Document:

ex_125550.htm

Exhibit 4.1

 

FIFTH LOAN MODIFICATION AGREEMENT

 

THIS FIFTH LOAN MODIFICATION AGREEMENT, is made as of the 15th day of October, 2018, by and between OPTICAL CABLE CORPORATION, a Virginia corporation (the “Borrower”), and PINNACLE BANK, a Tennessee banking corporation, successor in interest through name change and by merger with Bank of North Carolina (the “Lender”).

 

RECITALS

 

A.     The Borrower and Bank of North Carolina entered into that certain Credit Agreement dated April 26, 2016, as amended and modified by Loan Modification Agreement dated December 21, 2016, and by Second Loan Modification Agreement dated February 28, 2017, and by Third Loan Modification Agreement dated April 27, 2017, and by Fourth Loan Modification Agreement dated April 10, 2018 (collectively, the “Credit Agreement”). Pursuant to the Credit Agreement, the Borrower made and delivered certain Notes described therein.

 

B.     The Borrower and the Lender further entered into that certain Special Project Loan Agreement dated April 10, 2018. Pursuant to the Special Project Loan Agreement, the Borrower made and delivered to Lender a Special Project Revolving Credit Note dated April 10, 2018, in an amount not to exceed $6,000,000 (the “Special Project Note”). Borrower and Lender each agree that the Special Project Loan Agreement terminated in accordance with its terms on October 1, 2018. Borrower and Lender agree that Lender’s obligations under the Special Project Loan Agreement have been completely satisfied and terminated, including, without limitation, any obligation of Lender to make advances to Borrower in conjunction with the Special Project Revolving Credit Facility. Further, Borrower and Lender agree that all of Borrower’s obligations under the Special Project Loan Agreement have been completely satisfied and terminated, including, without limitation, any obligation of Borrower to deposit receipts from the Special Project Customer into the Special Deposit Account, and that the Special Project Note has been fully paid and satisfied.

 

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C.     The Borrower and the Lender desire to amend and modify the terms of the Credit Agreement, as provided herein. Lender is the holder of the Credit Agreement and the Notes described therein.

 

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.

 

3.     The Credit Agreement is amended and modified as follows:

 

(a)     Effective as of October 15, 2018, Section 1.6 of the Credit Agreement is replaced in its entirety by the following provision:

 

1.6.     Extension of Revolving Credit Expiration Date by Lender. In the exercise of its sole and absolute discretion, from time to time the Lender may extend the Revolving Credit Expiration Date in one year increments by giving written notice of extension to the Borrower no later than April 30 of the calendar year immediately prior to the calendar year of the then effective Revolving Credit Expiration Date (the “Revolving Credit Extension Deadline”). For example, assuming an effective Revolving Credit Expiration Date of April 30, 2020, if the Lender elects to extend the Revolving Credit Expiration Date from April 30, 2020, to April 30, 2021, the Lender will give written notice of such extension to the Borrower no later than April 30, 2019. In the event that the Lender does not give written notice of extension by the effective Revolving Credit Extension Deadline, unless sooner terminated pursuant to other provisions of this Agreement, the Revolving Credit Facility and the obligation of the Lender to make Advances hereunder shall automatically terminate on the Revolving Credit Expiration Date then in effect, without further action by, or notice of any kind from, the Lender.

 

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(b)     Effective as of October 15, 2018, Section 7.2 of the Credit Agreement is replaced in its entirety by the following provision:

 

7.2      Fixed Charge Coverage Ratio. Borrower shall maintain a Fixed Charge Coverage Ratio of not less than 1.25 to 1.0 for fiscal year 2018, and all fiscal years thereafter, measured annually on the last day of such fiscal year.

 

(c)     Effective as of October 15, 2018, Section 7.6 of the Credit Agreement is replaced in its entirety by the following provision:

 

7.6      Debt to Worth Ratio. Borrower shall maintain a ratio of Total Liabilities to Tangible Net Worth of no greater than 0.95:1.00. This covenant shall be monitored quarterly, and will commence with the fiscal quarter ending October 31, 2018.

 

Sections 7.6.1 and 7.6.2 are not affected by this modification of Section 7.6.

 

(d)      Effective as of October 15, 2018, Section 7.7 of the Credit Agreement is replaced in its entirety by the following provision:

 

7.7     Current Ratio. Borrower shall maintain a Current Ratio of not less than 3.00 to 1.00. This covenant shall be monitored quarterly, and will commence with the fiscal quarter ending October 31, 2018.

 

Sections 7.7.1 and 7.7.2 are not affected by this modification of Section 7.7.

