EXECUTION
UNCONDITIONAL GUARANTY
December 5, 1997
EMCORE Corporation
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
(Individually and collectively "Borrower")
MicroOptical Devices, Inc.
0000-X Xxxxxx Xxxx Xxxxx, X.X.
Alburquerque, NM 87019
(Individually and collectively "Guarantor")
First Union National Bank
0000 Xxxxxxx 00
Xxxxxx, Xxx Xxxxxx 00000
(Hereinafter referred to as "Bank")
To induce Bank to make, extend or renew loans, advances, credit, or other
financial accommodations to or for the benefit of Borrower, and in
consideration of loans, advances, credit, or other financial accommodations
made, extended or renewed to or for the benefit of Borrower, Guarantor hereby
absolutely, irrevocably and unconditionally guarantees to Bank and its
successors, assigns and affiliates the timely payment and performance of all
liabilities and obligations of Borrower to Bank and its affiliates, including,
but not limited to, all obligations under any notes, loan agreements, security
agreements, letters of credit, swap agreements (as defined in 11 U.S. Code ss.
101), instruments, accounts receivable, contracts, drafts, leases, chattel
paper, indemnities, acceptances, repurchase agreements, overdrafts, and the
Loan Documents defined below, however and whenever incurred or evidenced,
whether primary, secondary, direct, indirect, absolute, contingent, due or to
become due, now existing or hereafter contracted or acquired, and all
modifications, extensions or renewals thereof, including without limitation all
principal, interest, charges, and costs and expenses incurred thereunder
(including attorneys' fees and other costs of collection incurred, regardless
of whether suit is commenced) (collectively, the "Guaranteed Obligations").
Guarantor further covenants and agrees:
GUARANTOR'S LIABILITY. This Guaranty is a continuing and unconditional guaranty
of payment and performance and not of collection. The parties to this Guaranty
are jointly and severally obligated hereunder. This Guaranty does not impose
any obligation on Bank to extend or continue to extend credit or otherwise deal
with Borrower at any subsequent time. This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
the Guaranteed Obligations is rescinded, avoided or for any other reason must
be returned by Bank, and the returned payment shall remain payable as part of
the Guaranteed Obligations, all as though such payment had not been made.
Except to the extent the provisions of this Guaranty give the Bank additional
rights, this Guaranty shall not be deemed to supersede or replace any other
guaranties given to Bank by Guarantor; and the obligations guaranteed hereby
shall be in addition to any other obligations guaranteed by Guarantor pursuant
to any other agreement of guaranty given to Bank and other guaranties of the
Guaranteed Obligations.
TERMINATION OF GUARANTY. Guarantor may terminate this Guaranty by written
notice, delivered personally to or received by certified or registered United
States Mail by an authorized officer of the Bank at the address for notices
provided herein. Such termination shall be effective with respect to
Guaranteed Obligations arising more than 15 days after the date such written
notice is received by said Bank officer. Guarantor may not terminate this
Guaranty as to Guaranteed Obligations (including any subsequent extensions,
modifications or
compromises of the Guaranteed Obligations) then existing, or to Guaranteed
Obligations arising subsequent to receipt by Bank of said notice if such
Guaranteed Obligations are a result of Bank's obligation to make advances
pursuant to a commitment entered into prior to expiration of the 15 day notice
period, or are a result of advances which are necessary for Bank to protect its
collateral or otherwise preserve its interests. Termination of this Guaranty by
any single Guarantor will not affect the existing and continuing obligations of
any other guarantor hereunder.
APPLICATION OF PAYMENTS, BANK LIEN AND SET-OFF. Monies received from any source
by Bank for application toward payment of the Guaranteed Obligations may be
applied to such Guaranteed Obligations in any manner or order deemed
appropriate by Bank. Except as prohibited by law, Guarantor grants Bank a
security interest in all of Guarantor's accounts maintained with Bank and any
of its affiliates (collectively, the "Accounts"). If a Default occurs, Bank is
authorized to exercise its right of set-off or to foreclose its lien against
any obligation of Bank to Guarantor including, without limitation, all Accounts
or any other debt of any maturity, without notice.
