Document:

Second Loan Modification Agreement

 Exhibit 4.13 

Execution Copy 

SECOND LOAN MODIFICATION AGREEMENT 

THIS SECOND LOAN MODIFICATION AGREEMENT, is made as of the 30th day of April, 2010, by and between OPTICAL CABLE CORPORATION, a Virginia
corporation (the “Borrower”), for itself and as successor by merger to Superior Modular Products Incorporated, formerly a Delaware corporation and VALLEY BANK, a Virginia banking corporation, its affiliates and their successors and assigns
(the “Bank”). 
 WHEREAS, the Borrower and Superior Modular Products Incorporated and the Bank entered into that
certain Credit Agreement dated May 30, 2008, which was amended by that certain First Loan Modification Agreement between the Borrower and the Bank dated as of the 16th day of February, 2010 (the “Credit Agreement”); and 

WHEREAS, the Borrower and the Bank desire to modify the terms of the Credit Agreement and the Security Agreement to (i) terminate
the Revolving Loan, (ii) reflect the release of the Bank’s lien on, and security interest in, certain collateral securing the Loans, (iii) permit debt of the Borrower made available by SunTrust Bank, and (iv) affirm the Loan
Documents as modified hereby, as a condition of the Bank entering into this Agreement. 
 NOW, THEREFORE, in consideration of
the mutual promises and conditions contained herein, the parties hereto agree as follows: 
 1. The foregoing recitals are
incorporated in and constitute terms of this Agreement. 
 2. Capitalized terms contained in this Agreement which are not
otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement. 
  

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 3. Upon payment in full and satisfaction of the Revolving Loan, in accordance with that
certain Letter of Consent to Release Collateral from the Bank to the Borrower dated even date herewith, the Revolving Loan shall be deemed paid in full, satisfied, and terminated (the “Satisfaction and Termination”) and the Bank’s
lien on, and security interest in, the Borrower’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 therefor, reclaimed or repossessed from or returned by account debtors and all proceeds, products, rents and
profits thereof, as all such terms are defined in the Uniform Commercial Code in effect in Virginia, shall be deemed released. The Bank hereby consents to and permits the existence of the SunTrust Debt (as defined in the Credit Agreement as modified
hereby) and the Borrower’s execution of and performance in accordance with all agreements and instruments evidencing and securing the SunTrust Debt, none of which shall constitute a default under the Loan Documents or the Loans. 

4. Notwithstanding anything in the Loan Documents to the contrary, the Bank consents to the merger of any wholly owned subsidiary or
majority owned subsidiary of the Borrower into the Borrower, provided that the Borrower is the surviving entity. 
 5. In
connection with the Satisfaction and Termination, the Credit Agreement shall be amended as follows: 
 A. The definitions of
“Debt Service Coverage Ratio” and “Minimum Tangible Net Worth” in Section 1.1 are deleted in their entirety. 
  

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 B. The following new definition of “Released Collateral” is inserted in
Section 1.1: 
 “Released Collateral” means the Borrower’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 therefor, reclaimed or repossessed from or returned by account debtors and all proceeds, products, rents and profits thereof, as all such terms are defined in the UCC to secure the SunTrust
Debt. 
 C. The following new definition of SunTrust Debt is inserted in Section 1.1: 

“SunTrust Debt” means that certain $6,000,000 revolving loan made by SunTrust Bank to the Borrower evidenced by
that certain commercial note from the Borrower to the Bank dated April 30, 2010, and the related Commercial Security Agreement, Agreement to Note and other related documents. 

D. The following new provision (l) is inserted into the definition of Permitted Encumbrances in Section 1.1: 

(l) liens on the Borrower’s Released Collateral securing the SunTrust Debt. 

E. Section 4.1 Description of Collateral is amended and restated as follows: 

4.1 Description of Collateral. The Bank shall receive, subject to Permitted Encumbrances, as collateral security
for the Loans, the Notes and all other present and future indebtedness of the Borrower owing to the Bank: (a) A perfected first priority lien on and security interest in all of the Borrower’s personal property and assets of every kind and
description, whether now owned or hereafter acquired, including all furniture, fixtures and equipment, except the Released Collateral; and (b) A first lien deed of trust on the Real Property ((a) and (b) collectively constituting the
“Collateral”). 
 F. Section 7.10 is amended and restated as follows: 

7.10 Financial Covenants. Have and maintain, on a consolidated basis among the Borrower and each of its
subsidiaries, as of the end of each quarter (pursuant to the financial statements provided pursuant to Section 7.1(b)) tested on a rolling four quarter basis commencing with the quarter ending July 31, 2010: 

(a) A ratio of Debt to Tangible Net Worth no greater than 1.00 to 1.00. For purposes hereof, “Debt” shall
mean consolidated total liabilities and “Tangible Net Worth” shall mean consolidated total assets less consolidated (a) goodwill, (b) other intangible assets, and (c) total liabilities, as defined in accordance with
GAAP consistently applied; and 
  

