Exhibit 99.3
FINANCING AND SECURITY AGREEMENT
by and among
OPTELECOM, INC.,
OPTELECOM UK LIMITED,
OPTELECOM EUROPE LIMITED,
and
NKF ELECTRONICS, B.V.
as Obligors
and
MANUFACTURERS AND TRADERS TRUST COMPANY, Lender
Dated: March 8, 2005
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 2
Section 1.1 Certain Defined Terms. 2
Section 1.2 Accounting Terms and Other Definitional Provisions. 26
Section 1.3 Dutch Terms 26
ARTICLE II THE CREDIT FACILITIES 27
Section 2.1 The U.S. Revolving Credit Facility. 27
2.1.1 U.S. Revolving Credit Facility. 27
2.1.2 Procedure for Making U.S. Revolving Loan Advances. 27
2.1.3 U.S. Borrowing Base. 28
2.1.4 U.S. Borrowing Base Report. 29
2.1.5 Promise to Pay U.S. Revolving Loan. 29
2.1.6 Mandatory Prepayments of U.S. Revolving Loan. 29
2.1.7 Optional Prepayments of U.S. Revolving Loan. 30
2.1.8 U.S. Revolving Loan Account. 30
2.1.9 Revolving Credit Unused Line Fee, Monitoring Fee. 30
Section 2.2 The U.S. Term Loan. 31
2.2.1 U.S. Term Loan Commitment. 31
2.2.2 Promise to Pay U.S. Term Loan. 31
2.2.3 U.S. Term Loan Installment Payments. 31
2.2.4 Mandatory Prepayments of U.S. Term Loan. 31
2.2.5 Optional Prepayments of U.S. Term Loan. 32
Section 2.3 The Dutch Revolving Credit Facility. 32
2.3.1 Dutch Revolving Credit Facility. 32
2.3.2 Procedure for Making Dutch Revolving Loan Advances. 32
2.3.3 Dutch Borrowing Base. 33
2.3.4 Dutch Borrowing Base Report. 34
2.3.5 Promise to Pay Dutch Revolving Loan. 34
2.3.6 Mandatory Prepayments of Dutch Revolving Loan. 34
2.3.7 Optional Prepayments of Dutch Revolving Loan. 35
2.3.8 Dutch Revolving Loan Account. 35
Section 2.4 The Dutch Term Loan. 35
2.4.1 Dutch Term Loan Commitment. 35
2.4.2 Promise to Pay Dutch Term Loan. 36
2.4.3 Dutch Term Loan Installment Payments. 36
2.4.4 Mandatory Prepayments of Dutch Term Loan. 36
2.4.5 Optional Prepayments of Dutch Term Loan. 36
Section 2.5 Letter of Credit. 37
2.5.1 Obtaining Letters of Credit. 37
2.5.2 Letter of Credit Fees. 37
2.5.3 Terms of Letters of Credit; Post-Expiration
Date Letters of Credit. 37
2.5.4 Procedures for Letters of Credit. 38
2.5.5 Payments of Letters of Credit. 39
2.5.6 Change in Law; Increased Cost. 40
2.5.7 General Letter of Credit Provisions. 40
Section 2.6 Interest. 42
2.6.1 Applicable Interest Rates. 42
2.6.2 Selection of Interest Rates. 43
2.6.3 Inability to Determine Dollar LIBOR Rate or Euro LIBOR Rate. 45
2.6.4 Indemnity. 45
2.6.5 Payment of Interest. 45
Section 2.7 General Financing Provisions. 46
2.7.1 Consideration; Obligors' Representative. 46
i
2.7.2 Origination Fees. 47
2.7.3 Field Examination Fees. 47
2.7.4 Computation of Interest and Fees. 48
2.7.5 Payments. 48
2.7.6 Liens; Setoff. 48
2.7.7 Requirements of Law. 49
Section 2.8 Guaranty. 49
Section 2.9 Limitations on Joint and Several Liability
for Obligations. 52
ARTICLE III THE COLLATERAL 52
Section 3.1 Debt and Obligations Secured. 52
Section 3.2 Grant of Liens. 53
Section 3.3 Collateral Lists. 53
Section 3.4 Personal Property. 54
3.4.1 Securities, Chattel Paper, Promissory Notes, etc. 54
3.4.2 Patents, Copyrights and Other Property Requiring
Additional Steps to Perfect. 54
Section 3.5 Record Searches. 54
Section 3.6 Costs. 55
Section 3.7 Release. 55
Section 3.8 Inconsistent Provisions. 55
Section 3.9 Ranking of Lien Priorities. 56
Section 3.10 Authorization to File Financing Statements. 56
ARTICLE IV REPRESENTATIONS AND WARRANTIES 56
Section 4.1 Representations and Warranties. 56
4.1.1 Subsidiaries. 56
4.1.2 Good Standing. 56
4.1.3 Power and Authority. 57
4.1.4 Binding Agreements. 57
4.1.5 No Conflicts. 57
4.1.6 No Defaults, Violations. 57
4.1.7 Compliance with Laws. 58
4.1.8 Margin Stock. 58
4.1.9 Investment Company Act; Margin Securities. 58
4.1.10 Litigation. 58
4.1.11 Financial Condition. 58
4.1.12 Proforma Financial Statements. 59
4.1.13 Full Disclosure. 59
4.1.14 Indebtedness for Borrowed Money. 59
4.1.15 Taxes. 60
4.1.16 ERISA. 60
4.1.17 Title to Properties. 60
4.1.18 Patents, Trademarks, Etc. 60
4.1.19 Employee Relations. 61
4.1.20 Presence of Hazardous Materials or Hazardous
Materials Contamination. 61
4.1.21 Perfection and Priority of Collateral. 61
4.1.22 Places of Business and Location of Collateral. 62
4.1.23 Business Names and Addresses. 62
4.1.24 Equipment. 62
4.1.25 Inventory. 62
4.1.26 Accounts. 62
4.1.27 Compliance with Eligibility Standards. 63
4.1.28 Stock. 63
4.1.29 Purchase Agreement Transaction. 63
4.1.30 Centre of Main Interest. 63
Section 4.2 Survival; Updates of Representations and Warranties. 64
ii
ARTICLE V CONDITIONS PRECEDENT 64
Section 5.1 Conditions to the Initial Advance. 64
5.1.1 Organizational Documents - Obligors. 64
5.1.2 Approval of Dutch Borrower's Works Council. 65
5.1.3 Opinions of Obligors' Counsel in U.S., U.K.
and The Netherlands. 65
5.1.4 Consents, Licenses, Approvals, Etc. 65
5.1.5 Financing Documents and Collateral. 65
5.1.6 Other Financing Documents. 65
5.1.7 Other Documents, Etc. 66
5.1.8 Payment of Fees and Reimbursements. 66
5.1.9 Collateral Lists. 66
5.1.10 Recordings and Filings. 66
5.1.11 Receivables Insurance Policy. 66
5.1.12 Evidence of Insurance. 66
5.1.13 Landlord's and Mortgagee's Waivers. 66
5.1.14 Bailee Acknowledgements. 67
5.1.15 Field Examination. 67
5.1.16 Equipment Appraisal. 67
5.1.17 Proforma Balance Sheet and Projections. 67
5.1.18 Subordinated Obligations Documents. 67
5.1.19 Subordinated Obligations. 67
5.1.20 Purchase Agreement Transaction. 67
Section 5.2 Conditions to all Extensions of Credit. 68
5.2.1 Borrowing Base. 68
5.2.2 Default. 68
5.2.3 Representations and Warranties. 68
5.2.4 Legal Matters. 69
ARTICLE VI COVENANTS OF THE OBLIGORS 69
Section 6.1 Affirmative Covenants. 69
6.1.1 Financial Statements. 69
6.1.2 Reports to SEC and to Stockholders. 70
6.1.3 Recordkeeping, Rights of Inspection, Field Examination, Etc. 70
6.1.4 Corporate Existence. 71
6.1.5 Compliance with Laws. 71
6.1.6 Preservation of Properties. 71
6.1.7 Line of Business. 71
6.1.8 Insurance. 71
6.1.9 Taxes. 72
6.1.10 ERISA. 72
6.1.11 Notification of Events of Default and Adverse Developments. 72
6.1.12 Hazardous Materials; Contamination. 73
6.1.13 Disclosure of Significant Transactions. 74
6.1.14 Financial Covenants. 74
6.1.15 Collection of Receivables. 74
6.1.16 Assignments of Receivables. 75
6.1.17 Government Accounts. 75
6.1.18 Notice of Returned Goods, etc. 75
6.1.19 Inventory. 75
6.1.20 Insurance With Respect to Equipment and Inventory. 76
6.1.21 Maintenance of the Collateral. 76
6.1.22 Equipment. 76
6.1.23 Defense of Title and Further Assurances. 77
6.1.24 Business Names; Locations. 77
6.1.25 Subsequent Opinion of Counsel as to Recording Requirements. 77
6.1.26 Use of Premises and Equipment. 78
6.1.27 Protection of Collateral. 78
Section 6.2 Negative Covenants. 78
iii
6.2.1 Merger, Acquisition or Sale of Assets. 78
6.2.2 Subsidiaries. 78
6.2.3 Purchase or Redemption of Securities, Dividend Restrictions. 79
6.2.4 Indebtedness. 79
6.2.5 Investments, Loans and Other Transactions. 80
6.2.6 Stock of Subsidiaries. 80
6.2.7 Subordinated Indebtedness. 81
6.2.8 Liens. 81
6.2.9 Transactions with Affiliates. 81
6.2.10 ERISA Compliance. 81
6.2.11 Prohibition on Hazardous Materials. 81
6.2.12 Method of Accounting; Fiscal Year. 82
6.2.13 Compensation. 82
6.2.14 Transfer of Collateral. 82
6.2.15 Sale and Leaseback. 82
