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Exhibit 10.18
EXECUTION
PROMISSORY NOTE
(REVOLVING LINE OF CREDIT)
$8,000,000.00
June 22, 1998
EMCORE CORPORATION
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(Hereinafter referred to as the "Borrower")
FIRST UNION NATIONAL BANK
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
(Hereinafter referred to as the "Bank")
▇▇▇▇▇▇▇▇ promises to pay to the order of Bank, in lawful money
of the United States of America, at its office indicated above or wherever else
Bank may specify, the sum of EIGHT MILLION AND NO/100 DOLLARS ($8,000,000.00) or
such sum as may be advanced and outstanding from time to time with interest on
the unpaid principal balance at the rate and on the terms provided in this
Promissory Note (including all renewals, extensions or modifications hereof,
this "Note").
SECURITY. This Note is secured by the Unconditional Guaranty
dated the date hereof, made by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., individually and the TJR
Holding Trust (collectively, the "Note Guarantors") and by the Collateral
described in the Pledge and Assignment Agreement of even date herewith made by
the Note Guarantors in favor of the Bank (collectively, the "TJR Documents").
INTEREST RATE. Interest shall accrue on the unpaid principal
balance of each Revolving Loan (defined herein) under this Note from the date
such Revolving Loan is made available to the Borrower at the at a rate equal to
one month LIBOR plus three-quarters of one percent (3/4%) per annum
("LIBOR-BASED RATE"), as determined by the Bank prior to the commencement of
each Interest Period. The LIBOR-Based Rate shall remain in effect, subject to
the provisions hereof, for the entire Interest Period for which it is
determined. Borrower acknowledges that the LIBOR- Based Rate is not represented
or intended to be the lowest or most favorable rate of interest offered by Bank.
"LIBOR" is the rate for U.S. dollar deposits of that many months maturity as
reported on Telerate page 3750 as of 11:00 a.m., London time, on the second
London business day before the relevant Interest Period begins (or if not so
reported, then as determined by Bank from another recognized source of interbank
quotation). The term
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"Interest Period" means, initially, the period commencing on the date hereof and
ending June 30, 1998, and thereafter, each period commencing on the last day of
the immediately preceding Interest Period and ending one month thereafter, but
in no event after the Maturity Date; subject, however, to the following
provisions: (i) if any Interest Period would otherwise end on a day which is not
a New York business day, that Interest Period shall be extended to the next
succeeding New York business day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding New York business day;
and (ii) any Interest Period that begins on the last New York business day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
New York business day of a calendar month.
DEFAULT RATE. In addition to all other rights contained in
this Note, if a Default (defined herein) occurs and as long as a Default
continues, (a) Borrower shall no longer have the option to request a LIBOR-Based
Rate and (b) all outstanding Obligations shall bear interest at the Lending Rate
(s such term is defined in the Credit Agreement) plus 3% ("Default Rate"). The
Default Rate shall also apply from acceleration until the Obligations or any
judgment thereon is paid in full.
INDEMNIFICATION. The Borrower shall indemnify the Bank against
the Bank's loss or expense in employing deposits as a consequence of (i) the
Borrower's failure to make any payment when due under this Note, or (ii) any
prepayment of the Loan on a date other than the last day of an Interest Period
("INDEMNIFIED LOSS OR EXPENSE").
ADDITIONAL COSTS. If, at any time, a new, or a revision in any
existing law or interpretation or administration (including reversals) thereof
by any government authority, central bank or comparable agency imposes,
increases or modifies any reserve or similar requirement against assets,
deposits or credit extended by the Bank, or subjects the Bank to any tax, duty
or other charge (except tax on the Bank's net income), and any of the foregoing
increase the cost to the Bank of maintaining its commitment or reduce the amount
of any sum received or receivable by the Bank under this Note, within 15 days
after demand by the Bank, the Borrower agrees to pay the Bank such additional
amounts as will compensate the Bank for such increased costs or reductions
("ADDITIONAL COSTS").
MATCH FUNDING. The amount of such (i) Indemnified Loss or
Expense, or (ii) Additional Costs outlined above shall be determined, in the
Bank's sole discretion, based upon the assumption that the Bank funded 100% of
that portion of the Loan to which the LIBOR-Based Rate applies in the applicable
London interbank market.
