FOURTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
Exhibit 10.1
FOURTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This FOURTH Amendment (the "Amendment"), dated May 21, 2013, is entered into by and between EMCORE CORPORATION, a New Jersey corporation ("Company"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Xxxxx Fargo"), acting through its Xxxxx Fargo Capital Finance operating division.
Recitals
Company and Xxxxx Fargo are parties to a Credit and Security Agreement dated November 11, 2010 (as amended from time to time, the "Credit Agreement"). Capitalized terms used in these recitals have the meanings given to them in the Credit Agreement unless otherwise specified.
The Company has requested that certain amendments be made to the Credit Agreement, which Xxxxx Fargo is willing to make pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:
1. Amendments. The Credit Agreement is hereby amended as follows:
(a) Section 1.2(a) of the Credit Agreement is hereby deleted and replaced as follows:
(a) Borrowing Base. The borrowing base (the "Borrowing Base") is an amount equal to:
(i) 85% or such lesser percentage of Eligible Accounts as Xxxxx Fargo in its sole discretion may deem appropriate; provided, that the percentage shall be 85% so long as the dilution of the Accounts is 5% or less, plus
(ii) 85% or such lesser percentage of Eligible Foreign Accounts (which are not more than 120 days past invoice date) as Xxxxx Fargo in its sole discretion may deem appropriate, provided, that the percentage shall be 85% so long as the dilution of the Accounts is 5% or less or $10,000,000.00, whichever is less, plus
(iii) $4,909,090.91, which amount shall be reduced on June 1, 2013 and on the first day of each month thereafter by $90,909.09, plus
(iv) the lesser of (1) 60% of Eligible Progress Billing Accounts, or (2) $5,000,000.00 through June 30, 2013, which amount shall be reduced to $3,000,000.00 on July 1, 2013 and reduced to $0.00 on December 31, 2013, plus
(v) 85% or such lesser percentage of the Net Orderly Liquidation Value of Eligible Inventory (consisting of finished goods or raw materials) as Xxxxx Fargo in its sole discretion may deem appropriate, or $10,000,000.00, whichever is less, less
(vi) the Borrowing Base Reserve, less
(vii) Indebtedness (including amounts outstanding under letters of credit) that Company owes Xxxxx Fargo that has not been advanced on the Revolving Note, less
(viii) Indebtedness that is not otherwise described in Section 1, including Indebtedness that Xxxxx Fargo in its sole discretion finds on the date of determination to be equal to Xxxxx Fargo's net credit exposure with respect to any rate hedge agreement, derivative, foreign exchange, deposit, treasury management or similar transaction or arrangement extended to Company by Xxxxx Fargo and any Indebtedness owed by Company to Xxxxx Fargo Merchant Services, L.L.C.
(b) The opening paragraph of Section 5.2 of the Credit Agreement is hereby deleted and replaced as follows:
5.2 Financial Covenants. Company agrees, for any fiscal quarter in which the excess availability under the Borrowing Base plus all of the Company's cash and cash equivalents on deposit with Xxxxx Fargo is at any time less than $3,500,000.00, which amount shall be automatically increased to $5,500,000.00 on March 31, 2014, and to $7,500,000.00 on June 30, 2014 (which availability may be supplemented by draws upon the committed common stock equity facility dated August 16, 2011 and maintained with Commerce Court, not more than two times per year), to comply with the financial covenants described below, which shall be calculated using GAAP consistently applied, except as they may be otherwise modified by the following capitalized definitions. Any of the foregoing notwithstanding, the Company shall have the right to draw on its equity facility at any time for any purpose other than that specifically limited by this Section 5.2.
(c) Subsection (c) of the definition of "Eligible Accounts" contained in Exhibit A of the Credit Agreement is hereby deleted and replaced as follows:
(c) That portion of Accounts not yet earned by the final delivery of goods or that portion of Accounts not yet earned by the final rendition of services by Company to the account debtor, including with respect to both goods and services, progress xxxxxxxx (collectively "Progress Billing Accounts") and that portion of Accounts for which an invoice has not been sent to the applicable account debtor;
(d) A new definition for "Eligible Progress Billing Accounts" is hereby added to Exhibit A of the Credit Agreement which provides as follows:
"Eligible Progress Billing Accounts" means Accounts that are not Eligible Accounts solely as a result of being Progress Billing Accounts.
