﻿Exhibit 10.2

 

 

 

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Amended and Restated

Security Agreement (Commercial)

Blanket Lien; Accounts and General Intangibles

Inventory, Accounts and General Intangibles

Furniture, Fixtures and Equipment

 

 

THIS AMENDED AND RESTATED SECURITY AGREEMENT dated as of May 7, 2015 by OPTICAL
CABLE CORPORATION, a Virginia corporation (the “Owner”), in favor of SunTrust
Bank, its present and future affiliates and their successors and assigns
(“SunTrust”) provides:

 

THIS AMENDED AND RESTATED SECURITY AGREEMENT HEREBY AMENDS AND RESTATES, IN ALL
RESPECTS, THAT CERTAIN SECURITY AGREEMENT (COMMERCIAL) EXECUTED BY OWNER FOR THE
BENEFIT OF SUNTRUST AND DATED AS OF APRIL 30, 2010, AS THE SAME MAY HAVE BEEN
MODIFIED OR AMENDED FROM TIME TO TIME. NO NOVATION IS INTENDED HEREBY.

 

In order to induce SunTrust from time to time to enter into agreements with and
to extend or continue to extend credit to OPTICAL CABLE CORPORATION, a Virginia
corporation (and any one or more and any combination if more than one, the
“Borrower), and in consideration of any credit so extended, the Owner (which may
include the Borrower) hereby grants, sells, assigns, transfers and conveys to
SunTrust, a security interest in the Collateral and all proceeds, products,
rents and profits thereof and all substitutions and replacements therefore and
all revenues from the right to use the Collateral to secure the prompt payment
and performance of any and all liabilities, obligations, agreements and
undertakings of Borrower to SunTrust (and, in addition, all liabilities,
obligations, agreements and undertakings of Owner, or any one or more of them,
to SunTrust if Owner and Borrower are not the same person or entity) in any
amount, whether now existing or hereafter arising, including those owed by
Borrower or Owner to others and acquired by SunTrust through purchase,
assignment or otherwise, however created, evidenced or arising, whether
individually or jointly with others, and whether absolute or contingent, direct
or indirect, as maker, endorser, guarantor, surety or otherwise, liquidated or
unliquidated, matured or unmatured, whether or not secured by other collateral,
and including, without limitation, (a) all obligations to perform or forbear
from performing any acts, (b) all overdrafts on deposits or accounts maintained
by Borrower or Owner with SunTrust, (c) all liabilities, obligations, agreements
and undertakings of Borrower or Owner to SunTrust pursuant to any interest rate
hedge agreement or other derivative transaction agreement or any foreign
exchange contract or any application or other agreement requesting SunTrust to
issue any letter of credit including, without limitation, the obligation of
Borrower or Owner to reimburse SunTrust for all amounts funded by SunTrust
pursuant to any such letter of credit and (d) all costs of collection and
protection of SunTrust’s rights, including reasonable attorneys’ fees allowed by
law (in the amount of 15% of the principal and interest secured hereby if this
agreement is governed by the laws of Georgia), whether such collection or
protection occurs prior to, during, or after any bankruptcy proceedings filed by
or against any Obligor (as such term is defined below) (all the foregoing being
hereinafter collectively referred to as the “Obligations”).

 

Collateral. As used in this Security Agreement, the term “Collateral” shall mean
the following, which are checked below, whether now existing or hereafter
acquired:

 

☐

Blanket Security

Interest Covering

All Assets

 

All assets of Owner, as more particularly described herein, and including but
not limited to, all Accounts, Inventory, furniture, fixtures and Equipment,
goods, deposit accounts, instruments, documents, commercial tort claims, letter
of credit rights, investment property, chattel paper and General Intangibles (as
all such terms are used herein and in the Uniform Commercial Code).

☐   All or a portion of the Collateral will be attached as a fixture to real
property located at:

                                                                                                                                                                  

and such real property is owned
by                                                                                                   

        ☐

Accounts and

General

Intangibles

 

All of the Owner’s Accounts, chattel paper, documents, instruments and money,
returned and unearned insurance premiums, tax refunds, contract rights, returned
goods, reclaimed and repossessed goods deposit accounts and all General
Intangibles (as all such terms are used herein and in the Uniform Commercial
Code).

 

 

 
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☒

Inventory,

Accounts and

General

Intangibles

 

All of the Owner’s Accounts, deposit accounts, Inventory, general intangibles,
instruments, investment property, letter of credit rights, commercial tort
claims, documents, and chattel paper, and with respect to all of the foregoing,
without limitation, all goods represented thereby, all accessions thereto, and
all goods that may be substituted therefore, reclaimed or repossessed from or
returned by account debtors and all proceeds, products, rents and profits
thereof (as all such terms are used herein and in the Uniform Commercial Code).

        ☐

Furniture,

Fixtures and

Equipment

 

All of the Owners furniture, fixtures and Equipment, and leasehold improvements,
and including but not limited to, all leases, rental agreements, chattel paper,
rental payments and insurance proceeds together with all accessories,
accessions, attachments, parts, replacements, substitutions, improvements,
repairs installed in or affixed thereto (as all such terms are used herein and
in the Uniform Commercial Code).

☐         All or a portion of the Collateral will be attached as a fixture to
real property located at:

                                                                                                                                                                          

and such real property is owned
by                                                                                                                        

       

Representations and Warranties. The Owner represents and warrants to SunTrust as
follows:

 

a.

