Exhibit 10.1

Customer No.                    
Loan No.                    

     
RBC Centura
  WAIVER AND FIRST AMENDMENT TO

  LOAN AGREEMENT

     THIS WAIVER AND FIRST AMENDMENT TO LOAN AGREEMENT (“Waiver and First
Amendment”), is entered into effective as of November 15, 2004, by and among
VERILINK CORPORATION, a Delaware corporation (“Verilink”) and LARSCOM
INCORPORATED, a Delaware corporation (“Larscom”; Verilink and Larscom are
collectively referred to herein as “Borrower”) and RBC CENTURA BANK (“Bank”).

     A. Bank has extended certain financial accommodations pursuant to that
certain Loan and Security Agreement, dated April 8, 2004 (the “Loan Agreement”),
by and among Verilink, V-X Acquisition Company (“V-X”), XEL Communications, Inc.
(“XEL”) and Bank.

     B. V-X and XEL have been merged into Verilink and no longer exist as
separate entities.

     C. Larscom has become a wholly-owned subsidiary and has agreed to join
Verilink as a “Borrower” under the Loan Agreement.

     D. Verilink has informed Bank that it is currently in default under the
Loan Agreement due to its failure to comply with certain financial maintenance
covenants under Section 6.8 of the Loan Agreement.

     E. Verilink has requested that Bank waive any Events of Default caused by
its failure to be in compliance with the financial maintenance covenants and to
amend the Loan Agreement to change the requirements of those financial
maintenance covenants.

     F. Bank is willing to waive such non-compliance and to amend the terms of
the Loan Agreement upon the terms and conditions set forth herein.

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Bank hereby agree as
follows:

     1. Definitions. Capitalized terms used in this Waiver and First Amendment
and not otherwise defined herein shall have the meanings ascribed to those terms
in the Loan Agreement.

     2. Committed Revolving Line Amendment. As of the date of this Waiver and
First Amendment, the Credit Agreement is amended by deleting the definition of
“Committed Revolving Line” in its entirety and inserting in lieu thereof a new
definition as follows:

     “Committed Revolving Line” means Credit Extensions of up to $3,500,000.

     3. Financial Statements; Reports; Certificates Amendment. As of the date of
this Waiver and First Amendment, the Loan Agreement is amended by deleting
Section 6.4 in its entirety and inserting in lieu thereof a new Section 6.4 as
follows:

     6.4 Financial Statements; Reports; Certificates.

 

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               (a) Borrower shall deliver to Bank each and all of the financial
statements, reports, certificates and other records referenced under this
subsection (a) and such other statements, reports, certificates and records as
Bank may reasonably request from time to time.

                    (i) As soon as available, but in any event within twenty
(20) days after the end of each fiscal month, other than the last fiscal month
in each fiscal quarter, the timing for which shall coincide with Borrower’s
delivery of the Compliance Certificate, Borrower shall deliver to Bank an
unaudited consolidated balance sheet and a statement of income, retained
earnings, and cash flow prepared in accordance with GAAP on a basis consistent
with Borrower’s quarterly consolidated financial statements, but excluding notes
thereto, covering Borrower’s consolidated operations during such period, in a
form reasonably acceptable to Bank and certified by the chief financial officer
of Borrower or such other officer approved by Bank.

                    (ii) As soon as available, but in any event within twenty
(20) days after the end of each fiscal month, (i) a monthly variance report
supplementing the monthly income statement required to be submitted, showing
deviations from management’s most recent financial plan, and (ii) monthly sales
forecast, pipeline and backlog reports prepared under normal course of
operations.

