUCTION.
(a) SECTION HEADINGS ETC. The titles of the Sections and Table
of Contents of this Agreement appear as a matter of convenience only,
do not constitute a part hereof and shall not affect the construction
hereof. The words "herein," "hereof," "hereunder" and "hereto" refer to
this Indenture as a whole and not to any particular Section or other
subdivision. References to Sections are, unless otherwise specified,
references to Sections of this Agreement. References to Annexes,
Schedules, Exhibits and Attachments are, unless otherwise specified,
references to Annexes, Schedules, Exhibits and Attachments attached to
this Agreement.
(b) CONSTRUCTION. Each covenant contained herein shall be
construed (absent an express contrary provision herein) as being
independent of each other covenant contained herein, and compliance
with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with one or more other
covenants.
3.3 SEPARATE AGREEMENTS.
Notwithstanding that this Agreement is among each of the Guarantors and
the Trustee, this Agreement shall be construed and interpreted as a separate
Agreement between each Guarantor and the Trustee, and any whole or partial
invalidity of this Agreement in respect of any Guarantor shall not have any
effect on the validity or enforceability of this Agreement as among each other
Guarantor, respectively, as the case may be, and the Trustee.
3.4 PARTIAL INVALIDITY.
The unenforceability or invalidity of any provision or provisions of
this Agreement shall not render any other provision or provisions contained in
this Agreement unenforceable or invalid.
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3.5 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS EXCLUDING CHOICE-OF-LAW PRINCIPLES
OF THE LAW OF SUCH JURISDICTION THAT WOULD REQUIRE THE APPLICATION OF THE LAWS
OF A JURISDICTION OTHER THAN SUCH JURISDICTION.
4. WARRANTIES AND REPRESENTATIONS
Each Guarantor warrants and represents, as of the date such Guarantor
becomes a Guarantor hereunder, that each of the warranties and representations
made by the Company in Section 5 of the Note Purchase Agreement with respect to
Subsidiaries generally are true with respect to such Guarantor on the date that
such Guarantor becomes a Guarantor, with the same effect as though such
warranties and representations were made on and as of such date rather than on
and as of the date of this Agreement.
5. GENERAL COVENANTS
Each Guarantor covenants and agrees that on and after the date hereof
and so long as any of the Guarantied Obligations shall be outstanding:
5.1 UNDERTAKINGS IN NOTE PURCHASE AGREEMENT.
Each Guarantor will comply with each of the undertakings of the Company
in the Note Purchase Agreement in respect of which the Company undertakes to
cause such Guarantor (in its capacity as a Guarantor and as a Subsidiary) to
comply with such undertakings, as if such undertakings (as they apply to such
Guarantor) were set forth at length herein as the undertakings of such
Guarantor.
5.2 FURTHER ASSURANCES.
Each Guarantor will cooperate with the Noteholders and execute such
further instruments and documents as the Required Holders shall reasonably
request to carry out, to the reasonable satisfaction of the Required Holders,
the transactions contemplated by this Agreement and the other Financing
Documents.
6. MISCELLANEOUS
6.1 COMMUNICATIONS.
All communications hereunder shall be in writing, shall be delivered in
the manner required by the Note Purchase Agreement, and shall be addressed, if
to any Guarantor, at the applicable address set forth on Annex 1 hereto, and if
to any of the Noteholders:
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6 MISCELLANEOUS
(a) if such Noteholder is a Purchaser, at the address for such
Noteholder set forth on Schedule A to the Note Purchase Agreement, and
further including any parties referred to on such Schedule A which are
required to receive notices in addition to such Noteholder, and
(b) if such Noteholder is not a Purchaser, at the address for
such Noteholder set forth in the register for the registration and
transfer of Notes maintained pursuant to Section 13.1 of the Note
Purchase Agreement,
or to any such party at such other address as such party may designate by notice
duly given in accordance with this Section 6.1. Notices shall be deemed given
only when actually received.
6.2 AMENDMENT.
This Agreement may be amended in, and the observance of any term hereof
may be waived (either retroactively or prospectively), with (and only with) the
written consent of each Guarantor and the Required Holders, except that no
amendment or waiver of any of the provisions of Section 2, or any defined term
as it is used therein, will be effective unless consented to by each Guarantor
and each Noteholder in writing; provided that this Agreement may, in the manner
specified in Section 6.5, be amended to add one or more new Guarantors hereunder
without the consent of any other Guarantor or any holder of Notes.
