Guarantor Indemnification Agreement among Tyco International Group S.A., FiberCore, Inc., and Managing Shareholders

Summary

This agreement, dated December 20, 2000, is between Tyco International Group S.A. (the Guarantor), FiberCore, Inc. (the Borrower), and certain Managing Shareholders. Tyco agrees to guarantee a $10 million revolving credit loan that FiberCore is obtaining from Fleet National Bank. In return, FiberCore and its Managing Shareholders agree to reimburse Tyco for any payments made under the guarantee, including interest and expenses. The agreement outlines the rights and obligations of each party, including reimbursement procedures and conditions for the guarantee.

EX-10.6 9 0009.txt GUARANTOR INDEMNIFICATION AGREEMENT 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: Mohd A. Aslami, Charles De Luca, Steven Phillips 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, Wickersham & Taft, counsel to the Borrower, in substantially the form attached hereto as Exhibit D; and (vi) The opinion of Lionel, Sawyer & Collins, 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. 6, avenue Emile Reuter Second Floor L-2420 Luxembourg Attention: Richard W. Brann Telecopier: (011-352) 464-350 With copies to: Tyco International (US) Inc. One Tyco Park Exeter, NH 03833 Attn: Chief Corporate Counsel Fax: (603) 778-2823 Wilmer, Cutler & Pickering 2445 M Street, NW Washington, DC 20037 Attention: Meredith Cross Telecopier: (202) 663-6363 To the Borrower: FiberCore, Inc. 253 Worcester Road P.O. Box 180 Charlton, MA 01507 Attention: Steven Phillips Telecopier: (508) 248 5588 With a copy to: Cadwalader, Wickersham & Taft 100 Maiden Lane New York, NY 10038 Attn: Malcolm P. Wattman Telecopier: 212 ###-###-#### To Mohd A. Aslami c/o FiberCore, Inc. 253 Worcester Road P.O. Box 180 Charlton, MA 01507 Telecopier: (508) 248 5588 To Charles De Luca c/o FiberCore, Inc. 253 Worcester Road P.O. Box 180 Charlton, MA 01507 Telecopier: (508) 248 5588 To Steven Phillips c/o FiberCore, Inc. 253 Worcester Road P.O. Box 180 Charlton, MA 01507 Telecopier: (508) 248 5588 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: - ------------------------------------------- Mohd A. Aslami - ------------------------------------------- Charles De Luca - ------------------------------------------- Steven Phillips Exhibits: - -------- A. Form of Guaranty B. Terms of Series A Preferred Stock C. Amendments to Bylaws D. Form of Opinion of Cadwalader, Wickersham & Taft E. Form of Opinion of Lionel, Sawyer & Collins