This Security Agreement has been duly executed and delivered by Owner,
constitutes Owners valid and legally binding obligation and is enforceable in
accordance with its terms against Owner. Owner represents and warrants to
SunTrust that it has rights in all of the Collateral and/or has the power to
transfer rights in all of the Collateral. The execution, delivery and
performance of this Security Agreement, the grant of the security interest in
the Collateral and the consummation of the transactions contemplated will not,
with or without the giving or notice of the lapse of time, (a) violate any
material law applicable to Owner, (b) violate any judgment, writ, injunction or
order of any court or governmental body or officer applicable to Owner, (c)
violate or result in the breach of any material agreement to which Owner is a
party or by which any of Owner’s property, including the Collateral, is bound or
(d) violate any restriction on the transfer of any of the Collateral. The Owner
is and will continue to be the absolute owner of the Collateral and there are no
other liens or security interests affecting the Collateral other than the
security interest granted in this Security Agreement except those previously
disclosed to SunTrust in writing by the Owner and those set forth on Schedule A;
If the Owner is acting in the capacity of trustee, administrator or executor of
an estate, such fact shall be disclosed and satisfactory evidence of capacity
and authorization shall be provided to SunTrust;

 

b.

Check and complete the section which applies.

 

  ☐ The Owner is an individual above the age of majority and has the legal
capacity to enter into this Security Agreement and the Owner’s principal
residence is located in the state of                                   

☒

The Owner is a corporation duly organized and existing under the laws of the
Commonwealth of Virginia and the Owner’s Organizational Identification Number is
VA-0242955-3. The Owner is duly qualified and in good standing as a foreign
corporation in every jurisdiction where such qualification is necessary; the
execution and performance of this Security Agreement have been duly authorized
by action of its Board of Directors. no action of its shareholders being
necessary; the execution and performance of this Security Agreement will not
violate or contravene any provisions of law or regulation or its Articles of
incorporation, Shareholder Agreement, By-Laws or other agreements to which it is
a party or by which it is bound; and no consent or approval of any governmental
agency or authority is required in making or performing the obligations under
this Security Agreement;

  ☐

The Owner is a registered partnership, limited liability company or other
registered entity organized under the laws of the state
of                                                and the Owner’s Organizational
Identification Number
is                                                                  . The Owner
is duly qualified and in good standing to do business in every jurisdiction
where qualification is necessary; the execution and performance of this Security
Agreement have been duly authorized by its partners/ members/managers as
applicable and no further action of any party is necessary; the execution and
performance of this Security Agreement will not violate or contravene any
provisions of law or regulation or any partnership agreement, articles of
organization, operating agreement or other agreement to which it is a party or
by which it is bound; and no consent or approval of any governmental agency or
authority is required in making or performing the obligations under this
Security Agreement;

 

 

 
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  ☐

The Owner is an entity which is not registered; the execution and performance of
this Security Agreement have been duly authorized by all necessary party(ies)
and no further action of any party is necessary; the execution and performance
of this Security Agreement will not violate or contravene any provisions of law
or regulation or agreement to which Owner is a party or by which it is bound;
and no consent or approval of any governmental agency or authority is required
in making or performing the obligations under this Security Agreement; the
Owner’s place of business (if only one place of business) or chief executive
office (if more than one place of business) is located in the state
of                                                                               
;

  

 

c.

Primary Collateral location will be

5290 Concourse Drive, Roanoke, Virginia 24019;

1700 Capital Avenue, Suite 150, Plano, Texas 75074;

3030 Nicholas Avenue NE, Roanoke, Virginia 24012; and/or

33 Superior Way, Swannanoa, North Carolina 28778.

   

The Owner will maintain the Collateral in the above location(s). The Collateral
shall not be moved from the above location(s) without the prior written consent
of SunTrust except in the ordinary course of business or in connection with
consignment sales;

 

d.

The Owner maintains its books and records at

5290 Concourse Drive, Roanoke, Virginia 24019;

1700 Capital Avenue, Suite 150, Plano, Texas 75074;

3030 Nicholas Avenue NE, Roanoke, Virginia 24012; and/or

33 Superior Way, Swannanoa, North Carolina 28778.

 

e.

All information supplied and statements made to SunTrust in any financial
statement are true, correct, complete, valid and genuine in all material
respects;

  f. ☐ (Check if applicable) The Owner further represents that the Collateral is
being acquired with funds simultaneously advanced to the Borrower by SunTrust,
and such funds will be used for no other purpose;

 

g.

No part of the Collateral has been, and never will be so long as this Security
Agreement remains a lien on the Collateral, used for the generation, collection,
manufacture, storage, treatment, disposal, release or threatened release of any
hazardous substance, as those terms are defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C., Section 9601, et seq. (“CERCLA”), Superfund Amendments and
Reauthorization Act (“SARA”), applicable state laws, or regulations adopted
pursuant to either of the foregoing. The Owner agrees to comply with any
federal, state or local law, statute, ordinance or regulation, court or
administrative order or decree or private agreement regarding materials which
require special handling in collection, storage, treatment or disposal because
of their impact on the environment (“Environmental Requirements”). The Owner
agrees to indemnify and hold SunTrust harmless against any and all claims,
losses and expenses resulting from a breach of this provision of this Security
Agreement and the Owner will pay or reimburse SunTrust for all costs and expense
for expert opinions or investigations required or requested by SunTrust which,
in SunTrust’s sole discretion, are necessary to ensure compliance with this
provision of this Security Agreement. The obligation to indemnify shall survive
the payment of the Obligations and the satisfaction of this Security Agreement;
and

 

h.

All Collateral has been produced in compliance with the Fair Labor Standards Act
or other applicable wage and employee law, rule, regulation or order, and that
no existing or future liability shall occur as a result thereof. The Owner may
contest, in good faith, the applicability of any such law, rule, regulation or
order, including prosecuting any appeals, so long as SunTrust’s interest in the
Collateral, in the opinion of SunTrust, is not jeopardized as a result.

 

Choice of Law. Owner agrees that certain material events and occurrences
relating to this Security Agreement bear a reasonable relationship to the laws
of the Commonwealth of Virginia. This Security Agreement shall be governed by
the laws of such jurisdiction and, unless applicable law provides otherwise, in
the event of any legal proceeding arising out of or related to this Security
Agreement, Owner and SunTrust consent to the jurisdiction and venue of the
courts of the City of Roanoke, Virginia, and to the jurisdiction and venue of
the United States District Court for the Western District of Virginia and
further waive and agree not to assert that Owner or SunTrust are not personally
subject to the jurisdiction of such courts, that proceeding is brought in an
inconvenient forum or that venue is improper. Unless otherwise specified,
“Uniform Commercial Code” as used herein shall refer to the Uniform Commercial
Code of such jurisdiction, both current and as it may be amended or revised from
time to time in the future.

