EXHIBIT 10.6
GUARANTOR INDEMNIFICATION AGREEMENT
This Guarantor Indemnification Agreement ("Agreement") dated as of
December 20, 2000, is made by and among TYCO INTERNATIONAL GROUP S.A. (the
"Guarantor"), a company incorporated under the laws of Luxembourg; FiberCore,
Inc. (the "Borrower"), a company incorporated under the laws of Nevada; and the
Managing Shareholders, as defined herein.
WITNESSETH
WHEREAS, the Borrower wishes to obtain a revolving line of credit in
the maximum principal amount of $10,000,000 (the "Revolving Credit Loan") from
Fleet National Bank, a national banking association (the "Bank") pursuant to the
terms of Loan Agreement dated December 20, 2000 (the "Credit Agreement"); and
WHEREAS, the Guarantor is an affiliate of TYCO INTERNATIONAL LTD.
("Tyco"), a company organized under the laws of Bermuda, which currently
controls approximately 21.69% of the Borrower's common stock; and
WHEREAS, the Bank requires, as a condition of making the Revolving
Credit Loan, that a financially responsible party guarantee all indebtedness and
other obligations owing by the Borrower to the Bank with respect to the
Revolving Credit Loan pursuant to the Credit Agreement; and
WHEREAS the Guarantor is willing to guarantee the Revolving Credit
Loan on the terms set forth in the form of guaranty attached hereto as Exhibit A
(the "Guaranty") provided that, in consideration of providing the Guaranty, the
Guarantor is granted the rights and remedies set forth in this Agreement; and
WHEREAS, in order to induce the Guarantor to guarantee the Revolving
Credit Loan, the Borrower and the Managing Shareholders are willing to grant the
Guarantor the rights and remedies, and to undertake the obligations, set forth
in this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, that parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this agreement, the following terms shall have the
meanings specified below unless the context otherwise requires. All other
capitalized terms used in this Agreement that are defined in the Credit
Agreement or the Guaranty (except as herein otherwise expressly provided or
unless the context otherwise requires) shall have the meanings assigned to such
terms in the Credit Agreement or in the Guaranty as in force on the Effective
Date.
1.1 Applicable Percentage. The percentage specified in Section
2.2(b) or Section 2.3(b), as applicable.
1.2 Applicable Rate: A floating annual rate of interest equal to
One-Month LIBOR, as in effect from time to time, plus (a) so long as no Event of
Default has occurred and is continuing, 450 basis points or (b) upon the
occurrence and during the continuation of an Event of Default, 850 basis points.
The Applicable Rate shall be applied on the basis of a 360-day year for the
actual number of days an amount remains outstanding hereunder. Interest shall be
compounded daily until it has been paid in full.
1.3 Business Day: Each day other than Saturday, Sunday, or any other
day on which banking institutions are authorized or required by law, executive
order or governmental decree to be closed in Luxembourg, New York or
Massachusetts.
1.4 Common Stock: Newly issued shares of the Borrower's common
stock, par value $.001 per share, which are validly issued, free and clear of
all liens, claims, encumbrances, preemptive rights and other restrictions, other
than restrictions imposed by applicable securities laws.
1.5 Due Date: Each January 1, April 1, July 1 and October 1 that
occurs on or after the Effective Date and while the Guaranty remains in effect;
provided, however, that if a given Due Date is scheduled to occur on a day that
is not a Business Day, such Due Date shall occur on the next succeeding Business
Day.
1.6 Effective Date: As defined in Section 9.1.
1.7 Expenses: All present and future expenses reasonably incurred by
or on behalf of the Guarantor in connection with this Agreement or the Guaranty
and any amendment, supplement or other modification or waiver related hereto, or
thereto, whether incurred heretofore or hereafter, which expenses shall include,
without limitation, reasonable attorneys' fees, disbursements and expenses; all
costs and expenses incurred by the Guarantor in opening bank accounts and
receiving and transferring funds; and reasonable fees and expenses of
accountants, appraisers or other experts or advisors retained by the Guarantor.
1.8 Managing Shareholders: Xxxx X. Xxxxxx, Xxxxxxx Xx Xxxx, Xxxxxx
Xxxxxxxx and each other officer or director of the Borrower who becomes a party
to this Agreement pursuant to Section 3.8.
1.9 Material Adverse Change: A material adverse change in the
business, prospects, operations, assets, liabilities or condition (financial or
otherwise) of the Borrower and the Subsidiaries, taken as a whole.
1.10 Material Adverse Effect: Either (i) a material adverse effect
on the business of the Borrower and the Subsidiaries, taken as a whole, (ii) a
material adverse effect on the Borrower's ability to perform its obligations
under this Agreement, the Credit Agreement or any of the Loan Documents to which
it is a party, or (iii) an event or development that, in the reasonable judgment
of the Guarantor, is reasonably likely to cause the effects specified in (i) or
(ii).
1.11 One-Month LIBOR: With respect to any day, the One-Month London
Interbank Offered Rate (LIBOR) for U.S. Dollar borrowings, as determined by the
British Bankers' Association on the Due Date and as reported by Bloomberg
Financial Markets Service.