                    (iii) Beginning with the fiscal year ending July 2, 2004, as
soon as available, but in any event within one hundred twenty (120) days after
the end of Borrower’s fiscal year, Borrower shall deliver to Bank audited
consolidated financial statements of Borrower (including a balance sheet, an
income statement and a statement of retained earnings, each with the related
notes and changes in the financial position for such year and setting forth in
comparative form the figures for the prior year) prepared in accordance with
GAAP, consistently applied, together with an opinion on such financial
statements that is unqualified or qualified in a manner acceptable to Bank from
an independent certified public accounting firm reasonably acceptable to Bank,
together with (A) a certificate of the chief financial officer of Borrower, or
other officer approved by Bank, stating that no default has occurred and is
continuing or, if a default has occurred and is continuing, a statement as to
the nature thereof and the action that Borrower has taken and proposes to take
with respect thereto, (B) in the event of any change from GAAP in the generally
accepted accounting principles used in the preparation of such financial
statements, a statement of reconciliation conforming such financial statements
to GAAP and (C) notes to the consolidated financial statements.

                    (iv) If applicable, Borrower shall deliver to Bank copies of
all statements, reports and notices sent or made available generally by Borrower
to its security holders or to any holders of Subordinated Debt and all reports
on Forms 10-K and 10-Q filed with the Securities and Exchange Commission.

                    (v) Promptly upon receipt of notice thereof, Borrower shall
deliver to Bank a report of any legal actions pending or threatened against
Borrower or any Subsidiary that could result in damages or costs to Borrower or
any Subsidiary of Fifty Thousand Dollars ($50,000) or more.

                    (vi) Borrower shall deliver to Bank such budgets, sales
projections, operating plans or other financial information generally prepared
by Borrower in the ordinary course of business as Bank may reasonably request
from time to time.

                    (vii) Within twenty (20) days after the last day of each
fiscal quarter, Borrower shall deliver to Bank a report signed by Borrower, in
form reasonably

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acceptable to Bank, listing any applications or registrations that Borrower has
made or filed in respect of any Patents, Copyrights or Trademarks and the status
of any outstanding applications or registrations, as well as any change in
Borrower’s Intellectual Property Collateral, including, but not limited to, any
subsequent ownership right of Borrower in or to any Trademark, Patent or
Copyright not specified in Exhibits A, B and C to the Intellectual Property
Security Agreement delivered to Bank by Borrower in connection with this
Agreement.

                    (viii) Upon the reasonable request by Bank, which shall not
be unreasonably denied, Borrower shall deliver to Bank copies of written
communications from, to or of Borrower’s board of directors or, if there is no
written record, a written summary of such communications.

               (b) On or before the twentieth (20th) calendar day of each fiscal
month, Borrower shall deliver to Bank a Borrowing Base Certificate dated and
signed by a Responsible Officer (acceptable to the Bank) in substantially the
form of Exhibit D hereto (or such other form as shall be reasonably required by
the Bank) that provides the required information that is current as of the prior
month end, together with a report showing the aged listings of accounts
receivable and accounts payable as of the prior month end.

               (c) On or before the twentieth (20th) calendar day of each fiscal
month, Borrower shall deliver to Bank for the last fiscal month a Compliance
Certificate signed by a Responsible Officer (acceptable to the Bank) in
substantially the form of Exhibit E hereto.

               (d) On or prior to the beginning of each fiscal year of Borrower,
Borrower shall deliver to Bank a detailed annual budget.

               (e) Borrower shall permit Bank directly and through another
person on Bank’s behalf and Bank shall have a right from time to time hereafter,
directly and through another person on Bank’s behalf, to audit Borrower’s
Accounts and appraise Collateral at Borrower’s expense; provided, however, that
if there has been no Event of Default by Borrower Bank my exercise this right no
more than once per year.

     4. Primary Depository Amendment. As of the date of this Waiver and First
Amendment, the Loan Agreement is amended by deleting Section 6.7 in its entirety
and inserting in lieu thereof a new Section 6.7 as follows:

Primary Depository. Borrower shall maintain from and after November 30 2004, its
primary operating and depository accounts with Bank. Borrower shall provide
written notice to Bank of any other accounts held by Borrower or any Subsidiary
not deemed “primary” (“Secondary Accounts”). All Secondary Accounts shall be
transferred to Bank or made subject to an Account Control Agreement acceptable
to Bank, in its sole discretion, by November 30, 2004.