CONSENT TO MODIFICATIONS. Guarantor CONSENTS AND AGREES THAT BANK MAY FROM TIME
TO TIME, IN ITS SOLE DISCRETION, WITHOUT AFFECTING, IMPAIRING, LESSENING OR
RELEASING THE OBLIGATIONS OF THE GUARANTOR HEREUNDER: (a) extend or modify the
time, manner, place or terms of payment or performance and/or otherwise change
or modify the credit terms of the Guaranteed Obligations; (b) increase, renew,
or enter into a novation of the Guaranteed Obligations; (c) waive or consent to
the departure from terms of the Guaranteed Obligations; (d) permit any change
in the business or other dealings and relations of Borrower or any other
guarantor with Bank; (e) proceed against, exchange, release, realize upon, or
otherwise deal with in any manner any collateral that is or may be held by Bank
in connection with the Guaranteed Obligations or any liabilities or obligations
of Guarantor; and (f) proceed against, settle, release, or compromise with
Borrower, any insurance carrier, or any other person or entity liable as to any
part of the Guaranteed Obligations, and/or subordinate the payment of any part
of the Guaranteed Obligations to the payment of any other obligations, which
may at any time be due or owing to Bank; all in such manner and upon such terms
as Bank may deem appropriate, and without notice to or further consent from
Guarantor. No invalidity, irregularity, discharge or unenforceability of, or
action or omission by Bank relating to any part of, the Guaranteed Obligations
or any security therefor shall affect or impair this Guaranty.
WAIVERS AND ACKNOWLEDGMENTS. Guarantor WAIVES AND RELEASES THE FOLLOWING
RIGHTS, DEMANDS, AND DEFENSES Guarantor may have with respect to Bank and
collection of the Guaranteed Obligations: (a) promptness and diligence in
collection of any of the Guaranteed Obligations from Borrower or any other
person liable thereon, and in foreclosure of any security interest and sale of
any property serving as collateral for the Guaranteed Obligations; (b) any law
or statute that requires that Bank make demand upon, assert claims against, or
collect from Borrower or other persons or entities, foreclose any security
interest, sell collateral, exhaust any remedies, or take any other action
against Borrower or other persons or entities prior to making demand upon,
collecting from or taking action against Guarantor with respect to the
Guaranteed Obligations, including any such rights Guarantor might otherwise
have had under Va. Code xx.xx. 49-25 and 49-26, et seq., N.C.G.S. xx.xx. 26-7,
et seq., Tenn. Code Xxx. ss. 00-00-000, O.C.G.A. ss. 10-7-24 (and any successor
statute) and any other applicable law; (c) any law or statute that requires
that Borrower or any other person be joined in, notified of or made part of any
action against Guarantor; (d) that Bank preserve, insure or perfect any
security interest in collateral or sell or dispose of collateral in a
particular manner or at a particular time; (e) notice of extensions,
modifications, renewals, or novations of the Guaranteed Obligations, of any new
transactions or other relationships between Bank, Borrower and/or any
guarantor, and of changes in the financial condition of, ownership of, or
business structure of Borrower or any other guarantor; (f) presentment,
protest, notice of dishonor, notice of default, demand for payment, notice of
intention to accelerate maturity, notice of acceleration of maturity, notice of
sale, and all other notices of any kind whatsoever; (g) the right to assert
against Bank any defense (legal or equitable), set-off, counterclaim, or claim
that Guarantor may have at any time against Borrower or any other party liable
to Bank; (h) all defenses relating to invalidity, insufficiency,
unenforceability, enforcement, release or impairment of Bank's lien on any
collateral, of the Loan Documents,
PAGE 2
or of any other guaranties held by Bank; (i) any claim or defense that
acceleration of maturity of the Guaranteed Obligations is stayed against
Guarantor because of the stay of assertion or of acceleration of claims against
any other person or entity for any reason including the bankruptcy or
insolvency of that person or entity; and (j) the benefit of any exemption
claimed by Guarantor. Guarantor acknowledges and represents that it has relied
upon its own due diligence in making its own independent appraisal of Borrower,
Xxxxxxxx's business affairs and financial condition, and any collateral;
Guarantor will continue to be responsible for making its own independent
appraisal of such matters; and Guarantor has not relied upon and will not
hereafter rely upon Bank for information regarding Borrower or any collateral.
FINANCIAL CONDITION. Guarantor warrants, represents and covenants to Bank that
on and after the date hereof: (a) the fair saleable value of Guarantor's assets
exceeds its liabilities, Guarantor is meeting its current liabilities as they
mature, and Guarantor is and shall remain solvent; (b) all financial statements
of Guarantor furnished to Bank are correct and accurately reflect the financial
condition of Guarantor as of the respective dates thereof; (c) since the date
of such financial statements, there has not occurred a material adverse change
in the financial condition of Guarantor; and (d) there are not now pending any
court or administrative proceedings or undischarged judgments against
Guarantor, no federal or state tax liens have been filed or threatened against
Guarantor, and Guarantor is not in default or claimed default under any
agreement.