1.12 Series A Designations: The Designation of Rights, Privileges
and Preferences of Series A Preferred Stock, adopted by resolution of the
Borrower's Board of Directors on December __, 2000.
1.13 Series A Director: A Director designated by the Guarantor
pursuant to the terms of the Series A Designations.
1.14 Series A Preferred Stock: Shares of the Borrower's Series A
Preferred Stock having the rights, privileges and preferences set forth in
Exhibit B hereto.
1.15 Subsidiaries: As defined in Section 3.9.
1.16 Weighted Average Daily Trading Price: For any date, the average
(weighted to take account of the number of shares traded) of the selling prices
of the Borrower's common shares for the ten trading days immediately preceding
such date, as reported by Bloomberg Financial Markets Service.
ARTICLE II
GUARANTY; REIMBURSEMENT; FACILITY FEES; EXPENSES
2.1 Guaranty: At closing of the Revolving Credit Loan on the terms
contemplated by the Credit Agreement, as previously presented to and approved by
the Guarantor, subject to satisfaction of the conditions in Section 9.2, the
Guarantor shall execute and deliver the Guaranty to the Bank.
2.2 Reimbursement of Payments Made Under Guaranty: In the event that
the Guarantor makes a payment to the Bank pursuant to the Guaranty (each a
"Guaranty Payment"), the Guarantor will give written notice to the Borrower
specifying the date and the amount of such Guaranty Payment (each a
"Reimbursement Notice"). Upon issuance of the Reimbursement Notice, and to the
extent not prohibited under the Guaranty, the Guarantor shall assume and be
subrogated to all rights of the Bank under the Revolving Credit Loan. The
Borrower shall reimburse the Guarantor in full for each and every Guaranty
Payment and shall also pay the Guarantor interest at the Applicable Rate on the
outstanding balance of each Guaranty Payment from the day it is made through the
day immediately preceding the day on which the Guarantor is reimbursed as
provided herein. Reimbursement shall be made as specified in Section 2.2(a) or
2.2(b) below. Upon such reimbursement and payment of all interest and Expenses
payable under Article II, the Borrower shall be fully discharged from all
liability to the Guarantor with respect to such Guaranty Payment.
(a) Reimbursement in Cash. Unless otherwise specified by the
Guarantor in the Reimbursement Notice, reimbursement of a Guaranty Payment and
all interest accrued thereon shall be made in immediately available funds
denominated in U.S. Dollars within ten (10) Business Days after the Guarantor
gives the Reimbursement Notice.
(b) Reimbursement in Common Stock. If and to the extent so specified
by the Guarantor in the Reimbursement Notice, reimbursement of a Guaranty
Payment and all interest accrued thereon shall be made in the form of Common
Stock issued in the name of the Guarantor or its designee(s). The number of
shares of Common Stock to be issued for purposes of such reimbursement shall be
calculated as specified in Section 2.4, with the Applicable Percentage being
80%. Such shares of Common Stock shall be issued by the Borrower within fifteen
(15) Business Days after the Guarantor gives the Reimbursement Notice.
2.3 Guaranty Fees: On each Due Date, the Borrower shall pay to the
Guarantor a Guarantee facility fee (the "Fee") equal to 0.4% of the maximum
principal amount, including both amounts outstanding and amounts available to be
drawn by the Borrower, of the Revolving Credit Loan as of such Due Date.
(a) Unless otherwise specified by the Guarantor in a written
notice given to the Borrower before the Due Date, the
Fee shall be paid in immediately available funds
denominated in U.S. Dollars.
(b) If and to the extent so specified by the Guarantor in a
written notice given to the Borrower before the Due
Date, the Fee shall be paid in the form of Common Stock
issued in the name of the Guarantor or its designee(s).
The number of shares of Common Stock to be issued for
purposes of such payment shall be calculated as
specified in Section 2.4, with the Applicable Percentage
being 90%. Such shares of Common Stock shall be issued
by the Borrower within fifteen (15) Business Days after
the Due Date.
2.4 Calculation of Number of Shares: When a payment or reimbursement
hereunder is required to be made in the form of Common Stock, the number of
shares of Common Stock to be issued with respect to such payment or
reimbursement shall be calculated as follows as of the date on which such shares
are required to be issued:
Number = ($ Amount) / (AP x WADTP)
Where:
o Number = Number of shares of Common Stock to be issued, rounded to the
nearest whole share;
o $ Amount = The U.S. Dollar amount to be paid or reimbursed in Common Stock;
o AP = The Applicable Percentage; and
o WADTP = The Weighted Average Daily Trading Price
Example 1: Assuming the maximum principal amount of the Revolving
Credit Loan is $10,000,000 on August 1 of 2001, the amount of the
Fee will be $40,000. Assuming the Weighted Average Daily Trading
Price for the ten trading days ending July 31 is $5.00 per share,
the Guarantor will have the option of receiving the Fee (i) entirely
in cash, (ii) in the form of 8,889 shares of Common Stock in lieu of
a cash payment, or (ii) in the form of a combination of cash and
Common Stock.