     5. Financial Covenants Amendment. As of the date of this Waiver and First
Amendment, the Loan Agreement is amended by deleting Section 6.8 in its entirety
and inserting in lieu thereof a new Section 6.8 as follows:

6.8 Financial Covenants. Borrower shall maintain, as of the last day of each
fiscal month unless stated otherwise, and Borrower shall fully and timely comply
with, each

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and every one of the financial maintenance covenants set forth in this Section
and others that may be contained in this Agreement and the other Loan Documents.

               (a) Liquidity Ratio. A ratio of (i) unrestricted cash and
equivalents plus Net Accounts Receivable to (ii) all Indebtedness to Bank of at
least 2.00 to 1.00.

               (b) Tangible Net Worth. Tangible Net Worth of at least
$5,000,000.

               (c) Minimum Adjusted EBITDA. Minimum Adjusted EBITDA of (i) a
loss not exceeding $700,000 for the second fiscal quarter ending December 31,
2004, (ii) $0 for the three fiscal months ending January 28, 2005, (iii)
$300,000 for the three fiscal months ending February 25, 2005, (iv) $500,000 for
the three fiscal months ending April 1, 2005, and (v) $500,000 measured on a
rolling three month basis thereafter.

     6. Adjusted EBITDA Definition Amendment. As of the date of this Waiver and
First Amendment, the Loan Agreement is amended by adding the definition of
“Adjusted EBITDA” to Exhibit A of the Loan Agreement as follows:

“Adjusted EBITDA” Adjusted EBITDA means the total of (i) net income from
continuing operations (excluding extraordinary gains or losses), and to the
extent deducted in determining net income, (ii) Interest Expense and interest
income, (iii) income taxes, (iv) depreciation, depletion and amortization
expenses, (v) restructuring charges, and (vi) impairments of intangible assets,
including goodwill.

     7. Interest Expense Definition Amendment. As of the date of this Waiver and
First Amendment, the Loan Agreement is amended by adding the definition of
“Interest Expense” to Exhibit A of the Loan Agreement as follows:

“Interest Expense” means for any period for which the amount thereof is to be
determined, the consolidated interest expense of Borrower and its Subsidiaries,
including all interest on Funded Debt, all amortization of Indebtedness, all
fees payable in connection with the incurrence of such debt (to the extent
included in interest expense), and the interest portion of any deferred payment
obligation, to the extent required to be reflected on the income statement of
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP.

     8. Affirmative Covenant/Real Property Collateral Amendment. As of the date
of this Waiver and First Amendment, the Loan Agreement is amended by adding the
following provision to the Loan Agreement as Section 6.14 as follows:

6.14. Additional Collateral. Upon the occurrence of an Event of Default,
Borrower shall grant Bank a second-priority perfected security interest in the
real property (and all buildings, fixtures and improvements thereon) located at
950 Explorer Boulevard, Huntsville, Alabama (the “Real Property Collateral”) by
executing such instruments, agreements, documents or other records required by
Bank and taking such actions as may be requested by Bank to secure and perfect a
security interest in the Real Property Collateral on terms acceptable to Bank,
in its sole discretion. Borrower shall keep and maintain the Real Property
Collateral in good condition and make all needful and proper repairs,
replacements, additions, or improvements thereto as are reasonably necessary,
reasonable wear and tear excepted. Upon the sale of any portion of the Real
Property Collateral (whether or not an Event of Default has occurred), Borrower
shall immediately deliver to Bank all proceeds from said sale, which shall be
applied towards the satisfaction of the Obligations.

