German Guarantee Limitations. (a) Each Secured Party agrees not to enforce against a German Guarantor any payment obligation arising out of the guarantee contained in Section 2.01 (the “Payment Obligation”) (i) if and to the extent such Payment Obligation secures obligations of an affiliated company (verbundenes Unternehmen) of such German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the German Guarantor’s Subsidiaries) and (ii) if and to the extent the enforcement of such Payment Obligation would cause the German Guarantor’s or, in the case of a German GmbH & Co. KG Guarantor, its general partner’s net assets (Reinvermögen), i.e., assets (the calculation of which shall include all items set forth in Section 266(2) A., B. and C. of the German Commercial Code (Handelsgesetzbuch)) minus liabilities and liability reserves (the calculation of which shall include all items set forth in Section 266(3) B., C. and D. of the German Commercial Code (Handelsgesetzbuch)) to fall below its stated share capital (Stammkapital) (Begründung einer Unterbilanz) or, if such net assets are already less than its stated share capital (Stammkapital), would cause such amount to be further reduced (Vertiefung einer Unterbilanz) (such event a “Capital Impairment”) and such enforcement would result in a violation of Section 30 of the German Act on Limited Liability Companies (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – “GmbHG”) provided that for the purposes of calculating the amount to be enforced (if any) the following balance sheet items shall be adjusted as follows: (i) the amount of any increase of stated share capital (Stammkapital) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner that has been effected without the prior written consent of the Administrative Agent shall be deducted from the stated share capital (Stammkapital); (ii) liabilities arising from loans provided to the relevant German Guarantor by the Company or any of its Subsidiaries shall be disregarded if such loans are subordinated within the meaning of Section 39(2) of the German Insolvency Code (Insolvenzordnung); and (iii) any loans and other contractual liabilities incurred by the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner in violation of the provisions of any of the Loan Documents shall be disregarded. (b) Upon delivery of an Enforcement Notice (as defined below) and upon request of the Administrative Agent, the German Guarantor shall as soon as reasonably practicable and in any event within three months after such notice realize any asset that is shown in the balance sheet with a book value (Buchwert) that is significantly lower than the market value of such asset, which is not necessary for the German Guarantor’s business (betriebsnotwendig). After the expiry of such three months period the German Guarantor shall notify the Administrative Agent of the amount of the proceeds from the sale and submit an accompanying statement to the Administrative Agent stating the amount of the net assets (Reinvermögen) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner, and the amount by which such net assets (Reinvermögen) exceed its respective registered share capital, each recalculated (as of the date of delivery of an Enforcement Notice) for the purposes of paragraph (a) hereof to take into account such proceeds. (c) The limitations set out in paragraph (a) hereof shall not apply: (i) in relation to and to the extent the proceeds of any borrowings under the Credit Agreement have been on-lent, or otherwise passed on, to such German Guarantor or any of its Subsidiaries and have not been repaid; and (ii) to a German Guarantor which is a party to a domination agreement (Beherrschungsvertrag) as dominated entity (beherrschtes Unternehmen) or obliged to transfer its profits pursuant to a profit and loss transfer agreement (Gewinnabführungsvertrag), provided that in such case the Secured Parties shall in any event be entitled to enforce the Payment Obligation up to the amount enforceable pursuant to paragraph (a) above but may enforce the Payment Obligation in a higher amount only to the extent that such enforcement would not result in a personal liability of any officer of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner. (d) The limitations set out in paragraph (a) hereof only apply if and to the extent that: (i) within ten (10) Business Days following the notification by any Secured Party of its intention to enforce the Payment Obligation (the “Enforcement Notice”), the managing director(s) on behalf of the relevant German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner has/have confirmed in writing to the Administrative Agent to what extent the Payment Obligation cannot be enforced as it would cause a Capital Impairment within the meaning of paragraph (a) above (taking into account the adjustments set out in paragraph (a)(i) to (iii) above) and such confirmation is supported by evidence reasonably satisfactory to the Administrative Agent (the “Management Determination”) and the Administrative Agent (acting on behalf of the relevant Secured Party) has not contested this; or (ii) within twenty (20) Business Days from the date the Administrative Agent has contested the Management Determination, the Administrative Agent receives a determination by the German Guarantor’s auditors of the amount that could have been enforced on the date the Enforcement Notice without causing a Capital Impairment within the meaning of paragraph (a) above (the “Auditor’s Determination”). The amount determined in the Auditor’s Determination shall (except for manifest error) be binding for the Loan Parties and the Secured Parties. The costs of the Auditor’s Determination shall be borne by the relevant German Guarantor. (e) If the Administrative Agent disagrees with the Auditor’s Determination, the Secured Parties shall be entitled to enforce the Payment Obligation up to the amount which is undisputed between themselves and the German Guarantor. In relation to the amount which is disputed, the Secured Parties shall be entitled to further pursue their claims (if any) and the German Guarantor shall be entitled to prove that this amount is necessary for maintaining its or, in the case of a German GmbH & Co. KG Guarantor, its general partner’s stated share capital (Stammkapital) without violation of Section 30 GmbHG (calculated as of the date that the Enforcement Notice was given). (f) If the Payment Obligation was enforced without limitation because the Management Determination and/or the Auditor’s Determination (as the case may be) was not delivered within the relevant time or for any other reason, the Secured Parties shall promptly upon demand by the relevant German Guarantor repay to such German Guarantor any amount which is necessary pursuant to Section 30 GmbHG to maintain the stated share capital (Stammkapital) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner, calculated as of the date that the Enforcement Notice was given provided the relevant Secured Party has received a corresponding amount by the relevant German Guarantor as a consequence of enforcement of the relevant Payment Obligation. (g) Furthermore, each Secured Party agrees not to enforce against a German Guarantor any Payment Obligation if and to the extent (i) such Payment Obligation secures obligations of an affiliated company (verbundenes Unternehmen) of such German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the relevant German Guarantor’s subsidiaries) and (ii) such enforcement would result in the illiquidity of the German Guarantor (Zahlungsunfähigkeit) in the meaning of Section 17 subsection 2 German Insolvency Code (Insolvenzordnung) and (iii) such enforcement would provoke the liability of the managing director(s) of the German Guarantor under Section 64 sentence 3 GmbHG, provided that for the purposes of calculating illiquidity in the meaning of this paragraph (i) any liabilities of the relevant German Guarantor to the Company or any of its Subsidiaries shall be disregarded if and to the extent these liabilities were – with respect to the ordinary course of business – created or not realized in abusive interference with the relevant German Guarantor’s liquidity, particularly in order to avoid the enforcement by the German Guarantor, or if the due date of the respective liabilities deviates from the due dates usually agreed between the parties with respect to their ordinary course of business, and (ii) any outstanding claims - including any rights of recourse - of the relevant German Guarantor against the Company or any of its Subsidiaries that would not be considered under Section 17 subsection 2 German Insolvency Code particularly due to lacking maturity, deferral or enforceability (Durchsetzbarkeit) shall be considered as disposable liquidity of such German Guarantor (frei verfügbare Liquidität), if and to the extent these claims were – with respect to the ordinary course of business – created or not realized in abusive interference with the relevant German Guarantor’s liquidity, particularly in order to avoid the enforcement by a Secured Party, or if the due date or the contractual enforceability of the respective claims deviates from the usual agreements between the parties with respect to their ordinary course of business, and (iii) any payments effected by the relevant German Guarantor to the Company or any of its Subsidiaries that were beyond the ordinary course of business (gewöhnlicher Geschäftsverlauf) shall be regarded as disposable liquidity of the relevant German Guarantor (frei verfügbare Liquidität). (h) The limitation set out in Clause (g) shall only apply if and to the extent that: (i) within ten (10) Business Days after the receipt of the Enforcement Notice by the relevant German Guarantor, the managing director(s) on behalf of such German Guarantor has/have confirmed in writing to the respective Secured Party: (1) the extent to which the Security secures obligations of an affiliated company (verbundenes Unternehmen) of the relevant German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the relevant German Guarantor’s subsidiaries); and to what extent the