Example 2: Assuming the Guarantor has made a $10,000,000 Guaranty
Payment on Day One, One-Month LIBOR remains constant at 8.00%, and
(if the Guarantor elects to receive reimbursement of part or all of
the Guaranty Payment in Common Shares) the Weighted Average Daily
Trading Price for the ten trading days preceding the date of
reimbursement of the Guaranty Payment is $5.00 per share, the
Guarantor will have the option of receiving (i) a cash payment of
$10,000,000 plus interest calculated at the annual rate of 12.5%,
which interest is equal to $3,472.22 for Day Two, (ii) 2,500,000
shares of Common Stock in reimbursement of the $10,000,000 Guaranty
Payment plus additional shares of Common Stock in reimbursement of
accrued interest, which is equal to 868 shares for the interest
accrued on Day Two, or (iii) a combination thereof.
2.5 Reimbursement of Expenses: On the Effective Date, the Borrower
shall reimburse the Guarantor in immediately available U.S. Dollars for all
Expenses incurred by the Guarantor on or prior to such date, not to exceed
$40,000. The Borrower shall promptly reimburse the Guarantor for all Expenses
incurred by the Guarantor after the Effective Date within thirty (30) days of
the Borrower's receipt of invoices therefor.
2.6 Interest on Late Payments: Fees, Expenses and other amounts that
are not paid when due under this Agreement shall accrue interest at the
Applicable Rate from the date due through the day immediately preceding the day
on which they are paid. All such interest shall be payable in immediately
available U.S. Dollars on demand by the Guarantor.
2.7 Application of Payments. All payments received from the Borrower
will be applied first to reimbursement of the Guarantor's Expenses, second to
the payment of interest, and third to payment of other amounts owed to the
Guarantor hereunder.
2.8. Request for Supplemental Guaranty. Provided the Borrower is not
then in default under this Agreement, the Borrower may request the Guarantor to
guarantee up to $15 million principal amount of loans to the Borrower in
addition to the Revolving Credit Loan. In connection with any such request, the
Borrower shall make available all information reasonably requested by the
Guarantor for the purpose of evaluating such request. The Guarantor agrees to
consider any such request in light of the information provided by the Borrower,
but the Guarantor shall have no obligation to provide any such supplemental
guaranty.
2.9. Issuance of Series A Preferred Stock. As a further inducement
to and in consideration for the Guarantor's execution and delivery of the
Guaranty, the Borrower shall issue to the Guarantor, contemporaneously with the
closing of the Revolving Credit Loan, one (1) share of the Borrower's Series A
Preferred Stock, which shall be duly authorized, validly issued, fully paid,
non-assessable and free and clear of any and all liens, claims, encumbrances and
preemptive rights.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower hereby represents and warrants to the Guarantor as
follows:
3.1 Organization. The Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada and
has the corporate power and authority and all necessary governmental licenses,
permits, authorizations and approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted or presently proposed
to be conducted. The Borrower is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary.
3.2 Authority. The Borrower has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement by the Borrower and the
consummation by the Borrower of the transactions contemplated hereby have been
duly authorized by the Borrower's Board of Directors, and no other corporate
proceedings on the part of the Borrower are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been duly
and validly executed by the Borrower and (assuming this Agreement constitutes a
valid and binding obligation of the Guarantor and the Managing Shareholders)
constitutes a valid and binding agreement of the Borrower, enforceable against
the Borrower in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other laws affecting creditors'
rights generally from time to time in effect and to general equitable
principles.
3.3 Consents and Approvals. No filing with, and no permit,
authorization, license, consent or approval of, any governmental entity is
necessary for the execution, delivery and performance of this Agreement by the
Borrower and the consummation of the transactions contemplated by this
Agreement.
3.4 No Conflict or Violation. Neither the execution, delivery or
performance of this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) conflict with or result in any breach of any
provisions of the certificate of incorporation or bylaws of the Borrower, (b)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, vesting, payment, exercise, acceleration, suspension, revocation
or modification) under, any of the terms, conditions or provisions of any note,
credit agreement, bond, mortgage, deed of trust, security interest, indenture,
lease, license, contract, agreement, plan or other instrument or obligation to
which Borrower is a party or by which it, or any of its properties or assets,
may be bound or affected, or (c) violate any judgment, order, writ, injunction,
decree, statute, law, ordinance, rule or regulation applicable to Borrower or
any of its properties or assets, except, in the case of clauses (b) and (c), for
such violations, breaches, defaults or rights as to which requisite waivers or
consents have been obtained.
3.5 Capitalization. The authorized capital stock of the Borrower
consists of 100,000,000 shares of common stock (of which 56,250,030 were
outstanding as of December 15, 2000) and 10,000,000 shares of preferred stock
(of which none are outstanding as of the date of this Agreement).
3.6 No Material Adverse Change. No Material Adverse Change or
Material Adverse Effect has occurred since the date of the Borrower's most
recent consolidated quarterly financial statements filed with the Securities
Exchange Commission (the "SEC").