 

 

 
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Covenants.

 

a.

The Owner shall furnish to SunTrust such financial and business information and
reports in form and content satisfactory to SunTrust as and when SunTrust may
from time to time require.

 

b.

The Owner, if a corporation, shall maintain its corporate existence, and if
another entity shall maintain such entity standing, in each case in good
standing and shall not consolidate or merge with or acquire the stock or other
ownership interest of any other corporation or entity without the prior written
consent of SunTrust; provided, however, that mergers, consolidations and
acquisitions having consideration of less than $2,000,000 shall not require the
consent of SunTrust; the Owner shall, at the request of SunTrust, qualify as a
foreign corporation or other applicable entity and obtain all requisite licenses
and permits in each jurisdiction where the Owner does business.

 

c.

The Owner shall notify SunTrust in writing at least 30 days prior to any change
of its name or material change to its structure or change in its state of
residence, jurisdiction of registration or organization, principal place of
business or chief executive office.

 

d.

The following shall apply if the Collateral consists of tangible personal
property: The Owner shall maintain all of the Collateral in good condition and
repair. SunTrust shall have the right to inspect the Collateral at any
reasonable time and shall have the right to obtain such appraisals,
reappraisals, appraisal updates or environmental inspections as SunTrust, in its
sole discretion, may deem necessary from time to time. Owner will not use or
permit any person or entity to use the Collateral (i) in any manner inconsistent
with the provisions of this Security Agreement; or (ii) in violation of any
policy of insurance issued with respect to the Collateral; or (iii) in violation
of any local, state or federal law or regulation, including but not limited to
any such law or regulation pertaining to the protection of the environment or
the protection of the health or safety of persons or animals, and any such law
or regulation pertaining to the control of drugs, narcotics or other controlled
substances. If the Collateral has been used or is hereafter used in violation of
the covenants and agreements contained herein, Owner shall indemnify SunTrust
and hold SunTrust harmless against all claims, actions, causes of action, costs,
expenses, fees and penalties in connection with such use. Without the express
prior written consent of SunTrust. Owner shall not cause or permit all or any
part of the Collateral to be affixed to real property so as to become a fixture
as that term is defined or interpreted in the state in which the Collateral is
at any time located.

 

e.

Except for items set forth on Schedule A, the Owner will not pledge or grant any
security interest in any of the Collateral to any person or entity except
SunTrust, or permit any lien or encumbrance to attach to any of the Collateral,
or any levy to be made on the Collateral, or any financing statement (except
financing statements in favor of SunTrust) to be on file against the Collateral.

 

f.

Upon and during the continuance of an Event of Default, Owner hereby constitutes
and appoints any officer or employee of SunTrust as its true and lawful
attorney-in-fact (i) to transfer the Collateral into SunTrust’s name or the name
of its nominee, but SunTrust’s failure to do so shall not be interpreted to be a
waiver of any interest; and (ii) to do and perform all other acts and things
necessary, proper and requisite to carry out the intent of this Security
Agreement. The power herein granted shall be deemed to be coupled with an
interest and may not be revoked until the Obligations have been paid in full,
including all expenses payable by Owner and no amounts may be re-borrowed.

 

g.

The Owner agrees to pay on demand all legal expenses and reasonable attorneys’
fees (in the amount of 15% of the principal and interest secured hereby if this
agreement is governed by the laws of Georgia), as permitted by applicable law,
any appraisal fees and all expenses incurred or paid by SunTrust in protecting
and enforcing the rights of SunTrust under this Security Agreement, including
SunTrust’s right to take possession of the Collateral and its proceeds, and to
hold, prepare for sale, sell and dispose of the Collateral.

 

h.

This Security Agreement shall be a continuing agreement and shall remain in full
force and effect irrespective of any interruptions in the business relations of
the Borrower with SunTrust and shall apply to any ultimate balance which shall
remain due by the Borrower to SunTrust; provided, however, that the Owner may by
written notice terminate this Security Agreement with respect to all Obligations
of the Borrower incurred or contracted by the Borrower or acquired by SunTrust
after the date on which such notice is personally delivered to or mailed via
registered mail to the SunTrust address set forth below and accepted by
SunTrust.

 

i.

The Owner will defend the Collateral against the claims and demands of all
parties. The Owner will not, without prior written consent of SunTrust, grant
any security interest in the Collateral and will keep it free from any lien,
encumbrance or security interest except for items set forth on Schedule A;

 

 

 
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Blanket Security Interest. If the Collateral is identified a Blanket Security
Interest, Owner acknowledges and agrees that this Security Agreement and any
financing statement filed in connection with this Security Agreement is intended
to cover and does cover all assets of the Owner, wherever located, whether now
owned or subsequently acquired or arising and all proceeds and products thereof
and includes, but is not limited to all of the Owner’s:

 

a.

Accounts, insurance refund claims and all other insurance claims and proceeds,
tax refund claims, license fees, rents, contract rights, instruments,
certificates of deposit, documents, tangible chattel paper, electronic chattel
paper, promissory notes, drafts, acceptances and other forms of obligations and
receivables, whether or not earned by performance;

  b. Inventory;

 

c.

Equipment;

 

d.

General Intangibles;

 

e.

Commercial tort claims, letter of credit rights, awards and other payments in
respect of any taking and all insurance proceeds in respect of any of the
foregoing, and all monies and claims for money due and to become due to Owner
under all its Accounts, contract rights, leases and General Intangibles, all
investment property and financial assets, all as said terms are defined in the
Uniform Commercial Code.

 

Accounts. If the Collateral includes Accounts, the following shall apply.

 

a.