2. No Other Changes. Except as explicitly amended by this Amendment, all of the terms and conditions of the Credit Agreement shall remain in full force and effect and shall apply to any advance or letter of credit thereunder.
3. Amendment Fee. The Company shall pay Xxxxx Fargo a fully earned, non-refundable fee in the amount of $25,000.00 in consideration of Xxxxx Fargo's execution and delivery of this Amendment, which fee shall be immediately due and payable.
4. Conditions Precedent. This Amendment shall be effective when Xxxxx Fargo shall have received an executed original hereof, together with each of the following, each in substance and form acceptable to Xxxxx Fargo in its sole discretion:
(a) The Acknowledgment and Agreement of Guarantors set forth at the end of this Amendment, duly executed by each Guarantor.
(b) A Certificate of the Secretary of the Company certifying as to (i) the resolutions of the board of directors of the Company approving the execution and delivery of this Amendment, (ii) the fact that the articles of incorporation and bylaws of the Company, which were certified and delivered to Xxxxx Fargo pursuant to the Certificate of Authority of the Company's secretary or assistant secretary dated November 11, 2010 continue in full force and effect and have not been amended or otherwise modified except as set forth in the Certificate to be delivered, and (iii) certifying that the officers and agents of the Company who have been certified to Xxxxx Fargo, pursuant to the Certificate of Authority of the Company's secretary or assistant secretary dated November 11, 2010, as being authorized to sign and to act on behalf of the Company continue to be so authorized or setting forth the sample signatures of each of the officers and agents of the Company authorized to execute and deliver this Amendment and all other documents, agreements and certificates on behalf of the Company.
(c) Such other matters as Xxxxx Fargo may require.
5. Representations and Warranties. The Company hereby represents and warrants to Xxxxx Fargo as follows:
(a) The Company has all requisite power and authority to execute this Amendment and any other agreements or instruments required hereunder and to perform all of its obligations hereunder, and this Amendment and all such other agreements and instruments has been duly executed and delivered by the Company and constitute the legal, valid and binding obligation of the Company, enforceable in accordance with its terms.
(b) The execution, delivery and performance by the Company of this Amendment and any other agreements or instruments required hereunder have been duly authorized by all necessary corporate action and do not (i) require any authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect, having applicability to the Company, or the articles of incorporation or by-laws of the Company, or (iii) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which the Company is a party or by which it or its properties may be bound or affected.
(c) All of the representations and warranties contained in Article V of the Credit Agreement are correct on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date.
6. References. All references in the Credit Agreement to "this Agreement" shall be deemed to refer to the Credit Agreement as amended hereby; and any and all references in the Security Documents to the Credit Agreement shall be deemed to refer to the Credit Agreement as amended hereby.
7. No Waiver. The execution of this Amendment and the acceptance of all other agreements and instruments related hereto shall not be deemed to be a waiver of any Default or Event of Default under the Credit Agreement or a waiver of any breach, default or event of default under any Security Document or other document held by Xxxxx Fargo, whether or not known to Xxxxx Fargo and whether or not existing on the date of this Amendment.
8. Release. The Company, and each Guarantor signing the Acknowledgment and Agreement of Guarantors set forth below, hereby absolutely and unconditionally releases and forever discharges Xxxxx Fargo, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which the Company or each Guarantor has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown.
9. Costs and Expenses. The Company hereby reaffirms its agreement under the Credit Agreement to pay or reimburse Xxxxx Fargo on demand for all costs and expenses incurred by Xxxxx Fargo in connection with the Loan Documents, including without limitation all reasonable fees and disbursements of legal counsel. Without limiting the generality of the foregoing, the Company specifically agrees to pay all title insurance premiums, fees and disbursements of counsel to Xxxxx Fargo for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto. The Company hereby agrees that Xxxxx Fargo may, at any time or from time to time in its sole discretion and without further authorization by the Company, make a loan to the Company under the Credit Agreement, or apply the proceeds of any loan, for the purpose of paying any such premiums, fees, disbursements, costs and expenses and the fee required under Paragraph 3 of this Amendment.
10. Miscellaneous. This Amendment and the Acknowledgment and Agreement of Guarantors may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and all of which counterparts, taken together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
EMCORE CORPORATION, a New Jersey corporation By /s/ Xxxx Xxxxxxxx Its Chief Financial Officer XXXXX FARGO Bank, National Association By /s/ Xxx Xxxxxxx Its Authorized Signatory | |