Security cannot be enforced as this would result in the illiquidity of the relevant German Guarantor and the liability of the directors within the meaning of Clause (g) and such confirmation is supported by evidence reasonably satisfactory to the Secured Party; and (2) such confirmation is supported by evidence by means of unaudited liquidity statements (Liquiditätsbilanz) in which the current cash and cash equivalents (together “Cash”) and the cash available within the next three weeks are opposed to the liabilities which will become due within the next three weeks and a liquidity schedule (Liquiditätsplan) showing the liquidity of the relevant German Guarantor for the preceding 12 months and the expected liquidity during the subsequent two months (the liquidity statements and the liquidity schedule jointly the “Management Evaluation”) and the Secured Party has not contested this; and (3) that all reasonable measures within ordinary course of business have been taken or will promptly be taken – including the realisation of assets of the relevant German Guarantor – in order to increase the liquidity of the German Guarantor and this confirmation is supported by reasonable evidence, or (ii) within twenty (20) Business Days from the date on which a Secured Party has contested the Management Evaluation made in accordance with this Clause (h) (i) (the “Auditing Period”), the Secured Party receives liquidity statements with an auditor’s confirmation of the amount that could have been enforced on the date of the Enforcement Notice without causing illiquidity within the meaning of Clause (g) (the “Auditor’s Evaluation”). For the avoidance of doubt, in case the Management Evaluation is contested, the Secured Party shall not enforce the payment obligations created hereunder (Versprechen, zeitweilig nicht zu vollstrecken) prior to the expiry of the Auditing Period. The costs of the Auditor’s Evaluation shall be borne by the relevant German Guarantor. (i) If a Secured Party disagrees with the Auditor’s Evaluation, the Secured Party shall be entitled to enforce the Security up to the amount which is undisputed between itself and the relevant German Guarantor. In relation to the amount which is disputed, and if and to the extent the factual basis for the Management Evaluation and the Auditor’s Evaluation particularly with regard to the liquidity of the relevant German Guarantor has changed after the point in time to which the Auditor’s Evaluation relates, the Secured Party shall be entitled to further pursue its claims (if any) and the relevant German Guarantor shall be entitled to prove that this amount is necessary for avoiding illiquidity in the meaning of Section 17 subsection 2 German Insolvency Code (Insolvenzordnung) (calculated in accordance with Clause (g)). The Auditor’s Evaluation does not prevent the Secured Party from initiating court proceedings if it holds that the prerequisites of an abusive interference as set forth in Section (g) (i) and (ii) are met. (j) No reduction of the amount enforceable under this guarantee in accordance with the above limitations will prejudice the rights of the Secured Parties to continue enforcing the guarantee (subject always to the operation of the limitation set out above at the time of such enforcement) until full satisfaction of the guaranteed claims. For the avoidance of doubt, nothing in this Section 2.04 shall affect the right of the Secured Parties (or any of them) to accelerate the Loans pursuant to Section 9 of the Credit Agreement or to enforce the security granted under any Collateral Document.
Appears in 1 contract
Sources: Guarantee and Collateral Agreement (Harman International Industries Inc /De/)
German Guarantee Limitations. (a) Each Secured Credit Party agrees not to enforce against a German Guarantor any payment obligation arising out of the guarantee contained in Section 2.01 (the “Payment Obligation”) (i) if and to the extent (i) such Payment Obligation secures obligations of an affiliated company (verbundenes Unternehmen) of such German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the German Guarantor’s Subsidiaries) and (ii) if and to the extent the enforcement of such Payment Obligation would cause the German Guarantor’s or, in the case of a German GmbH & Co. KG Guarantor, its general partner’s net assets (Reinvermögen), i.e., assets (the calculation of which shall include all items set forth in Section 266(2) A., B. and C. of the German Commercial Code (Handelsgesetzbuch)) minus liabilities and liability reserves (the calculation of which shall include all items set forth in Section 266(3) B., C. and D. of the German Commercial Code (Handelsgesetzbuch)) to fall below its stated share capital (Stammkapital) (Begründung einer Unterbilanz) or, if such net assets are already less than its stated share capital (Stammkapital), would cause such amount to be further reduced (Vertiefung einer Unterbilanz) (such event a “Capital Impairment”) and such enforcement would result in a violation of Section 30 of the German Act on Limited Liability Companies (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – “GmbHG”) provided that for the purposes of calculating the amount to be enforced (if any) the following balance sheet items shall be adjusted as follows:
(i) the amount of any increase of stated share capital (Stammkapital) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner that has been effected without the prior written consent of the Administrative Agent shall be deducted from the stated share capital (Stammkapital);
(ii) liabilities arising from loans provided to the relevant German Guarantor by the Company or any of its Subsidiaries shall be disregarded if such loans are subordinated within the meaning of Section 39(2) of the German Insolvency Code (Insolvenzordnung); and
(iii) any loans and other contractual liabilities incurred by the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner in violation of the provisions of any of the Loan Documents shall be disregarded.
(b) Upon delivery of an Enforcement Notice (as defined below) and upon request of the Administrative Agent, the German Guarantor shall as soon as reasonably practicable and in any event within three months after such notice realize any asset that is shown in the balance sheet with a book value (Buchwert) that is significantly lower than the market value of such asset, which is not necessary for the German Guarantor’s business (betriebsnotwendig). After the expiry of such three months period the German Guarantor shall notify the Administrative Agent of the amount of the proceeds from the sale and submit an accompanying statement to the Administrative Agent stating the amount of the net assets (Reinvermögen) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner, and the amount by which such net assets (Reinvermögen) exceed its respective registered share capital, each recalculated (as of the date of delivery of an Enforcement Notice) for the purposes of paragraph (a) hereof to take into account such proceeds.
(c) The limitations set out in paragraph (a) hereof shall not apply:
(i) in relation to and to the extent the proceeds of any borrowings under the Credit Agreement have been on-lent, or otherwise passed on, to such German Guarantor or any of its Subsidiaries and have not been repaid; and
(ii) to a German Guarantor which is a party to a domination agreement (Beherrschungsvertrag) as dominated entity (beherrschtes Unternehmen) or obliged to transfer its profits pursuant to a profit and loss transfer agreement (Gewinnabführungsvertrag), provided that in such case the Secured Credit Parties shall in any event be entitled to enforce the Payment Obligation up to the amount enforceable pursuant to paragraph (a) above but may enforce the Payment Obligation in a higher amount only to the extent that such enforcement would not result in a personal liability of any officer of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner.
(d) The limitations set out in paragraph (a) hereof only apply if and to the extent that:
(i) within ten (10) Business Days following the notification by any Secured Credit Party of its intention to enforce the Payment Obligation (the “Enforcement Notice”), the managing director(s) on behalf of the relevant German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner has/have confirmed in writing to the Administrative Agent to what extent the Payment Obligation cannot be enforced as it would cause a Capital Impairment within the meaning of paragraph (a) above (taking into account the adjustments set out in paragraph (a)(i) to (iii) above) and such confirmation is supported by evidence reasonably satisfactory to the Administrative Agent (the “Management Determination”) and the Administrative Agent (acting on behalf of the relevant Secured Credit Party) has not contested this; or
(ii) within twenty (20) Business Days from the date the Administrative Agent has contested the Management Determination, the Administrative Agent receives a determination by the German Guarantor’s auditors of the amount that could have been enforced on the date the Enforcement Notice without causing a Capital Impairment within the meaning of paragraph (a) above (the “Auditor’s Determination”). The amount determined in the Auditor’s Determination shall (except for manifest error) be binding for the Loan Parties and the Secured Credit Parties. The costs of the Auditor’s Determination shall be borne by the relevant German Guarantor.
(e) If the Administrative Agent disagrees with the Auditor’s Determination, the Secured Credit Parties shall be entitled to enforce the Payment Obligation up to the amount which is undisputed between themselves and the German Guarantor. In relation to the amount which is disputed, the Secured Credit Parties shall be entitled to further pursue their claims (if any) and the German Guarantor shall be entitled to prove that this amount is necessary for maintaining its or, in the case of a German GmbH & Co. KG Guarantor, its general partner’s stated share capital (Stammkapital) without violation of Section 30 GmbHG (calculated as of the date that the Enforcement Notice was given).