6.2.16 Disposition of Collateral. 82
6.2.17 Amendments or Modification to Charter Documents. 83
ARTICLE VII DEFAULT AND RIGHTS AND REMEDIES 83
Section 7.1 Events of Default. 83
7.1.1 Failure to Pay. 83
7.1.2 Breach of Representations and Warranties. 83
7.1.3 Failure to Comply with Certain Covenants. 83
7.1.4 Failure to Comply with Other Covenants. 84
7.1.5 Default Under Other Financing Documents. 84
7.1.6 Insolvency. 84
7.1.7 Bankruptcy. 84
7.1.8 Receivership. 84
7.1.9 Judgment. 84
7.1.10 Execution; Attachment. 85
7.1.11 Default Under Other Borrowings. 85
7.1.12 Unenforceable Liens. 85
7.1.13 Challenge to Agreements. 85
7.1.14 Material Adverse Effect. 85
7.1.15 Change in Control. 85
7.1.16 Liquidation, Termination, Dissolution. 85
7.1.17 Suit by Seller. 86
Section 7.2 Remedies. 86
7.2.1 Acceleration, Termination. 86
7.2.2 Uniform Commercial Code. 86
7.2.3 Standard of Care. 87
7.2.4 Specific Rights With Regard to Collateral. 88
7.2.5 Application of Proceeds. 89
7.2.6 Performance by Lender. 89
7.2.7 Other Remedies. 90
ARTICLE VIII MISCELLANEOUS 90
Section 8.1 Notices. 90
Section 8.2 Amendments; Waivers. 91
Section 8.3 Cumulative Remedies. 92
Section 8.4 Severability. 92
Section 8.5 Assignments and Participations by Lender. 93
Section 8.6 Disclosure of Information by Lender. 93
Section 8.7 Successors and Assigns. 93
Section 8.8 Continuing Agreements. 93
Section 8.9 Enforcement Costs. 94
iv
Section 8.10 Applicable Law; Jurisdiction. 94
8.10.1 Applicable Law. 94
8.10.2 Submission to Jurisdiction. 94
8.10.3 Appointment of Agent for Service of Process. 95
8.10.4 Service of Process. 95
Section 8.11 Duplicate Originals and Counterparts;
Counterpart Facsimile Execution. 95
Section 8.12 Headings. 95
Section 8.13 No Agency. 96
Section 8.14 Date of Payment. 96
Section 8.15 Entire Agreement. 96
Section 8.16 Liability of the Lender. 96
Section 8.17 Patriot Act Notice. 97
Section 8.18 Waiver of Trial by Jury. 97
v
FINANCING AND SECURITY AGREEMENT
THIS FINANCING AND SECURITY AGREEMENT (this "Agreement") is made as of
March 8, 2005, by and among (a) OPTELECOM, INC., a corporation organized under
the laws of the State of Delaware (the "U.S. Borrower"), (b) OPTELECOM UK
LIMITED, a company organized and existing under the laws of England and Wales
and OPTELECOM EUROPE LIMITED, a company organized and existing under the laws of
England and Wales (each a "U.K. Subsidiary" and collectively, the "U.K.
Subsidiaries"), (c) NKF ELECTRONICS IBERICA S.L., formerly known as NKF IBERICA
S.L., a private company with limited liability organized and existing under the
laws of Spain (the "Spanish Subsidiary") and (d) NKF ELECTRONICS, B.V., a
corporation organized and existing under the laws of The Netherlands (the "Dutch
Borrower")(the U.S. Borrower and the Dutch Borrower each being sometimes called
a "Borrower" and both of them being collectively called the "Borrowers")(the
U.S. Borrower, the U.K. Subsidiaries, the Spanish Subsidiary, the Dutch Borrower
and each Additional Obligor (hereinafter defined) being each sometimes call an
"Obligor" and all of them collectively, the "Obligors"); and MANUFACTURERS AND
TRADERS TRUST COMPANY, a New York State bank (the "Lender").
RECITALS
A. The Obligors have requested the Lender to make credit facilities and term
loans to the Borrowers consisting of: (i) a revolving credit facility in the
maximum principal amount of Five Million Dollars ($5,000,000) to be made
available to the U.S. Borrower for the purpose of obtaining letters of credit
and financing the U.S. Borrower's working capital needs and certain Acquisition
Expenses (hereinafter defined), (ii) a term loan in the maximum principal amount
of Nine Million One Hundred Fifty Two Thousand Eight Hundred Seventy Dollars and
Forty Cents ($9,152,870.40) to be made to the U.S. Borrower for the purpose of
partially financing the U.S. Borrower's acquisition of the stock of the Dutch
Borrower, (iii) a revolving credit facility in the maximum principal amount of
the Euro Currency Equivalent (hereinafter defined) of Five Million Dollars
($5,000,000) to be made available to the Dutch Borrower in Euros for the purpose
of obtaining letters of credit and financing the Dutch Borrower's working
capital needs, and (iv) a term loan in the maximum principal amount of Four
Million Eighty Eight Thousand Euros ((euro)4,088,000) to be made available to
the Dutch Borrower for the purpose of refinancing certain indebtedness owed to
the Seller (hereinafter defined).
B. The Lender is willing to make such credit facilities and term loans
available to the Borrowers upon the terms and subject to the conditions set
forth in this Agreement.
AGREEMENTS
NOW THEREFORE, in consideration of the premises, and for other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
agree as follows:
1
ARTICLE I DEFINITIONS
Section 1.1 Certain Defined Terms.
As used in this Agreement, the terms defined in the Preamble and Recitals
hereto shall have the respective meanings specified therein, and the following
terms shall have the following meanings:
"Account" individually and "Accounts" collectively mean all presently
existing or hereafter acquired or created accounts (as defined in the Maryland
Uniform Commercial Code-Secured Transactions), accounts receivable, receivables
arising out of the use of a credit or charge card or information contained on or
for use with the card, contract rights, notes, drafts, instruments, acceptances,
chattel paper, leases and writings evidencing a monetary obligation or a
security interest in, or a lease of, goods, all rights to receive the payment of
money or other consideration under present or future contracts, or by virtue of
merchandise sold or leased, services rendered, loans and advances made or other
considerations given, by or set forth in or arising out of any present or future
chattel paper, note, draft, lease, acceptance, writing, bond, insurance policy,
instrument, document or general intangible, and all extensions and renewals of
any thereof, all rights under or arising out of present or future contracts,
agreements or general interest in goods which gave rise to any or all of the
foregoing, including all commercial tort claims (as defined in the Maryland
Uniform Commercial Code-Secured Transactions), other claims or causes of action
now existing or hereafter arising in connection with or under any agreement or
document or by operation of law or otherwise, all collateral security of any
kind, Supporting Obligations, letter-of-credit rights (as defined in the
Maryland Uniform Commercial Code-Secured Transactions) and letters of credit
given by any Person with respect to any of the foregoing, all books and records
in whatever media (paper, electronic or otherwise) recorded or stored, with
respect to any or all of the foregoing and all equipment and general intangibles
necessary or beneficial to retain, access and/or process the information
contained in those books and records, and all proceeds (cash and non-cash) of
the foregoing.
"Account Debtor" means any Person who is obligated on a Receivable and
"Account Debtors" means collectively, all Persons who are obligated on the
Receivables.
"Acquisition Expenses" means cost and expenses associated in connection
with the U.S. Borrower's acquisition of the stock of the Dutch Borrower.
