CONSENT TO AMENDMENT AND WAIVER
EXHIBIT
10.2
This
CONSENT TO AMENDMENT AND WAIVER (this “Consent”),
dated
as of April 9, 2007 (the “Effective
Date”),
is
entered into among EMCORE Corporation, a New Jersey corporation (the
“Company”),
and
the beneficial owner party hereto (the
“Consenting
Holder”).
Capitalized terms used but not defined herein have the meanings assigned to
them
in the Indenture, dated as of November 16, 2005 (the “Indenture”),
between the Company and Deutsche Bank Trust Company Americas, as trustee (the
“Trustee”).
RECITALS
WHEREAS,
the Company announced on November 6, 2006 that its board of directors
established a special committee (the “Special
Committee”)
to
conduct an internal investigation relating to the Company’s historical stock
option grant procedures and that the Company has informed the Securities and
Exchange Commission (the “SEC”)
of the
Special Committee’s investigation;
WHEREAS,
on December 15, 2006, the Company filed a Form 12b-25 with the SEC stating
that
the Company is (i) continuing to review the findings of the Special Committee
as
well as the accounting guidance regarding stock option granting practices
recently published by the SEC to determine, among other things, for which
specific prior periods a restatement of its historical financial statements
may
be required and (ii) unable to file its Form 10-K for the fiscal year ended
September 30, 2006 (the “Form
10-K”)
within
the time period prescribed by the SEC;
WHEREAS,
on January 30, 2007, the Company received a letter purporting to constitute
a
notice of default from Cede & Co., the nominee of The Depository Trust
Company (“DTC”)
and
the Holder of record of entire principal amount of the then outstanding 5%
Convertible Senior Subordinated Notes due 2011 (the “Notes”)
issued
pursuant to the Indenture (the “Notice”);
WHEREAS,
on February 12, 2007, the Company filed a Form 12b-25 with the SEC stating
that
the Company would not be able to timely file its Quarterly Report on Form 10-Q
for the quarter ended December 31, 2006 (the “Form
10-Q”);
WHEREAS,
under Sections 8.01 and 8.02 of the Indenture, if the Company does not cure
the
purported default within sixty (60) calendar days following notice of default,
an Event of Default would occur under the Indenture and the Trustee or the
Holders of at least 25% of the outstanding principal amount of the Notes could
accelerate the maturity of the Notes causing the outstanding principal amount
of
the Notes and accrued and unpaid interest thereon to become immediately due
and
payable;
WHEREAS,
Section 11.02 of the Indenture permits the Company and the Trustee to amend
or
supplement the Indenture with the consent of the Holders of at least a majority
in principal amount of the Notes then outstanding and Sections 8.04 and 11.02
of
the Indenture permit the Holders of at least a majority in principal amount
of
the Notes to waive compliance by the Company with any provision of the Indenture
and the Notes;
WHEREAS,
the Company and the Consenting Holder desire to amend the Indenture and the
Notes in the form of the First Supplemental Indenture between the Company and
the Trustee, a copy of which is attached hereto as Exhibit
A
(the
“Supplemental
Indenture”);
and
WHEREAS,
the Indenture, dated as of February 24, 2004 (the “2004
Indenture”),
between the Company and Deutsche Bank Trust Company Americas, as trustee, has
been amended by consent of a majority of the beneficial owners to permit the
Company to hold, purchase or exchange notes issued pursuant to the 2004
Indenture (the “2004
Notes”)
without the requirement to surrender such 2004 Notes to the Trustee under the
2004 Indenture for cancellation, and the Company is providing the Consenting
Holder the right under this Consent to exchange certain Notes with the Company
for 2004 Notes that may be held or purchased by the Company.
NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereby agree as follows:
AGREEMENT
Section
1. Waiver.
Pursuant to Sections 8.04 and 11.02 of the Indenture and subject to the
provisions set forth in Section 11 of the Supplemental Indenture upon
effectiveness of the Supplemental Indenture, the Consenting Holder hereby waives
(the “Waiver”)
any
and all Defaults or Events of Default relating to any failure of the Company
to
observe or perform any covenant or agreement contained in the Notes or the
Indenture as a result of the Company’s failure to file with the SEC, or with the
Trustee, the Form 10-K, the Form 10-Q and/or any other reports that the Company
fails to file in a timely manner (collectively, the “Asserted
Reports Defaults”)
for
reasons in whole or in part directly or indirectly attributable to or arising
out of the Company’s review of its historical stock option grants as initially
reported in a Current Report on Form 8-K filed with the SEC on November 6,
2006.
Any Defaults or Events of Default that have occurred with respect to Section
6.03 of the Indenture shall be deemed to have been cured for all purposes and
the Notices are hereby withdrawn.
Section
2. Supplemental
Indenture.
Pursuant to Section 11.02 of the Indenture, the Consenting Holder hereby
consents to the execution and delivery by the Company and the Trustee of the
Supplemental Indenture in substantially the form attached hereto as Exhibit
A
and to
the amendments to the Indenture and the Notes set forth therein (the
“Amendments”).
Section
3. Rescission
and Agreement to Rescind.
In the
event that Holders or beneficial owners of the Notes (other than the Consenting
Holder) holding at least 25% in aggregate principal amount of the outstanding
Notes deliver or the Trustee delivers a notice of acceleration to the Company
relating to any Asserted Reports Defaults and/or declares all of the Notes
to be
due and payable (the “Acceleration”),
the
Consenting Holder hereby agrees to provide, within three business days after
the
Company notifies the Consenting Holder that Holders or beneficial owners of
the
Notes have given such Acceleration, written notice to the Trustee that the
Consenting Holder rescinds such notice and/or the Acceleration, as applicable,
in accordance with Section 8.02 of the Indenture.
Section
4. Transfer.
The
Consenting Holder may transfer its Notes (together with its rights
hereunder) to any Person, subject to the ability of such Person to make the
representations and warranties set forth in Section 6 of this Consent and
subject to each such Person executing a counterpart to this Consent and
delivering such counterpart to the Trustee and the Company prior to the
transfer. Any transfer in violation of this Section 4 shall be null and void.
The provisions of this Section 4 will terminate on the Purchase Expiration
Date
(as defined in Section 5 hereof). The parties agree that the Trustee shall
have
no responsibility whatsoever with respect to any transfers in accordance with
this Section 4.
Section
5. Purchase
and Exchange of Notes.
(a) Purchase
of Notes.
At any
time prior to the fifth Business Day following the Effective Date (the
“Purchase
Expiration Date”),
the
Company may purchase an aggregate of 12% of the outstanding principal amount
of
Notes held by each of the Consenting Holders, upon notice to the Consenting
Holders setting forth the purchase date (not later than the Purchase Expiration
Date), at a purchase price equal to $1,000 per $1,000 principal amount of the
Notes purchased plus accrued and unpaid interest, if any, to but excluding
the
date of purchase. On the purchase date, the Company shall notify the Trustee
as
to which Notes the Company intends to repurchase and shall transmit by wire
transfer to the Paying Agent (as defined in the Indenture) an aggregate amount
of money sufficient to pay the purchase price of and accrued interest on the
Notes to be purchased from the Consenting Holders. Each Consenting Holder shall
cause the broker or custodian holding the Consenting Holder’s beneficial
interest in the Notes to be purchased from the Consenting Holder to submit
an
instruction through DTC’s DWAC system to the Paying Agent to withdraw the amount
of Notes to be purchased from the Consenting Holder. Upon the Paying Agent’s
receipt of such instructions, the Company shall cause the Paying Agent to
deliver to the account number set forth next to each Consenting Holder’s name on
Schedule
I
hereto
payment in the amount set forth next to each Consenting Holder’s name on
Schedule
I
hereto.
On and after the purchase date, interest shall cease to accrue on the Notes
purchased by the Company on the purchase date.