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     9. Negative Covenant/Real Property Collateral Amendment. As of the date of
this Waiver and First Amendment, the Loan Agreement is amended by adding the
following provision to the Loan Agreement as Section 7.20 as follows:

7.20 Real Property Collateral Encumbrances. Borrower shall not create, incur,
assume or allow any Lien with respect to the Real Property Collateral or assign
or otherwise convey any right to receive income or permit any of its
Subsidiaries so to do, except as currently exists pursuant to that certain
Mortgage and Security Agreement dated as of June 30, 2000, Loan Agreement dated
as of June 30, 2004, Mortgage and Security Agreement dated as of December 4,
2000 and Loan Agreement dated as of December 4, 2000, or covenant to any other
person that Borrower in the future will refrain from creating, incurring,
assuming or allowing any Lien with respect to the Real Property Collateral.

     10. Rights and Remedies Amendment. As of the date of this Waiver and First
Amendment, the Loan Agreement is amended by deleting the first paragraph of
Section 9.1 in its entirety and inserting in lieu thereof a new first paragraph
for Section 9.1 as follows:

9.1. Rights and Remedies upon an Event of Default. If an Event of Default shall
occur under this Agreement, in addition to any other rights and remedies which
may be available to Bank and without limiting any other rights and remedies
granted to Bank in this Agreement, the other Loan Documents and at law and in
equity, including, without limitation, the rights and remedies provided to Bank
under the Code, which rights and remedies are fully exercisable by Bank as and
when provided herein and therein, Bank shall have the rights and remedies set
forth below in this Section 9.1, any and all of which it may exercise at its
election, without notice of its election and without demand, except as otherwise
expressly provided below.

     11. Acceleration of Obligations Amendment. As of the date of this Waiver
and First Amendment, the Loan Agreement is amended by deleting Section 9.1(a) in
its entirety and inserting in lieu thereof a new Section 9.1(a) as follows:

(a) Acceleration of Obligations. Bank may, at its option and by written notice
to Borrower, accelerate and declare immediately due and payable the Obligations,
as well as any of and all of the other indebtedness and obligations owing under
this Agreement and the other Loan Documents that are not already due hereunder
and that are not already due thereunder. If there is more than one Obligation,
Bank may accelerate and declare immediately due and payable all of the
Obligations, or Bank may from time to time and at any number of times after the
occurrence of an Event of Default, accelerate and declare immediately due and
payable any one or more of the Obligations as Bank in its discretion elects to
accelerate (provided that upon the occurrence of an Event of Default described
in Section 8 under the heading “Insolvency”, all Obligations shall become
immediately due and payable without any action by Bank).

     12. Borrower Definition Amendment. As of the date of this Waiver and First
Amendment, the Loan Agreement is hereby amended such that the term “Borrower”
shall hereinafter be deemed to include Larscom, and Larscom shall hereinafter be
a party to the Loan Agreement for all purposes whatsoever.

     13. Joinder Agreement. Larscom hereby agrees to be bound by the Loan
Agreement as a “Borrower” (as such term is defined therein), and shall be deemed
to be a party to, and subject to and bound by, the terms and conditions of the
Loan Agreement.

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     14. Events of Default Waiver. Borrower hereby acknowledges that an Event of
Default existed as of October 1, 2004 under Section 8.2 of the Loan Agreement.
Subject to Section 12.8 of the Loan Agreement and pursuant to Borrower’s
request, Bank hereby waives the Event of Default caused by Borrower’s failure to
maintain compliance with the Tangible Net Worth covenant as of October 1, 2004.
Notwithstanding the above, the waiver set forth herein is conditioned upon no
Event of Default otherwise existing under the Loan Agreement or other Loan
Documents. Borrower acknowledges and agrees that this waiver is specific to the
matters referred to herein and that Bank does not waive Borrower’s compliance
with, or any of its rights with respect to, any of Borrower’s other obligations
to Bank under the Loan Agreement and the other Loan Documents, all of which
Borrower acknowledges, are unaffected by this waiver. The waiver and amendment
of the Tangible Net Worth covenant provided for in this Waiver and First
Amendment shall be effective as of October 1, 2004, but shall be void and of no
further force or effect, at Bank’s election in its sole discretion, if any of
the conditions set forth herein are not satisfied by Borrower in accordance with
the terms hereof.