3.7 No Increase in Debt. The aggregate amount of the Borrower's
outstanding consolidated debt (including all amounts required by generally
accepted accounting principles ("GAAP") to be treated as debt) does not exceed
the aggregate amount of debt reflected on the Borrower's most recent
consolidated balance sheet filed with the SEC.
3.8 Managing Shareholders. Except for the Managing Shareholders, no
officer or other employee of the Borrower holds more than 1% of the Borrower's
outstanding common stock.
3.9 Subsidiaries. Schedule 3.9 sets forth a complete list of all
corporations or other entities of which the Borrower, directly or indirectly,
has the voting power to elect a majority of the board of directors or other
managers of such corporations or other entities (the "Subsidiaries") together
with, for each Subsidiary, the jurisdiction of its incorporation or organization
and the percentage of each class of shares or other equity interests owned
directly or indirectly by the Borrower.
3.10 Subsidiary Organization. Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation and has the corporate power and authority and, except with respect
to certain governmental licenses, permits, authorizations and approvals
associated with Xtal FiberCore Brasil ("Xtal") that are in the process of being
obtained and with respect to which Xtal is entitled to be indemnified for losses
arising from the failure to so obtain by June 20, 2001, has all necessary
governmental licenses, permits, authorizations and approvals to own, lease and
operate its properties and to carry on its business as it is now being conducted
or presently proposed to be conducted. Each Subsidiary is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary.
ARTICLE IV
AFFIRMATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that, so long as this Agreement
remains in effect, the Borrower shall, and with respect to the covenants in
Sections 4.4, 4.5 and 4.6, shall cause each of the Subsidiaries to:
4.1 Credit Agreement Payments: On or before the applicable due date,
make all payments due to the Bank under the Credit Agreement.
4.2 Notice of Proceedings or Adverse Change: Give notice to the
Guarantor, as soon as possible and in any event within two (2) Business Days
after a responsible officer of the Borrower has any knowledge of:
(a) the occurrence of any Default or Event of Default under
the Credit Agreement or this Agreement; or
(b) any litigation or proceeding that is pending or
threatened against the Borrower or any of the
Subsidiaries in which the portion of the total claim
that is not covered by insurance exceeds $2,500,000; in
which injunctive or similar relief is sought; or which,
if adversely determined, would reasonably be expected to
have a Material Adverse Effect.
4.3 Correspondence, Notices and Financial Statements exchanged with
the Bank: Immediately furnish, or cause to be furnished, to the Guarantor (a)
copies of all correspondence, notices, material information and financial
statements provided by or on behalf of the Borrower to the Bank (whether or not
required under the Credit Agreement); (b) copies of all correspondence and
notices provided to the Borrower by the Bank under the Credit Agreement; and (c)
a certificate, issued on each Due Date and signed by the Borrower's Chief
Financial Officer, stating that the Borrower is in complete compliance with this
Agreement, the Credit Agreement, and all related agreements or amendments
between the Borrower and the Guarantor or the Borrower and the Bank.
4.4 Visitation and Inspection Rights: Permit the Guarantor to
inspect, and to discuss with the Borrower's or Subsidiary's officers, agents and
auditors, the affairs, finances, and accounts of the Borrower or Subsidiary and
the Borrower's or Subsidiary's books and records, and to make abstracts or
reproductions thereof and to duplicate, reduce to hard copy or otherwise use any
and all computer or electronically stored information or data (provided that, in
all circumstances, all information obtained by the Guarantor shall be treated as
confidential and disclosed only, if necessary, to the Guarantor's auditors,
counsel and others agents and regulatory authorities), in each case, (i) during
normal business hours, (ii) upon reasonable notice, and (iii) at the expense of
the Borrower, and at the same time as the Guarantor and its affiliates may
discuss with the Borrower's or Subsidiary's officers, agents and auditors its
affairs, finances, and accounts.
4.5 Preservation of Existence; Compliance with Law:
(a) Do or cause to be done all things necessary to preserve,
renew and keep in full force and effect its corporate
existence, and its rights, licenses, permits and
franchises that are material or necessary for the
conduct of its business; and
(b) Comply with all applicable laws, rules, regulations and
orders, whether now in effect or hereafter enacted or
promulgated by any applicable Governmental Authority.
4.6 Taxes, etc.: Pay and discharge or cause to be paid and
discharged when due, or adequately reserve for the payment of, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income and profits or upon any of its property, real, personal or mixed or upon
any part thereof, as well as any other lawful claims that, if unpaid, might
become a Lien upon such properties or any part thereof.
4.7 Board of Directors: Permit at least one Series A Director to
serve as a member of the Borrower's Board of Directors at all times.
4.8 Additional Parties: Within fifteen (15) Business Days after the
first day on which an officer of the Borrower becomes the holder of more than 1%
of the Borrower's common stock, cause each such officer to execute and become a
party to this Agreement as a Managing Shareholder.
4.9 Reports Regarding Status of Xtal Licenses: On each Due Date, and
on any other date within ten (10) Business Days after receiving a request from
the Guarantor for such information, provide a written report to the Guarantor as
to the status of efforts to obtain the licenses, permits, authorizations and
approvals for Xtal that are referred to in Section 3.10 and, if applicable, the
status and amounts of any indemnity claims that have been asserted as a result
of any failure to obtain such licenses, permits, authorizations and approvals.