(f) If the Payment Obligation was enforced without limitation because the Management Determination and/or the Auditor’s Determination (as the case may be) was not delivered within the relevant time or for any other reason, the Secured Credit Parties shall promptly upon demand by the relevant German Guarantor repay to such German Guarantor any amount which is necessary pursuant to Section 30 GmbHG to maintain the stated share capital (Stammkapital) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner, calculated as of the date that the Enforcement Notice was given provided the relevant Secured Credit Party has received a corresponding amount by the relevant German Guarantor as a consequence of enforcement of the relevant Payment Obligation.
(g) Furthermore, each Secured Credit Party agrees not to enforce against a German Guarantor any Payment Obligation if and to the extent (i) such Payment Obligation secures obligations of an affiliated company (verbundenes Unternehmen) of such German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the relevant German Guarantor’s subsidiaries) and (ii) such enforcement would result in the illiquidity of the German Guarantor (Zahlungsunfähigkeit) in the meaning of Section 17 subsection 2 German Insolvency Code (Insolvenzordnung) and (iii) such enforcement would provoke the liability of the managing director(s) of the German Guarantor under Section 64 sentence 3 GmbHG, provided that for the purposes of calculating illiquidity in the meaning of this paragraph
(i) any liabilities of the relevant German Guarantor to the Company or any of its Subsidiaries shall be disregarded if and to the extent these liabilities were – with respect to the ordinary course of business – created or not realized in abusive interference with the relevant German Guarantor’s liquidity, particularly in order to avoid the enforcement by the German Guarantor, or if the due date of the respective liabilities deviates from the due dates usually agreed between the parties with respect to their ordinary course of business, and
(ii) any outstanding claims - – including any rights of recourse - – of the relevant German Guarantor against the Company or any of its Subsidiaries that would not be considered under Section 17 subsection 2 German Insolvency Code particularly due to lacking maturity, deferral or enforceability (Durchsetzbarkeit) shall be considered as disposable liquidity of such German Guarantor (frei verfügbare Liquidität), if and to the extent these claims were – with respect to the ordinary course of business – created or not realized in abusive interference with the relevant German Guarantor’s liquidity, particularly in order to avoid the enforcement by a Secured Credit Party, or if the due date or the contractual enforceability of the respective claims deviates from the usual agreements between the parties with respect to their ordinary course of business, and
(iii) any payments effected by the relevant German Guarantor to the Company or any of its Subsidiaries that were beyond the ordinary course of business (gewöhnlicher Geschäftsverlauf) shall be regarded as disposable liquidity of the relevant German Guarantor (frei verfügbare Liquidität).
(h) The limitation set out in Clause (g) shall only apply if and to the extent that:
(i) within ten (10) Business Days after the receipt of the Enforcement Notice by the relevant German Guarantor, the managing director(s) on behalf of such German Guarantor has/have confirmed in writing to the respective Secured Credit Party:
(1) the extent to which the Security secures obligations of an affiliated company (verbundenes Unternehmen) of the relevant German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the relevant German Guarantor’s subsidiaries); and to what extent the Security cannot be enforced as this would result in the illiquidity of the relevant German Guarantor and the liability of the directors within the meaning of Clause (g) and such confirmation is supported by evidence reasonably satisfactory to the Secured Credit Party; and
(2) such confirmation is supported by evidence by means of unaudited liquidity statements (Liquiditätsbilanz) in which the current cash and cash equivalents (together “Cash”) and the cash available within the next three weeks are opposed to the liabilities which will become due within the next three weeks and a liquidity schedule (Liquiditätsplan) showing the liquidity of the relevant German Guarantor for the preceding 12 months and the expected liquidity during the subsequent two months (the liquidity statements and the liquidity schedule jointly the “Management Evaluation”) and the Secured Credit Party has not contested this; and
(3) that all reasonable measures within ordinary course of business have been taken or will promptly be taken – including the realisation of assets of the relevant German Guarantor – in order to increase the liquidity of the German Guarantor and this confirmation is supported by reasonable evidence, or
(ii) within twenty (20) Business Days from the date on which a Secured Credit Party has contested the Management Evaluation made in accordance with this Clause (h) (i) (the “Auditing Period”), the Secured Credit Party receives liquidity statements with an auditor’s confirmation of the amount that could have been enforced on the date of the Enforcement Notice without causing illiquidity within the meaning of Clause (g) (the “Auditor’s Evaluation”). For the avoidance of doubt, in case the Management Evaluation is contested, the Secured Credit Party shall not enforce the payment obligations created hereunder (Versprechen, zeitweilig nicht zu vollstrecken) prior to the expiry of the Auditing Period. The costs of the Auditor’s Evaluation shall be borne by the relevant German Guarantor.
(i) If a Secured Credit Party disagrees with the Auditor’s Evaluation, the Secured Credit Party shall be entitled to enforce the Security up to the amount which is undisputed between itself and the relevant German Guarantor. In relation to the amount which is disputed, and if and to the extent the factual basis for the Management Evaluation and the Auditor’s Evaluation particularly with regard to the liquidity of the relevant German Guarantor has changed after the point in time to which the Auditor’s Evaluation relates, the Secured Credit Party shall be entitled to further pursue its claims (if any) and the relevant German Guarantor shall be entitled to prove that this amount is necessary for avoiding illiquidity in the meaning of Section 17 subsection 2 German Insolvency Code (Insolvenzordnung) (calculated in accordance with Clause (g)). The Auditor’s Evaluation does not prevent the Secured Credit Party from initiating court proceedings if it holds that the prerequisites of an abusive interference as set forth in Section (g) (i) and (ii) are met.
(j) No reduction of the amount enforceable under this guarantee in accordance with the above limitations will prejudice the rights of the Secured Credit Parties to continue enforcing the guarantee (subject always to the operation of the limitation set out above at the time of such enforcement) until full satisfaction of the guaranteed claims. For the avoidance of doubt, nothing in this Section 2.04 shall affect the right of the Secured Credit Parties (or any of them) to accelerate the Loans pursuant to Section 9 of the Credit Agreement or to enforce the security granted under any Collateral DocumentAgreement.
Appears in 1 contract
Sources: Guarantee Agreement (Harman International Industries Inc /De/)
German Guarantee Limitations. (ai) Each Secured Party agrees not to enforce against a German Guarantor any payment obligation arising out of the guarantee contained in Section 2.01 (the “Payment Obligation”) (i) if and to the extent such Payment Obligation secures obligations of an affiliated company (verbundenes Unternehmen) of such German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the German Guarantor’s 's Subsidiaries) and (ii) if and to the extent the enforcement of such Payment Obligation would cause the German Guarantor’s 's or, in the case of a German GmbH & Co. KG Guarantor, its general partner’s 's net assets (Reinvermögen), i.e., assets (the calculation of which shall include all items set forth in Section 266(2) A., B. and C. of the German Commercial Code (Handelsgesetzbuch)) minus liabilities and liability reserves (the calculation of which shall include all items set forth in Section 266(3) B., C. and D. of the German Commercial Code (Handelsgesetzbuch)) to fall below its stated share capital (Stammkapital) (Begründung einer Unterbilanz) or, if such net assets are already less than its stated share capital (Stammkapital), would cause such amount to be further reduced (Vertiefung einer Unterbilanz) (such event a “Capital Impairment”) and such enforcement would result in a violation of Section 30 of the German Act on Limited Liability Companies (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – “GmbHG”) provided that for the purposes of calculating the amount to be enforced (if any) the following balance sheet items shall be adjusted as follows:
(i) the amount of any increase of stated share capital (Stammkapital) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner that has been effected without the prior written consent of the Administrative Agent shall be deducted from the stated share capital (Stammkapital);
(ii) liabilities arising from loans provided to the relevant German Guarantor by the Company or any of its Subsidiaries shall be disregarded if such loans are subordinated within the meaning of Section 39(2) of the German Insolvency Code (Insolvenzordnung); and
(iii) any loans and other contractual liabilities incurred by the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner in violation of the provisions of any of the Loan Documents shall be disregarded.
