EXH10-54
FORBEARANCE AGREEMENT
This AGREEMENT is made as of the 31st day of July, 1996, by and among
AUTOMATED LIGHT TECHNOLOGIES, INC., a Delaware corporation with an office and
principal place of business located at 174 Charlton Road, Sturbridge,
Massachusetts ("ALT"), FIBERCORE, INC., a Nevada Corporation with an office and
principal place of business located at 174 Charlton Road, Sturbridge,
Massachusetts ("FCI") and CONNECTICUT INNOVATIONS, INCORPORATED, a corporation
constituted a cussi-public instrumentality of the State of Connecticut with an
office located at 40 Cold Spring Road, Rocky Hill, Connecticut ("CII").
WITNESSETH
WHEREAS, on August 2, 1990, CII made a loan to ALT in the original
principal amount of $300,000 as evidenced by a Promissory Note from ALT in such
amount and governed by a Loan Agreement and related documents of the same date
(the "Obligations");
WHEREAS, in connection with the loan made in 1990, CII received a
Warrant to purchase 66,667 shares of ALT Common Stock at an exercise price of
$1.50 per share, which Warrant has, due to subsequent events, including a merger
of ALT into a wholly owned subsidiary of FCI in September of 1995, been adjusted
such that CII is now entitled to purchase 70,933 shares of FCI Common Stock at
$1.48 per share; and
WHEREAS, ALT has acknowledged that it is in default under the
Promissory Note and Loan Agreement and has requested that CII forbear at this
time from pursuing its rights and remedies for payment in full of its
indebtedness and liabilities under the aforementioned agreements; and
WHEREAS, FCI acknowledges that, as owner of 100% of the capital stock
of ALT, it will receive a direct and substantial benefit from entering into this
Agreement.
NOW, THEREFORE, in consideration for CII's agreeing to forbear from
immediately pursuing its rights and remedies under the Loan Agreement (subject
to the terms and conditions contained herein), and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
Section 1. Ratification of Obligations; Modification.
(a) All of the Obligations, including without limitation, all
indebtedness and liabilities, existing as of the date of this Agreement or
arising thereafter, subject to the terms and conditions contained herein, shall
be and are ratified and confirmed in all respects. As of June 30, 1996, the
remaining principal and interest balance on the
Promissory Note is $241,128, and subject to the provisions of this Agreement,
interest shall continue to accrue and any late payment penalties or interest
charges shall be applied as provided in the Promissory Note and Loan Agreement.
(b) Until the sooner to occur of the Conversion Date (as defined in
Section 2) or September 1, 1996, ALT's payment obligations under the Promissory
Note are hereby modified as follows. For the months beginning March 1, 1996
through and including the Conversion Date, ALT shall make a payment to CII in
the amount of One Thousand Dollars ($1,000.00) per month.
Section 2. Forbearance Obligations; Conversion.
(a) CII agrees to forbear from taking any action to recover payment in
full of the Obligations and from instituting any proceedings against ALT to
enforce its rights and remedies under the Loan Agreement arising from ALT's
default thereunder through and including the earlier to occur of (I) the
Conversion Date or (ii) September 1, 1996. If the Conversion Date has not
occurred as of September 1, 1996, then the Obligations shall be fully restored
as though never modified.
(b) The Conversion Date shall be the date upon which (I) FCI shall have
filed an S-1 Registration Statement covering all shares of FCI Common Stock to
be issued to CII hereunder (the "CII Stock"), and (ii) ALT shall have made the
payments required under Section 1(b) above.