"Additional Obligor" means each Subsidiary of the Obligors which has
executed and delivered an Additional Obligor Joinder Supplement and has
otherwise complied with the provisions of Section 6.2.2 (Subsidiaries).
"Additional Obligor Joinder Supplement" shall mean an Additional Obligor
Joinder Supplement in substantially the form attached hereto as EXHIBIT A, with
the blanks appropriately completed and executed and delivered by the Additional
Obligor and by the Lender.
"Affiliate" means, with respect to any designated Person, any other
Person, (a) directly or indirectly controlling, directly or indirectly
controlled by, or under direct or indirect common control with the Person
designated, (b) directly or indirectly owning or holding five percent (5%) or
more of any equity interest in such designated Person, or (c) five percent (5%)
or more of
2
whose stock or other equity interest is directly or indirectly owned or held by
such designated Person. For purposes of this definition, the term "control"
(including with correlative meanings, the terms "controlling", "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through ownership of voting securities or other equity
interests or by contract or otherwise.
"Agreement" means this Financing and Security Agreement, as amended,
restated, supplemented or otherwise modified in writing in accordance with the
provisions of Section 8.2 (Amendments; Waivers).
"Aggregate Revolving Loan Cap" means Five Million Dollars ($5,000,000).
"Applicable Interest Rate" means (a) the LIBOR Rate, or (b) the Base Rate.
"Applicable Margin" means the applicable percentage per annum added, as
set forth in Section 2.6.1 (Applicable Interest Rates), to the LIBOR Base Rate
or the Base Rate to then constitute the Applicable Interest Rate.
"Assessments" has the meaning set forth in Section 2.7.5 (Payments).
"Asset Coverage Ratio" means, as of any one time, the ratio of (a) the sum
of (i) the amount of the U.S. Borrowing Base, plus (ii) the amount of the Dutch
Borrowing Base, minus (iii) any Unused Availability, to (b) the total aggregate
outstanding amount of the Credit Facility.
"Asset Disposition" means the disposition of any or all of the Assets of
any Obligor, whether by sale, lease, transfer or other disposition (including
any such disposition effected by way of merger or consolidation) other than (a)
transfers from one Obligor to another, (b) sales of Inventory, (c) licensing of
Patents, Trademarks and/or Copyrights, and (d) dispositions of worn, used,
surplus or obsolete Equipment made in the ordinary course of business, in each
case prior to the occurrence of a Default which is continuing.
"Assets" means at any date all assets that, in accordance with GAAP
consistently applied, should be classified as assets on a consolidated and
consolidating balance sheet of the U.S. Borrower.
"Bankruptcy Code" means with respect to the U.S. Borrower and any other
Obligor located with the United State of America, the United States Bankruptcy
Code, with respect to any Obligor located within the United Kingdom, any similar
Laws in effect in the United Kingdom, with respect to any Obligor located within
The Netherlands, any similar Laws in effect in The Netherlands, all as amended
from time to time, and any successor Laws.
"Base Rate" means the sum of (a) the Prime Rate plus (b) the Applicable
Margin.
"Base Rate Loan" means any Loan for which interest is to be computed with
reference to the Base Rate.
"Borrower" means each Person defined as a Borrower in the preamble of this
Agreement and, "Borrowers" means the collective reference to both Persons
defined as "Borrower" in the preamble to this Agreement.
3
"Business Day" means for all purposes other than as covered by clauses (b)
and (c) below, (a) any day other than a Saturday, Sunday or other day on which
commercial banks in the State and in the State of New York are authorized or
required to close, (b) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Dollar LIBOR Loans,
any day which is a Business Day described in clause (a) and which is also a day
for trading by and between banks in Dollar deposits are being carried on in the
London interbank market, or (c) if the applicable Business Day relates to a
Dutch Revolving Loan, any day in which trading by and between banks in Euro
deposits are being carried on in the London interbank market.
"Calculation Date" has the meaning set forth in Section 2.2.4 (Mandatory
Prepayments of U.S. Term Loan).
"Capital Expenditure" means an expenditure (whether payable in cash or
other property or accrued as a liability) for Fixed or Capital Assets,
including, without limitation, the entering into a Capital Lease.
"Capital Lease" means with respect to any Person any lease of real or
personal property, for which the related Lease Obligations have been or should
be, in accordance with GAAP consistently applied, capitalized on the balance
sheet of that Person.
"Cash Equivalents" means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit with
maturities of one (1) year or less from the date of acquisition of, or money
market accounts maintained with, the Lender, any Affiliate of the Lender, or any
other domestic commercial bank having capital and surplus in excess of One
Hundred Million Dollars ($100,000,000.00) or such other domestic financial
institutions or domestic brokerage houses to the extent disclosed to, and
approved by, the Lender, (c) commercial paper of a domestic issuer rated at
least either A-2 by Standard & Poor's Corporation (or its successor) or P-2 by
Xxxxx'x Investors Service, Inc. (or its successor) with maturities of six (6)
months or less from the date of acquisition, and (d) repurchase obligations with
a term of not more than seven (7) days for underlying securities of the types
described in clause (a) or deposits of the type described in clause (b) above
entered into with a bank meeting the qualifications described in clause (b)
above. In addition, with respect to each Non-U.S. Obligor, Cash Equivalents
shall also mean (a) securities with maturities of one year or less from the date
of acquisition issued or fully guaranteed by the national government or any
agency thereof or any agency thereof in which jurisdiction such Non-U.S. Obligor
is organized and existing and (b) certificates of deposit with maturities of one
(1) year or less from the date of acquisition of, or money market accounts
maintained with a commercial bank or financial institution reasonably acceptable
to the Lender; provided that the Lender has a first priority lien on, and
security interest in, all of such Non-U.S. Obligor's rights, title and interest
in and to such Cash Equivalents. In addition, with respect to each Non-U.S.
Obligor, Cash Equivalents shall also mean (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed by the
national government or any agency thereof in which jurisdiction such Non-U.S.
Obligor is organized and existing and (b) certificates of deposit with
maturities of one (1) year or less from the date of acquisition of, or money
market accounts maintained with a commercial bank or financial institution in
which jurisdiction such Non-U.S. Obligor is organized and existing and which is
reasonably acceptable to the Lender.
4
"Chattel Paper" means chattel paper (as defined in the Maryland Uniform
Commercial Code-Secured Transactions), together with, writing or writings which
evidence both a monetary obligation and a security interest in or lease of
specific goods; any returned, rejected or repossessed goods covered by any such
writing or writings and all proceeds (in any form including, without limitation,
accounts, contract rights, documents, chattel paper, instruments and general
intangibles) of such returned, rejected or repossessed goods; and all proceeds
(cash and non-cash) of the foregoing.
"Change of Control" shall be deemed to have occurred (a) with respect to
the U.S. Borrower if (i) the acquisition by any Person, or two or more Persons
acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934) of 51% or more of the outstanding shares of voting stock of the U.S.
Borrower, or (ii) if a majority of the members of the board of directors of the
U.S. Borrower are not Continuing Directors, or (b) with respect any other
Obligor, if the U.S. Borrower shall at any time not own directly or indirectly,
beneficially and of record, 100% (on a fully diluted basis) of the outstanding
Equity of such Obligor.
"Closing Date" means the Business Day, in any event not later than March
8, 2005, on which the Lender shall be satisfied that the conditions precedent
set forth in Section 5.1 (Conditions to the Initial Advance) have been fulfilled
or otherwise waived by the Lender in accordance with this Agreement.
"Collateral" means all property of each and every Obligor subject from
time to time to the Liens of this Agreement, any of the Security Documents
and/or any of the other Financing Documents, together with any and all cash and
non-cash proceeds and products thereof, including, without limitation, the U.S.
Collateral and the Dutch Collateral.
"Collateral List" and "Collateral Lists" have the meanings described
respectively in Section 3.3 (Collateral Lists).
"Commitment" means the U.S. Revolving Credit Commitment, the U.S. Term
Loan Commitment, the Dutch Revolving Credit Commitment and the Dutch Term Loan
Commitment, as the case may be, and "Commitments" means the collective reference
to the U.S. Revolving Credit Commitment, the U.S. Term Loan Commitment, the
Dutch Revolving Credit Commitment and the Dutch Term Loan Commitment.
"Commonly Controlled Entity" means an entity, whether or not incorporated,
which is under common control with any Obligor within the meaning of Section
414(b) or (c) of the Internal Revenue Code.
"Compliance Certificate" means a periodic Compliance Certificate described
in Section 6.1.1(b) (Financial Statements).