(b) Upon delivery of an Enforcement Notice (as defined below) and upon request of the Administrative Agent, the German Guarantor shall as soon as reasonably practicable and in any event within three months after such notice realize any asset that is shown in the balance sheet with a book value (Buchwert) that is significantly lower than the market value of such asset, which is not necessary for the German Guarantor’s business (betriebsnotwendig). After the expiry of such three months period the German Guarantor shall notify the Administrative Agent of the amount of the proceeds from the sale and submit an accompanying statement to the Administrative Agent stating the amount of the net assets (Reinvermögen) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner, and the amount by which such net assets (Reinvermögen) exceed its respective registered share capital, each recalculated (as of the date of delivery of an Enforcement Notice) for the purposes of paragraph (a) hereof to take into account such proceeds.
(c) The limitations set out in paragraph (a) hereof shall not apply:
(i) in relation to and to the extent the proceeds of any borrowings under the Credit Agreement have been on-lent, or otherwise passed on, to such German Guarantor or any of its Subsidiaries and have not been repaid; and
(ii) to a German Guarantor which is a party to a domination agreement (Beherrschungsvertrag) as dominated entity (beherrschtes Unternehmen) or obliged to transfer its profits pursuant to a profit and loss transfer agreement (Gewinnabführungsvertrag), provided that in such case the Secured Parties shall in any event be entitled to enforce the Payment Obligation up to the amount enforceable pursuant to paragraph (a) above but may enforce the Payment Obligation in a higher amount only to the extent that such enforcement would not result in a personal liability of any officer of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner.
(d) The limitations set out in paragraph (a) hereof only apply if and to the extent that:
(i) within ten (10) Business Days following the notification by any Secured Party of its intention to enforce the Payment Obligation (the “Enforcement Notice”), the managing director(s) on behalf of the relevant German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner has/have confirmed in writing to the Administrative Agent to what extent the Payment Obligation cannot be enforced as it would cause a Capital Impairment within the meaning of paragraph (a) above (taking into account the adjustments set out in paragraph (a)(i) to (iii) above) and such confirmation is supported by evidence reasonably satisfactory to the Administrative Agent (the “Management Determination”) and the Administrative Agent (acting on behalf of the relevant Secured Party) has not contested this; or
(ii) within twenty (20) Business Days from the date the Administrative Agent has contested the Management Determination, the Administrative Agent receives a determination by the German Guarantor’s auditors of the amount that could have been enforced on the date the Enforcement Notice without causing a Capital Impairment within the meaning of paragraph (a) above (the “Auditor’s Determination”). The amount determined in the Auditor’s Determination shall (except for manifest error) be binding for the Loan Parties and the Secured Parties. The costs of the Auditor’s Determination shall be borne by the relevant German Guarantor.
(e) If the Administrative Agent disagrees with the Auditor’s Determination, the Secured Parties shall be entitled to enforce the Payment Obligation up to the amount which is undisputed between themselves and the German Guarantor. In relation to the amount which is disputed, the Secured Parties shall be entitled to further pursue their claims (if any) and the German Guarantor shall be entitled to prove that this amount is necessary for maintaining its or, in the case of a German GmbH & Co. KG Guarantor, its general partner’s stated share capital (Stammkapital) without violation of Section 30 GmbHG (calculated as of the date that the Enforcement Notice was given).
(f) If the Payment Obligation was enforced without limitation because the Management Determination and/or the Auditor’s Determination (as the case may be) was not delivered within the relevant time or for any other reason, the Secured Parties shall promptly upon demand by the relevant German Guarantor repay to such German Guarantor any amount which is necessary pursuant to Section 30 GmbHG to maintain the stated share capital (Stammkapital) of the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner, calculated as of the date that the Enforcement Notice was given provided the relevant Secured Party has received a corresponding amount by the relevant German Guarantor as a consequence of enforcement of the relevant Payment Obligation.
(g) Furthermore, each Secured Party agrees not to enforce against a German Guarantor any Payment Obligation if and to the extent (i) such Payment Obligation secures obligations of an affiliated company (verbundenes Unternehmen) of such German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the relevant German Guarantor’s subsidiaries) and (ii) such enforcement would result in the illiquidity of the German Guarantor (Zahlungsunfähigkeit) in the meaning of Section 17 subsection 2 German Insolvency Code (Insolvenzordnung) and (iii) such enforcement would provoke the liability of the managing director(s) of the German Guarantor under Section 64 sentence 3 GmbHG, provided that for the purposes of calculating illiquidity in the meaning of this paragraph
(i) any liabilities of the relevant German Guarantor to the Company or any of its Subsidiaries shall be disregarded if and to the extent these liabilities were – with respect to the ordinary course of business – created or not realized in abusive interference with the relevant German Guarantor’s liquidity, particularly in order to avoid the enforcement by the German Guarantor, or if the due date of the respective liabilities deviates from the due dates usually agreed between the parties with respect to their ordinary course of business, and
(ii) any outstanding claims - including any rights of recourse - of the relevant German Guarantor against the Company or any of its Subsidiaries that would not be considered under Section 17 subsection 2 German Insolvency Code particularly due to lacking maturity, deferral or enforceability (Durchsetzbarkeit) shall be considered as disposable liquidity of such German Guarantor (frei verfügbare Liquidität), if and to the extent these claims were – with respect to the ordinary course of business – created or not realized in abusive interference with the relevant German Guarantor’s liquidity, particularly in order to avoid the enforcement by a Secured Party, or if the due date or the contractual enforceability of the respective claims deviates from the usual agreements between the parties with respect to their ordinary course of business, and
(iii) any payments effected by the relevant German Guarantor to the Company or any of its Subsidiaries that were beyond the ordinary course of business (gewöhnlicher Geschäftsverlauf) shall be regarded as disposable liquidity of the relevant German Guarantor (frei verfügbare Liquidität).
(h) The limitation set out in Clause (g) shall only apply if and to the extent that:
(i) within ten (10) Business Days after the receipt of the Enforcement Notice by the relevant German Guarantor, the managing director(s) on behalf of such German Guarantor has/have confirmed in writing to the respective Secured Party:
(1) the extent to which the Security secures obligations of an affiliated company (verbundenes Unternehmen) of the relevant German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the relevant German Guarantor’s subsidiaries); and to what extent the Security cannot be enforced as this would result in the illiquidity of the relevant German Guarantor and the liability of the directors within the meaning of Clause (g) and such confirmation is supported by evidence reasonably satisfactory to the Secured Party; and
(2) such confirmation is supported by evidence by means of unaudited liquidity statements (Liquiditätsbilanz) in which the current cash and cash equivalents (together “Cash”) and the cash available within the next three weeks are opposed to the liabilities which will become due within the next three weeks and a liquidity schedule (Liquiditätsplan) showing the liquidity of the relevant German Guarantor for the preceding 12 months and the expected liquidity during the subsequent two months (the liquidity statements and the liquidity schedule jointly the “Management Evaluation”) and the Secured Party has not contested this; and
(3) that all reasonable measures within ordinary course of business have been taken or will promptly be taken – including the realisation of assets of the relevant German Guarantor – in order to increase the liquidity of the German Guarantor and this confirmation is supported by reasonable evidence, or
(ii) within twenty (20) Business Days from the date on which a Secured Party has contested the Management Evaluation made in accordance with this Clause (h) (i) (the “Auditing Period”), the Secured Party receives liquidity statements with an auditor’s confirmation of the amount that could have been enforced on the date of the Enforcement Notice without causing illiquidity within the meaning of Clause (g) (the “Auditor’s Evaluation”). For the avoidance of doubt, in case the Management Evaluation is contested, the Secured Party shall not enforce the payment obligations created hereunder (Versprechen, zeitweilig nicht zu vollstrecken) prior to the expiry of the Auditing Period. The costs of the Auditor’s Evaluation shall be borne by the relevant German Guarantor.
(i) If a Secured Party disagrees with the Auditor’s Evaluation, the Secured Party shall be entitled to enforce the Security up to the amount which is undisputed between itself and the relevant German Guarantor. In relation to the amount which is disputed, and if and to the extent the factual basis for the Management Evaluation and the Auditor’s Evaluation particularly with regard to the liquidity of the relevant German Guarantor has changed after the point in time to which the Auditor’s Evaluation relates, the Secured Party shall be entitled to further pursue its claims (if any) and the relevant German Guarantor shall be entitled to prove that this amount is necessary for avoiding illiquidity in the meaning of Section 17 subsection 2 German Insolvency Code (Insolvenzordnung) (calculated in accordance with Clause (g)). The Auditor’s Evaluation does not prevent the Secured Party from initiating court proceedings if it holds that the prerequisites of an abusive interference as set forth in Section (g) (i) and (ii) are met.