(b) Agreement
Regarding Purchase. The
Company agrees that it will not exercise its right to purchase any Notes under
this Section 5 unless it is also exercising its right to purchase a pro rata
amount of the 2004 Notes pursuant to Section 5 of that certain Consent to
Amendment and Waiver entered into by the Company and certain holders of the
2004
Notes (the “2004
Indenture Consent”).
(c) Exchange
of Notes. The
Company hereby agrees to exchange all 2004 Notes that the Company purchases
pursuant to the 2004 Indenture Consent for a like principal amount of Notes
held
by the Consenting Holder. Such exchange shall occur promptly after a purchase
of
2004 Notes pursuant to the 2004 Indenture Consent, but in no event later than
April 30, 2007.
(d) Investment
Representations.
The
Consenting Holder understands that the 2004 Indenture Notes delivered to it
in
exchange for the Notes (the “Exchange
Notes”)
have
not been registered under the Securities Act of 1933, as amended (the
“Securities
Act”).
The
Consenting Holder also understands that (x) if the exchange and delivery of
the
Exchange Notes for certain of the Notes involves an offer and sale of the
Exchange Notes to the Consenting Holder and (y) if such offer and sale is not
exempt from registration under the Securities Act by reason of Section 3(a)(9)
thereof (it being understood that the Company makes no representation or
warranty as to the legal matters referred to in the immediately preceeding
clauses (x) and (y)), the Exchange Notes being delivered to it in exchange
for
certain of the Notes pursuant to an exemption from registration contained in
the
Securities Act based in part upon the Consenting Holder’s representations
contained in this Consent. The Consenting Holder, hereby represents and warrants
as follows:
(i) Consenting
Holder Bears Economic Risk.
The
Consenting Holder has substantial experience in evaluating and investing in
private placement transactions of securities in companies similar to the Company
so that it is capable of evaluating the merits and risks of its investment
in
the Company and has the ability to protect its own investment interests. The
Consenting Holder understands that it must bear the economic risk of investment
in the Exchange Notes indefinitely unless the Exchange Notes are registered
pursuant to the Securities Act, or an exemption from registration is available.
The Consenting Holder understands that the Company has no obligation to register
the Exchange Notes under the Securities Act.
(ii) Acquisition
for Own Account.
The
Consenting Holder is acquiring the Exchange Notes for its own account and not
with a view towards their distribution.
(iii) Qualified
Institutional Buyer.
The
Consenting Holder is a qualified institutional buyer as defined in Rule 144A
under the Securities Act.
(iv) Company
Information.
The
Consenting Holder has had an opportunity to discuss the Company’s business,
management and financial affairs with officers and management of the Company
and
has had the opportunity to review the Company’s operations and facilities. The
Consenting Holder has also had the opportunity to ask questions of, and receive
answers from, the Company and its management regarding the terms and conditions
of an investment in the Exchange Notes.
(v) Rule
144.
The
Consenting Holder acknowledges and agrees that the Exchange Notes are
“restricted securities” as defined in Rule 144 promulgated under the Securities
Act (“Rule
144”)
as in
effect from time to time and must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. The Consenting Holder has been advised or is aware
of
the provisions of Rule 144, which permits limited resale of securities that
are
“restricted securities” (as defined in Rule 144) subject to the satisfaction of
certain conditions specified in Rule 144.
(vi) Transfer
Restrictions.
The
Consenting
Holder understands that the Exchange Notes shall be subject to restrictions
on
transfer under the Securities Act and, subject to Section 5(e), will bear a
restrictive legend as to such restrictions and will be subject to stop-transfer
restrictions.
(e) Opinion
of Counsel.
Upon
request by the Company, the Consenting Holder shall deliver to the Company,
prior to any exchange of Notes pursuant to the provisions hereof, an opinion
of
counsel to the Consenting Holder, that such exchange would be exempt from
registration under Section 4(2) of the Securities Act or that such exchange
otherwise does not require registration of the Exchange Notes under the
Securities Act.