"Continuing Directors" means, as of any date of determination, any member
of the board of directors of the U.S. Borrower who (a) was a member of such
board of directors on the Closing Date or (b) was nominated for election or
elected to such board of directors with the approval of a majority of the
Continuing Directors who were members of such board at the time of such
nomination or election.
5
"Copyrights" means and includes, in each case whether now existing or
hereafter arising, all of each Obligor's rights, title and interest in and to
(a) all copyrights, rights and interests in copyrights, works protectable by
copyright, copyright registrations, copyright applications, and all renewals of
any of the foregoing, (b) all income, royalties, damages and payments now or
hereafter due and/or payable under any of the foregoing, including, without
limitation, damages or payments for past, current or future infringements of any
of the foregoing, (c) the right to xxx for past, present and future
infringements of any of the foregoing, and (d) all rights corresponding to any
of the foregoing throughout the world.
"Credit Facility" means the U.S. Revolving Credit Facility, the U.S. Term
Loan, the Dutch Revolving Credit Facility and the Dutch Term Loan, which are
extended pursuant to this Agreement, and "Credit Facilities" means collectively
the U.S. Revolving Credit Facility, the U.S. Term Loan, the Dutch Revolving
Credit Facility and the Dutch Term Loan and any and all other credit facilities
now or hereafter extended under or secured by this Agreement.
"Current Letter of Credit Obligations" has the meaning described in
Section 2.5.5 (Payments of Letters of Credit).
"Default" has the meaning set forth in Section 7.1 (Events of Default).
"Documents" means all documents of title, whether now existing or
hereafter acquired or created, and all proceeds (cash and non-cash) of the
foregoing.
"Dollar", "Dollars" and "$" mean the lawful currency of the United States
of America.
"Dollar Currency Equivalent" means, on any date of determination, the
amount of Dollars which results from the sale of a given amount in Euros,
determined at the rate of exchange quoted generally by the Lender to its
customers as the market rate of foreign exchange for the sale of Euros for
Dollars.
"Dollar Interest Period" means as to any Dollar LIBOR Loan, the period
commencing on and including the date such Dollar LIBOR Loan is made (or on the
effective date of the U.S. Borrower's election to convert any Base Rate Loan to
a Dollar LIBOR Loan in accordance with the provisions of this Agreement) and
ending on and including the day which is 30, 60, 90 or 180 days thereafter, as
selected by the U.S. Borrower in accordance with the provisions of this
Agreement, and thereafter, each period commencing on the last day of the then
preceding Interest Period for such Dollar LIBOR Loan and ending on and including
the day which is 30, 60, 90 or 180 days thereafter, as selected by the U.S.
Borrower, in accordance with the provisions of this Agreement; provided, however
that:
(a) the first day of any Dollar Interest Period shall be a Business Day;
(b) if any Dollar Interest Period would end on a day that is not a
Business Day, such Dollar Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case, such Dollar Interest Period shall end on
the next preceding Business Day; and
(c) no Dollar Interest Period shall extend beyond the U.S. Revolving
Credit Termination Date.
6
"Dollar LIBOR Loan" means any Loan for which interest is to be computed
with reference to the Dollar LIBOR Rate.
"Dollar LIBOR Rate" means for any Dollar Interest Period with respect to
any Dollar LIBOR Loan, the interest rate per annum (rounded up, if necessary, to
the nearest 1/16th of 1%) equal to the per annum rate of interest at which
deposits in Dollars are obtained by dividing (i) the rate fixed by the British
Bankers Association for Dollar deposits in the London Interbank Eurodollar
Market at approximately 11:00 a.m. (London time) (or as soon thereafter as
practicable), two Business Days before the first day of the applicable Dollar
Interest Period, in an amount equal to the aggregate principal amount
outstanding on the first day of the Dollar Interest Period, as determined by the
Lender from any broker, quoting service or commonly available source utilized by
the Lender, by (ii) a percentage equal to 100% minus the stated maximum rate of
all reserves required to be maintained against "Eurocurrency Liabilities" as
specified in Regulation D (or against any other category of liabilities which
includes deposits by reference to which the interest rate on Dollar LIBOR Loans
is determined or any category of extension of credit or other assets which
includes loans by a non-United States' office of a bank to United States
residents) to any member bank of the Federal Reserve System.
"Dutch Borrower" means the Person defined as the Dutch Borrower in the
preamble of this Agreement.
"Dutch Borrowing Base" has the meaning described in Section 2.3.3 (Dutch
Borrowing Base).
"Dutch Borrowing Base Deficiency" has the meaning described in Section
2.3.3 (Dutch Borrowing Base).
"Dutch Borrowing Base Report" has the meaning described in Section 2.3.4
(Dutch Borrowing Base Report).
"Dutch Collateral" means the collective reference to all property of all
Non-U.S. Obligors from time to time subject to the Liens of this Agreement, the
Dutch Security Documents and the other Financing Documents, together with any
and all cash and non-cash proceeds and products thereof.
"Dutch Obligations" means the principal of the Dutch Revolving Loan, the
Dutch Term Loan and any Letters of Credit issued for the account of the Dutch
Borrower and all of the obligations of the Non-U.S. Obligors hereunder and under
the Financing Documents, together with any interest thereon, Fees, Enforcement
Costs and indemnifications attributable thereto.
"Dutch Origination Fee" has the meaning described in Section 2.7.2
(Origination Fees).
"Dutch Revolving Credit Commitment" means the agreement of the Lender
relating to the making of the Dutch Revolving Loan Advance subject to and in
accordance with the provisions of this Agreement.
"Dutch Revolving Credit Commitment Period" means the period of time from
the Closing Date to the Business Day preceding the Dutch Revolving Credit
Termination Date.
"Dutch Revolving Credit Committed Amount" is at any one time the Euro
Currency Equivalent of Five Million Dollars ($5,000,000).
7
"Dutch Revolving Credit Expiration Date" means April 1, 2007.
"Dutch Revolving Credit Facility" means the facility established by the
Lender pursuant to Section 2.3 (Dutch Revolving Credit Facility).
"Dutch Revolving Credit Termination Date" means the earlier of (a) the
Dutch Revolving Credit Expiration Date, or (b) the date on which the Dutch
Revolving Credit Commitment is terminated pursuant to Section 7.2.1
(Acceleration, Termination) or otherwise.
"Dutch Revolving Loan" means the aggregate of all the Dutch Revolving Loan
Advances.
"Dutch Revolving Loan Account" has the meaning described in Section 2.3.8
(Dutch Revolving Loan Account).
"Dutch Revolving Loan Advance" and "Dutch Revolving Loan Advances" have
the meanings described in Section 2.3.1 (Dutch Revolving Credit Facility).
"Dutch Revolving Loan Mandatory Prepayment" and "Dutch Revolving Loan
Mandatory Prepayments" have the meanings described in Section 2.3.6 (Mandatory
Prepayments of Dutch Revolving Loan).
"Dutch Revolving Loan Optional Prepayment" and "Dutch Revolving Loan
Optional Prepayments" have the meanings described in Section 2.3.7 (Optional
Prepayments of Dutch Revolving Loan).
"Dutch Security Documents" means collectively any assignment, pledge
agreement, guaranty trust agreement, security agreement, mortgage, deed of
trust, deed to secure debt, indenture, debenture, charge, financing statement
and any similar instrument, document or agreement under or pursuant to which a
Lien is now or hereafter granted to, or for the benefit of, the Lender on any
property of the Dutch Borrower or the other Non-U.S. Obligors to secure all or
any portion of the Dutch Obligations, including, without limitation, Deed of
Pledge of Rights, Deed of Pledge of Moveable Assets, Deed of Pledge of Bank
Accounts, all as the same may from time to time be amended, restated,
supplemented or otherwise modified.
"Dutch Term Loan" has the meanings described in Section 2.4.1 (Dutch Term
Loan Commitment).
"Dutch Term Loan Commitment" means the agreement of the Lender to make the
Dutch Term Loan in accordance with the provisions of this Agreement.
"`Dutch Term Loan Committed Amount" means Four Million Eighty Eight
Thousand Euros ((euro)4,088,000).
"Dutch Term Loan Scheduled Payment" means the amount of the payment on the
Dutch Term Loan which the Dutch Borrower is required to make on each Dutch Term
Loan Scheduled Payment Date in accordance with Section 2.4.3 (Dutch Term Loan
Installment Payments) of this Agreement.
"Dutch Term Loan Scheduled Payment Date" means the first day of each
month, commencing April, 2005.
8
"Dutch Term Loan Mandatory Prepayment" and "Dutch Term Loan Mandatory
Prepayments" have the meanings described in Section 2.4.4 (Mandatory Prepayments
of Dutch Term Loan).