(j) No reduction of the amount enforceable under this guarantee in accordance with the above limitations will prejudice the rights of the Secured Parties to continue enforcing the guarantee (subject always to the operation of the limitation set out above at the time of such enforcement) until full satisfaction of the guaranteed claims. For the avoidance of doubt, nothing in this Section 2.04 shall affect the right of the Secured Parties (or any of them) to accelerate the Loans pursuant to Section 9 of the Credit Agreement or to enforce the security granted under any Collateral Document.
Appears in 1 contract
Sources: Guarantee and Collateral Agreement (Harman International Industries Inc /De/)
German Guarantee Limitations. Notwithstanding anything to the contrary contained in this Agreement (including, without limitation, Section 10.1) or any other Loan Document:
(a) Each Secured Credit Party agrees not to enforce against a Borrower incorporated in Germany as a limited liability company (Gesellschaft mit beschränkter Haftung) or as a limited partnership with a limited liability company as sole general partner (GmbH & Co. KG) (a “German Guarantor Borrower”) any payment obligation arising out of the guarantee contained in Section 2.01 10.01 (the “Payment Obligation”) (i) if and to the extent such Payment Obligation secures obligations of an affiliated company (verbundenes verbundene Unternehmen) of such German Guarantor Borrower within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the German GuarantorBorrower’s Subsidiaries) subsidiaries), and (ii) if and to the extent the enforcement of such Payment Obligation would cause (as of the date of delivery of an Enforcement Notice (as defined below)) the German GuarantorBorrower’s or, in the case of a German Borrower in the form of a GmbH & Co. KG GuarantorKG, its general partner’s net assets (Reinvermögen)Nettoreinvermögen) calculated in accordance with applicable law, i.e., assets (the calculation of which shall include all items set forth in Section 266(2) A., B. and C. applicable provisions of the German Commercial Code (Handelsgesetzbuch)) minus liabilities and liability reserves (the calculation of which shall include all items set forth in Section 266(3) B., C. and D. of consistently applied by the German Commercial Code (Handelsgesetzbuch)) Borrower and the principles developed by court decisions for Section 30 GmbHG to fall below its stated registered share capital (Stammkapital) (Begründung einer Unterbilanz) or, if such net assets are already less than its stated registered share capital (Stammkapital), would cause such amount to be further reduced (Vertiefung einer Unterbilanz) (such event a “Capital Impairment”) and such enforcement would result in a violation of Section 30 of the German Act on Limited Liability Companies (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – “GmbHG”), and/or (iii) if and to the extent that such enforcement would result (as of the date of delivery of an Enforcement Notice) in a violation of Section 268(8) of the German Commercial Code (Handelsgesetzbuch) provided that for the purposes of calculating the amount to be enforced (if any) the following balance sheet items shall be adjusted as follows:
(i) the amount of any increase of stated the registered share capital (Stammkapital) effected out of retained earnings (Kapitalerhöhung aus Gesellschaftsmitteln) of the German Guarantor Borrower or, in the case of a German Borrower in the form of a GmbH & Co. KG GuarantorKG, its general partner that has been effected without the prior written consent of the Administrative Agent shall be deducted from the stated registered share capital (Stammkapital);
(ii) liabilities arising from loans provided to the relevant German Guarantor Borrower by the Company or any of its Subsidiaries shall be disregarded if such loans are subordinated within the meaning of Section 39(2) of the German Insolvency Code (Insolvenzordnung) or qualify as shareholder loans within the meaning of Section 39(1) No. 5 of the German Insolvency Code (Insolvenzordnung); and;
(iii) any loans and other contractual liabilities incurred by the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner Borrower in violation of the provisions of any of the Loan Documents shall be disregarded; and
(iv) the net assets (Nettoreinvermögen) shall take into account the costs of the Auditor’s Determination and Auditor’s Evaluation (each as defined below), either as a reduction of assets or an increase of liabilities.
(b) Upon delivery If the German Borrower intends to demonstrate that the enforcement of an Enforcement Notice (as defined below) and the Payment Obligation would be limited pursuant to the limitation on enforcement set out above, it shall, upon request of the Administrative Agent, the German Guarantor shall as soon as reasonably practicable and in any event within three months after such notice realize any asset that is shown in the balance sheet with a book value (Buchwert) that is significantly lower than the market value of such asset, which in its reasonable opinion is not necessary for the German GuarantorBorrower’s business (betriebsnotwendig). After the expiry realization of such three months period assets the German Guarantor Borrower shall notify the Administrative Agent of the amount of the proceeds from the sale and submit an accompanying statement to the Administrative Agent stating the amount of the net assets (ReinvermögenNettoreinvermögen) of the German Guarantor Borrower or, in the case of a German Borrower in the form of a GmbH & Co. KG GuarantorKG, its general partner, and the amount by which such net assets (ReinvermögenNettoreinvermögen) exceed its respective registered share capital, each recalculated (as of the date of delivery of an Enforcement NoticeNotice and on the basis of the Management Determination or the Auditor’s Determination, respectively) for the purposes of paragraph (a) hereof to take into account such proceeds.
(c) The limitations set out in paragraph (a) hereof shall not apply:
(i) in relation to and to the extent the German Borrower can demonstrate that the proceeds of any borrowings under the Credit Agreement have not been on-lent, or otherwise passed on, to such German Guarantor Borrower or any of its Subsidiaries subsidiaries and have not been repaid; and
(ii) to a German Guarantor which is a party to if at the time of the enforcement of the guarantee granted hereunder a domination agreement (Beherrschungsvertrag) or a profit and loss transfer agreement (Gewinnabführungsvertrag) in accordance with Section 291 of the German Stock Corporation Act (Aktiengesetz) exists between the German Borrower as dominated entity (beherrschtes Unternehmen) or entity obliged to transfer its profits profits, respectively, and the obligor (or such obligor’s direct or indirect shareholder) for whose obligations the guarantee hereunder is granted by the German Borrower, unless the statutory loss compensation claim (Verlustübernahmeanspruch) of such German Borrower pursuant to a the domination and/or profit and loss transfer agreement is not fully recoverable (Gewinnabführungsvertrag), nicht werthaltig) (provided that in such case the Secured Parties shall statutory loss compensation claim (Verlustübernahmeanspruch) is only recoverable in any event part (teilweise werthaltig), the guarantee granted hereunder may be entitled to enforce the Payment Obligation up enforced without giving regard to the amount enforceable pursuant to limitations provided for in paragraph (a) above but may enforce the Payment Obligation in a higher amount only to the extent that such statutory loss compensation claim (Verlustübernahmeanspruch) is recoverable(werthaltig)); and
(iii) if and to extent the German Borrower holds on the date of enforcement would not result in a personal liability of any officer of the German Guarantor or, in of the case guarantee granted hereunder a fully recoverable indemnity or claim for refund (“vollwertiger Gegenleistungs- oder Rückgewähranspruch”) within the meaning of a German GmbH & Co. KG Guarantor, Section 30 (1) sentence 2 of the GmbHG against its general partnershareholder.
(d) The limitations set out in paragraph (a) hereof only apply if and to the extent that:
(i) within ten (10) Business Days following the notification by any Secured Credit Party of its intention to enforce the Payment Obligation (the “Enforcement Notice”), the managing director(s) on behalf of the relevant German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner Borrower has/have confirmed in writing to the Administrative Agent to what extent the Payment Obligation cannot be enforced as it would cause a Capital Impairment (as of the date of delivery of an Enforcement Notice) within the meaning of paragraph (a) above (taking into account the adjustments set out in paragraph (a)(i) to (iiiiv) above) and such confirmation is supported by evidence reasonably satisfactory to the Administrative Agent (the “Management Determination”) and the Administrative Agent (acting on behalf of the relevant Secured Credit Party) has not contested this; or
(ii) within twenty (20) Business Days from the date the Administrative Agent has contested the Management Determination, the Administrative Agent receives a determination by the German GuarantorBorrower’s auditors of the amount that could have been enforced on the date the Enforcement Notice without causing a Capital Impairment (as of the date of delivery of an Enforcement Notice) within the meaning of paragraph (a) above (the “Auditor’s Determination”). The amount determined in the Auditor’s Determination shall (except for manifest error) be binding for the Loan Parties and the Secured Credit Parties. The costs of the Auditor’s Determination shall be borne by the relevant German GuarantorBorrower.