 

(e)     Effective as of October 15, 2018, the definition of Revolving Credit Expiration Date in Annex A to Credit Agreement is replaced in its entirety by the following provision:

 

“Revolving Credit Expiration Date” means (a) April 30, 2020, or, in the event that the Lender from time to time elects to extend the Revolving Expiration Date in accordance with the provisions of Section 1.6 of the Credit Agreement, the last date to which Lender elects to extend the Revolving Credit Expiration Date in accordance therewith, or (b) such later date as to which the Lender shall, in its sole discretion, agree in writing to extend the Revolving Credit Expiration Date without regard to Section 1.6 of the Credit Agreement.

 

4.     In accordance with the provisions of the Credit Agreement, as modified above, the Lender hereby extends the current Revolving Credit Expiration Date to April 30, 2020. The Borrower acknowledges and agrees to such extension of the Revolving Credit Expiration Date.

 

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5.     Although the two Deed of Trust Modification Agreements (as defined in the Special Project Loan Agreement) increasing each of the two Deeds of Trust from $17,000,000 to $19,600,000, were executed to act as collateral for the Special Project Note, and the Special Project Note has been fully paid and satisfied, the two Deeds of Trust (as defined in the Special Project Loan Agreement) will not be modified at this time. Subject to Lender’s receipt of an update to existing title insurance, any endorsements Lender may determine are necessary in its sole discretion, and no new exceptions to title without Lender’s written approval, the two Deeds of Trust shall be modified, at Borrower’s option, to remove all references to the Special Project Note and Special Project Loan Agreement and to reduce the maximum amount of each Deed of Trust back to $17,000,000, and any UCC Financing Statement filed in connection with the Special Project Note shall be amended to release any additional collateral granted by Borrower to secure the Special Project Note.

 

6.     Except as expressly amended and modified hereby, all terms and conditions of the Credit Agreement and the Financing Documents remain unchanged, and of full force and effect in accordance with their terms. The amendments and modifications contained in this Agreement do not constitute or create a novation of the Credit Agreement, the Notes, or any of the other Financing Documents, or the obligations of the Borrower evidenced thereby.

 

6.     The Borrower hereby acknowledges the Lender's performance of all of the Lender's obligations under the Financing Documents, ratifies all of the Financing Documents, as expressly amended and modified hereby, and certifies that they are enforceable in accordance with their terms, without defense or offset. 

 

7.     The Borrower represents and warrants to the Lender to induce the Lender to enter into this Agreement, that the execution, delivery and performance of this Agreement has been duly authorized by all requisite action and such authorization has not been rescinded, and that all representations and warranties made by it in the Financing Documents are true, correct and enforceable on and as of the date hereof.

 

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8.     The effective date of this Agreement shall be October 15, 2018.

 

9.     This Agreement shall be governed by, and construed in accordance with, the laws 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.

 

10.     This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

11.     This Agreement may be signed in several counterparts, each of which shall be an original and all of which shall constitute one and the same document.

 

IN WITNESS WHEREOF, the parties have caused this 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.

 

 

[The signature pages follow]      

 

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Signature Page of Borrower

 

 

	Witness:	
			BORROWER:

			OPTICAL CABLE CORPORATION

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

			Chief Financial Officer & Senior Vice President

			

  

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Signature Page of Lender

 

 

	Witness: 	
			LENDER:

			PINNACLE BANK 

			
	 	 
	 	 
	/s/ Matt Arnold	 	By:	/s/ Shannon S. Miller	 (Seal)
	Matt Arnold	 	 	
			Shannon S. Miller 

			Senior Vice President 

			

 

 7abwn_ex101.htm

EXHIBIT 10.1
  
 WARRANT EXERCISE AGREEMENT
  
 THIS WARRANT EXERCISE AGREEMENT (the “Agreement”) is made as of October 17, 2018 (the “Effective Date”) by and between AIRBORNE WIRELESS NETWORK (the “Company”) and Sabby Volatility Warrant Master Fund, Ltd. (the “Warrant Holder”). Each of the Company and the Warrant Holder may be referred to herein individually as a “Party,” and collectively as the “Parties.”
  
 WHEREAS, the Company issued certain shares of its Series A Convertible Preferred Stock (“Preferred Stock”), Series 1 Warrants to purchase shares of its Preferred Stock, which originally expired on August 29, 2018, extended to November 29, 2018 (the “Series 1 Warrants”), Series 2 Warrants to purchase shares of its Preferred Stock, which expire on November 29, 2018 (the “Series 2 Warrants”) and Series 3 Warrants to purchase shares of its Preferred Stock, which expire on May 29, 2019 (the “Series 3 Warrants,” together with the Series 1 Warrants and the Series 2 Warrants, the “Warrants” and collectively with the Preferred Stock and the Warrants, the “Securities”) in a public offering; and
  
 WHEREAS, the Company and the Warrant Holder each agree to the exercise of Warrants hereunder subject to certain conditions set forth hereunder;
  
 NOW THERFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency thereof is mutually acknowledged, the Parties agree as follows:
  
 1. Exercise of Warrants. On the Effective Date or the first business day immediately thereafter, the Warrant Holder shall exercise a minimum of $600,000 of its Series 3 Warrants, provided, however, as a condition to the Warrant Holder’s obligations hereunder, the Company shall have received duly executed lock-up agreements from all other holders of Securities, substantially in the form of the Lock-Up Agreement (as defined below). The execution and delivery of such duly executed lock-up agreements from each holder of Securities is a condition precedent to the effectiveness of this Agreement, and a failure by the other holders of the Warrants to deliver such lock-up agreements will render this Agreement null and void ab initio and of no legal force and effect.
  