UNAVAILABILITY OF INTEREST RATE. If, at any time, (i) the Bank
shall determine that, by reason of circumstances affecting foreign exchange and
interbank markets generally, LIBOR deposits in the applicable amounts are not
being offered to the Bank; or (ii) a new, or a revision in any existing law or
interpretation or administration (including reversals) thereof by any government
authority, central bank or comparable agency shall make it unlawful or
impossible for the Bank to honor its obligations under this Note, then (A) the
Bank's
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obligation, if any, to make or maintain a Revolving Loan at the LIBOR-Based Rate
shall be suspended, and (B) the applicable LIBOR-Based Rate shall, for the
remainder of the term of the Loan, immediately be converted to (x) the Lending
Rate (as such term is defined in the Credit Agreement) or (y) if the undersigned
has hedged the LIBOR-Based Rate by entering into an interest rate swap agreement
with the Bank, the rate of interest payable to the undersigned by the Bank as a
Floating Rate Payer under the terms of said swap agreement (plus the percentage
added to LIBOR above if not included in said rate of interest payable by the
Bank).
INTEREST AND FEE(S) COMPUTATION. (ACTUAL/360). Interest and
fees, if any, shall be computed on the basis of a 360-day year for the actual
number of days in the applicable period ("Actual/360 Computation"). The
Actual/360 Computation determines the annual effective yield by taking the
stated (nominal) rate for a year's period and then dividing said rate by 360 to
determine the daily periodic rate to be applied for each day in the applicable
period. Application of the Actual/360 Computation produces an annualized
effective rate exceeding that of the nominal rate.
REPAYMENT TERMS. This Note shall be due and payable in
consecutive monthly payments of accrued interest only commencing on July 1,
1998, and on the first day of each month thereafter until fully paid. In any
event, all principal and accrued interest hereunder shall be due and payable on
the earlier to occur of (i) the day the Revolving Loans are accelerated due to
the occurrence of a Default, or (ii) December 31, 1999 (the "Maturity Date").
MANDATORY PREPAYMENTS. Upon the receipt of Net Cash Proceeds
(as defined below) from any sale or issuance of any shares of Borrower's common
stock or any class of its preferred stock, any securities convertible into or
exchangeable for shares of any such stock, or any warrants, rights or options to
acquire shares of such stock, Borrower will prepay the Obligations in an amount
equal to 100% of such Net Cash Proceeds, and (notwithstanding any provision of
this Note or any other Loan Document) such prepayment shall be applied in the
following manner:
FIRST: to pay the principal balance of any outstanding
Revolving Loans (defined herein), together with any accrued and unpaid interest
thereon, and SECOND to pay the principal balance of any outstanding Revolving
Loans incurred under the Credit Agreement (defined herein), together with any
accrued and unpaid interest thereon.
The maximum amount available to be advanced under this Note
shall be permanently reduced by an amount equal to the amount applied to reduce
the principal balance of the Revolving Loans pursuant to clause First above. As
used herein "Net Cash Proceeds" means the aggregate amount of cash received from
time to time (whether as initial consideration a through payment or disposition
of deferred compensation) by or on behalf of Borrower in connection with any
sale or issuance of equity securities contemplated above, after deduction
therefrom only (i) reasonable and customary brokerage commissions, underwriting
fees and discounts, legal fees and other similar fees and expenses, and (ii) the
amount of taxes payable in connection with, or as a result of, such transaction;
but in each case only to the extent that such amounts are deducted upon receipt
of such cash proceeds and actually paid to persons or entities,
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other than Borrower, Note Guarantors or any Affiliate of Borrower or Note
Guarantors. For the avoidance of doubt, ▇▇▇▇▇▇▇▇ acknowledges that (i) the
foregoing shall not be deemed or construed as a consent by Bank to any such
equity sale or issuance which would otherwise be prohibited by the terms of the
Loan Documents and (i) this Section, as it relates to the reduction of
Borrower's Obligations under the Credit Agreement, shall survive the payment in
full and/or termination of ▇▇▇▇▇▇▇▇'s Obligations hereunder. In connection with
any prepayment required hereunder, Bank shall cooperate with Borrower to
mitigate any Indemnified Loss of Expense otherwise payable hereunder and similar
charges payable under the Credit Agreement.
APPLICATION OF PAYMENTS. Monies received by Bank from any
source for application toward payment of the Obligations shall be applied first
to fees, penalties, accrued interest and then to principal. If a Default occurs,
monies may be applied to the Obligations in any manner or order deemed
appropriate by Bank. If any payment received by Bank under this Note or other
Loan Documents is rescinded, avoided or for any reason returned by Bank because
of any adverse claim or threatened action, the returned payment shall remain
payable as an obligation of all persons liable under this Note or other Loan
Documents as though such payment had not been made.
LOAN DOCUMENTS AND OBLIGATIONS. The term "Loan Documents" used
in this Note and other Loan Documents refers to all documents executed in
connection with the loan evidenced by this Note and any prior notes which
evidence all or any portion of the loan evidenced by this Note, and may include,
without limitation, this Note, the TJR Documents, the Credit Agreement (as such
term is defined below), guaranty agreements, security agreements, security
instruments, financing statements, mortgage instruments, letters of credit and
any renewals or modifications, whenever any of the foregoing are executed, but
does not include swap agreements (as defined in 11 U.S.C. ss. 101).