(e) If the Administrative Agent disagrees with the Auditor’s Determination, the Secured Credit Parties shall be entitled to enforce the Payment Obligation up to the amount which is undisputed between themselves and the German GuarantorBorrower. In relation to the amount which is disputed, the Secured Credit Parties shall be entitled to further pursue their claims (if any) and the German Guarantor Borrower shall be entitled to prove that this amount is necessary for maintaining its or, in the case of a German Borrower in the form of a GmbH & Co. KG GuarantorKG, its general partner’s stated registered share capital (Stammkapital) without violation of Section 30 GmbHG (calculated as of the date that the Enforcement Notice was given).
(f) If the Payment Obligation was enforced without limitation because the Management Determination and/or the Auditor’s Determination (as the case may be) was not delivered within the relevant time or for any other reason, the Secured Credit Parties shall promptly upon demand by the relevant German Guarantor Borrower repay to such German Guarantor Borrower any amount which is necessary pursuant to Section 30 GmbHG to maintain the stated registered share capital (Stammkapital) of the German Guarantor Borrower or, in the case of a German Borrower in the form of a GmbH & Co. KG GuarantorKG, its general partner, calculated as of the date that the Enforcement Notice was given provided the relevant Secured Credit Party has received a corresponding amount by the relevant German Guarantor Borrower as a consequence of enforcement of the relevant Payment Obligation.
(g) Furthermore, each Secured Party agrees not to enforce against a German Guarantor any Payment Obligation if and to the extent (i) such Payment Obligation secures obligations of an affiliated company (verbundenes Unternehmen) of such German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the relevant German Guarantor’s subsidiaries) and (ii) such enforcement would result in the illiquidity of the German Guarantor (Zahlungsunfähigkeit) in the meaning of Section 17 subsection 2 German Insolvency Code (Insolvenzordnung) and (iii) such enforcement would provoke the liability of the managing director(s) of the German Guarantor under Section 64 sentence 3 GmbHG, provided that for the purposes of calculating illiquidity in the meaning of this paragraph
(i) any liabilities of the relevant German Guarantor to the Company or any of its Subsidiaries shall be disregarded if and to the extent these liabilities were – with respect to the ordinary course of business – created or not realized in abusive interference with the relevant German Guarantor’s liquidity, particularly in order to avoid the enforcement by the German Guarantor, or if the due date of the respective liabilities deviates from the due dates usually agreed between the parties with respect to their ordinary course of business, and
(ii) any outstanding claims - including any rights of recourse - of the relevant German Guarantor against the Company or any of its Subsidiaries that would not be considered under Section 17 subsection 2 German Insolvency Code particularly due to lacking maturity, deferral or enforceability (Durchsetzbarkeit) shall be considered as disposable liquidity of such German Guarantor (frei verfügbare Liquidität), if and to the extent these claims were – with respect to the ordinary course of business – created or not realized in abusive interference with the relevant German Guarantor’s liquidity, particularly in order to avoid the enforcement by a Secured Party, or if the due date or the contractual enforceability of the respective claims deviates from the usual agreements between the parties with respect to their ordinary course of business, and
(iii) any payments effected by the relevant German Guarantor to the Company or any of its Subsidiaries that were beyond the ordinary course of business (gewöhnlicher Geschäftsverlauf) shall be regarded as disposable liquidity of the relevant German Guarantor (frei verfügbare Liquidität).
(h) The limitation set out in Clause (g) shall only apply if and to the extent that:
(i) within ten (10) Business Days after the receipt of the Enforcement Notice by the relevant German Guarantor, the managing director(s) on behalf of such German Guarantor has/have confirmed in writing to the respective Secured Party:
(1) the extent to which the Security secures obligations of an affiliated company (verbundenes Unternehmen) of the relevant German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the relevant German Guarantor’s subsidiaries); and to what extent the Security cannot be enforced as this would result in the illiquidity of the relevant German Guarantor and the liability of the directors within the meaning of Clause (g) and such confirmation is supported by evidence reasonably satisfactory to the Secured Party; and
(2) such confirmation is supported by evidence by means of unaudited liquidity statements (Liquiditätsbilanz) in which the current cash and cash equivalents (together “Cash”) and the cash available within the next three weeks are opposed to the liabilities which will become due within the next three weeks and a liquidity schedule (Liquiditätsplan) showing the liquidity of the relevant German Guarantor for the preceding 12 months and the expected liquidity during the subsequent two months (the liquidity statements and the liquidity schedule jointly the “Management Evaluation”) and the Secured Party has not contested this; and
(3) that all reasonable measures within ordinary course of business have been taken or will promptly be taken – including the realisation of assets of the relevant German Guarantor – in order to increase the liquidity of the German Guarantor and this confirmation is supported by reasonable evidence, or
(ii) within twenty (20) Business Days from the date on which a Secured Party has contested the Management Evaluation made in accordance with this Clause (h) (i) (the “Auditing Period”), the Secured Party receives liquidity statements with an auditor’s confirmation of the amount that could have been enforced on the date of the Enforcement Notice without causing illiquidity within the meaning of Clause (g) (the “Auditor’s Evaluation”). For the avoidance of doubt, in case the Management Evaluation is contested, the Secured Party shall not enforce the payment obligations created hereunder (Versprechen, zeitweilig nicht zu vollstrecken) prior to the expiry of the Auditing Period. The costs of the Auditor’s Evaluation shall be borne by the relevant German Guarantor.
(i) If a Secured Party disagrees with the Auditor’s Evaluation, the Secured Party shall be entitled to enforce the Security up to the amount which is undisputed between itself and the relevant German Guarantor. In relation to the amount which is disputed, and if and to the extent the factual basis for the Management Evaluation and the Auditor’s Evaluation particularly with regard to the liquidity of the relevant German Guarantor has changed after the point in time to which the Auditor’s Evaluation relates, the Secured Party shall be entitled to further pursue its claims (if any) and the relevant German Guarantor shall be entitled to prove that this amount is necessary for avoiding illiquidity in the meaning of Section 17 subsection 2 German Insolvency Code (Insolvenzordnung) (calculated in accordance with Clause (g)). The Auditor’s Evaluation does not prevent the Secured Party from initiating court proceedings if it holds that the prerequisites of an abusive interference as set forth in Section (g) (i) and (ii) are met.
(j) No reduction of the amount enforceable under this guarantee in accordance with the above limitations will prejudice the rights of the Secured Credit Parties to continue enforcing the guarantee (subject always to the operation of the limitation set out above at the time of such enforcement) until full satisfaction of the guaranteed claims. For the avoidance of doubt, nothing in this Section 2.04 10.02 shall affect the right of the Secured Credit Parties (or any of them) to accelerate the Loans pursuant to Section 9 Article VII of the Credit this Agreement or to enforce the security granted under any Collateral Document. LENDER COMMITMENT COMMITMENT JPMORGAN CHASE BANK, N.A. $ 52,500,000 CAD0 JPMORGAN CHASE BANK, N.A., TORONTO BRANCH $ 0 CAD34,000,000 DEUTSCHE BANK AG NEW YORK BRANCH $ 42,500,000 CAD0 ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION $ 42,500,000 CAD25,000,000 U.S. BANK NATIONAL ASSOCIATION $ 42,500,000 CAD0 U.S. BANK NA CANADA BRANCH $ 0 CAD25,000,000 CITIBANK, N.A. $ 35,000,000 CAD0 CITIBANK, N.A., CANADIAN BRANCH $ 0 CAD18,000,000 PNC BANK, NATIONAL ASSOCIATION $ 35,000,000 CAD0 PNC BANK CANADA BRANCH $ 0 CAD18,000,000 RBS CITIZENS, NATIONAL ASSOCIATION $ 35,000,000 CAD18,000,000 KEYBANK NATIONAL ASSOCIATION $ 25,000,000 CAD18,000,000 COMERICA BANK $ 25,000,000 CAD10,000,000 FIFTH THIRD BANK $ 25,000,000 CAD0 FIFTH THIRD BANK, CANADIAN BRANCH $ 0 CAD18,000,000 THE NORTHERN TRUST COMPANY $ 25,000,000 CAD5,000,000 HSBC BANK USA, NATIONAL ASSOCIATION $ 15,000,000 CAD18,000,000 ▇▇▇▇▇▇▇ SACHS BANK USA $ 0 CAD25,000,000 BANK OF MONTREAL $ 0 CAD18,000,000
1. The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.
2. On the first day of each Interest Period (or as soon as possible thereafter) the Administrative Agent shall calculate, as a percentage rate, a rate (the “Associated Costs Rate”) for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Administrative Agent as a weighted average of the Lenders’ Associated Costs Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum.