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 (b) A consolidated Debt Service Coverage Ratio of not less than 1.50 to
1.00. For purposes hereof “Debt Service Coverage Ratio” means Adjusted EBITDA divided by current maturities of long term debt plus consolidated interest expense, defined in accordance with GAAP consistently applied (“Debt Service
Coverage Ratio”). “Adjusted EBITDA” means earnings before interest expense, taxes, depreciation and amortization and the following non-cash expenses: (i) any impairment of intangible assets including, without limitation, goodwill
and (ii) stock compensation expense, all as presented in the consolidated financial statements. Regarding consolidated interest expense, (x) the amortization of deferred financing costs is included as interest expense in the consolidated
statement of operations and is also included as depreciation and amortization in the consolidated statement of cash flows, (y) in the calculation of the numerator, amortization of deferred financing costs should be deducted from the interest
expense to avoid duplication, and (z) in the calculation of the denominator, amortization of deferred financing costs should be deducted from interest expense since it is the amortization of a cash payment that occurred in the year the
financing was completed and does not represent a periodic interest payment. 
 G. Section 7.11 Non-Bank Debt is amended and
restated as follows: 
 7.11 Non-Bank Debt. Except as to the SunTrust Debt secured by the Borrower’s
Released Collateral, cause all non-Bank indebtedness for borrowed money of the Borrower (other than capitalized lease obligations) to be subordinate to the Loans and the Collateral. 

H. Section 7.15 Operating Accounts is deleted in its entirety. 

I. The following language is inserted at the end of Section 8.3: “; (f) the SunTrust Debt.” 

J. The following new provision (o) is inserted into Section 9.1 Events of Default: 

(o) the occurrence of a default under the SunTrust Debt. 

 

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 6. In connection with the Satisfaction and Termination, the Security Agreement shall be
amended as follows: 
 A. Section 1. Security Interest is amended and restated as follows: 

Section 1. Security Interest. Debtor hereby grants to Secured Party a security interest (“Security Interest”) in all
of Debtor’s right, title and interest in and to all of its real and personal property, including all furniture, fixtures and equipment, whether now owned or hereafter acquired, except 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 therefor, reclaimed or repossessed from or returned by account debtors and all proceeds, products, rents and profits thereof, as all such terms are defined in the UCC (“Collateral”). 

7. The modifications contained in this Agreement do not constitute or create a novation of any of the Loan Documents or the Loans.

 8. Except as expressly modified hereby, all terms and conditions of the Loan Documents remain unchanged, and of full force
and effect in accordance with their terms. 
 9. The Borrower hereby ratifies all of the Loan Documents, as expressly modified
hereby, and certifies that they are enforceable in accordance with their terms, without defense or offset. 
 10. The Borrower
represents and warrants to the Bank to induce the Bank to enter into this Agreement, that the execution, delivery and performance of this Agreement has been duly authorized by all requisite action, and that all representations and warranties made by
it in the Loan Documents are true, correct and enforceable on and as of the date hereof. 
 11. The effective date of this
Agreement shall be the date first hereinabove written. 
 12. This Agreement shall be governed by, and construed in accordance
with, the laws 
  

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of the Commonwealth of Virginia. The parties consent to the jurisdiction and venue of the courts of the Commonwealth of Virginia, specifically to 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 in connection with any action, suit or proceeding arising out of or relating to this Agreement. 

13. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted
assigns. 
 14. This Agreement may be signed in several counterparts, each which shall be an original and all of which shall
constitute one and the same document. 
 [signature page follows] 

 

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 IN WITNESS WHEREOF, the parties have caused this Second Loan Modification Agreement to
be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. 
  

							
	 BORROWER:
	 		 	OPTICAL CABLE CORPORATION
				
		 		 	 By:
	 	 /s/ Tracy G. Smith

		 		 	 Name:
	 	Tracy G. Smith
		 		 	 Title:
	 	Senior Vice President and
		 		 		 	Chief Financial Officer
			
	 BANK:
	 		 	VALLEY BANK
				
		 		 	 By:
	 	 /s/ Scott L. Leffel

		 		 	 Name:
	 	Scott L. Leffel
		 		 	 Title:
	 	Vice PresidentAddendum A to Commercial Note

 Exhibit 4.14 

 

			
	

	  	 Addendum A To Note

LIBOR Index Rate (104)

SECTION 1 
 Definitions. As used
in this Addendum, the following terms shall have the meanings set forth below: 
 “Bank” shall mean SunTrust Bank and
its successors and assigns. 
 “Borrower” shall collectively and individually refer to the maker of the attached note
dated April 30, 2010 (“Note”). The terms of this Addendum are hereby incorporated into the Note and in the event of any conflict between the terms of the Note and the terms of this Addendum, the terms of this Addendum shall control.