"Dutch Term Loan Maturity Date" means the earlier of April 1, 2009 or the
date the Dutch Term Loan is accelerated under Section 7.2.1 (Acceleration,
Termination).
"Dutch Term Loan Optional Prepayment" and "Dutch Term Loan Optional
Prepayments" have the meanings described in Section 2.4.5 (Optional Prepayments
of Dutch Term Loan).
"EBITDA" means as to the U.S. Borrower and its consolidated Subsidiaries
for any period of determination thereof, the sum of (a) net income, plus (b)
interest expense, plus (c) tax provisions, plus (d) depreciation plus (e)
amortization of assets for such period, in accordance with GAAP consistently
applied.
"Eligible Dutch Receivable" means each Eligible Receivable of the Dutch
Borrower, "Eligible Dutch Receivables" means all Eligible Receivables of the
Dutch Borrower.
"Eligible Inventory" means all Inventory of the U.S. Borrower held for
sale in the ordinary course of business, valued in Dollars at the lowest of the
net purchase cost or net manufacturing cost, any ceiling prices which may be
established by any Law of any Governmental Authority or prevailing market value,
excluding, however, any Inventory which consists of:
(a) any Inventory located outside of the United States;
(b) any Inventory of the U.S. Borrower in which the Lender has not
properly perfected the Liens of the Lender under this Agreement, free and clear
of all other Liens;
(c) any Inventory not owned by the U.S. Borrower, which is subject to
any retention of title in the seller or which is not in the actual possession of
the U.S. Borrower;
(d) unless expressly waived in writing by the Lender in each instance,
any Inventory in the possession of a bailee, warehouseman, consignee or similar
third party, except to the extent that such bailee, warehouseman, consignee or
similar third party has entered into an agreement with the Lender in which such
bailee, warehouseman, consignee or similar third party consents and agrees to
the Lender's Lien on such Inventory and to such other terms and conditions as
may be reasonably required by the Lender;
(e) any Inventory located on premises leased or rented to the U.S.
Borrower or otherwise not owned by the U.S. Borrower, unless the Lender has
received a waiver and consent from the lessor, landlord and/or owner in form and
substance reasonably satisfactory to the Lender and from any mortgagee of such
lessor, landlord or owner to the extent required by the Lender;
(f) any Inventory, the sale or other disposition of which has given rise
to a Receivable;
(g) any Inventory which fails to meet all standards and requirements
imposed by any Governmental Authority over such Inventory or its production,
storage, use or sale;
9
(h) work-in-process, supplies, displays, packaging and promotional
materials;
(i) any Inventory as to which the Lender determines in the exercise of
its reasonable and good faith discretion at any time is not in good condition or
is defective, unmerchantable, post-seasonal, slow moving or obsolete; and
(j) any Inventory which the Lender in the reasonable and good faith
exercise of its discretion has deemed to be ineligible because the Lender
otherwise considers the collateral value to the Lender to be impaired or its
ability to realize such value to be insecure.
"Eligible Receivable" and "Eligible Receivables" mean, at any time of
determination thereof, the unpaid portion of each Account valued in Dollars with
respect to the U.S. Borrower and valued in Euros with respect to the Non-U.S.
Obligors (net of any returns, discounts, claims, credits, charges, accrued
rebates or other allowances, offsets, deductions, counterclaims, disputes or
other defenses and reduced by the aggregate amount of all reserves, limits and
deductions provided for in this definition and elsewhere in this Agreement, but
including interest or time value of money fees payable to the extent such
amounts are insured under the Obligors' receivables insurance policy acceptable
to the Lender the proceeds of which have been assigned to the Lender pursuant to
an assignment acknowledged by the insurer); provided that each Account conforms
and continues to conform to the following criteria to the satisfaction of the
Lender:
(a) the Account arose in the ordinary course of the business of the
Obligor owed on such Account, from a bona fide outright sale of Inventory by
such Obligor, or from services performed by such Obligor;
(b) the Account is a valid, legally enforceable obligation of the
Account Debtor and requires no further act on the part of any Person under any
circumstances to make the Account payable by the Account Debtor;
(c) the Account is based upon an enforceable order or contract, written
or oral, for Inventory shipped or for services performed, and the same were
shipped or performed in accordance with such order or contract;
(d) if the Account arises from the sale of Inventory, the Inventory the
sale of which gave rise to the Account has been shipped or delivered to the
Account Debtor on an absolute sale basis and not on a xxxx and hold sale basis,
a consignment sale basis, a guaranteed sale basis, a sale or return basis, or on
the basis of any other similar understanding;
(e) if the Account arises from the performance of services, such
services have been fully rendered (or have been rendered to the extent necessary
to create a valid and binding unconditional obligation of the Account Debtor for
payment of the portion of the Account included in the computation of Eligible
Receivables) and do not relate to any warranty claim or obligation;
(f) the Account is evidenced by an invoice or other documentation in
form acceptable to the Lender, dated no later than the date of shipment in the
case of the sale of goods, or dated promptly (but in no event later than the
last day of the billing cycle during which the services were completed) after
completion of the performance of services, and containing only terms normally
offered by the Obligor owed on such Account;
10
(g) the amount shown on the books of the Obligor owed on such Account
and on any invoice, certificate, schedule or statement delivered to the Lender
is owing to such Obligor, and no partial payment has been received unless
reflected with that delivery;
(h) the Account is either (i) not outstanding more than ninety (90) days
from the date of the invoice therefor or past due more than sixty (60) days
after its due date, which shall not be later than sixty (60) days after the
invoice date or (ii) is secured by a letter of credit, guaranty or banker's
acceptance having terms and from such issuer as are acceptable to the Lender in
its sole and absolute discretion (which letter of credit, guaranty or banker's
acceptance is subject to an irrevocable assignment of proceeds in favor of the
Lender, unless otherwise approved by the Lender) or (iii) is insured under a
receivables insurance policy acceptable to the Lender, the proceeds of which
have been assigned to the Lender pursuant to an assignment acknowledged by the
insurer;
(i) unless insured under the applicable Obligor's receivables insurance
policy acceptable to the Lender, the proceeds of which have been assigned to the
Lender pursuant to an assignment acknowledged by the insurer, the Account is not
owing by an Account Debtor or group of affiliated Account Debtors whose then
existing Accounts owing to the applicable Obligor exceed in the aggregate fifty
percent (50%) of the total Eligible Receivables of all the Obligors in the
aggregate;
(j) unless insured under the applicable Obligor's receivables insurance
policy acceptable to the Lender, the proceeds of which have been assigned to the
Lender pursuant to an assignment acknowledged by the insurer, the Account is not
owing by any Account Debtor for which the Lender has deemed fifty percent (50%)
or more of such Account Debtor's other Accounts due to such Obligor to be
non-Eligible Receivables;
(k) the Account Debtor has not returned, rejected or refused to retain,
or otherwise notified any Obligor of any dispute concerning, or claimed
nonconformity of, any of the Inventory or services from the sale or furnishing
of which the Account arose, provided, that if such Account otherwise meets the
conditions for inclusion among the Eligible Receivables, such Account, minus the
amount of the Account attributable to returned, rejected, refused, disputed or
claimed non-conforming Inventory, may be included among the Eligible
Receivables;
(l) the Account is not subject to any present or contingent (and no
facts exist which are the basis for any future) offset, claim, deduction or
counterclaim, dispute or defense in law or equity on the part of such Account
Debtor, or any claim for credits, allowances, or adjustments by the Account
Debtor because of returned, inferior, or damaged Inventory or unsatisfactory
services, or for any other reason including, without limitation, those arising
on account of a breach of any express or implied representation or warranty,
provided, if such Account otherwise meets the conditions for inclusion among the
Eligible Receivables, such Account, minus the amount of the claim, may be
included among the Eligible Receivables;
(m) the Account Debtor is not a Subsidiary or Affiliate of any Obligor
or an employee, officer, director or shareholder of any Obligor;
(n) unless insured under the applicable Obligor's receivables insurance
policy acceptable to the Lender, the proceeds of which have been assigned to the
Lender pursuant to an assignment acknowledged by the insurer, the Account Debtor
is not incorporated or primarily conducting business or otherwise located in any
jurisdiction outside of (i) the United States of
11
America, Canada, or (ii) with respect to an Account Debtor of the Non-U.S.