4.10 Further Assurances: Execute and deliver to the Guarantor all
further documents, agreements and instruments, and take all further action that
may be required under applicable law, or that the Guarantor may reasonably
request, in order to effectuate the transactions contemplated by the Agreement.
ARTICLE V
NEGATIVE COVENANTS OF THE BORROWER
The Borrower covenants and agrees that, so long as this Agreement
remains in effect, the Borrower shall not, and, with respect to the covenants in
Sections 5.1, 5.2, 5.3 and 5.5, shall cause each of the Subsidiaries not to,
directly or indirectly, without the prior written consent of the Guarantor:
5.1 Fundamental Changes: Amend its articles of incorporation, bylaws
or other organizational documents, except as contemplated by this Agreement;
dissolve, liquidate, merge, consolidate or otherwise alter or modify its
corporate name, mailing address, principal place of business, structure, status
or existence; enter into or engage in any operation or activity materially
different from that presently conducted by it, or significantly change the scope
of its business operations.
5.2 Illegal Activities: Engage in any conduct or activity that
violates any applicable law.
5.3 Indebtedness: Create, assume, incur or permit to exist at any
time (a) any indebtedness for borrowed money other than (i) indebtedness to the
Bank under the Credit Agreement, (ii) indebtedness incurred in accordance with a
capital expenditure program and associated financing strategy approved in
advance by the Borrower's Board of Directors with the affirmative vote of at
least one Series A Director, (iii) indebtedness in existence on the Effective
Date and disclosed in the Credit Agreement, (iv) trade indebtedness incurred in
the ordinary course of business, (v) indebtedness secured by liens in existence
on the Effective Date and disclosed in the Credit Agreement, or (vi) purchase
money indebtedness not to exceed $100,000 per year; or (b) any lien or similar
encumbrance on (i) any property of the Borrower other than liens in favor of the
Bank securing repayment of the Revolving Credit Loan, or (ii) any property of a
Subsidiary other than liens securing indebtedness permitted by clause (a)(ii),
(a)(iii), (a)(v) or (a)(vi) of this Section 5.3.
5.4 Subordination: Issue or cause to be issued any debt that is or
would be senior to the indebtedness to the Guarantor other than indebtedness to
the Bank pursuant to the Credit Agreement.
5.5 Disposal of Assets: Sell, assign, transfer, exchange, or
otherwise dispose of, in a single transaction or a series of related
transactions, 25% or more of the Borrower's consolidated tangible assets, as
defined by GAAP, unless all net proceeds of each such transaction are applied
within ten (10) Business Days after the date of receipt to reduce permanently
the maximum principal amount of the Revolving Credit Loan.
5.6 Dividends: Declare or pay any dividend (other than dividends
payable solely in common stock of the Borrower having voting rights equivalent
to the shares on which the dividends are paid, or in options, warrants or other
rights to purchase such common stock of the Borrower) on any shares of any class
of capital stock of the Borrower or any warrants or options to purchase any such
capital stock.
5.7 Stock Voting Rights: Create a class of common or preferred stock
with voting rights different from or superior to those of the Common Stock or
modify the voting rights of an existing class of common or preferred stock.
5.8 Limitation on Optional Payments and Modifications of Debt
Instruments and other Material Agreements: Make any optional payment,
prepayment, repurchase or redemption of any debt for borrowed money, other than
debt under the Credit Agreement; debt owed to the Guarantor; or, if approved in
advance by the Borrower's Board of Directors with the affirmative vote of at
least one Series A Director, debt owed to Crescent International, Ltd.
5.9 Limitation on Borrower Guarantee Obligations: Create, incur,
assume, or allow to exist any Borrower Guarantee Obligation (as defined below),
except:
(a) Borrower Guarantee Obligations in existence on the
Effective Date that are disclosed in the Credit
Agreement;
(b) Borrower Guarantee Obligations with respect to
indebtedness of Subsidiaries that is permitted by
Section 5.3; and
(c) Borrower Guarantee Obligations for performance, appeal,
judgment, replevin and similar bonds, or suretyship
arrangements, all arising in the ordinary course of
business; or other Borrower Guarantee Obligations that
arise in the ordinary course of business.
A Borrower Guarantee Obligation is the obligation of the Borrower to
pay, perform or otherwise discharge a debt or other obligation of another if the
person primarily liable fails to pay, perform or otherwise discharge such debt
or obligation.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE MANAGING SHAREHOLDERS
6.1 Representations and Warranties: Each of the Managing
Shareholders hereby represents and warrants to the Guarantor as follows:
(a) Authority. Such Managing Shareholder has the power and
authority to enter into this Agreement and to carry out
his obligations hereunder. This Agreement has been duly
and validly executed by such Managing Shareholder and
(assuming this Agreement constitutes a valid and binding
obligation of the Guarantor, the Borrower and the other
Managing Shareholders) constitutes a valid and binding
agreement of such Managing Shareholder, enforceable
against him in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting creditors' rights
generally from time to time in effect and to general
equitable principles.