INTEREST. Regardless of any other provision of this Guaranty or other Loan
Documents, if for any reason the effective interest on any of the Guaranteed
Obligations should exceed the maximum lawful interest, the effective interest
shall be deemed reduced to and shall be such maximum lawful interest, and any
sums of interest which have been collected in excess of such maximum lawful
interest shall be applied as a credit against the unpaid principal balance of
the Guaranteed Obligations.
DEFAULT. If any of the following events occur, a default ("Default") under this
Guaranty shall exist: (a) Failure of timely payment or performance of the
Guaranteed Obligations or a default or any Event of Default (as such term is
defined in the applicable Loan Document) under any Loan Document; (b) A breach
of any agreement or representation contained or referred to in the Guaranty, or
any of the Loan Documents, or contained in any other contract or agreement of
Guarantor with Bank or its affiliates, whether now existing or hereafter
arising; (c) The dissolution of, termination of existence of, loss of good
standing status by, appointment of a receiver for, assignment for the benefit
of creditors of, or the commencement of any insolvency or bankruptcy proceeding
by or against, Guarantor or any general partner of or the holder(s) of the
majority ownership interests of Guarantor; and/or (d) The entry of any monetary
judgment or the assessment against, the filing of any tax lien against, or the
issuance of any writ of garnishment or attachment against any property of or
debts due Guarantor.
If a Default occurs, the Guaranteed Obligations shall be due immediately and
payable without notice. Guarantor shall pay interest on the Guaranteed
Obligations from such Default at the highest rate of interest charged on any of
the Guaranteed Obligations.
ATTORNEY'S FEES AND OTHER COSTS OF COLLECTION. Guarantor shall pay all of
Bank's reasonable expenses incurred to enforce or collect any of the Guaranteed
Obligations, including, without limitation, reasonable arbitration,
paralegals', attorneys' and experts' fees and expenses, whether incurred
without the commencement of a suit, in any suit, arbitration, or administrative
proceeding, or in any appellate or bankruptcy proceeding.
SUBORDINATION OF OTHER DEBTS. Guarantor agrees: (a) to subordinate the
obligations now or hereafter owed by Borrower to Guarantor ("Subordinated
Debt") to any and all obligations of Borrower to Bank now or hereafter existing
while this Guaranty is in effect, provided however that Guarantor may receive
regularly scheduled principal and interest payments on the Subordinated Debt so
long as (i) all sums due and payable by Borrower to Bank have been paid in full
on or prior to such date, and (ii) no event or condition which constitutes or
which with notice or the lapse or time would constitute an event of default
with respect to the
PAGE 3
Guaranteed Obligations, shall be continuing on or as of the payment date; (b)
Guarantor will place a legend indicating such subordination on every note,
ledger page or other document evidencing any part of the Subordinated Debt; and
(c) except as permitted by this paragraph, Guarantor will not request or accept
payment of or any security for any part of the Subordinated Debt, and any
proceeds of the Subordinated Debt paid to Guarantor, through error or
otherwise, shall immediately be forwarded to Bank by Guarantor, properly
endorsed to the order of Bank, to apply to the Guaranteed Obligations.
MISCELLANEOUS. (a) ASSIGNMENT. This Guaranty and other Loan Documents shall
inure to the benefit of and be binding upon the parties and their respective
heirs, legal representatives, successors and assigns. Bank's interests in and
rights under this Guaranty and other Loan Documents are freely assignable, in
whole or in part, by Bank. Any assignment shall not release Guarantor from the
Guaranteed Obligations. (b) APPLICABLE LAW; CONFLICT BETWEEN DOCUMENTS. This
Guaranty and other Loan Documents shall be governed by and construed under the
laws of the state in which office of Bank first shown above is located without
regard to that state's conflict of laws principles. If the terms of this
Guaranty should conflict with the terms of any commitment letter that survives
closing, the terms of this Guaranty shall control. (c) JURISDICTION. Guarantor
irrevocably agrees to non-exclusive personal jurisdiction in the state in which
the office of Bank first shown above is located. (d) SEVERABILITY. If any
provision of this Guaranty or of the other Loan Documents shall be prohibited
or invalid under applicable law, such provision shall be ineffective but only
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Guaranty or
other document. (e) NOTICES. Any notices to Guarantor shall be sufficiently
given, if in writing and mailed or delivered to the Guarantor's address shown
above or such other address as provided hereunder, and to Bank, if in writing
and mailed or delivered to Bank's office address shown above or such other
address as Bank may specify in writing from time to time. In the event that
Guarantor changes Guarantor's address at any time prior to the date the
Guaranteed Obligations are paid in full, Guarantor agrees to promptly give
written notice of said change of address by registered or certified mail,
