EXECUTION
CONSENT AND AMENDMENT AGREEMENT
This CONSENT AND AMENDMENT AGREEMENT, dated as of December
2, 1997 (the "Amendment") is made by and between First Union National Bank
(the "Bank") and EMCORE Corporation (the "Borrower"). All capitalized terms
used herein and not otherwise defined herein shall have the meanings set forth
in the Loan Agreement (as such term is defined below).
W I T N E S S E T H :
WHEREAS, on March 31, 1997, the Borrower and the Bank entered
into a Revolving Loan and Security Agreement (the "Loan Agreement") pursuant to
which the Bank agreed to make revolving loans to the Borrower, in accordance
with the terms therewith; and
WHEREAS, the terms and conditions of the Loan Agreement
prohibit the Borrower from creating any subsidiaries or acquiring the assets or
the stock of another entity without the prior written consent of the Bank; and
WHEREAS, the Borrower is about to form a wholly-owned
subsidiary, EMKR Acquisition Corporation ("EMKR") which will merge with and
into MicroOptical Devices, Inc., a Delaware corporation ("MODE") (the "Merger
Transaction"); and
WHEREAS, the Bank has agreed to consent to the Merger
Transaction and waive any defaults under Sections 10.11, 10.17, 10.20 and
11.1(c) of the Loan Agreement which resulted from the consummation of the
Merger Transaction, provided that the Loan Agreement is amended as set forth
herein and that MODE executes and delivers a Guaranty and Security Agreement in
favor of the Bank; as more particularly set forth herein.
NOW THEREFORE, in consideration of the mutual promises and
covenants herein and in any other document or instrument executed and delivered
in connection herewith, the parties hereto agree as follows:
1. Amendments to the Loan Agreement. On the Effective
Date (as defined below) the Loan Agreement is hereby deemed amended as follows:
(a) The following definitions are hereby added
to SECTION 1:
"Guarantor" means MicroOptical Devices, Inc.
"Guaranty" means the Guaranty dated
December 3, 1997 made by Guarantor in favor
of the Bank with respect to the obligations
of the Borrower to the Bank, as the same
may be modified, amended, or supplemented
from time to time.
"Security Agreement" means the Security
Agreement dated December 3, 1997 made by
the Guarantor in favor of the Bank as
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the same may be modified, amended or
supplemented from time to time.
(b) The term "Loan Documents" as defined in
SECTION 1 is amended to include the Guaranty and the Security
Agreement.
(c) Clause (A) of the definition of "Fixed
Charge Coverage Ratio" set forth in Section 1 is hereby amended in
its entirety to read as follows: "(A) EBIT for the period of
determination to ..."
(d) Section 2.2 is hereby amended to include
the following additional paragraph:
Notwithstanding anything to the contrary set forth
herein, the Borrower agrees that it shall not be
permitted to borrow hereunder (and the Bank shall
not honor any Borrowing Notice received) to the
extent any proposed Revolving Loan would, when added
to the aggregate amount of the already outstanding
Revolving Loans, increase the amount of Obligations
outstanding hereunder to an amount equal to or in
excess of $5,000,000 unless and until, the Borrower
has granted in favor of the Bank a first priority
perfected security interest and Lien in all of the
Borrower's right, title and interest in and to the
Warrant Notes, the Note Stock Pledge Agreements and
the Warrant Note Collateral, in form and substance
satisfactory to the Bank.
(e) Section 8.12 is hereby amended to include
the following phrase at the end of the sentence "except for Guarantor."
(f) The word "not" is hereby inserted after the word
"is" and before the word "an" in Section 8.17.
(g) The lead-in of SECTION 10 is hereby
amended in its entirety to read as follows:
The Borrower covenants and agrees that so long as
the Revolving Loan Commitment remains in effect,
there are any Revolving Loans outstanding or any
other obligation remains unpaid, the Borrower shall
and shall cause each of its Subsidiaries to:
(h) In all of SECTION 10 except for Sections 10.1,
10.2, 10.9, 10.13, 10.14, 10.15, 10.16, 10.24, 10.25 and 10.27. All
references to "Borrower" shall be deemed references to "it" such that
the covenants will apply to the Borrower and each of its Subsidiaries.
In addition to the foregoing, with respect to any covenant in SECTION
10 which contains a monetary limitation, compliance shall be
determined on a consolidated basis, i.e., the Borrower and all its
Subsidiaries.
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(i) Section 10.1 of the Loan Agreement is
amended by adding the following sentence to the end of the Section:
All financial statements delivered by the Borrower
shall include financial statements of its
Subsidiaries on a consolidating basis.
(j) Section 10.2 is amended to include the
following phrase at the end of the sentence: "and to loan to Guarantor
up to an amount not exceeding $2,000,000 at any time outstanding."
(k) An additional proviso is hereby added to
Section 10.4 at the end of the sentence as follows:
and provided, further, that the financial
accommodations to the Guarantor permitted under
Section 10.26 shall not be deemed to be in violation
of this covenant.
(l) Section 10.5 should begin as follows: "The
Borrower and all of its Subsidiaries shall ...."
(m) Sections 10.14 (a) and (b) of the Loan
Agreement are modified as follows: each reference to "Borrower shall"
is hereby amended to read "Borrower and its Subsidiaries, on a
consolidated basis, shall".
(n) Section 10.20 should begin: "The Borrower
and each of its Subsidiaries shall".
(o) Section 10.21 is amended to include the
following language at the end of the Section:
; provided, however, that all Subsidiaries may
declare and pay dividends to the Borrower.