(b) No Conflict or Violation. Neither the execution,
delivery or performance of this Agreement, nor the
consummation of the transactions contemplated hereby,
will (a) result in a violation or breach of, or
constitute (with or without due notice or lapse of time
or both) a default (or give rise to any right of
termination, cancellation, vesting, payment, exercise,
acceleration, suspension, revocation or modification)
under, any of the terms, conditions or provisions of any
note, credit agreement, bond, mortgage, deed of trust,
security interest, indenture, lease, license, contract,
agreement, plan or other instrument or obligation to
which such Managing Shareholder is a party or by which
he or any of his properties or assets may be bound or
affected, or (b) violate any judgment, order, writ,
injunction, decree, statute, law, ordinance, rule or
regulation applicable to such Managing Shareholder or
any of his properties or assets, except for such
violations, breaches, defaults or rights as to which
requisite waivers or consents have been obtained.
6.2 Restriction on Sale of Shares: So long as this Agreement remains
in effect, and unless otherwise consented to in writing by the Guarantor, no
Managing Shareholder shall sell, transfer, grant, pledge, hypothecate, or
otherwise dispose of or encumber any interest in, or the right to vote
(collectively, "Sell"), any shares of the Borrower's stock; provided, however,
that each Managing Shareholder may Sell, (a) in the twelve-month period ending
on the first anniversary of the Effective Date, not more than the greater of (i)
500,000 shares of the Borrower's common stock or (ii) ten percent (10%) of the
total number of shares of the Borrower's common stock that, at any time during
such twelve-month period, such Managing Shareholder either (A) owned or (B) had
the right to acquire through the exercise of vested options or then-exercisable
warrants or conversion rights but did not acquire during such subsequent
twelve-month period; and (b) in any subsequent twelve-month period, not more
than ten percent (10%) of the total number of shares of the Borrower's common
stock that, at any time during such subsequent twelve-month period, such
Managing Shareholder either (i) owned or (ii) had the right to acquire through
the exercise of vested options or then-exercisable warrants or conversion rights
but did not acquire during such subsequent twelve-month period.
6.3. Termination of Managing Shareholder Status. A Managing
Shareholder shall cease to be a party to and be bound by the provisions of this
Agreement as of the first day upon which such Managing Shareholder is neither
(i) an officer or employee of, nor (ii) a consultant providing management
services or exercising significant decision-making authority with respect to,
the Borrower or any of the Subsidiaries or their respective businesses.
ARTICLE VII
EVENTS OF DEFAULT
Each of the following events or circumstances shall constitute an "Event of
Default." An Event of Default hereunder shall be deemed to be continuing unless
and until waived in writing by the Guarantor.
7.1 The failure of the Borrower to make any payment or issue any
shares of Common Stock when due, as provided in Article II of this Agreement.
7.2 The failure of the Borrower to perform, comply with or observe
in any material respect any of the covenants specified in Article V of this
Agreement.
7.3 The failure of any of the Managing Shareholders to perform,
comply with or observe in any material respect any of the covenants in Article
VI of this Agreement.
7.4 The failure of the Borrower to perform, comply with or observe
any other term, covenant or agreement applicable to the Borrower contained in
this Agreement unless such failure is cured within 20 days after notice thereof
by the Guarantor.
7.5 Any material breach of a representation or warranty made by the
Borrower or a Managing Shareholder in this Agreement.
7.6 Any of the following events shall occur:
(a) The Borrower or any of the Subsidiaries shall admit its
inability to pay its debts as they mature or shall make
an assignment for the benefit of itself or any of its
creditors;
(b) Proceedings in bankruptcy or for reorganization of the
Borrower or any of the Subsidiaries, or for the
readjustment of its debts under the Bankruptcy Code, as
amended, or any part thereof, or under any other laws,
whether state or federal, for the relief of debtors, now
or hereafter existing, shall be commenced against or by
the Borrower or any of the Subsidiaries and, except with
respect to any such proceedings instituted by the
Borrower or any of the Subsidiaries, shall not be
discharged within sixty (60) days of their commencement;
or
(c) A receiver or trustee shall be appointed for the
Borrower of any of the Subsidiaries or for any
substantial part of its assets, or any proceedings shall
be instituted for the dissolution or the full or partial
liquidation of the Borrower or any of the Subsidiaries,
and except with respect to any such appointment
requested or proceedings instituted by the Borrower or
any of the Subsidiaries, such receiver or trustee or
proceedings shall not be discharged within sixty (60)
days of their appointment or commencement; or
(d) The Borrower or any of the Subsidiaries shall
discontinue business or materially change the nature of
its business.
7.7 Indebtedness of the Borrower or any of the Subsidiaries for
borrowed money in an outstanding principal amount of $2,500,000 or more shall be
accelerated by the lender as a result of the occurrence of an event of default
under the terms of the documents evidencing or securing such indebtedness.