The Owner warrants that each and every Account, now owned or hereafter acquired,
is a bona fide existing obligation, valid and enforceable against the account
debtor, for goods sold or leased and delivered or services rendered in the
ordinary course of business; it is subject to no dispute, defense or offset
greater than $200,000 other than those disclosed to SunTrust; the Owner has good
title to the Account and has full right and power to grant SunTrust a security
interest in the Accounts and the Owner will immediately notify SunTrust of any
Account to which these warranties are or become untrue; the Owner agrees that it
will not permit any return of merchandise, the sale of which gave rise to any of
the Accounts, except in the usual and regular course of business;

 

b.

The Owner shall maintain complete and accurate books and records, and its
principal books and records, including all records concerning Accounts, shall be
kept and maintained at the place(s) specified above. The Owner shall not move
such books and records without giving SunTrust at least 30 days prior written
notice. All accounting records and financial reports furnished to SunTrust shall
be maintained and prepared in accordance with generally accepted accounting
principles consistently applied. It is specifically agreed that SunTrust shall
have and the Owner hereby grants to SunTrust a security interest in all books
and records of the Owner and shall have access to them at any time for
inspection, verification, examination and audit;

  c. The Owner will prepare and deliver to SunTrust, at SunTrust’s request from
time to time, a listing and aging of all Accounts and any further schedules or
information with respect to Accounts that SunTrust may require;

 

d.

SunTrust shall have the right at any time during the continuance of an Event of
Default, to notify account debtors of its security interest in the Accounts and
supporting obligations and require payments to be made directly to SunTrust,
During the continuance of an Event of Default, the Owner hereby appoints
SunTrust and any officer or employee of SunTrust, as SunTrust may from time to
time designate, as its attorneys-in-fact for the Owner, to sign and endorse in
the name of the Owner, to give notice in the name of the Owner, and to perform
all other actions necessary or desirable in the reasonable discretion of
SunTrust to effect these provisions and carry out the intent hereof, all at the
cost and expense of the Owner. The Owner hereby ratifies and approves all acts
of such attorneys-in-fact and neither SunTrust nor any other such
attorneys-in-fact will be liable for any acts of commission or omission nor for
any error of judgment. This power being coupled with an interest is irrevocable
so long as any Account or General Intangible pledged to SunTrust remains unpaid
and the Borrower has any unpaid Obligations to SunTrust. The costs of such
collection and enforcement, including reasonable attorneys’ fees and
out-of-pocket expenses, shall be borne solely by the Owner whether the same are
incurred by SunTrust or the Owner;

 

e.

During the continuance of an Event of Default, at the option of SunTrust, all
payments on the Accounts received by the Owner shall be remitted to SunTrust in
their original form on the day of receipt; all notes, checks, drafts and other
instruments so received shall be duly endorsed to the order of SunTrust. During
the continuance of an Event of Default, at SunTrust’s election, the payments
shall be deposited into a special deposit account (“Special Account”) maintained
with SunTrust. SunTrust may designate with each such deposit the particular
Account-upon which payment was made. The Special Account shall be held by
SunTrust as additional security for the Obligations. Prior to depositing
payments on the Accounts into the Special Account, the Owner agrees that it will
not commingle such payments with any of the Owner’s funds or property, but will
hold them separate and apart and in trust for SunTrust. SunTrust will have the
power to withdraw funds from the Special Account. SunTrust may at any time and
from time to time, in its sole discretion, apply any part of the funds in the
Special Account to the Obligations whether or not the same is due. Upon full and
final satisfaction of the Obligations (including without limitation all fees and
expenses owing to SunTrust or its attorneys), plus termination of any commitment
to extend additional funds, SunTrust will pay to the Owner any excess funds,
whether received by SunTrust as a deposit in the Special Account or as a direct
payment on any of the Accounts;

 

 
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f.

If any of the Owner’s Accounts arise out of contracts with the United States or
any department, agency, or instrumentality thereof, the Owner will immediately
notify SunTrust in writing and execute any instruments and take any steps
required by SunTrust in order that all moneys due and to become due under such
contracts shall be assigned to SunTrust and in order that proper notice be given
under the Federal Assignment of Claims Act;

 

g.

SunTrust shall not be liable and shall suffer no loss on account of loss or
depreciation of any Account due to acts or omissions of SunTrust unless
SunTrust’s conduct is willful and malicious, and SunTrust shall have no duty to
take any action to preserve the Collateral or collect Accounts:

 

h.

Upon request by SunTrust, the Owner will note on its records concerning the
Accounts, a notation of the security interest under this Security Agreement,
which notation must be satisfactory to SunTrust in both form and content;

 

i.

During the continuance of an Event of Default, SunTrust may enforce collection
of any Account and supporting obligation by suit or otherwise and may surrender,
release or exchange all or any part thereof, or compromise, extend or renew the
same for any period. All monies so received by SunTrust may in SunTrust’s sole
discretion, be either (i) applied by SunTrust directly toward payment of all or
any part of the Obligations, whether or not then due, in such order of
application as SunTrust may determine; or (ii) deposited to the credit of
Borrower or in an account with SunTrust as security for payment of the
Obligations and SunTrust may, from time to time, in its sole discretion, permit
Borrower to use all or any part of the funds on deposit in said account in the
normal course of business. Owner will promptly reimburse SunTrust for all
expenses, including reasonable attorneys’ fees and legal expenses, incurred by
SunTrust in seeking to collect on or enforce collection of such amounts; and

 

j.

During the continuance of an Event of Default, Owner will forthwith, upon
receipt, transmit and deliver to SunTrust, in the form received, all cash,
checks, drafts, items, chattel paper and other instruments or writing for the
payment of money (properly endorsed, where required, so that such items may be
collected by SunTrust) which may be received by Owner at any time in full or
partial payment or otherwise as proceeds of any of the Accounts. After such
notice from SunTrust, Owner will not commingle any such proceeds with any other
of its funds or property, but will hold them separate and apart from Owner’s own
funds or property and in express trust for SunTrust until delivery is made to
SunTrust, and

 

k.