(f) Rule
144. The
Consenting Holder acknowledges that pursuant to Rule 144, current
interpretations thereof by the Securities and Exchange Commission (the
“SEC”)
and
“no-action” letters from the staff of the SEC, the Consenting Holder will be
entitled to relate back (i.e., “tack”) the holding period of the Exchange Notes
and the shares of common stock issuable upon conversion thereof (the
“Conversion
Shares”)
to the
Consenting Holder’s holding period of the Notes and, so long as (x) the
aggregate period during which the Notes and the Exchange Notes and the
Conversion Shares are held is at least two years and (y) at the time of
determination the Consenting Holder is not and has not for the preceding three
months been an “affiliate” (as such term is defined in Rule 144) of the Company,
the Exchange Notes and the Conversion Shares may be sold pursuant to Rule 144(k)
(the “Rule
144 Interpretation”).
The
Company shall not, directly or indirectly, dispute or otherwise interfere with
any claim by the Consenting Holder that the holding period of the Exchange
Notes
and the Conversion Shares for purposes of Rule 144 tacks to the holding period
of the Notes; provided, however, that nothing contained in this Section 5(e)
shall obligate the Company or its legal counsel to take a position that is
inconsistent with the provisions of applicable law or regulations and the
administrative and judicial interpretations thereof in effect from time to
time
after the date hereof that alter the Rule 144 Interpretation (collectively,
“Applicable
Law”).
The
Company and the Consenting Holder agree and acknowledge that the foregoing
covenants shall in no way (A) limit the transfer restrictions to which the
Exchange Notes and any Conversion Shares are subject as set forth in Section
5(d)(vi); or (B) require the Company to take any action to authorize the
transfer of any Exchange Notes or Conversion Shares if the Consenting Holder
has
not demonstrated to the Company’s reasonable satisfaction that the Exchange
Notes or Conversion Shares have been acquired for the Consenting Holder’s own
account and not with a view towards their distribution. Upon receipt of a legal
opinion of the Consenting Holder’s legal counsel, which opinion is in form and
scope reasonably acceptable to the Company, to the effect that particular
Exchange Notes or Conversion Shares may be sold or transferred without
registration under the Securities Act, the Company shall (x) act expeditiously
to permit and to facilitate the transfer of such Exchange Securities and
Conversion Shares and (y) issue new Exchange Notes or Conversion Shares without
restrictive legend if the same is covered in the scope of such legal opinion,
which Exchange Notes shall, to the extent permitted by The Depositary Trust
Company and the CUSIP Service Bureau, have the same CUSIP as the other 2004
Notes at the time outstanding that are not Exchange Notes.
Section
6. Representations
and Warranties of the Consenting Holder.
The
Consenting Holder hereby represents and warrants to the Company as
follows:
(a) The
Consenting Holder is the beneficial owner of the principal amount of Notes
indicated below its name on the signature page hereto, has the power and
authority to vote such Notes, has full power and authority to execute and
deliver this Consent and to perform its obligations hereunder and owns the
Notes
through the DTC Participant or Custodian set forth in Schedule
I
hereto.
(b) The
Consenting Holder has such knowledge and experience in financial and business
matters that the Consenting Holder is capable of protecting its own interests
in
connection with the grant of the rights set forth herein and evaluating the
merits and risks related thereto.
(c) The
Consenting Holder and the Consenting Holder’s advisors have such knowledge and
experience in financial, tax and business matters so as to enable the Consenting
Holder to utilize the information made available to the Consenting Holder to
evaluate the merits and risks of transaction contemplated by this Consent and
to
make an informed investment decision with respect thereto.
(d) The
Consenting Holder has its own tax advisors and has not relied upon the Company
and/or its representatives for tax advice in connection with the transactions
contemplated by this Consent.
(e) The
Consenting Holder acknowledges that the Amendments, including, without
limitation, the amendment to Section 3.07(a) of the Indenture contained in
the
Supplemental Indenture, provide additional rights or benefits to the Holders
of
the Notes and that such Amendment does not adversely affect the legal rights
under the Indenture of the Consenting Holder.
Section
7. Representation
and Warranty of the Company.