 “Business Day” shall mean, with respect to Interest Periods applicable to the LIBOR Rate, a day on which the Bank is
open for business and on which dealings in U.S. dollar deposits are carried on in the London Inter-Bank Market. 
 “Interest
Period” shall mean a period of one (1) month, provided that (i) the initial Interest Period may be less than one month, depending on the initial funding date and (ii) no Interest Period shall extend beyond the maturity date of
the Note. 
 “Interest Rate Determination Date” shall mean the date the Note is initially funded and the first Business
Day of each calendar month thereafter. 
 “LIBOR Rate” shall mean that rate per annum effective on any Interest Rate
Determination Date which is equal to the quotient of: 
 (i) the rate per annum equal to the offered rate for deposits in U.S.
dollars for a one (1) month period, which rate appears on that page of Bloomberg reporting service, or such similar service as determined by the Bank, that displays British Bankers’ Association interest settlement rates for deposits in
U.S. Dollars, as of 11:00 A.M. (London, England time) two (2) Business Days prior to the Interest Rate Determination Date; provided, that if no such offered rate appears on such page, the rate used for such Interest Period will be the
per annum rate of interest determined by the Bank to be the rate at which U.S. dollar deposits for the Interest Period, are offered to the Bank in the London Inter-Bank Market as of 11:00 A.M. (London, England time), on the day which is two
(2) Business Days prior to the Interest Rate Determination Date, divided by 
 (ii) a percentage equal to 1.00 minus
the maximum reserve percentages (including any emergency, supplemental, special or other marginal reserves) expressed as a decimal (rounded upward to the next 1/100th of 1%) in effect on any day to which the Bank is subject with respect to any
LIBOR loan pursuant to regulations issued by the Board of Governors of the Federal Reserve System with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities” under Regulation D). This percentage will be
adjusted automatically on and as of the effective date of any change in any reserve percentage. 
 “Prime Rate” shall
mean the publicly announced prime lending rate of the Bank from time to time in effect, which rate may not be the lowest or best lending rate made available by the Bank or, if the Note is governed by Subtitle 10 of Title 12 of the Commercial Law
Article of the Annotated Code of Maryland, “Prime Rate” shall mean the Wall Street Journal Prime Rate, which is the Prime Rate published in the “Money Rates” section of the Wall Street Journal from time to time.

 SECTION 2 
 Interest.
The Borrower shall pay interest upon the unpaid principal balance of the Note at the LIBOR Rate plus the margin provided in the Note. Interest shall be due and payable as provided in the Note and shall be calculated as described in the Note. The
interest rate shall remain fixed during each month based upon the interest rate established pursuant to this Addendum on the applicable Interest Rate Determination Date. 

SECTION 3 
 Additional Costs. In
the event that any applicable law or regulation or the interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof (whether or not having the force of law) (i) shall change
the basis of taxation of payments to the Bank of any amounts payable by the Borrower hereunder (other than taxes imposed on the overall net income of the Bank) or (ii) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or credit extended by the Bank, or (iii) shall impose any other condition with respect to the Note, and the result of any of the foregoing is to increase the cost to
the Bank of making or maintaining the Note or to reduce any amount receivable by the Bank hereunder, and the Bank determines that such increased costs or reduction in amount receivable was attributable to the LIBOR Rate basis used to establish the
interest rate hereunder, then the Borrower shall from time to time, upon demand by the Bank, pay to the Bank additional amounts sufficient to compensate the Bank for such increased costs (the “Additional Costs”). A detailed statement as to
the amount of such Additional Costs, prepared in good faith and submitted to the Borrower by the Bank, shall be conclusive and binding in the absence of manifest error. 
  

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 SECTION 4 

Unavailability Of Dollar Deposits. If the Bank determines in its sole discretion at any time (the “Determination Date”) that it can no
longer make, fund or maintain LIBOR based loans for any reason, including without limitation illegality, or the LIBOR Rate cannot be ascertained or does not accurately reflect the Bank’s cost of funds, or the Bank would be subject to Additional
Costs that cannot be recovered from the Borrower, then the Bank will notify the Borrower and thereafter will have no obligation to make, fund or maintain LIBOR based loans. Upon such Determination Date the Note will be converted to a variable rate
loan based upon the Prime Rate. Thereafter the interest rate on the Note shall adjust simultaneously with any fluctuation in the Prime Rate. 
  

									
	 Individual(s) Signature(s):
	 		 		 	Non-Individual Signature:
				
	  
	 	(Seal)	 		 	 Optical Cable Corporation

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

		 		 		 		 	
		 		 		 	 Tracy G. Smith, CFO, Senior Vice President and Secretary

		 		 		 	Name and title, printed or typed
					
		 		 		 	By:	 	  

				
		 		 		 	  

		 		 		 	Name and title, printed or typed

  

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