During the continuance of an Event of Default, to protect SunTrust’s rights
hereunder, Owner hereby constitutes any officer or employee of SunTrust its true
and lawful attorney-in-fact with full power of substitution to endorse or sign
the name of Owner upon any invoice, freight or express bill, or bill of lading
relating to any Account covered hereby and to notify the post office authorities
to change the address for delivery of Owner’s mail relating to the Accounts to
an address designated by SunTrust and to receive, open, and dispose of all mail
relating to the Accounts addressed to Owner and to do and perform all other acts
and things necessary, proper and requisite to carry out the intent of this
Security Agreement, This power shall be deemed to be coupled with an interest
and may not be revoked by Owner until the Obligations have been paid in full.

 

Inventory. If the Collateral includes Inventory, the following shall apply:

 

a.

The Owner agrees to maintain books and records pertaining to the Inventory in
such detail, form and scope as SunTrust shall require. The Owner shall promptly
advise SunTrust of any substantial changes relating to the type, or quantity of
the Inventory or any event which would have a material effect on the value of
the Inventory or on the security interest granted to SunTrust.

 

b.

If the Inventory remains in the possession or control of any of the Owner’s
agents or processors, the Owner shall notify such agents or processors of
SunTrust’s security interest, and, during the continuance of an Event of
Default, shall instruct them to hold such Inventory for SunTrust’s account and
subject to SunTrust’s instruction.

 

c.

The Owner will prepare and deliver to SunTrust, at SunTrust’s request from time
to time, a listing of all Inventory and such information regarding the Inventory
as SunTrust may require.

 

d.

During the continuance of an Event of Default, SunTrust may require the Owner to
assemble the Inventory and make it available to SunTrust at a place to be
designated by SunTrust which is reasonably convenient. During the continuance of
an Event of Default. SunTrust may take possession of the Inventory without a
court order.

 

 
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e.

Except during the continuance of an Event of Default hereunder, Owner may,
unless otherwise provided in this Security Agreement, in the ordinary course of
business, at its own expense, sell, lease or furnish under contract of service
any of the Inventory normally held by Owner for such purpose.

 

Insurance, Taxes and Assessments. The Owner shall at all times keep insurable
Collateral insured against any and all risks, including, without limitation,
fire, and such other insurance, including but not limited to flood insurance, as
may be required by SunTrust from time to time, and in such amounts as may be
satisfactory to SunTrust. Insurance may be purchased from an insurer of the
Owner’s choice, except as otherwise required by law. All such insurance policies
are to be made payable to SunTrust, in the event of loss, under a standard
non-contributory ‘mortgagees”, “lenders”, or “secured party” clause and shall
contain a breach of warranty provision acceptable to SunTrust which shall
establish SunTrust’s right to be paid the insurance proceeds irrespective of any
action, inaction, breach of warranty or conditions, or negligence of Owner or
any other person or entity with respect to such policies. All such insurance
policies shall provide for a minimum of thirty days written notice to SunTrust
prior to cancellation. During the continuance of an Event of Default, Owner
appoints SunTrust attorney-in-fact to file claims under any insurance policies,
to receive, receipt and give acquittance for any payments that may be payable to
Owner hereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments, or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies, which power of attorney shall be deemed coupled with an interest and
irrevocable so long as SunTrust has a security interest in any of the
Collateral. Owner shall provide proof of such insurance as requested by
SunTrust. The Owner shall pay and discharge all taxes; assessments and charges
of every kind prior to the date when such taxes; assessments or charges shall
become delinquent and provide proof of such payments to SunTrust, upon request.
However, nothing contained in this Security Agreement shall require the Owner to
pay any such taxes, assessments and charges so long as it shall contest its
validity in good faith and shall post any bond or security required by SunTrust
against the payment. Upon the failure of the Owner to purchase required
insurance or to pay such required amounts, SunTrust, at its option, and at the
Owner’s expense, may obtain such insurance or pay such taxes, assessments, and
charges. In addition, SunTrust may from time to time, in its sole discretion,
perform any undertakings of the Owner which the Owner shall fail to perform and
take any other action which SunTrust deems necessary for the maintenance or
preservation of any of the Collateral. Any amounts so paid shall be included in
the Obligations secured by the Collateral. At SunTrust’s request, the Owner
agrees to promptly reimburse SunTrust on demand for all such expenses incurred
by SunTrust, together with interest thereon from the date paid by SunTrust at
the highest rate payable on the Obligations. Any insurance obtained by SunTrust,
at its option, may be single or dual interest, protecting its rights, rights of
the Owner or joint rights. Any insurance obtained by SunTrust may provide, at
its option, that such insurance will pay the lesser of the unpaid balance of the
Obligations or the repair or replacement value of the Collateral. SunTrust may
use the proceeds of any insurance obtained by Owner or by SunTrust to repair or
replace the Collateral or, if SunTrust elects to do so, to repay part or all of
the Obligations, whether or not then due, and in such order as SunTrust may
determine, and the Borrower will still be responsible to repay any remaining
unpaid balance of the Obligations. The whole or partial loss or destruction of
all or any part of the Collateral shall not affect or impair the obligation of
any person or entity liable under the Obligations. 

 

Deposit Accounts. If the Collateral includes deposit accounts, the Collateral
shall include all demand, time, savings, passbook and other deposit accounts of
the Owner with all banks, credit unions, savings and loan associations and other
financial institutions which are now owned or hereafter acquired by the Owner or
in which the Owner now has or hereafter acquires any right, title or interest,
together with all proceeds of the deposit accounts. 