The term "Obligations" used in this Note refers to any and all
indebtedness and other obligations under this Note, all other obligations under
any other Loan Document(s), and all obligations under any swap agreements as
defined in 11 U.S.C. ss. 101 between Borrower and Bank whenever executed.
LATE CHARGE. If any payments are not timely made, Borrower
shall also pay to Bank a late charge equal to 3% of each payment past due for 10
or more days. Acceptance by Bank of any late payment without an accompanying
late charge shall not be deemed a waiver of Bank's right to collect such late
charge or to collect a late charge for any subsequent late payment received.
ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay
all of Bank's reasonable expenses incurred to enforce or collect any of the
Obligations, including, without limitation, reasonable arbitration, paralegals',
attorneys' and experts' fees and expenses, whether incurred without the
commencement of a suit, in any trial, arbitration, or administrative proceeding,
or in any appellate or bankruptcy proceeding.
USURY. Regardless of any other provision of this Note or other
Loan Documents, if for any reason the effective interest should exceed the
maximum lawful interest,
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the effective interest shall be deemed reduced to, and shall be, such maximum
lawful interest, and (i) the amount which would be excessive interest shall be
deemed applied to the reduction of the principal balance of this Note and not to
the payment of interest, and (ii) if the loan evidenced by this Note has been or
is thereby paid in full, the excess shall be returned to the party paying same,
such application to the principal balance of this Note or the refunding of
excess to be a complete settlement and acquittance thereof.
DEFAULT. If any of the following occurs, a default ("Default")
under this Note shall exist: NONPAYMENT; NONPERFORMANCE. The failure of timely
payment or performance of the Obligations or Default under this Note or any
other Loan Documents or failure of any party to comply with any other term,
condition or agreement set forth in this Note or any other Loan Document, beyond
any applicable grace period, if any. FALSE WARRANTY. A warranty or
representation made or deemed made in the Loan Documents or furnished Bank in
connection with the loan evidenced by this Note proves materially false, or if
of a continuing nature, becomes materially false. CROSS DEFAULT. At Bank's
option, any default in payment or performance of any obligation under any other
loans, contracts or agreements of Borrower, any Subsidiary or Affiliate of
Borrower, any general partner of or the holder(s) of the majority ownership
interests of Borrower with Bank or its affiliates ("Affiliate" shall have the
meaning as defined in 11 U.S.C. ss. 101, except that the term "debtor" therein
shall be substituted by the term "Borrower" herein; "Subsidiary" shall mean any
corporation of which more than 50% of the issued and outstanding voting stock is
owned directly or indirectly by Borrower). CESSATION; BANKRUPTCY. 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
commencement of any bankruptcy or insolvency proceeding by or against the
Borrower, its Subsidiaries or Affiliates, if any, or any general partner of or
the holder(s) of the majority ownership interests of Borrower, or any party to
the Loan Documents. NOTE GUARANTORS. If (i) any Note Guarantor fails to comply
with any payment obligation set forth in the Guaranty or if any Note 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 Note 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 Note Guarantor shall terminate, purport to terminate or take any steps
which have the effect of decreasing its liability under the Guaranty.
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REMEDIES UPON DEFAULT. If a Default occurs under this Note or
any Loan Documents, Bank may at any time thereafter, take the following actions:
BANK LIEN. Foreclose its security interest or lien against ▇▇▇▇▇▇▇▇'s accounts
without notice. ACCELERATION UPON DEFAULT. Accelerate the maturity of this Note
and all other Obligations, and all of the Obligations shall be immediately due
and payable. CUMULATIVE. Exercise any rights and remedies as provided under the
Note and other Loan Documents, or as provided by law or equity.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to
Bank such information as required under the Credit Agreement and other Loan
Documents.
AUTOMATIC DEBIT OF CHECKING ACCOUNT FOR LOAN PAYMENT. Borrower
authorizes Bank to debit its demand deposit account number 002030000135558 or
any other account with Bank for any payments due under this Note. Borrower
further certifies that ▇▇▇▇▇▇▇▇ holds legitimate ownership of this account and
preauthorizes this periodic debit as part of its right under said ownership.
REVOLVING LOANS. Borrower may borrow, repay and reborrow, and
Bank may advance and readvance under this Note respectively from time to time
(each a "Revolving Loan" and together the "Revolving Loans"), so long as the
total indebtedness outstanding at any one time does not exceed the principal
amount stated on the face of this Note (as such availability may be reduced
pursuant to the Section captioned Mandatory Prepayments hereunder). Bank's
obligation to make Revolving Loans under this Note shall terminate if there is a
Default.