6.3 SUCCESSORS AND ASSIGNS.
(a) All covenants and other agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note)
whether so expressed or not.
(b) Each Guarantor agrees to take such action as may be
reasonably requested by any Noteholder to confirm such Guarantor's
guaranty of the Guarantied Obligations in connection with the transfer
of the Notes of such Noteholder.
6.4 SURVIVAL.
All representations and warranties contained herein or made in writing
by any Guarantor in connection herewith shall survive the execution and delivery
of this Agreement. So long as the Guarantied Obligations and all payment
obligations of each Guarantor hereunder shall not have been fully and finally
performed and indefeasibly paid, the obligations of each Guarantor hereunder
shall survive the transfer and payment of any Note and the payment in full of
all the Notes.
6.5 JOINDER AGREEMENT.
Upon execution and delivery by any Person of a counterpart of a Joinder
Agreement substantially in the form attached to this Agreement as Annex 2 (each,
a "JOINDER AGREEMENT"), this Agreement shall for all purposes, without further
action, be deemed to have been amended
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6 MISCELLANEOUS
to add such Person as a Guarantor hereunder with the same effect as if such
Person had been an original party hereto.
6.6 EXPENSE.
(a) AMENDMENTS AND WAIVERS. The Guarantors will pay when
billed the reasonable costs and expenses (including reasonable
attorneys' fees) incurred by the Noteholders in connection with the
consideration, negotiation, preparation or execution of any amendments,
waivers, consents, standstill agreements and other similar agreements
with respect hereto (whether or not any such amendments, waivers,
consents, standstill agreements or other similar agreements are
executed or become effective).
(b) RESTRUCTURING AND WORKOUT, INSPECTIONS. At any time when
the Guarantors and the Noteholders are conducting restructuring or
workout negotiations in respect hereof, or a Default or Event of
Default exists, the Guarantors will pay when billed the reasonable
costs and expenses (including reasonable attorneys' fees and the fees
of professional advisors) incurred by the Noteholders in connection
with the assessment, analysis or enforcement of any rights or remedies
that are or may be available to the Noteholders and in connection with
inspections made pursuant to Section 7.3 of the Note Purchase
Agreement.
(c) COLLECTION AND ENFORCEMENT. If the Guarantors shall fail
to pay when due any of the Guarantied Obligations or shall otherwise
fail to comply with any provision of this Agreement, the Guarantors
will pay to each Noteholder, to the extent permitted by law, such
amounts as shall be sufficient to cover the costs and expenses,
including, without limitation, reasonable attorneys' fees, incurred by
such Noteholder in collecting any sums due hereunder and in enforcing
any rights or remedies that are or may be available to such Noteholder.
6.7 BENEFITS OF GUARANTY RESTRICTED TO NOTEHOLDERS.
Nothing express or implied in this Agreement is intended or shall be
construed to give to any Person other than the Guarantors and the Noteholders
any legal or equitable right, remedy or claim under or in respect hereof or any
covenant, condition or provision therein or herein contained, and all such
covenants, conditions and provisions are and shall be held to be for the sole
and exclusive benefit of the Guarantors and the Noteholders.
6.8 ENTIRE AGREEMENT.
This Agreement constitutes the final written expression of all of the
terms hereof and is a complete and exclusive statement of those terms.
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6. MISCELLANEOUS
6.9 CONNECTICUT WAIVER.
TO THE EXTENT ANY ASSETS AND/OR REAL ESTATE OF ANY GUARANTOR IS LOCATED
IN CONNECTICUT, EACH GUARANTOR ACKNOWLEDGES THAT THIS AGREEMENT AND EACH
TRANSACTION RELATED HERETO IS A "COMMERCIAL TRANSACTION" WITHIN THE MEETING OF
CHAPTER 903A OF THE CONNECTICUT GENERAL STATUES, AS AMENDED. EACH GUARANTOR
HEREBY WAIVES ANY RIGHT WHICH IT 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 TRUSTEE OR ANY NOTEHOLDER
SEEKS ANY PREJUDGMENT REMEDY AT ANY TIME PRIOR TO FINAL JUDGMENT IN ANY
LITIGATION INSTITUTED IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER FINANCING
DOCUMENT, WHETHER BY WAY OF ATTACHMENT, FOREIGN ATTACHMENT, GARNISHMENT OR
REPLEVIN.
6.10 COUNTERPARTS.
This Agreement may be executed and delivered in any number of
counterparts, each of such counterparts constituting an original but altogether
only one Agreement.