 

 

 
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Additional Covenants and Agreements if Borrower is Different than Owner. If
Borrower is different than Owner, then so long as any of the Obligations remain
outstanding or so long as this Security Agreement shall remain in effect Owner
covenants and agrees as follows: (a) Owner hereby expressly consents to and
adopts any agreements which Borrower has entered into or will enter into with
SunTrust regarding any of the Obligations or the Collateral; (b) Owner hereby
agrees that the Collateral shall be subject to disposition in accordance with
the terms and conditions of this Security Agreement and any agreements executed
by Borrower in connection with any of the Obligations or the Collateral, (c)
Owner will not be subrogated to SunTrust’s rights to any other collateral and
any proceeds thereof in which SunTrust holds a security interest to secure
payment of any of the Obligations; (d) Owner agrees that SunTrust may at any
time and from time to time, without notice to, or the consent of, Owner: (i)
retain any of the Collateral in satisfaction of any of the Obligations to the
extent permitted by applicable law, (ii) retain or obtain a security interest or
lien in any property in addition to the Collateral to secure payment or
performance of any of the Obligations, (iii) allow or cause any Obligations to
be incurred, (iv) retain or obtain persons or entities that are primarily or
secondarily obligated upon any of the Obligations other than the Borrower, (v)
extend or renew any of the Obligations for any period (whether or not longer
than the original term), (vi) release, compromise or modify any of the
Obligations, (vii) release, in whole or in part, any person or entity primarily
or secondarily obligated upon any of the Obligations or enter into any
compromise with respect to the obligation of any such person or entity relative
to any of the Obligations, (viii) release with or without consideration,
SunTrust’s security interest or lien in any property other than the Collateral
which may at any time secure payment or performance of any of the Obligations,
(ix) accept substitutions or exchanges for any property other than the
Collateral which may at any time secure payment or performance of any of the
Obligations, (x) exercise its rights as a secured party and dispose of the
Collateral without having first resorted to any property securing any of the
Obligations other than the Collateral and without having first proceeded against
or demanded payment from any person or entity primarily or secondarily obligated
upon any of the Obligations; and (e) Owner specifically waives any and all
rights pursuant to O.C.G.A. Sec. 10-7-24 or T.C.A. Sec. 47-12-101 et seq. if
this Security Agreement is governed by the laws of Georgia or Tennessee and the
same or similar provision contained in the Uniform Commercial Code of any other
state or states which may govern this Security Agreement.

 

Events of Default. As used herein the term “Obligor” shall individually,
collectively, jointly and severally refer to Borrower, Owner and any other
person or entity that is primarily or secondarily liable upon all or any part of
the Obligations secured hereby and any person or entity that has conveyed or may
hereafter convey any security interest or lien to SunTrust in any real or
personal property to secure payment of all or any part of the Obligations.
Unless prohibited by applicable law, an “Event of Default” shall occur hereunder
upon the occurrence of any one or more of the following events or conditions:

 

a.

the failure by any Obligor to pay when due, whether by acceleration or
otherwise, any sum constituting all or any part of the Obligations;

 

b.

the failure of any Obligor to perform any covenant, promise or obligation
contained in this Security Agreement, any document evidencing any of the
Obligations, or any other agreement to which any Obligor and SunTrust are
parties, any of which continues for 30 days after Borrower has received written
notice thereof;

 

c.

the breach of any of Obligor’s representations or warranties in this Security
Agreement or any other agreement with SunTrust which breach continues for 30
days after Borrower has received written notice thereof;

 

d.

the failure of any Obligor to pay when due any amount owed to any creditor other
than SunTrust under a written agreement calling for the payment of money except
for amounts disputed by Obligor in good faith, which failure continues for 30
days after Borrower has received written notice thereof from such creditor;
provided that, for any such dispute involving an amount greater than $200,000,
Borrower shall provide SunTrust with a copy of such notice and the failure to do
so shalt constitute a default hereunder;

 

e.

the death, declaration of incompetency, dissolution, liquidation, termination or
suspension of usual business of any Obligor or merger or consolidation having an
aggregate consideration of more than $2,000,000;

 

f.

intentionally deleted;

 

g.

the insolvency or inability to pay debts as they mature of any Obligor, the
filing of any petition or the commencement of any proceeding by an Obligor for
relief under any bankruptcy or insolvency law, or any law relating to the relief
of debtors, readjustment of indebtedness, debtor reorganization, or composition
or extension of debt;

 

h.

the entry of a judgment or the issuance or service of any attachment; levy or
garnishment against any Obligor or the property of any Obligor or the
repossession or seizure of property of any Obligor that is greater than
$200,000;

 

i.

any deterioration or impairment of the tangible Collateral or Accounts or any
decline or depreciation in the value of the tangible Collateral or Accounts
which causes a material reduction in the value of tangible Collateral or
Accounts in the judgment of SunTrust;

 

j.

a determination by SunTrust that a material adverse change in the financial
condition of Borrower has occurred since the date of this Security Agreement
that, in the sole determination of SunTrust, would likely result in Borrower’s
failure to satisfy a financial covenant set forth in the Agreement;

 

k.

any Obligor commits fraud or makes a material misrepresentation at any time in
connection with this Security Agreement, the Obligations or the Collateral;

 

l.

except in the ordinary course of business or in connection with consignment
sales, the Collateral or any part thereof is located for more than thirty
consecutive days outside the state or states in which the Collateral is to be
located pursuant to this Security Agreement or if the Collateral or any part
hereof is removed from such state with the intent that it will be located
outside such state for more than thirty days;

 

 
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m.

should the state of organization or registration of Owner (if an entity) change;
or

 

n.

any other act or circumstances leading SunTrust to deem itself insecure.