return receipt requested, all charges prepaid. (f) PLURAL; CAPTIONS. All
references in the Loan Documents to borrower, guarantor, person, document or
other nouns of reference mean both the singular and plural form, as the case
may be, and the term "person" shall mean any individual, person or entity. The
captions contained in the Loan Documents are inserted for convenience only and
shall not affect the meaning or interpretation of the Loan Documents. (g)
BINDING CONTRACT. Guarantor by execution of and Bank by acceptance of this
Guaranty agree that each party is bound to all terms and provisions of this
Guaranty. (h) AMENDMENTS, WAIVERS AND REMEDIES. No waivers, amendments or
modifications of this Guaranty and other Loan Documents shall be valid unless
in writing and signed by an officer of Bank. No waiver by Bank of any Default
shall operate as a waiver of any other Default or the same Default on a future
occasion. Neither the failure nor any delay on the part of Bank in exercising
any right, power, or privilege granted pursuant to this Guaranty and other Loan
Documents shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise or the exercise of any
other right, power or privilege. All remedies available to Bank with respect to
this Guaranty and other Loan Documents and remedies available at law or in
equity shall be cumulative and may be pursued concurrently or successively. (i)
PARTNERSHIPS. If Guarantor is a partnership, the obligations, liabilities and
agreements on the part of Guarantor shall remain in full force and effect and
fully applicable notwithstanding any changes in the individuals comprising the
partnership. The term "Guarantor" includes any altered or successive
partnerships, and predecessor partnership(s) and the partners shall not be
released from any obligations or liabilities hereunder. (j) LOAN DOCUMENTS. The
term "Loan Documents" refers to all documents executed in connection with the
Guaranteed Obligations, including, without limitation, the Revolving Loan and
Security Agreement dated as of March 31,1997 ("Loan Agreement") between the
Borrower and the Bank together with all of the "Loan Documents" (as such term
is defined in the Loan Agreement) and may include, without limitation,
commitment letters that survive closing, loan agreements, other guaranty
agreements, security agreements, instruments, financing statements, mortgages,
deeds of trust, deeds to secure debt, letters of credit and any amendments or
supplements (excluding swap agreements as defined in 11 U.S. Code ss. 101).
PAGE 4
FINANCIAL AND OTHER INFORMATION. In addition to the other covenants set forth
herein and the other Loan Documents, Guarantor shall deliver to Bank such
information as Bank may reasonably request from time to time, including without
limitation, financial statements and information pertaining to Guarantor's
financial condition. Such information shall be true, complete, and accurate.
SECURITY. Guarantor has granted Bank a security interest in the collateral
described in the Loan Documents, including, but not limited to, personal
property collateral described in that certain Security Agreement dated the date
hereof.
ARBITRATION. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Guaranty and other Loan
Documents ("Disputes") between or among parties to this Guaranty shall be
resolved by binding arbitration as provided herein. Institution of a judicial
proceeding by a party does not waive the right of that party to demand
arbitration hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to arbitration,
claims brought as class actions, claims arising from Loan Documents executed in
the future, or claims arising out of or connected with the transaction
reflected by this Guaranty.
Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association (the "AAA") and Title 9 of the U.S. Code. All
arbitration hearings shall be conducted in the city in which the office of Bank
first stated above is located. The expedited procedures set forth in Rule 51 et
seq. of the Arbitration Rules shall be applicable to claims of less than
$1,000,000.00. All applicable statutes of limitation shall apply to any
Dispute. A judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall be
comprised of licensed attorneys. The single arbitrator selected for expedited
procedure shall be a retired judge from the highest court of general
jurisdiction, state or federal, of the state where the hearing will be
conducted or if such person is not available to serve, the single arbitrator
may be a licensed attorney. Notwithstanding the foregoing, this arbitration
provision does not apply to disputes under or related to swap agreements.
PRESERVATION AND LIMITATION OF REMEDIES. Notwithstanding the preceding binding
arbitration provisions, Bank and Guarantor agree to preserve, without
diminution, certain remedies that any party hereto may employ or exercise
freely, independently or in connection with an arbitration proceeding or after
an arbitration action is brought. Bank and Guarantor shall have the right to
proceed in any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable: (i) all rights to foreclose
against any real or personal property or other security by exercising a power
of sale granted under Loan Documents or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in
a Dispute.