3. The Associated Costs Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Administrative Agent. This percentage will be certified by that Lender in its notice to the Administrative Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender’s participation in all Loans made from that Facility Office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that Facility Office.
4. The Associated Costs Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Administrative Agent as follows:
(a) in relation to a Loan in Pounds Sterling: per cent. per annum
(b) in relation to a Loan in any currency other than Pounds Sterling: per cent. per annum. Where:
Appears in 1 contract
Sources: Credit Agreement (Belden Inc.)
German Guarantee Limitations. Notwithstanding anything to the contrary contained in this Agreement (including, without limitation, Section 10.1) or any other Loan Document:
(a) Each Secured Credit Party agrees not to enforce against a Borrower incorporated in Germany as a limited liability company (Gesellschaft mit beschränkter Haftung) or as a limited partnership with a limited liability company as sole general partner (GmbH & Co. KG) (a “German Guarantor Borrower”) any payment obligation arising out of the guarantee contained in Section 2.01 10.01 (the “Payment Obligation”) (i) if and to the extent such Payment Obligation secures obligations of an affiliated company (verbundenes verbundene Unternehmen) of such German Guarantor Borrower within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the German GuarantorBorrower’s Subsidiaries) subsidiaries), and (ii) if and to the extent the enforcement of such Payment Obligation would cause (as of the date of delivery of an Enforcement Notice (as defined below)) the German GuarantorBorrower’s or, in the case of a German Borrower in the form of a GmbH & Co. KG GuarantorKG, its general partner’s net assets (Reinvermögen)Nettoreinvermögen) calculated in accordance with applicable law, i.e., assets (the calculation of which shall include all items set forth in Section 266(2) A., B. and C. applicable provisions of the German Commercial Code (Handelsgesetzbuch)) minus liabilities and liability reserves (the calculation of which shall include all items set forth in Section 266(3) B., C. and D. of consistently applied by the German Commercial Code (Handelsgesetzbuch)) Borrower and the principles developed by court decisions for Section 30 GmbHG to fall below its stated registered share capital (Stammkapital) (Begründung einer Unterbilanz) or, if such net assets are already less than its stated registered share capital (Stammkapital), would cause such amount to be further reduced (Vertiefung einer Unterbilanz) (such event a “Capital Impairment”) and such enforcement would result in a violation of Section 30 of the German Act on Limited Liability Companies (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – — “GmbHG”), and/or (iii) if and to the extent that such enforcement would result (as of the date of delivery of an Enforcement Notice) in a violation of Section 268(8) of the German Commercial Code (Handelsgesetzbuch) provided that for the purposes of calculating the amount to be enforced (if any) the following balance sheet items shall be adjusted as follows:
(i) the amount of any increase of stated the registered share capital (Stammkapital) effected out of retained earnings (Kapitalerhöhung aus Gesellschaftsmitteln) of the German Guarantor Borrower or, in the case of a German Borrower in the form of a GmbH & Co. KG GuarantorKG, its general partner that has been effected without the prior written consent of the Administrative Agent shall be deducted from the stated registered share capital (Stammkapital);
(ii) liabilities arising from loans provided to the relevant German Guarantor Borrower by the Company or any of its Subsidiaries shall be disregarded if such loans are subordinated within the meaning of Section 39(2) of the German Insolvency Code (Insolvenzordnung) or qualify as shareholder loans within the meaning of Section 39(1) No. 5 of the German Insolvency Code (Insolvenzordnung); and;
(iii) any loans and other contractual liabilities incurred by the German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner Borrower in violation of the provisions of any of the Loan Documents shall be disregarded; and
(iv) the net assets (Nettoreinvermögen) shall take into account the costs of the Auditor’s Determination and Auditor’s Evaluation (each as defined below), either as a reduction of assets or an increase of liabilities.
(b) Upon delivery If the German Borrower intends to demonstrate that the enforcement of an Enforcement Notice (as defined below) and the Payment Obligation would be limited pursuant to the limitation on enforcement set out above, it shall, upon request of the Administrative Agent, the German Guarantor shall as soon as reasonably practicable and in any event within three months after such notice realize any asset that is shown in the balance sheet with a book value (Buchwert) that is significantly lower than the market value of such asset, which in its reasonable opinion is not necessary for the German GuarantorBorrower’s business (betriebsnotwendig). After the expiry realization of such three months period assets the German Guarantor Borrower shall notify the Administrative Agent of the amount of the proceeds from the sale and submit an accompanying statement to the Administrative Agent stating the amount of the net assets (ReinvermögenNettoreinvermögen) of the German Guarantor Borrower or, in the case of a German Borrower in the form of a GmbH & Co. KG GuarantorKG, its general partner, and the amount by which such net assets (ReinvermögenNettoreinvermögen) exceed its respective registered share capital, each recalculated (as of the date of delivery of an Enforcement NoticeNotice and on the basis of the Management Determination or the Auditor’s Determination, respectively) for the purposes of paragraph (a) hereof to take into account such proceeds.
(c) The limitations set out in paragraph (a) hereof shall not apply:
(i) in relation to and to the extent the German Borrower can demonstrate that the proceeds of any borrowings under the Credit Agreement have not been on-lent, or otherwise passed on, to such German Guarantor Borrower or any of its Subsidiaries subsidiaries and have not been repaid; and
(ii) to a German Guarantor which is a party to if at the time of the enforcement of the guarantee granted hereunder a domination agreement (Beherrschungsvertrag) or a profit and loss transfer agreement (Gewinnabführungsvertrag) in accordance with Section 291 of the German Stock Corporation Act (Aktiengesetz) exists between the German Borrower as dominated entity (beherrschtes Unternehmen) or entity obliged to transfer its profits profits, respectively, and the obligor (or such obligor’s direct or indirect shareholder) for whose obligations the guarantee hereunder is granted by the German Borrower, unless the statutory loss compensation claim (Verlustübernahmeanspruch) of such German Borrower pursuant to a the domination and/or profit and loss transfer agreement is not fully recoverable (Gewinnabführungsvertrag), nicht werthaltig) (provided that in such case the Secured Parties shall statutory loss compensation claim (Verlustübernahmeanspruch) is only recoverable in any event part (teilweise werthaltig), the guarantee granted hereunder may be entitled to enforce the Payment Obligation up enforced without giving regard to the amount enforceable pursuant to limitations provided for in paragraph (a) above but may enforce the Payment Obligation in a higher amount only to the extent that such statutory loss compensation claim (Verlustübernahmeanspruch) is recoverable(werthaltig)); and
(iii) if and to extent the German Borrower holds on the date of enforcement would not result in a personal liability of any officer of the German Guarantor or, in of the case guarantee granted hereunder a fully recoverable indemnity or claim for refund (“vollwertiger Gegenleistungs- oder Rückgewähranspruch”) within the meaning of a German GmbH & Co. KG Guarantor, Section 30 (1) sentence 2 of the GmbHG against its general partnershareholder.