Obligors only, any member state of the European Union;
(o) the Account Debtor with respect to such Account is not insolvent or
the subject of any bankruptcy or insolvency proceedings of any kind;
(p) unless the actions required by Section 6.1.17 (Government Accounts)
have been taken, the Account Debtor is not a Governmental Authority;
(q) none of the Obligors is indebted in any manner to the Account Debtor
(as creditor, lessor, supplier or otherwise), with the exception of customary
credits, warranty obligations, adjustments and/or discounts given to an Account
Debtor by any Obligor in the ordinary course of its business, provided, if such
Account otherwise meets the conditions for inclusion among the Eligible
Receivables, such Account, minus the amount of the indebtedness, may be included
among the Eligible Receivables;
(r) the Account does not arise from services under or related to any
warranty obligation of any Obligor or out of service charges, finance charges or
other fees for the time value of money;
(s) the Account is not evidenced by chattel paper or an instrument of
any kind, unless the original of such chattel paper or instrument has been
furnished to the Lender as collateral and security for the Obligations and is
not secured by any letter of credit or receivables insurance policy, the
proceeds of which have not been assigned to the Lender pursuant to an assignment
accepted and acknowledged by the issuer or insurer;
(t) the title of the applicable Obligor to the Account is absolute and
is not subject to any prior assignment, claim, Lien, or security interest,
except Permitted Liens;
(u) no bond or other undertaking by a guarantor or surety has been or is
required to be obtained, supporting the performance of any Obligor in respect of
any of such Obligor's agreements with the Account Debtor;
(v) no bond or other undertaking by a guarantor or surety has been or is
required to be obtained, supporting the Account and any of the Account Debtor's
obligations in respect of the Account;
(w) the applicable Obligor, has the full and unqualified right and power
to assign and grant a security interest in, and Lien on, the Account to the
Lender as security and collateral for the payment of the Obligations and/or the
Dutch Obligations, as appropriate;
(x) if included in the U.S. Borrowing Base, the Account is subject to a
Lien in favor of the Lender, which Lien is perfected as to the Account by the
filing of financing statements and which Lien upon such filing constitutes a
first priority security interest and Lien, or, if included in the Dutch
Borrowing Base, the Account is subject to a Lien in favor of the Lender which
Lien constitutes a first priority security interest and Lien;
(y) the Inventory giving rise to the Account was not, at the time of the
sale thereof, subject to any Lien, except those in favor of the Lender; and
12
(z) the Lender in the reasonable and good faith exercise of its
discretion has not deemed the Account ineligible because of uncertainty as to
the creditworthiness of the Account Debtor or because the Lender otherwise
considers the collateral value of such Account to the Lender to be impaired or
its ability to realize such value to be insecure.
"Eligible Spanish Receivable" means each Eligible Receivable of the
Spanish Subsidiary which has been sold by the Spanish Subsidiary to the Dutch
Borrower subject to and in accordance with that certain Receivables Purchase
Agreement, by and between the Spanish Subsidiary and the Dutch Borrower, and
"Eligible Spanish Receivables" means all Eligible Receivables of the Spanish
Subsidiary which have been sold by the Spanish Subsidiary to the Dutch Borrower
subject to and in accordance with that certain Receivables Purchase Agreement,
by and between the Spanish Subsidiary and the Dutch Borrower.
"Eligible U.K. Receivable" means each Eligible Receivable of the U.K.
Subsidiaries, and "Eligible U.K. Receivables" means all Eligible Receivables of
the U.K. Subsidiaries.
"Eligible U.S. Receivable" means each Eligible Receivable of the U.K.
Subsidiaries, and "Eligible U.S. Receivables" means all Eligible Receivables of
the U.S. Borrower.
"Enforcement Costs" means all out-of-pocket expenses, charges, costs and
fees whatsoever (including, without limitation, reasonable outside attorney's
fees and expenses) of any nature whatsoever paid or incurred by or on behalf of
the Lender in connection with (a) the creation, collection and enforcement of
any or all of the Obligations, this Agreement and/or any of the other Financing
Documents, and (b) the creation, perfection, collection, maintenance,
preservation, defense, protection, realization upon, disposition, sale or
enforcement of all or any part of the Collateral, including, without limitation,
those costs and expenses more specifically enumerated in Section 3.6 (Costs)
and/or Section 8.9 (Enforcement Costs). The Lender understands and agrees that
Non-U.S. Obligors shall be liable only for payment of those Enforcement Costs
which relate solely to the Dutch Obligations.
"Equipment" means all equipment, machinery, computers, chattels, tools,
parts, machine tools, furniture, furnishings, fixtures and supplies of every
nature, presently existing or hereafter acquired or created and wherever
located, whether or not the same shall be deemed to be affixed to real property,
together with all accessions, additions, fittings, accessories, special tools,
and improvements thereto and substitutions therefor and all parts and equipment
which may be attached to or which are necessary or beneficial for the operation,
use and/or disposition of such personal property, all licenses, warranties,
franchises and general intangibles related thereto or necessary or beneficial
for the operation, use and/or disposition of the same, together with all
Accounts, Chattel Paper, Instruments and other consideration received by any
Obligor on account of the sale, lease or other disposition of all or any part of
the foregoing, and together with all rights under or arising out of present or
future Documents and contracts relating to the foregoing and all proceeds (cash
and non-cash) of the foregoing.
"Equity" means at any date as to the U.S. Borrower and its consolidated
Subsidiaries the total of capital stock (except treasury stock and net of any
note receivable received upon the issuance of any shares of capital stock) and
contributed capital, as determined on a consolidated basis in accordance with
GAAP consistently applied, after eliminating all inter-company items.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
00
"Xxxx," "Xxxxx" and "(euro)" mean the lawful currency of the European
Monetary Union of which The Netherlands is a member.
"Euro Currency Equivalent" means, on any date of determination, the amount
of Euros which results from the sale of a given amount in Dollars, determined at
the rate of exchange quoted generally by the Lender to its customers as the
market rate of foreign exchange for the sale of Dollars for Euros.
"Euro Interest Period" means as to any Euro LIBOR Loan, the period
commencing on and including the date such Euro LIBOR Loan is made and ending on
and including the day which is one (1) month, two (2) months or three (3) months
thereafter, as selected by the Dutch Borrower in accordance with the provisions
of this Agreement, and thereafter, each period commencing on the last day of the
then preceding Euro Interest Period for such Euro LIBOR Loan and ending on and
including the day which is one (1) month, two (2) months or three (3) months
thereafter, as selected by the Dutch Borrower in accordance with the provisions
of this Agreement; provided, however, that:
(a) the first date of any Euro Interest Period shall be a Business Day;
(b) if any Euro Interest Period would end on a day that is not a
Business Day, such Euro Interest Period shall be extended to the next succeeding
Business Day unless such next succeeding Business Day would fall in the next
calendar month in which case, such Euro Interest Period shall end on the next
preceding Business Day; and
(c) no Euro Interest Period shall extend beyond the Dutch Revolving
Credit Termination Date.
"Euro LIBOR" means for any Euro Interest Period with respect to any Euro
LIBOR Loan, the rate per annum (rounded upward, if necessary, to the nearest
next 1/100 of 1%) equal to the daily London Interbank Offered Rate for Euro
deposits for a term comparable to the applicable Euro Interest Period as
determined by the Lender (taking into account any reserves applicable to the
Lender for Euro LIBOR Loans) at or about 11:00 A.M. (London time) two Business
Days prior to the first Business Day of the Euro Interest Period.
"Euro LIBOR Loan" means any Loan for which interest is to be computed with
reference to the Euro LIBOR Rate.
"Euro LIBOR Rate" means for any Euro Interest Period with respect to any
Euro LIBOR Loan, (a) the Euro LIBOR, plus (b) the Applicable Margin.
"Event of Default" has the meaning described in Section 7.1 (Events of
Default).
"Excess Cash Flow" means for any fiscal year of the U.S. Borrower, an
amount equal to the U.S. Borrower's consolidated EBITDA less the U.S. Borrower's
total consolidated Fixed Charges as shown on the annual financial statements for
such period, furnished to the Lender in accordance with Section 6.1.1 (Financial
Statements).
"Fees" means the collective reference to each fee payable to the Lender
under the terms of this Agreement or under the terms of any of the other
Financing Documents, including, without limitation, the Revolving Credit Unused
Line Fees, the Origination Fees, and any and all Letter of Credit Fees.
14
"Financing Documents" means at any time collectively this Agreement, the
Security Documents (including the Dutch Security Documents), any and all Letter
of Credit Documents and any other instrument, agreement or document previously,
simultaneously or hereafter executed and delivered by any Obligor, any guarantor
and/or any other Person, singly or jointly with another Person or Persons,
evidencing, securing, guarantying any of the foregoing or otherwise in
connection with this Agreement, any of the Security Documents (including any of
the Dutch Security Documents), any of the Credit Facilities, and/or any of the
Obligations.