ARTICLE VIII
REMEDIES FOR AN EVENT OF DEFAULT
8.1 Control of Board. Upon the occurrence and during the
continuation of an Event of Default, the Guarantor shall have the right, but not
the obligation, as holder of the Series A Preferred Stock, to designate
additional Series A Directors to be added to the Borrower's Board of Directors
pursuant to the terms of the Series A Designations. If the Guarantor elects to
exercise such right, it shall do so by delivering written notice (a "Designation
Notice") to the Borrower specifying the names of the individuals to be appointed
as additional Series A Directors.
(a) The appointments of the additional Series A Directors shall
become effective immediately upon delivery of the Designation Notice.
(b) Within one day after the Guarantor delivers a Designation
Notice, the Borrower's chief executive officer shall call and give written
notice to all directors, including all Series A Directors, of a special meeting
of the Borrower's Board of Directors (which may be by telephone) to occur no
later than two days after the date of such notice. The notice shall specify the
place, date and time of the special meeting and shall be delivered by hand, by
overnight courier or by facsimile. If the Borrower's chief executive officer
fails to call and give notice of such meeting within the time specified by this
subsection, such special meeting may be called and notice may be given by the
Series A Directors.
8.2 Acceleration. Upon the occurrence of an Event of Default
specified in Section 7.6, and without any action by the Guarantor, (a) all
amounts owed to the Guarantor under this Agreement shall immediately become due
and payable in full, and (b) any right the Borrower may have to satisfy such
obligations by issuing Common Stock shall immediately terminate.
8.3 Remedies Cumulative. The remedies provided for in this Article
VIII are cumulative and are not exclusive of any other remedies provided by law.
ARTICLE IX
EFFECTIVE DATE; CONDITIONS PRECEDENT; TERMINATION
9.1 Effective Date. This Agreement shall become effective on the
date (the "Effective Date") that is the later of (a) the date of this Agreement
or (b) the first day on which the Guaranty has been executed by the Guarantor
and delivered to the Bank; provided, however, that if the Effective Date has not
occurred by December __, 2000 this Agreement shall be null and void and no party
shall have any further rights or obligations hereunder.
9.2 Conditions Precedent. The obligation of the Guarantor to execute
the Guaranty and deliver it to the Bank is conditioned upon satisfaction of each
of the following conditions at or before closing of the Revolving Credit Loan:
(a) This Agreement shall have been executed and delivered by the
Borrower and each of the Managing Shareholders;
(b) The terms of the Revolving Credit Loan, the Credit Agreement,
and each other loan document shall be acceptable to the Guarantor;
(c) The Guaranty shall be substantially in the form attached hereto
as Exhibit A;
(d) The Borrower's Bylaws shall have been amended as set forth in
Exhibit C;
(e) The Borrower's Board of Directors shall have adopted a
resolution designating the rights, privileges and preferences of the Series A
Preferred Stock, which shall be substantially in the form attached hereto as
Exhibit B, and a certificate of designations setting forth such rights,
privileges and preferences shall have been duly filed with the Secretary of
State of Nevada.
(f) The Series A Preferred Stock shall have been duly issued to the
Guarantor, free and clear of all liens, claims and encumbrances, and the
Guarantor shall have received a certificate evidencing its ownership of such
Series A Preferred Stock.
(g) The Guarantor shall have received each of the following, in form
and substance reasonably acceptable to counsel for the Guarantor:
(i) Copies of the Borrower's certificate or articles of
incorporation and the certificate of designation of rights,
privileges and preferences of the Series A Preferred Stock, each
certified by the Secretary of State of Nevada;
(ii) A copy of the Borrower's amended bylaws, certified by the
Secretary of the Borrower;
(iii) A certified copy of a resolution of the Borrower's Board of
Directors evidencing approval of this Agreement and the transactions
contemplated hereby;
(iv) An incumbency certificate identifying each of the Borrower's
directors and executive officers and including specimen signatures
of the officers executing this Agreement;
(v) The opinion of Cadwalader, Xxxxxxxxxx & Xxxx, counsel to the
Borrower, in substantially the form attached hereto as Exhibit D;
and
(vi) The opinion of Lionel, Xxxxxx & Xxxxxxx, Nevada counsel to the
Borrower, in substantially the form attached hereto as Exhibit E.
9.3 Term and Termination. This Agreement and all covenants,
agreements, representations and warranties herein shall survive the closing of
the Revolving Credit Loan and continue in full force and effect from the
Effective Date until both (a) the Guaranty has been terminated pursuant to
Section 8(a) thereof and (b) all obligations of the Borrower under Article II of
this Agreement have been fully and indefeasibly performed. Notwithstanding any
termination of this Agreement pursuant to the immediately preceding sentence,
this Agreement shall be reinstated, and the Borrower shall immediately reissue
the Series A Preferred Stock to the Guarantor if such stock is not then
outstanding, if at any time either (i) the Guaranty is reinstated pursuant to
Section 8 thereof, or (ii) any payment made to or value received by the
Guarantor hereunder is rescinded or must otherwise be returned by the Guarantor
upon the insolvency, bankruptcy or reorganization or the Borrower, or otherwise,
all as though such payment had not been made or value received.