(c) On the Conversion Date, the following events shall occur:
(i) CII will exercise the Warrant and pay the exercise
price by canceling One Hundred Four Thousand Nine
Hundred Eighty One Dollars and No/100 ($104,981.00)
of the balance of the Obligations. FCI shall deliver
to CII a stock certificate representing 70,933 shares
of FCI Common Stock;
(ii) The actual principal and interest balance remaining
under the Promissory Note as of the Conversion Date
(not including any late payment penalties of interest
charges), after giving credit for payments made
pursuant to Section 1(b) above and exercise of the
Warrant pursuant to Section 2(c)(i) above, shall be
converted automatically into that number of shares of
FCI Common Stock determined by dividing said balance
by a number equal to 60% of the Current Market Value
of FCI Common Stock. For purposes hereof, Current
Market Value of FCI Common Stock shall mean the
average closing price of FCI's common stock as
reported through Bloomberg for the fifteen (15)
consecutive trading days immediately preceding the
date of this Agreement. FCI shall
deliver to CII a stock certificate representing that
number of shares of FCI Common Stock determined
pursuant to this Section 2(c)(ii);
(iii) CII will issue a release in favor of ALT, FCI, their
officers, directors, and employees with respect to
the Obligations, including the Warrant, and will
release its lien on ALT's assets; and
Section 5. Events of Default and Remedies. Upon the occurrence of any
of the following events or the existence of any of the following conditions (any
such event or condition being herein referred to as an "Event of Default"):
(a) Any representation or warranty made by ALT or FCI herein or in any
other instrument creating, evidencing or securing any of their Obligations to
CII or in any certificate, financial statement or other document delivered in
connection herewith shall prove to have been incomplete, untrue or incorrect in
any material respect as of the date made or deemed to have been made or
repeated; or
(b) ALT or FCI shall fail fully to perform or comply with any terms,
covenants or provisions of this Agreement;
then, and in any such event, CII's obligation to forbear pursuant to Section
2(a) of this Agreement shall terminate and the Obligations, to the extent they
have not been released, shall, at CII's option and without notice or demand
become and be immediately due and payable in full and CII may, at its option,
exercise and enforce its rights and remedies available under or in connection
with the Loan Agreement, the other documents and agreements executed or
delivered in connection therewith, at law and/or in equity.
CII's failure or delay to exercise any remedy after any particular
Event of Default shall not operate as a waiver of any remedy in that or in any
subsequent instance.
Section 6. No Present Claims and Releases. ALT and FCI acknowledge and
agree that (a) they have no claim or cause of action against CII; (b) neither
ALT, FCI nor any of its stockholders or affiliates have any offset rights,
counterclaims or defenses of any kind with respect to any of ALT's Obligations,
indebtedness or liabilities to CII and/or against CII for any reason whatsoever;
and (c) CII has heretofore properly performed and satisfied in a timely manner
all of its obligations to ALT and FCI. ALT and FCI each further unconditionally
releases, waives, and forever discharges (I) any and all liabilities,
obligations, duties, promises or indebtedness of any kind of CII to ALT, except
the obligations to be performed by CII for ALT and FCI as expressly stated in
this Agreement; and (ii) all claims, offsets, causes of action, suits or
defenses of any kind whatsoever (if any), whether known or unknown, which ALT or
FCI might otherwise have against CII or any of its directors, officers,
shareholders, employees, agent and/or attorneys.
Section 7. Expenses. ALT agrees that it is responsible and liable for
the payment to CII of an amount equal to any and all out-of-pocket costs or
expenses (including legal
fees, appraisals and disbursements) hereafter incurred or sustained by CII in
connection with the preservation of or enforcement of any of its rights under
this Agreement, the Loan Agreement (as set forth therein) or in respect of any
of their other obligations to CII, (whether or not any one or more legal
proceedings is commenced by or on behalf of CII or an appearance is filed on
behalf of CII in any legal proceeding filed by, against or in any way involving
CII).
Section 8. Waiver of Jury Trial. ALT AND FCI EACH HEREBY WAIVES ANY
RIGHTS THAT IT MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE LOAN
AGREEMENT, ANDY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS. THEY ACKNOWLEDGE AND AGREE THAT THEY HAVE
KNOWINGLY, VOLUNTARILY AND INTELLIGENTLY, WITH THE ADVICE OF LEGAL COUNSEL IF
THEY HAVE DEEMED IT NECESSARY, AGREED TO THIS WAIVER.
Section 9. Miscellaneous.
(a) Except as expressly set forth herein, all of the agreement, terms,
convenants, representations, provisions and obligations to us of any nature
arising under or in respect of this Agreement and the Loan Agreement (if the
Loan Agreement has not been canceled pursuant to Section 2(c)(iii) above) shall
survive the termination of CII's forbearance obligations under this Agreement.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
(c) This Agreement shall be binding upon ALT, FCI and their respective
heirs, representatives and assigns and shall inure to the benefit of CII, its
successors and assigns and any subsequent holder of the Loan Agreement (if the
Loan Agreement has not been canceled pursuant to Section 2(c)(iii) above).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed this 31st day of July, 1996.
CONNECTICUT INNOVATIONS, INCORPORATED
BY:___/S/________________________
Victor Budnick
Its: President and Executive Director
AUTOMATED LIGHT TECHNOLOGIES, INC. FIBERCORE, INC.
BY:___/S/_____________________ BY:___/S/___________________________
Its Exec. V.P. & General Manager Its
July 31, 1996 July 31, 1996