"Fixed Charges" means for any period of determination, the sum of (a) the
scheduled or required payments (including, without limitation, principal and
interest) on all Indebtedness for Borrowed Money of the U.S. Borrower and its
consolidated Subsidiaries; (b) all taxes paid in cash by the U.S. Borrower and
its consolidated Subsidiaries; and (c) all Capital Expenditures made by the U.S.
Borrower and its consolidated Subsidiaries.
"Fixed Charge Coverage Ratio" means, as to the U.S. Borrower and its
consolidated Subsidiaries, for any period of determination, the ratio of EBITDA
to Fixed Charges.
"Fixed or Capital Assets" of a Person at any date means all assets which
would, in accordance with GAAP consistently applied, be classified on the
balance sheet of such Person as property, plant or equipment at such date.
"GAAP" means generally accepted accounting principles in the United States
of America in effect from time to time.
"General Intangibles" means all general intangibles (as defined in the
Maryland Uniform Commercial Code-Secured Transactions) of every nature, whether
presently existing or hereafter acquired or created, and without implying any
limitation of the foregoing, further means all books and records, commercial
tort claims, other claims (including, without limitation, all claims for income
tax and other refunds), payment intangibles, Supporting Obligations, choses in
action, causes of action in tort or equity, contract rights, judgments, customer
lists, software, Patents, Trademarks, licensing agreements, rights in
intellectual property, goodwill (including goodwill of any Obligor's business
symbolized by and associated with any and all Trademarks, trademark licenses,
Copyrights and/or service marks), royalty payments, licenses, letter-of-credit
rights, letters of credit, contractual rights, the right to receive refunds of
unearned insurance premiums, rights as lessee under any lease of real or
personal property, literary rights, Copyrights, service names, service marks,
logos, trade secrets, amounts received as an award in or settlement of a suit in
damages, deposit accounts, interests in joint ventures, general or limited
partnerships, or limited liability companies or partnerships, rights in
applications for any of the foregoing, books and records in whatever media
(paper, electronic or otherwise) recorded or stored, with respect to any or all
of the foregoing, all Supporting Obligations with respect to any of the
foregoing, and all equipment and general intangibles necessary or beneficial to
retain, access and/or process the information contained in those books and
records, and all proceeds (cash and non-cash) of the foregoing.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any department, agency or instrumentality thereof.
15
"Hazardous Materials" means (a) any "hazardous waste" as defined by the
Resource Conservation and Recovery Act of 1976, as amended from time to time,
and regulations promulgated there under; (b) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended from time to time, and regulations promulgated
thereunder; and (c) any substance the presence of which on any property now or
hereafter owned, acquired or operated by any of the Obligors is prohibited by
any Law similar to those set forth in this definition, including, without
limitation, any Law which requires special handling in the collection, storage,
treatment or disposal of a substance.
"Hazardous Materials Contamination" means the contamination (whether
presently existing or occurring after the date of this Agreement) by Hazardous
Materials of any property owned, operated or controlled by any of the Obligors
or for which any of the Obligors has responsibility, including, without
limitation, improvements, facilities, soil, ground water, air or other elements
on, or of, any property now or hereafter owned, acquired or operated by any of
the Obligors, and any other contamination by Hazardous Materials for which any
of the Obligors is, or is claimed to be, responsible.
"Indebtedness for Borrowed Money" of a Person means at any time the sum at
such time of (a) Liabilities of such Person for borrowed money or for the
deferred purchase price of property or services, (b) any obligations of such
Person in respect of letters of credit, banker's or other acceptances or similar
obligations issued or created for the account of such Person, (c) Lease
Obligations of such Person with respect to Capital Leases, (d) all liabilities
secured by any Lien on any property owned by such Person, to the extent attached
to such Person's interest in such property, even though such Person has not
assumed or become personally liable for the payment thereof, (e) Indebtedness
for Borrowed Money of third parties which is being guarantied by such Person or
which is secured by the property of such Person; and (f) the net exposure of
such Person under any obligations, liabilities or indebtedness, contingent or
otherwise, under or in connection with, any Interest Rate/Currency Protection
Agreement and other similar agreements and arrangements; but excluding current
trade and other accounts payable in the ordinary course of business in
accordance with customary trade terms and which are not overdue (as determined
in accordance with customary trade practices) or which are being disputed in
good faith by such Person and for which adequate reserves are being provided on
the books of such Person in accordance with GAAP., and (g) Subordinated
Indebtedness of a Person.
"Instrument" means a negotiable instrument (as defined in the Maryland
Uniform Commercial Code-Negotiable Instruments), a "certificated security" (as
defined in the Maryland Uniform Commercial Code-Investment Securities), or any
other writing which evidences a right to payment of money and is not itself a
security agreement or lease and is of a type which is in the ordinary course of
business transferred by delivery with any necessary endorsement.
"Insured Eligible Dutch Receivable" means an Eligible Dutch Receivable
which has been insured in a manner acceptable to the Lender in its reasonable
discretion, by an insurance company acceptable to the Lender in its reasonable
discretion, which insurance policy has been assigned to the Lender pursuant to
an assignment of insurance acceptable to the Lender in its reasonable
discretion.
"Insured Eligible Spanish Receivables" means an Eligible Spanish
Receivable which has been insured under .an insurance policy of the Dutch
Borrower in a manner acceptable to the Lender in its reasonable discretion, by
an insurance company acceptable to the Lender in its
16
reasonable discretion, which insurance policy has been assigned to the Lender
pursuant to an assignment of insurance acceptable to the Lender in its
reasonable discretion.
"Insured Eligible U.K. Receivables" means an Eligible U.K. Receivable
which has been insured in a manner acceptable to the Lender in its reasonable
discretion, by an insurance company acceptable to the Lender in its reasonable
discretion, which insurance policy has been assigned to the Lender pursuant to
an assignment of insurance acceptable to the Lender in its reasonable
discretion.
"Interest Payment Date" means the dates provided for the payment of
interest on the Loans in Section 2.6.5 (Payment of Interest).
"Interest Period" means a Dollar Interest Period or a Euro Interest
Period.
"Interest Rate Election Notice" has the meaning described in Section 2.6.2
(Selection of Interest Rates).
"Interest Rate/Currency Protection Agreement" means, for any Person,
interest rate swap, cap, floor or collar agreements, currency agreements,
currency spot, foreign exchange and forward contracts or similar arrangement
between such Person and one or more financial institutions providing for the
transfer or mitigation of interest or currency risks either generally or under
specific contingencies.
"Interest Rate/Currency Protection Reserve" means at any time of
determination, the aggregate of the obligations to the Lender of any or all of
the Obligors under all Interest Rate/Currency Protection Agreements to which any
Obligor is a party in the event of a termination of any such Interest
Rate/Currency Protection Agreements on an estimated "marked-to market" basis.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the Income Tax Regulations issued and proposed to
be issued thereunder.
"Inventory" means all inventory of each Obligor and all right, title and
interest of each Obligor in and to all of its now owned and hereafter acquired
goods, merchandise and other personal property furnished under any contract of
service or intended for sale or lease, including, without limitation, all raw
materials, work-in-progress, finished goods and materials and supplies of any
kind, nature or description which are used or consumed in any Obligor's business
or are or might be used in connection with the manufacture, packing, shipping,
advertising, selling or finishing of such goods, merchandise and other licenses,
warranties, franchises, general intangibles, personal property and all documents
of title or documents relating to the same and all proceeds (cash and non-cash)
of the foregoing.
"Investment Property" means investment property (as such term is defined
by the Maryland Uniform Commercial Code-Secured Transactions) together with each
Security, whether certificated or uncertificated, security entitlement,
securities account, commodity contract or commodity account, and all proceeds
(cash and non-cash) of, and Supporting Obligations with respect to, the
foregoing.
"IP Pledges" means those certain pledges over Patents and Trademarks dated
the Closing Date from the U.S. Borrower or the Dutch Borrower for the benefit of
the Lender, as the same
17
may from time to time be amended, restated, supplemented or otherwise modified.
The IP Pledges are part of the Security Documents and the Dutch Security
Documents, as applicable.
"Item of Payment" means each check, draft, cash, money, instrument, item,
and other remittance in payment or on account of payment of the Receivables or
otherwise with respect to any Collateral, including, without limitation, cash
proceeds of any returned, rejected or repossessed goods, the sale or lease of
which gave rise to a Receivable, and other proceeds of Collateral; and "Items of
Payment" means the collective reference to all of the foregoing.
"Laws" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any Governmental Authority.