 2. Lock-Up Agreements. Concurrently with the execution of this Agreement by all of the Parties, the Warrant Holder shall execute and deliver a Lock-Up Agreement, in substantially the form attached hereto as Exhibit A hereto (the “Lock-up Agreement”), to the Company, pursuant to which the Warrant Holder agrees not to sell or transfer its Warrants, shares of Preferred Stock or shares of common stock of the Company (“Common Stock”) during the 60-day period commencing on the date hereof, provided, however, that:
   
  	  
	(a)	during the 30-day period commencing on the date of the Warrant Holder’s exercise under Section 1, the Warrant Holder will be permitted to freely transfer any Warrants, shares of Preferred Stock and shares of Common Stock; and
	  
	  
	  

	  
	(b)	if (x) Ionic Ventures LLC does not exercise at least $600,000 of its Warrants by the end of November 16, 2018; and (y) the Warrant Holder notifies the Company by 5:00 p.m. on November 19, 2018, that it intends to exercise at least $600,000 of its Warrants and does so on the immediately following business day, then commencing on such date until the expiration of the Lock-Up Agreement, the Warrant Holder will be permitted to freely transfer any Warrants, shares of Preferred Stock and shares of Common Stock.

  
 3. Amendment to the Series 1 and Series 2 Warrants. The Company and the Warrant Holder hereby agree to amend the Series 1 Warrants and the Series 2 Warrants to extend the expiration dates thereof to May 29, 2019. The Company shall thereafter use commercially reasonable efforts to file and seek a declaration of effectiveness of a post-effective amendment to the Company’s registration statement on Form S-1 (Reg. No. 333-220295) so that the amended Series 1 and Series 2 Warrants can be exercised and resold pursuant thereto.
  
 4. Complete Agreement and Modifications. This Agreement represents the entire agreement between the Parties with respect to the subject matter set forth herein, and there are no understandings or agreements with respect thereto except as specifically stated in this Agreement. This Agreement supersedes the terms of any prior agreements between or among the Parties with respect to the subject set forth herein. The terms of this Agreement may not be modified except pursuant to a document signed by the Parties, and no right of any party may be waived except pursuant to a document signed by the Party expressly waiving that right.
  
  	 
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 5. Binding Agreement. No Party may assign this Agreement or its rights and obligations hereunder without the prior written consent of the other Parties. This Agreement shall be binding upon, and inure to the benefit of, the Parties and their respective successors and permitted assigns. By signing below, each Party acknowledges that it has read this Agreement, has had an opportunity to consult with its own independent counsel, and by signing below, voluntarily accepts the terms of this Agreement. 
  
 6. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed in that State.
  
 7. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.
  
 8. Severability. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
  
 9. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.
  
 10. Authority. By signing below, each signatory represents and warrants that such signatory has the requisite authority to enter into this Agreement.
  
 11. Representation as to Other Parties and Report of Form 8-K. The Company shall file a Current Report on Form 8-K on or before 9:30 am ET on the trading day immediately following the date hereof disclosing all material terms of this Agreement and the material terms of any of the Lock-Up Agreements and understandings and agreements with the other parties (written or otherwise) to the Lock-Ups that were entered into in connection therewith.
  
 [Signature Page Follows]
  
  	 
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 IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first set forth above.
  
  
  	 SABBY VOLATILITY WARRANT MASTER FUND, LTD.
	
	  
	  

	 	 	 
	 By:
	/s/ Robert Grundstein	
	  
	  
	  

	 Name: 
	Robert Grundstein	 
	  
	  
	  

	 Its: 
	Chief Operating Officer of Investment Manager	 
	 	 	 
	 AIRBORNE WIRELESS NETWORK

	  
	  
	  

	 By: 
	 /s/ Michael J. Warren 
	  

	  
	  
	  

	 Name: 
	 Michael J. Warren
	  

	  
	  
	  

	 Its: 
	 Chief Executive Officer
	  

  
  
 [Signature Page to Warrant Exercise Agreement]
   
  	 
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 Exhibit A
  
 Form of Lock-Up Agreement
  
  
  	 4

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