 

Remedies Upon Default; Acceleration of Obligations. Unless prohibited by
applicable law, the Obligations secured hereby shall automatically and
simultaneously mature and become due and payable, without notice or demand, upon
the filing of any petition or the commencement of any proceeding by or against
an Obligor for relief under any bankruptcy or insolvency law, or any law
relating to the relief of debtors, readjustment of indebtedness, debtor
reorganization, or composition or extension of debt: Unless prohibited by
applicable law, upon the occurrence of any one or more of the other Events of
Default described above, the Obligations secured hereby shall, at the option of
SunTrust, immediately mature and become due and payable, without notice or
demand. If all or any part of the Obligations secured hereby are not paid as and
when due and payable, whether by acceleration or otherwise, which failure
continues for 5 days after Borrower has received written notice thereof, then
SunTrust may, at its option, without notice or demand of any kind: (a) transfer
all or any part of the Collateral into the name of SunTrust or its nominee, at
Owner’s expense, with or without disclosing that such Collateral is subject to
SunTrust’s security interest; (b) enter upon premises upon which the Collateral
is located and, to the extent permitted by law without legal process, take
exclusive possession of the Collateral, and redeem the Collateral, or any part
thereof (irrespective of redemption penalty); (c) appropriate and apply toward
payment of such of the Obligations, and in such order of application, as
SunTrust may from time to time elect, all or any part of any balances, credits,
items or monies in any bank deposit or deposit account constituting a part of
the Collateral; (d) sell the Collateral at public or private sale, either in
whole or in part, and SunTrust may purchase the Collateral at any such public
sale and at any private sale as permitted by law. Such sale shall result in the
sale, conveyance and disposition of all right, title and interest of Owner in
all or any part of the Collateral which is the subject of such a disposition and
SunTrust is authorized as attorney-in-fact for Owner to sign and execute any
transfer, conveyance or instrument in writing that may be necessary or desirable
to effectuate any such disposition of the Collateral, which power shall be
coupled with an interest; and (e) exercise all other rights of a secured party
under the Uniform Commercial Code and all other rights under law or pursuant to
this Security Agreement, all of which shall be cumulative. If any notification
of intended disposition of any Collateral is required by law, reasonable
notification shall be deemed given if written notice is deposited in the U.S.
Mail, first class or certified postage prepaid, addressed to Owner and such
other persons or entities as SunTrust deems to be appropriate, stating all items
required by applicable statutes, including the time and place of any public sale
or the time after which any private sale or disposition is to be made, at least
ten (10) days prior thereto. The proceeds of any disposition of the Collateral
shall be applied in the following order (i) First, to pay all costs and expenses
associated with the retaking, holding, preparation and disposition of the
Collateral; (ii) Then to pay attorneys’ fees; (iii) Next, to pay all accrued but
unpaid interest upon the Obligations in such order as SunTrust may determine in
its discretion; and (iv) Finally, to all unpaid principal outstanding upon the
Obligations, whether or not due and payable, in such order as SunTrust may
determine in its discretion. Any remaining surplus shall be paid to Owner or
otherwise in accordance with law. If the proceeds of such disposition are
insufficient to pay the Obligations in full, Borrower and all other persons or
entities liable thereon shall remain fully obligated to SunTrust for the unpaid
balance thereof.

 

Execution by More than One Party. To the extent permitted by applicable law, the
term “Owner” as used in this Security Agreement shall, if this instrument is
signed by more than one party, mean the “Owner and each of them” and each shall
be jointly and severally obligated and liable. If any party is a partnership or
limited liability company, the agreements and obligations on the part of the
Owner shall remain in force and applicable regardless of any changes in the
parties composing the partnership or limited liability company and the term
“Owner” shall include any altered or successive partnership or limited liability
company and the predecessor partnership or limited liability company and its
partners or members/managers shall not be released from any obligation or
liability.

 

Waivers by the Owner. The Owner hereby waives (a) notice of acceptance of this
Agreement and of any extensions or renewals of credit by SunTrust to the
Borrower; (b) presentment and demand for payment of the Obligations; (c) protest
and notice of dishonor or default to the Owner or to any other party with
respect to the Obligations; (d) all other notices to which the Owner might
otherwise be entitled; and (e) if for business purposes, the benefit of any
homestead exemption. To the extent permitted by applicable law, the Owner
further waives any right to require that any action be brought against the
Borrower or any other party, the right to require that resort be had to any
security or to any balance of any deposit account or credit on the books of
SunTrust in favor of the Borrower or any other party, the right to redeem the
Collateral and to object to SunTrust’s proposal to retain the Collateral in
satisfaction of any of Obligations and any right to obtain injunctive or other
relief relative to SunTrust’s sale or other disposition of the Collateral and to
recover losses caused by SunTrust’s failure to approve or correct any list of
Collateral provided to SunTrust for any purpose by any person or entity. Owner
waives all rights, claims and defenses based on principles of suretyship.

 

 

 
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No Obligation to Extend Credit. This Security Agreement shall not be construed
to impose any obligation on SunTrust to extend or continue to extend any credit
at any time.

 

Indemnity. The Owner agrees to indemnify and hold harmless SunTrust; its
subsidiaries, affiliates, successors, and assigns and their respective agents,
directors, employees, and officers from and against any and all complaints,
claims, defenses, demands, actions, bills, causes of action (including, without
limitation, costs and reasonable attorneys’ fees), and losses of every nature
and kind whatsoever, which may be raised or sustained by any directors,
officers, employees, shareholders,- creditors, regulators, successors in
interest, or receivers of the Borrower or any third party as a result of or
arising out of, directly or indirectly, SunTrust extending credit as evidenced
by the Obligations to the Borrower, and taking the Collateral as security for
the Obligations, and the Owner agrees to be liable for any and all judgments
which may be recovered in any such action, claim, proceeding, suit, or bill,
including any compromise or settlement thereof, and defray any and all expenses,
including, without limitation, costs and reasonable attorneys’ fees, that may be
incurred in or by reason of such actions, claims, proceedings, suits, or bills.
This obligation to indemnify shall survive the payment of the Obligations and
the satisfaction of this Security Agreement.

 

Financing Statements and Additional Documentation. SunTrust is authorized to
file such financing statements and amendments as SunTrust deems necessary to
perfect, continue or assure its security interest in the Collateral and the
Owner hereby ratifies any financing statement filed previously by SunTrust. The
Owner will deliver such instruments of future assignment or assurance, and such
other agreements, as SunTrust may from time to time request to carry out the
intent of this Security Agreement, and will join with SunTrust in executing any
documents in form satisfactory to SunTrust, and hereby authorizes SunTrust to
sign for Owner, or to file without signature, any financing statements,
amendments and other documents and instruments from time to time as SunTrust may
deem advisable, and pay any cost of filing the same, including all recordation,
transfer, indebtedness and other taxes and fees, deemed advisable by SunTrust.