     15. Conditions to Effectiveness. This Waiver and First Amendment shall
become effective as of the date hereof, and the waivers and amendments set forth
herein shall be effective as of the respective dates set forth herein, when Bank
shall have received the following in form and substance satisfactory to Bank:

               (a) Counterparts of this Waiver and First Amendment executed by
and on behalf of Verilink, Larscom and Bank;

               (b) All fees and expenses payable or reimbursable by Borrower as
of the date hereof, including, without limitation, all costs, fees and expenses
of Bank in connection with the preparation, execution and delivery of this
Waiver and First Amendment and the other instruments and documents to be
delivered pursuant hereto (including the reasonable fees and out-of-pocket
expenses of counsel for Bank with respect thereto); and

               (c) A new commitment fee in the amount of $7,500.

     16. No Additional Waiver; Reaffirmation. Except as otherwise provided
herein, the terms of the Loan Agreement and the other Loan Documents remain in
full force and effect. After giving effect to this Waiver and First Amendment
(and any other waivers and amendments made prior hereto, if any) Borrower hereby
(a) renews and reaffirms all representations and warranties set forth in the
Loan Agreement and the other Loan Documents (subject to any changes therein
expressly permitted by the Loan Agreement and other Loan Documents), and
certifies that all such representations and warranties are true and correct in
all material respects as of the date hereof, (b) certifies that no Event of
Default exists and is continuing under the Loan Agreement, other than as
referred to herein, and that Borrower is in compliance in all material respects
with all obligations under the Loan Agreement and the other Loan Documents, (c)
certifies that the execution, delivery and performance by Borrower of this
Waiver and First Amendment have been duly authorized by all requisite corporate
action on the part of Borrower and will not violate any of Borrower’s articles
of incorporation, bylaws or other organizational documents, and (d) certifies
that this Waiver and First Amendment has been duly executed and delivered by
Borrower, and this Amendment constitutes the legal, valid and binding obligation
of Borrower, enforceable against Borrower in accordance with its terms. This
Waiver and First Amendment shall constitute one of the “Loan Documents” as
defined in the Loan Agreement.

     17. References. All references to the “Loan Agreement,” contained in the
Loan Agreement itself or in any of the other Loan Documents, shall refer to the
Loan Agreement as amended hereby.

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     18. Applicable Law. THIS WAIVER AND FIRST AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
GEORGIA WITHOUT GIVING EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES.

     19. Counterparts and Headings. This Waiver and First Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
instrument. Receipt by Bank of a facsimile copy of an executed signature page
hereof shall constitute receipt by Bank of an executed counterpart of this
Waiver and First Amendment. The headings of this Waiver and First Amendment are
for convenience of reference only, are not part of this Waiver and First
Amendment and are not to affect the construction of, or to be taken into
consideration interpreting, this Waiver and First Amendment.

[SIGNATURES BEGIN ON FOLLOWING PAGE]

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     IN WITNESS WHEREOF, the undersigned have executed this Waiver and First
Amendment as of the date first above written.

     
VERILINK CORPORATION
  Witness:
 
   
By: /s/ C. W. Smith
  /s/ A. Tucker

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Name: C. W. Smith
  Print Name: A. Tucker
Title: Vice President and CFO
   
 
   
LARSCOM INCORPORATED
  Witness:
 
   
By: /s/ C. W. Smith
  /s/ A. Tucker

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Name: C. W. Smith
  Print Name: A. Tucker
Title: Vice President
   
 
   
RBC CENTURA BANK
   
 
   
By: /s/ Joseph Singer
   

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Name: Joseph Singer
   
Title: Vice President – Georgia Markets
   

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