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement. This Agreement (including the Exhibits
hereto) constitutes the entire agreement of the parties hereto and supersedes
any and all prior or contemporaneous agreements, written or oral, as to the
matters contained herein.
10.2 Amendments, Waivers. No amendment of this Agreement shall be
effective unless the same is in writing and signed by the Guarantor and the
Borrower. No waiver of any provision of this Agreement shall be effective unless
the same is in writing and signed by the waiving party. The Guarantor's failure
to insist upon the strict performance of any term, condition or other provision
of this Agreement, or to exercise any right or remedy hereunder, shall not
constitute a waiver by the Guarantor of any such term, condition or other
provision or Event of Default in connection therewith, nor shall a single or
partial exercise of any such right or remedy preclude any other or future
exercise, or the exercise of any other right or remedy; and any waiver of any
such term, condition or other provision or of any such Event of Default shall
not affect or alter this Agreement, and each and every term, condition and other
provision of this Agreement shall, in such event, continue in full force and
effect and shall be operative with respect to any other then existing or
subsequent Event of Default in connection therewith.
10.3 Successors and Assigns: This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither the Borrower nor any of the Managing Shareholders
shall have the right to assign all or any part of this Agreement or any interest
herein without the prior written consent of the Guarantor. The Guarantor may
assign this Agreement without the consent of the Borrower or the Managing
Shareholders to any affiliate of the Guarantor or to any purchaser of the entire
equity interest of Tyco, or Tyco's affiliates, in the Borrower.
10.4 GOVERNING LAW: THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK without regard to the
conflict-of-laws principles thereof (other than Section 5-1401 of the General
Obligations Law of the State of New York).
10.5 Submission to Jurisdiction; Waivers: Each party hereto hereby
irrevocably and unconditionally
a. submits itself and its property in any legal action or proceeding
relating to this Agreement, any amendments to this Agreement, or for recognition
enforcement of any judgment in respect thereof, to the exclusive general
jurisdiction of the courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from either thereof; and
b. appoints CT Corporation as its agent for service of process in
the state of New York.
10.6 Notices: All Notices, communications and distributions
hereunder shall be given or made to the intended recipient at the address
specified below, or at such other address as the addressee may hereafter specify
for the purpose by written notice to the other party hereto. Such Notices and
other communications (including, without limitation, any modifications of, or
waivers or consents under, this Agreement) shall be given or made in writing and
may be delivered by hand, by overnight courier, by facsimile, or by first-class
mail (return receipt requested). All such Notices and other communications shall
be deemed to have been duly given (a) if delivered by hand, overnight courier or
first-class mail (return receipt requested), on the date of delivery; and (b) if
transmitted by facsimile (with receipt confirmed by machine), on the date of
transmission if the same is a Business Day or, if not a Business Day, on the
first Business Day after the date of transmission.
To the Guarantor:
Tyco International Group S.A.
0, xxxxxx Xxxxx Xxxxxx
Xxxxxx Xxxxx
X-0000 Xxxxxxxxxx
Attention: Xxxxxxx X. Xxxxx
Telecopier: (011-352) 464-350
With copies to:
Tyco International (US) Inc.
Xxx Xxxx Xxxx
Xxxxxx, XX 00000
Attn: Chief Corporate Counsel
Fax: (000) 000-0000
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxx Xxxxx
Telecopier: (000) 000-0000
To the Borrower:
FiberCore, Inc.
000 Xxxxxxxxx Xxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Telecopier: (000) 000 0000
With a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Telecopier: 000-000-0000
To Xxxx X. Xxxxxx
c/o FiberCore, Inc.
000 Xxxxxxxxx Xxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000
Telecopier: (000) 000 0000
To Xxxxxxx Xx Xxxx
c/o FiberCore, Inc.
000 Xxxxxxxxx Xxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000
Telecopier: (000) 000 0000
To Xxxxxx Xxxxxxxx
c/o FiberCore, Inc.
000 Xxxxxxxxx Xxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000
Telecopier: (000) 000 0000
10.7 Severability: In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.8 Section Headings: The Article and Section headings in this
Agreement are inserted for convenience of reference only and shall not in any
way affect the meaning or construction of any provision of this Agreement.
10.9 Counterparts: This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
10.10 Specific Performance: The Parties each acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the Parties shall be
entitled to preliminary relief to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy that they may be entitled to by law or
equity.
IN WITNESS WHEREOF, the parties have executed, or caused their duly authorized
representatives to execute, this Agreement as of the date first above written.
TYCO INTERNATIONAL GROUP S.A.
By:
-------------------------------------------
Name:
Title:
FIBERCORE, INC.
By:
---------------------------------------
Name:
Title:
-------------------------------------------
Xxxx X. Xxxxxx
-------------------------------------------
Xxxxxxx Xx Xxxx
-------------------------------------------
Xxxxxx Xxxxxxxx
Exhibits:
--------
A. Form of Guaranty
B. Terms of Series A Preferred Stock
C. Amendments to Bylaws
D. Form of Opinion of Cadwalader, Xxxxxxxxxx & Taft
E. Form of Opinion of Lionel, Xxxxxx & Xxxxxxx