 

Successor in Interest: SunTrust as Collateral Agent. This Security Agreement
shall be binding upon the Owner, its successors and assigns, and the benefits
hereof shall inure to SunTrust, its successors and assigns. Notwithstanding the
foregoing, Owner shall not assign Owner’s rights or obligations under this
Security Agreement without SunTrust’s prior written consent. SunTrust Bank shall
serve as collateral agent on behalf of itself and present and future affiliates.

 

Miscellaneous. (a) Each and every power given herein is coupled with an interest
and is irrevocable by death or otherwise. (b) The captions of the paragraphs of
this Security Agreement are for convenience only and shall not be deemed to
constitute a part hereof or used in construing the intent of the parties. (c) If
any part of any provision of this Security Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective to the extent
of such invalidity only, without in any way affecting the remaining parts of
such provision or the remaining provisions of this Security Agreement. (d) This
Security Agreement shall not be modified or amended except in a writing signed
by Owner and SunTrust. (e) All representations, warranties, covenants and
agreements contained herein or made in writing by Owner in connection herewith
shall survive the execution and delivery of this Security Agreement and any and
all notes, other agreements, documents and writings relating to or arising out
of any of the foregoing or any of the Obligations. (f) All rights and remedies
of SunTrust expressed herein are in addition to all other rights and remedies
possessed by SunTrust under applicable law or other agreements, including rights
and remedies under any other agreement or instrument relating to any of the
Obligations or any security therefor. (g) No waiver by SunTrust of any of its
rights or remedies or of any default shall operate as a waiver of any other
right or remedy or of any other default or of the same right or remedy or of the
same default on a future occasion. No delay or omission on the part of SunTrust
in exercising any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by SunTrust of any right or remedy shall preclude any
other or further exercise thereof or the exercise of any other right or remedy.
No action of SunTrust permitted hereunder or under any agreement or instrument
relating to any of the Obligations or any security therefor shall impair or
affect the rights of SunTrust in and to the Collateral. (h) All terms as defined
herein shall include both the plural and singular, where applicable. (i) All
notices or communications given to Owner or SunTrust pursuant to the terms of
this Security Agreement shall be in writing and given to Owner and SunTrust at
the address set forth below. Unless otherwise specifically provided herein to
the contrary, such written notices and communications shall be delivered by hand
or overnight courier service, or mailed by first class mail, postage prepaid,
addressed to the parties hereto at the addresses referred to herein or to such
other addresses as either party may designate to the other party by a written
notice given in accordance with the provisions of this Security Agreement. Any
written notice delivered by hand or by overnight courier service shall be deemed
given or received upon receipt. Any written notice delivered by U.S. Mail shall
be deemed given or received on the third (3rd) business day after being
deposited in the U.S. Mail. (j) SunTrust shall not be responsible or liable for
its failure to give notice to Owner of any default in the payment of any amounts
that might become due and owing with respect to the Collateral nor shall
SunTrust be responsible or liable for SunTrust’s failure to collect any amounts
payable with respect to the Collateral. (k) SunTrust shall be under no
obligation to monitor the market value of any Collateral, to advise the Owner of
such market value, or to take any action whatsoever to preserve the value of any
Collateral by selling, exchanging or otherwise disposing of such Collateral in
order to avoid any loss to the Owner resulting from a decline in the market
value of such Collateral. (l) SunTrust shall be under no obligation to pay any
amounts owing with respect to any Collateral. (m) This Agreement is in addition
to and not in replacement of any other agreement between Owner and SunTrust. (n)
The term Owner shall include all persons signing below as Owner and the
obligation of such Owners hereunder shall be their joint and several
obligations.

 

 

 
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WAIVER OF JURY TRIAL. OWNER AND SUNTRUST HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT
TO ANY LITIGATION, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, BASED
HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SECURITY AGREEMENT
AND ANY OTHER DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION
WITH THIS SECURITY AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR SUNTRUST ENTERING INTO OR ACCEPTING THIS
SECURITY AGREEMENT. FURTHER, OWNER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR
AGENT OF SUNTRUST, NOR SUNTRUST’S COUNSEL, HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUNTRUST WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.

 

 

[SIGNATURE PAGES FOLLOW]

 

 
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SIGNATURE PAGE TO

AMENDED AND RESTATED SECURITY AGREEMENT

 

 

 

The undersigned have executed this Security Agreement as of the date first
written above.

 

 

 

OWNER:

 

 

OPTICAL CABLE CORPORATION, a Virginia corporation

 

 

By:           /s/ Tracy G. Smith                     (SEAL)

Name:     Tracy G. Smith

Title:       SVP and CFO

 

 

 

 

 

Addresses

 

Owner Address for Purpose of Notice             5290 Concourse
Drive                                   

Roanoke, Virginia 24019

 

SunTrust Address for Purpose of Notice        10 Franklin
Road                                   

Richmond, Virginia 24011

 

 
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SCHEDULE A TO

AMENDED AND RESTATED SECURITY AGREEMENT

 

 

 

 

 

(a) Liens arising in connection with any court proceedings in the aggregate
amount of no more than $200,000 at any one time; (b) carriers’ warehousemen’s,
suppliers’ or other similar possessory liens arising in the ordinary course of
business and securing liabilities in an outstanding aggregate amount not in
excess of $200,000 at any time, so long as such liens attach only to Inventory;
(c) pledges or deposits of money securing bids, tenders, contracts (other than
contracts for the payment of money) or leases to which Owner is a party as
lessee made in the ordinary course of business; (d) deposits securing, or in
lieu of, surety, appeal or customs bonds in proceedings to which Owner is a
party; (e) purchase money liens incurred in the ordinary course of business for
purchase of equipment, and (f) liens and security interests in favor of Valley
Bank, IOS Capital and IKON Financial Services (together with any renewals,
replacements or extensions thereof) and liens and security interests in
connection with leases including, without limitation, leasing of equipment and
capital leases.

 

 

 

 

 

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