[Remainder of page intentionally left blank; next page is signature page.]
13
85
IN WITNESS WHEREOF, each Guarantor has caused this Agreement to be
executed on its behalf by one of its duly authorized officers as of the date
first set forth above.
SPECTRAN COMMUNICATION FIBER
TECHNOLOGIES, INC.
By /s/ Bruce A. Cannon
-------------------------------
Name: Bruce A. Cannon
Title: Secretary
SPECTRAN SPECIALTY OPTICS
COMPANY
By /s/ Bruce A. Cannon
-------------------------------
Name: Bruce A. Cannon
Title: Secretary
APPLIED PHOTONIC DEVICES, INC.
By /s/ Bruce A. Cannon
--------------------------------
Name: Bruce A. Cannon
Title: Secretary
[GUARANTY AGREEMENT]
86
Annex 1 to Guaranty Agreement
Addresses of Guarantors
SpecTran Communication Fiber Technologies, Inc.
50 Hall Road
Sturbridge, MA 01566
Attn: Chief Executive Officer
SpecTran Specialty Optics Company
150 Fisher Drive
Avon CT 060011(*)
Attn: President
Applied Photonic Devices, Inc.
300 Lake Road
Dayville, CT 06241(**5)
Attn: Chief Executive Officer
* Spectran Specialty Optics Company intends to move its principal executive
offices to 55 Darling Drive, Avon, Connecticut 06001 during 1997.
Applied Photonic Devices, Inc. intends to move its principal executive offices
to 50 Hall Road, Sturbridge, Massachusetts by the end of 1996.
- ----------
(5)Applied Photonic Devices, Inc. intends to move its principal
executive offices to 50 Hall Road, Sturbridge, Massachusetts by the end of 1996.
87
ANNEX 2
[FORM OF JOINDER AGREEMENT]
JOINDER AGREEMENT
[Date]
To each of the Noteholders (as defined in the Guaranty
Agreement hereinafter referred to)
Ladies and Gentlemen:
Reference is made to the Guaranty Agreement, dated as of December 1,
1996 (as amended, restated or otherwise modified from time to time, the
"GUARANTY AGREEMENT"), by SpecTran Communication Fiber Technologies, Inc.
("SCFT"), a Delaware corporation, SpecTran Specialty Optics Company ("SSOC"), a
Delaware corporation, and APPLIED PHOTONIC DEVICES, INC. ("APD"), a Delaware
corporation (SCFT, SSOC and APD, together with each other Person that becomes a
party to the Guaranty Agreement, the "GUARANTORS"), in favor of each of the
Noteholders (as defined in the Agreement). Capitalized terms used herein and not
otherwise defined have the meanings ascribed to such terms in the Guaranty
Agreement.
[NEW GUARANTOR], a ___________________ corporation (the "NEW
GUARANTOR"), agrees with you as follows:
1. GUARANTY. The New Guarantor hereby unconditionally and expressly
agrees to become, and by execution and delivery of this Agreement does become, a
"Guarantor" under and as defined in the Guaranty Agreement. Without limitation
of the foregoing or of anything in the Guaranty Agreement, by such execution and
delivery hereof the New Guarantor does become fully liable, as a Guarantor, for
the payment of the Guarantied Obligations as further provided in Section 1 of
the Guaranty Agreement. As provided in Section 6.5 of the Guaranty Agreement,
the Guaranty Agreement is hereby amended, without any further action, to add the
New Guarantor as a Guarantor thereunder as if the New Guarantor had been an
original party to the Guaranty Agreement. Annex 1 to the Guaranty Agreement is
hereby amended by adding the following address of the New Guarantor for purposes
of communications pursuant to Section 6.1 of the Guaranty Agreement: [insert
name and address of New Guarantor].
2. FURTHER ASSURANCES. The New Guarantor agrees to cooperate with the
Noteholders and execute such further instruments and documents as the Required
Holders shall reasonably request to effect, to the reasonable satisfaction of
the Required Holders, the purposes of this Agreement.
3. BINDING EFFECT. This Agreement shall be binding upon the New
Guarantor and shall inure to the benefit of the Noteholders and their respective
successors and assigns.
Annex 2-1
88
IN WITNESS WHEREOF, the New Guarantor has caused this Agreement to be
executed on its behalf by one of its duly authorized officers.
[NEW GUARANTOR]
By
------------------------------------
Name:
Title:
Annex 2-2