Guarantor and Bank agree that they shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any right
or claim to punitive or exemplary damages they have now or which may arise in
the future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. The Guarantor represents and
warrants that:
(i) the assumption by the Guarantor of its liabilities and
obligations hereunder will result in material benefits to the Guarantor;
PAGE 5
(ii) this Guaranty when executed and delivered by the Guarantor will
constitute a legal, valid and binding obligation on his or her part,
enforceable against the Guarantor in accordance with its terms, subject, as to
enforcement of remedies only, to any applicable bankruptcy, insolvency,
moratorium or similar laws of general application at the time in effect and
general principles of equity;
(iii) the Guarantor has good and marketable title to all of the
Guarantor's properties and assets listed in the most recent financial
statements delivered to the Lender on or prior to the date hereof (except as
otherwise expressly described in said financial statements, and except those
properties and assets disposed of since the date of said financial statements
in the ordinary course of business);
(iv) neither the execution and delivery of this Guaranty or any other
document, agreement, certificate and instrument to which the Guarantor is a
party or by which the Guarantor is bound, nor the consummation of the
transactions contemplated under the Loan Documents, nor the compliance with or
performance of the terms and conditions herein or therein will result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of the Guarantor, except as
permitted in or anticipated by this Guaranty and the other Loan Documents, nor
is prevented by, limited by, conflicts with or will result in the breach or
violation of or a default under the terms, conditions or provisions of (a) any
indenture, evidence of indebtedness, loan or financing agreement, or other
agreement or instrument of whatever nature to which the Guarantor is a party or
by which the Guarantor or its properties are bound, or (b) any provision of any
existing law, rule, regulation, order, writ, injunction or decree of any court
or governmental authority to which the Guarantor is subject;
(v) the Guarantor is not a party to any action, suit, proceeding,
inquiry, hearing or investigation pending, or within the best of the
Guarantor's knowledge, after due inquiry and investigation, threatened, in any
court of law or in equity, or before or by any governmental authority wherein
there is a reasonable probability that an unfavorable determination, decision,
decree, ruling or finding would (a) result in any material adverse change in
the business, assets, liabilities, financial condition, properties or
operations of the Guarantor, (b) materially adversely affect the transactions
contemplated by this Guaranty and the other Loan Documents or the Guarantor's
ability to perform its obligations hereunder, or (c) adversely affect the
validity or enforceability of this Agreement of Guaranty;
(vi) the Guarantor is not in violation of or default with respect to
any law, rule, regulation, order, writ, injunction, decree or demand of any
court, governmental authority, commission, board, agency or instrumentality;
(vii) all consents, approvals, orders or authorizations of, or
registrations, declarations or filings with any governmental authority which
are required in connection with the valid execution and delivery of this
Guaranty by the Guarantor and the other Loan Documents to which it is a party,
and the carrying out or performance of any of the transactions required or
contemplated hereunder to be performed by the Guarantor have been obtained or
accomplished and are in full force and effect; and
(viii) the Guarantor has duly filed or caused to be filed all federal,
state and municipal tax reports and returns which are required to be filed by
it, and has paid or made adequate provision for the payment of, all taxes,
assessments, fees and other governmental charges which have become due pursuant
to said returns, or otherwise pursuant to any assessment received by the
Guarantor, except such taxes, if any, as are being contested in good faith by
the Guarantor by appropriate proceedings (provided that such contest shall not
result in a lien being placed on any of the Guarantor's properties or assets or
result in any of the Guarantor's properties or assets being subject to loss or
forfeiture as a result of nonpayment during the continuance of such contest)
and for which the Guarantor has maintained adequate reserves.
GUARANTOR'S COVENANTS. Guarantor covenants and agrees that so long as this
Guaranty is in full force and effect it shall comply with all of the covenants
set forth in SECTION 10 of the Loan Agreement as they
PAGE 6
apply to the Guarantor and the Subsidiaries of Borrower (collectively, the
"Loan Covenants"). All of such Loan Covenants are deemed incorporated herein in
their entirety as if fully and completely set forth herein except that all
references to "Borrower" therein are hereby deemed references to the Guarantor.
This Guaranty shall automatically be deemed effective and in full force and
effect upon the occurrence of the "Effective Time" (as such term is defined in
the Agreement and Plan of Merger dated December 5, 1997 among the Borrower,
EMKR Acquisition Corporation, the Guarantor and the principal stockholders of
the Guarantor).
IN WITNESS WHEREOF, Guarantor, on the day and year first written above, has
caused this Unconditional Guaranty to be executed under seal.
MICROOPTICAL DEVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
_______________________________________
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: President & CEO
PAGE 7