(d) The limitations set out in paragraph (a) hereof only apply if and to the extent that:
(i) within ten (10) Business Days following the notification by any Secured Credit Party of its intention to enforce the Payment Obligation (the “Enforcement Notice”), the managing director(s) on behalf of the relevant German Guarantor or, in the case of a German GmbH & Co. KG Guarantor, its general partner Borrower has/have confirmed in writing to the Administrative Agent to what extent the Payment Obligation cannot be enforced as it would cause a Capital Impairment (as of the date of delivery of an Enforcement Notice) within the meaning of paragraph (a) above (taking into account the adjustments set out in paragraph (a)(i) to (iiiiv) above) and such confirmation is supported by evidence reasonably satisfactory to the Administrative Agent (the “Management Determination”) and the Administrative Agent (acting on behalf of the relevant Secured Credit Party) has not contested this; or
(ii) within twenty (20) Business Days from the date the Administrative Agent has contested the Management Determination, the Administrative Agent receives a determination by the German GuarantorBorrower’s auditors of the amount that could have been enforced on the date the Enforcement Notice without causing a Capital Impairment (as of the date of delivery of an Enforcement Notice) within the meaning of paragraph (a) above (the “Auditor’s Determination”). The amount determined in the Auditor’s Determination shall (except for manifest error) be binding for the Loan Parties and the Secured Credit Parties. The costs of the Auditor’s Determination shall be borne by the relevant German GuarantorBorrower.
(e) If the Administrative Agent disagrees with the Auditor’s Determination, the Secured Credit Parties shall be entitled to enforce the Payment Obligation up to the amount which is undisputed between themselves and the German GuarantorBorrower. In relation to the amount which is disputed, the Secured Credit Parties shall be entitled to further pursue their claims (if any) and the German Guarantor Borrower shall be entitled to prove that this amount is necessary for maintaining its or, in the case of a German Borrower in the form of a GmbH & Co. KG GuarantorKG, its general partner’s stated registered share capital (Stammkapital) without violation of Section 30 GmbHG (calculated as of the date that the Enforcement Notice was given).
(f) If the Payment Obligation was enforced without limitation because the Management Determination and/or the Auditor’s Determination (as the case may be) was not delivered within the relevant time or for any other reason, the Secured Credit Parties shall promptly upon demand by the relevant German Guarantor Borrower repay to such German Guarantor Borrower any amount which is necessary pursuant to Section 30 GmbHG to maintain the stated registered share capital (Stammkapital) of the German Guarantor Borrower or, in the case of a German Borrower in the form of a GmbH & Co. KG GuarantorKG, its general partner, calculated as of the date that the Enforcement Notice was given provided the relevant Secured Credit Party has received a corresponding amount by the relevant German Guarantor Borrower as a consequence of enforcement of the relevant Payment Obligation.
(g) Furthermore, each Secured Party agrees not to enforce against a German Guarantor any Payment Obligation if and to the extent (i) such Payment Obligation secures obligations of an affiliated company (verbundenes Unternehmen) of such German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the relevant German Guarantor’s subsidiaries) and (ii) such enforcement would result in the illiquidity of the German Guarantor (Zahlungsunfähigkeit) in the meaning of Section 17 subsection 2 German Insolvency Code (Insolvenzordnung) and (iii) such enforcement would provoke the liability of the managing director(s) of the German Guarantor under Section 64 sentence 3 GmbHG, provided that for the purposes of calculating illiquidity in the meaning of this paragraph
(i) any liabilities of the relevant German Guarantor to the Company or any of its Subsidiaries shall be disregarded if and to the extent these liabilities were – with respect to the ordinary course of business – created or not realized in abusive interference with the relevant German Guarantor’s liquidity, particularly in order to avoid the enforcement by the German Guarantor, or if the due date of the respective liabilities deviates from the due dates usually agreed between the parties with respect to their ordinary course of business, and
(ii) any outstanding claims - including any rights of recourse - of the relevant German Guarantor against the Company or any of its Subsidiaries that would not be considered under Section 17 subsection 2 German Insolvency Code particularly due to lacking maturity, deferral or enforceability (Durchsetzbarkeit) shall be considered as disposable liquidity of such German Guarantor (frei verfügbare Liquidität), if and to the extent these claims were – with respect to the ordinary course of business – created or not realized in abusive interference with the relevant German Guarantor’s liquidity, particularly in order to avoid the enforcement by a Secured Party, or if the due date or the contractual enforceability of the respective claims deviates from the usual agreements between the parties with respect to their ordinary course of business, and
(iii) any payments effected by the relevant German Guarantor to the Company or any of its Subsidiaries that were beyond the ordinary course of business (gewöhnlicher Geschäftsverlauf) shall be regarded as disposable liquidity of the relevant German Guarantor (frei verfügbare Liquidität).
(h) The limitation set out in Clause (g) shall only apply if and to the extent that:
(i) within ten (10) Business Days after the receipt of the Enforcement Notice by the relevant German Guarantor, the managing director(s) on behalf of such German Guarantor has/have confirmed in writing to the respective Secured Party:
(1) the extent to which the Security secures obligations of an affiliated company (verbundenes Unternehmen) of the relevant German Guarantor within the meaning of Section 15 of the German Stock Corporation Act (Aktiengesetz) (other than any of the relevant German Guarantor’s subsidiaries); and to what extent the Security cannot be enforced as this would result in the illiquidity of the relevant German Guarantor and the liability of the directors within the meaning of Clause (g) and such confirmation is supported by evidence reasonably satisfactory to the Secured Party; and
(2) such confirmation is supported by evidence by means of unaudited liquidity statements (Liquiditätsbilanz) in which the current cash and cash equivalents (together “Cash”) and the cash available within the next three weeks are opposed to the liabilities which will become due within the next three weeks and a liquidity schedule (Liquiditätsplan) showing the liquidity of the relevant German Guarantor for the preceding 12 months and the expected liquidity during the subsequent two months (the liquidity statements and the liquidity schedule jointly the “Management Evaluation”) and the Secured Party has not contested this; and
(3) that all reasonable measures within ordinary course of business have been taken or will promptly be taken – including the realisation of assets of the relevant German Guarantor – in order to increase the liquidity of the German Guarantor and this confirmation is supported by reasonable evidence, or
(ii) within twenty (20) Business Days from the date on which a Secured Party has contested the Management Evaluation made in accordance with this Clause (h) (i) (the “Auditing Period”), the Secured Party receives liquidity statements with an auditor’s confirmation of the amount that could have been enforced on the date of the Enforcement Notice without causing illiquidity within the meaning of Clause (g) (the “Auditor’s Evaluation”). For the avoidance of doubt, in case the Management Evaluation is contested, the Secured Party shall not enforce the payment obligations created hereunder (Versprechen, zeitweilig nicht zu vollstrecken) prior to the expiry of the Auditing Period. The costs of the Auditor’s Evaluation shall be borne by the relevant German Guarantor.
(i) If a Secured Party disagrees with the Auditor’s Evaluation, the Secured Party shall be entitled to enforce the Security up to the amount which is undisputed between itself and the relevant German Guarantor. In relation to the amount which is disputed, and if and to the extent the factual basis for the Management Evaluation and the Auditor’s Evaluation particularly with regard to the liquidity of the relevant German Guarantor has changed after the point in time to which the Auditor’s Evaluation relates, the Secured Party shall be entitled to further pursue its claims (if any) and the relevant German Guarantor shall be entitled to prove that this amount is necessary for avoiding illiquidity in the meaning of Section 17 subsection 2 German Insolvency Code (Insolvenzordnung) (calculated in accordance with Clause (g)). The Auditor’s Evaluation does not prevent the Secured Party from initiating court proceedings if it holds that the prerequisites of an abusive interference as set forth in Section (g) (i) and (ii) are met.
(j) No reduction of the amount enforceable under this guarantee in accordance with the above limitations will prejudice the rights of the Secured Credit Parties to continue enforcing the guarantee (subject always to the operation of the limitation set out above at the time of such enforcement) until full satisfaction of the guaranteed claims. For the avoidance of doubt, nothing in this Section 2.04 10.02 shall affect the right of the Secured Credit Parties (or any of them) to accelerate the Loans pursuant to Section 9 Article VII of the Credit this Agreement or to enforce the security granted under any Collateral Document.. [Signature Pages Follow]
Appears in 1 contract
Sources: Credit Agreement (Belden Inc.)