ADDITIONAL COVENANTS, REPRESENTATIONS AND WARRANTIES. All of
the agreements, covenants, representations and warranties made by the Borrower
in the Revolving Loan and Security Agreement dated March 31, 1997 between the
Borrower and the Bank as the same may be amended from time to time (the "Credit
Agreement") and the other Loan Documents (as such term is defined in the Credit
Agreement) are deemed incorporated herein in their entirety as if fully and
completely set forth herein. All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Credit
Agreement. For the avoidance of doubt, ▇▇▇▇▇▇▇▇ acknowledges all terms and
provisions of the Credit Agreement incorporated by reference into this Note
shall be so incorporated as such terms exist as of the date hereof and shall
remain so incorporated herein irrespective of the termination or expiration of
the Credit Agreement.
WAIVERS AND AMENDMENTS. No waivers, amendments or
modifications of this Note 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 remedy under this Note and other Loan Documents shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.
Each Borrower or any person liable under this Note waives
presentment, protest, notice of dishonor, demand for payment, notice of
intention to accelerate maturity, notice of
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acceleration of maturity, notice of sale and all other notices of any kind.
Further, each agrees that Bank may extend, modify or renew this Note or make a
novation of the loan evidenced by this Note for any period and grant any
releases, compromises or indulgences with respect to any collateral securing
this Note, or with respect to any other Borrower or any other person liable
under this Note or other Loan Documents, all without notice to or consent of
each Borrower or each person who may be liable under this Note or other Loan
Documents and without affecting the liability of Borrower or any person who may
be liable under this Note or other Loan Documents.
MISCELLANEOUS PROVISIONS.
ASSIGNMENT. This Note 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 Note and other Loan Documents are freely assignable, in whole
or in part, by Bank. In addition, nothing in this Note or any of the Loan
Documents shall prohibit Bank from pledging or assigning this Note or any of the
Loan Documents or any interest therein to any Federal Reserve Bank. Borrower
shall not assign its rights and interest hereunder without the prior written
consent of Bank, and any attempt by ▇▇▇▇▇▇▇▇ to assign without Bank's prior
written consent is null and void. Any assignment shall not release Borrower from
the Obligations. APPLICABLE LAW; CONFLICT BETWEEN DOCUMENTS. This Note and other
Loan Documents shall be governed by and construed under the laws of the state
where Bank first shown above is located without regard to that state's conflict
of laws principles. If the terms of this Note should conflict with the terms of
the loan agreement or any commitment letter that survives closing, the terms of
this Note shall control. BORROWER'S ACCOUNTS. Except as prohibited by law,
Borrower grants Bank a security interest in all of ▇▇▇▇▇▇▇▇'s accounts with Bank
and any of its affiliates. JURISDICTION. Borrower irrevocably agrees to
non-exclusive personal jurisdiction in the state in which the office of Bank
first shown above is located. SEVERABILITY. If any provision of this Note 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 Note or other such document. NOTICES. Any notices
to Borrower shall be sufficiently given, if in writing and mailed or delivered
to the Borrower'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 ▇▇▇▇▇▇▇▇ changes ▇▇▇▇▇▇▇▇'s address at any time
prior to the date the Obligations are paid in full, ▇▇▇▇▇▇▇▇ agrees to promptly
give written notice of said change of address by registered or certified mail,
return receipt requested, all charges prepaid. 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. BINDING CONTRACT.
Borrower by execution of and Bank by acceptance of this Note agree that each
party is bound to all terms and provisions of this Note. REVOLVING LOANS. Bank
in its sole discretion may make other Revolving Loans under this Note pursuant
hereto. POSTING OF PAYMENTS. All payments received
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during normal banking hours after 2:00 p.m. local time at the office of Bank
first shown above shall be deemed received at the opening of the next banking
day. FEES AND TAXES. Borrower shall promptly pay all documentary, intangible
recordation and/or similar taxes on this transaction whether assessed at closing
or arising from time to time.
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 Note and other
Loan Documents ("Disputes") between or among parties to this Note 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 Note.
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 Borrower 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 Borrower 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.
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Borrower 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.
CONDITIONS PRECEDENT. This Note shall not be deemed in full
force and effect and no Revolving Loans shall be made hereunder until the Bank
has received the following:
(1) This Note, duly executed and delivered by the Borrower;
(2) All of the TJR Documents fully executed by the parties
thereto; and
(3) A Year 2000 Computer Compliance Questionnaire fully
completed by the Borrower, in form and substance satisfactory to the
Bank.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇, on the day and year first above written,
has caused this Note to be executed under seal.
EMCORE CORPORATION
CORPORATE By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
SEAL -----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and CFO
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