(p) The first sentence of Section 10.26 is
amended to include the following phrase at the end of such sentence:
except that the Borrower may (i) make financial
accommodations to the Guarantor, however
characterized, whether as loans, notes payable,
accounts receivable, advances or otherwise, in an
amount not to exceed $2,000,000 at any time
outstanding, and (ii) accept the Notes Secured by
Stock Pledge Agreements dated on or about December
4, 1997 made in its favor by (1) AER 1997 Trust (in
the principal amount of $3,127,560.72), (2) Gallium
Enterprises Inc. (in the principal amount of
$2,632,338.48, (3) Xxxxxx X. Xxxx (in the principal
amount of $566,067.36), (4) Xxxxxx X. Xxxx (in the
principal amount of $566,067.36) and (5) Xxxxxx X.
Xxxxxxxx, Xx. (in the principal amount of
$566,067.36) (collectively, the "Warrant Notes").
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(q) Section 10.27 is hereby added to
SECTION 10:
10.27 Warrant Notes, etc. The Borrower hereby agrees
that it will not create, assume or permit to exist
any Lien upon or otherwise transfer any of its
right, title and interest in and to (i) the Warrant
Notes, (ii) the Stock Pledge Agreements dated on or
about December 4, 1997 executed and delivered by
each of the makers of the Warrant Notes in favor of
the Borrower (collectively, the "Note Stock Pledge
Agreements") and (iii) the "Collateral" (as such
quoted term is defined in the Note Stock Pledge
Agreements, referred to hereinafter as the "Warrant
Note Collateral") except in favor of the Bank as set
forth herein and the Liens described in clause (iii)
of Section 10.5.
The Borrower further agrees not to agree to any
amendments or other modifications to the Warrant
Notes or the Note Stock Pledge Agreements.
(r) Each Event of Default enumerated in
Sections 11.1(b), (d), (e), (f), (g) and (h) shall apply to the Guarantor as
if the term "Guarantor" appeared each time the term "Borrower" appears in
those Sections.
(s) The phrase "or 10.27" is hereby added
after "10.26" in Section 11.1(c).
(t) The following subsection 11.1(e) is hereby
added to Section 11.1:
Guarantor - If (i) Guarantor fails to comply with
any payment obligation set forth in the Guaranty or
if Guarantor fails to comply with any of the
covenants or other agreements set forth in the
Guaranty or any other Loan Document to which it is a
party beyond any applicable grace period provided
for therein, or (ii) any representation or warranty
made or deemed made by Guarantor in the Guaranty or
any other Loan Document to which it is a party or
which is contained in any exhibit, schedule or any
other document or other statement furnished at any
time under or in connection with the Guaranty or any
of the other Loan Documents shall prove to have been
incorrect in any material respect on or as of the
date made or deemed made, or (iii) if Guarantor
shall terminate, purport to terminate or take any
steps which have the effect of decreasing its
liability under the Guaranty.
2. The Bank shall be deemed to have (i) given its consent to
the Merger Transaction, (ii) waived any Defaults or Events of Default the
Merger Transaction created under Sections 10.11, 10.17, 10.20 and 11.1(c) of
the Loan Agreement and (iii) agreed to the amendments to the Loan Agreement set
forth herein as of the date all of the following conditions have been satisfied
(the "Effective Date"):
(a) The Bank shall have received the original
Guaranty and the Security Agreement (each in form and substance
satisfactory to the Bank) executed by MODE together with UCC-1
Financing Statements in form for recording with the appropriate
jurisdictions, naming MODE, as Debtor and the Bank, as Secured Party
(the "MODE Documents");
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(b) The Bank shall have received (i) certified
copies of all corporate action taken by MODE to authorize the
execution, delivery and performance, in accordance with their
respective terms, of the MODE Documents and any other documents
required or contemplated hereunder or thereunder; (ii) a certificate
of incumbency with respect to the officers of MODE authorized and
directed to execute and deliver the MODE Documents and other documents
required or contemplated thereunder; (iii) certified copies of the
articles of incorporation and by-laws of MODE, amended to the date
hereof; and (iv) certificate(s) of good standing for MODE from the
appropriate authority in its jurisdiction of incorporation and in each
other jurisdiction in which it is required to qualify to do business;
(c) The Bank shall have received a Certificate of
the Borrower, executed by the Chief Financial Officer of the Borrower
and dated the Effective Date that (i) no Default or Event of Default
has occurred and is continuing and (ii) the representations and
warranties of the Borrower contained in the Loan Documents are true
and correct as of such date; and
(d) The Bank shall have received the opinion of
MODE's counsel covering the MODE Documents, in form and substance
satisfactory to the Bank and its counsel.
3. The Loan Agreement is, and shall continue to be, in full
force and effect and is hereby ratified and confirmed in all respects except
that after giving effect to this Amendment all references in the Loan Agreement
to "this Agreement," "hereto," "hereof," "hereunder" or words of like import
referring to the Loan Agreement shall mean the Loan Agreement, as amended; and
all references in the other Loan Documents to the Loan Agreement shall mean the
Loan Agreement, as amended hereby.
4. This Amendment may be executed in counterparts,
each of which shall be deemed to be an original but all of which together
shall constitute one and the same instrument.
5. This Amendment, including the validity thereof and the
rights and obligations of the parties hereunder, shall be construed in
accordance with and governed by the laws of the State of New Jersey.
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IN WITNESS WHEREOF, each of the parties hereto has caused
this Consent and Amendment Agreement to be duly executed and delivered on this
2nd day of December, 1997.
BORROWER:
EMCORE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
___________________________________
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: President & CEO
BANK:
FIRST UNION NATIONAL BANK
By: /s/ Xxxxxxx X. Xxxxxxxx
____________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
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