The
Company hereby represents and warrants to the Consenting Holders that it has
full power and authority to execute and deliver this Consent and to perform
its
obligations hereunder.
Section
8. Tax
Consequences.
The
Consenting Holder acknowledges that the Amendments and Waiver may constitute
a
taxable event with respect to the Notes and that the Consenting Holder has
consulted its tax advisors regarding the risk that adoption of the Amendments
and Waiver constitutes a significant modification for U.S. federal income tax
purposes, the tax consequences to them if the Amendments and Waiver are so
treated, the characterization of the Notes and any new notes (if the Amendments
and Waiver constitute a significant modification) as securities for tax
purposes, and the tax consequences of continuing to hold Notes after the
adoption of the Amendments and Waiver (including the specific consequences
in
the event of a subsequent redemption of the Notes). The Consenting Holder
further acknowledges that, to
ensure
compliance with requirements imposed by the Internal Revenue Service, that
any
U.S. federal income tax advice contained in this communication (including
attachments) is not intended or written to be used, and cannot be used, for
the
purpose of (i) avoiding penalties under the Internal Revenue Code or (ii)
promoting, marketing, or recommending to another party any transaction or matter
addressed herein.
Section
9. Miscellaneous.
(a) Severability.
In case
any provision of this Consent shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not
in
any way be affected or impaired thereby.
(b) Counterpart
Originals.
The
parties may sign any number of counterparts of this Consent and on separate
counterparts. Each signed counterpart shall be an original, but all of them
together represent the same agreement.
(c) Headings.
The
Headings of the Sections of this Consent have been inserted for convenience
of
reference only, are not to be considered part of this Consent and shall in
no
way modify or restrict any of the terms or provisions hereof.
(d) Governing
Law.
THE
INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE
THIS
CONSENT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW
TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
(e) Amendment.
This
Consent may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
(f) Notices.
All
notices provided for or permitted hereunder shall be made in writing by
hand-delivery, facsimile or air courier guaranteeing overnight delivery to
the
other party at the following addresses (or at such other address as shall be
given in writing by any party to the others):
If
to the
Company:
EMCORE
Corporation
0000
Xxxxxx Xxxx. XX
Xxxxxxxxxxx,
XX 00000
Attention:
Chief Financial Officer
Facsimile
No.: (000) 000-0000
with
a
copy to:
Xxxxx
Day
00
Xxxxxxxxx Xxxxxx X.X.
Xxxxxxxxxx,
XX 00000
Attention:
Xxxx X. Xxxxx, Esq.
Facsimile
No.: (000) 000-0000
If
to the
Consenting Holder, at the addresses shown below its name on the signature page
attached to this Consent, or to such other address as has been designated by
notice in writing by such party to the others in accordance with the provisions
of this Section 9(f).
All
such
notices shall be deemed to have been duly given (i) when delivered by hand,
if personally delivered, (ii) when confirmation of receipt is delivered by
facsimile transmission or (iii) on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery. For purposes of
this Consent, “business day” shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New York are authorized
or
obligated by law or executive order to close.
IN
WITNESS WHEREOF, the parties hereto have caused this Consent to be duly executed
as of the date first above written.
EMCORE
CORPORATION
By:
/s/
Xxxxxx Xxxxxxxx Xx.
Name:
Xxxxxx Xxxxxxxx Xx.
Title:
Chief Executive Officer
IN
WITNESS WHEREOF, the parties hereto have caused this Consent to be duly executed
as of the date first above written.
CONSENTING
HOLDER:
ALEXANDRA
GLOBAL MASTER FUND LTD.
By:
ALEXANDRA INVESTMENT MANAGEMENT, LLC, as Investment Manager
By:
/s/
Xxxxxx Xxxxxxxxx
Name:
Xxxxxxx Xxxxxxxxx
Title:
Chairman & CEO
Holder
of
$16,580,460 principal amount of the Notes
Address:
c/o
Alexandra Investment Management, LLC
000
Xxxxx
Xxxxxx
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Facsimile
No.: 000-000-0000