"Lease Obligations" of a Person means for any period the rental
commitments of such Person for such period under leases for real and/or personal
property (net of rent from subleases thereof, but including taxes which such
Person, as the lessee, is obligated to pay under the terms of said leases,
except to the extent that such taxes are payable by sublessees).
"Lender" means the Person defined as the Lender in the preamble of this
Agreement.
"Letter of Credit" and "Letters of Credit" shall have the meanings
described in Section 2.5.1 (Letters of Credit).
"Letter of Credit Agreement" means the collective reference to each letter
of credit application and agreement substantially in the form of the Lender's
then standard form of application for letter of credit or such other form as may
be approved by the Lender, executed and delivered by the U.S. Borrower or the
Dutch Borrower in connection with a request for the issuance of a Letter of
Credit, as the same may from time to time be amended, restated, supplemented or
modified; and "Letter of Credit Agreements" means all of the foregoing in effect
at any time and from time to time.
"Letter of Credit Cash Collateral Account" has the meaning described in
Section 2.5.3 (Terms of Letters of Credit).
"Letter of Credit Documents" means any and all drafts under or purporting
to be under a Letter of Credit, any Letter of Credit Agreement, and any other
instrument, document or agreement executed and/or delivered by the U.S. Borrower
or the Dutch Borrower or any other Person under, pursuant to or in connection
with a Letter of Credit or any Letter of Credit Agreement.
"Letter of Credit Fee" and "Letter of Credit Fees" have the meanings
described in Section 2.5.2 (Letter of Credit Fees).
"Letter of Credit Obligations" means the collective reference to all
Obligations of U.S. Borrower and the Dutch Borrower with respect to the Letters
of Credit and the Letter of Credit Agreements.
"Liabilities" means at any date all liabilities that in accordance with
GAAP consistently applied should be classified as liabilities on a balance sheet
of the U.S. Borrower and its consolidated Subsidiaries.
"LIBOR Base Rate" means the Dollar LIBOR Rate or the Euro LIBOR, as
applicable.
18
"LIBOR Loan" means a Dollar LIBOR Loan or a Euro LIBOR Loan, as
applicable.
"LIBOR Rate" means the Dollar LIBOR Rate or the Euro LIBOR Rate, as
applicable.
"Lien" means any mortgage, deed of trust, deed to secure debt, grant,
pledge, security interest, assignment, encumbrance, judgment, lien,
hypothecation, provision in any instrument or other document for confession of
judgment, cognovit or other similar right or remedy, claim or charge of any
kind, whether perfected or unperfected, avoidable or unavoidable, including,
without limitation, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or equivalent Law of any
jurisdiction, excluding the precautionary filing of any financing statement by
any lessor in a true lease transaction, by any xxxxxx in a true bailment
transaction or by any consignor in a true consignment transaction under the
Uniform Commercial Code or equivalent Law of any jurisdiction or the agreement
to give any financing statement by any lessee in a true lease transaction, by
any bailee in a true bailment transaction or by any consignee in a true
consignment transaction.
"Loan" means each of the U.S. Revolving Loan, the U.S. Term Loan, the
Dutch Revolving Loan or the Dutch Term Loan, as the case may be, and "Loans"
means the collective reference to the U.S. Revolving Loan, the U.S. Term Loan,
the Dutch Revolving Loan, and the Dutch Term Loan.
"Loan Notice" means an oral, e-mail or facsimile transmission notice
provided by the U.S. Borrower to the Lender of a requested U.S. Revolving Loan
Advance or an e-mail or facsimile transmission notice provided by the Dutch
Borrower to the Lender of a requested a Dutch Revolving Loan Advance, which in
either event shall be directed to the parties at the addresses provided in
Section 8.1 (Notices) but without providing copies to the other parties listed
in that Section.
"Material Adverse Effect" means an effect, either in any case or in the
aggregate, which results in a material adverse change (a) in the business,
prospects, condition, properties, assets, affairs or operations of either
Borrower, (b) in the right or ability of either Borrower to carry on a
substantial portion of its operations as now conducted or proposed to be
conducted, or (c) to a material part of the value of, or the ability of the
Lender to realize upon, the Collateral, including, without limitation, the Dutch
Collateral.
"Multi-employer Plan" means a Plan which is a Multi-employer plan as
defined in Sections 3(37) and 4001(a)(3) of ERISA.
"Non-U.S. Obligor means each of the U.K. Subsidiaries, the Spanish
Subsidiary and the Dutch Borrower, the "Non-U.S. Obligors" means all of U.K.
Subsidiaries and the Dutch Borrower collectively;
"Non-U.S. Stock Pledge Agreements" means, collectively, the Stock Pledge
Agreements executed by Non-U.S. Obligors.
"Obligations" means all present and future indebtedness, duties,
obligations, and liabilities, whether now existing or contemplated or hereafter
arising, of any one or more of the Obligors to the Lender under, arising
pursuant to, in connection with and/or on account of the provisions of this
Agreement, each Security Document, and/or any of the other Financing
19
Documents, the Loans, and/or any of the Credit Facilities including, without
limitation, the principal of, and interest on, late charges, the Fees,
Enforcement Costs, and prepayment fees (if any), letter of credit fees or fees
charged with respect to any guaranty of any letter of credit; also means all
other present and future indebtedness, liabilities and obligations, whether now
existing or contemplated or hereafter arising, of any one or more of the
Obligors to the Lender or its Affiliates with respect to the Interest
Rate/Currency Protection Agreements, deposit or other cash management or credit
services of any nature whatsoever regardless of whether such debts, obligations
and liabilities be direct, indirect, primary, secondary, joint, several, joint
and several, fixed or contingent; and also means any and all renewals,
extensions, substitutions, amendments, restatements and rearrangements of any
such debts, obligations and liabilities.
"Obligor" means each Person defined as an Obligor in the preamble of this
Agreement and, and "Obligors" means the collective reference to all Persons
defined as "Obligors" in the preamble to this Agreement.
"Origination Fees" has the meaning described in Section 2.7.2 (Origination
Fees).
"Outstanding Letter of Credit Obligations" has the meaning described in
Section 2.5.3 (Terms of Letters of Credit).
"Patents" means and includes, in each case whether now existing or
hereafter arising, all of each Obligor's rights, title and interest in and to
(a) any and all patents and patent applications, (b) any and all inventions and
improvements described and claimed in such patents and patent applications, (c)
reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any patents and patent applications, (d) income,
royalties, damages, claims and payments now or hereafter due and/or payable
under and with respect to any patents or patent applications, including, without
limitation, damages and payments for past and future infringements, (e) rights
to xxx for past, present and future infringements of patents, and (f) all rights
corresponding to any of the foregoing throughout the world.
"Patriot Act means the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means: (a) Liens for Taxes which are not delinquent or
which (i) are being diligently contested in good faith and by appropriate
proceedings and adequate reserves with respect thereto are maintained on the
books of an Obligor, and (ii) are not, and will not be with appropriate filing,
the giving of notice and/or the passage of time, entitled to priority over any
Lien of the Lender as to any pre-existing Obligation to the Lender(except the
Lien created under the Subordinated Obligations Documents); (b) deposits or
pledges to secure obligations under workers' compensation, social security or
similar laws, or under unemployment insurance in the ordinary course of
business; (c) Liens securing any or all of the Obligations; (d) judgment Liens
to the extent the entry of such judgment does not constitute a Default or an
Event of Default under the terms of this Agreement or result in the sale or levy
of, or execution on, any of the Collateral; (e) statutory liens of landlords,
carriers, warehousemen, mechanics, materialmen and other similar liens imposed
by law, which are incurred in the ordinary course of business for sums not more
than thirty (30) days delinquent or which are being contested in good faith; (f)
liens against cash deposits to secure the performance of tenders, statutory
obligations, surety, customs bonds, bids, government contracts, performance
bonds and other similar obligations
20
(exclusive of obligations for the payment of borrowed money); (g) deposits made
in the ordinary course of business to secure liability to insurance carriers;
(h) Purchase Money Security Interests; provided that the aggregate outstanding
Liabilities secured by any such Liens does not exceed Five Hundred Thousand
Dollars ($500,000) per annum; and (i) any other Liens existing as of the Closing
Date which are set forth on Schedule 4.1.21 attached hereto and made a part
hereof.
"Person" means and includes an individual, a corporation, a partnership, a
joint venture, a limited liability company or partnership, a trust, an
unincorporated association, a Governmental Authority, or any other organization
or entity.
"Plan" means any pension plan that is covered by Title IV of ERISA and in
respect of which any Obligor or a Commonly Controlled Entity is an "employer" as
defined in Section 3 of ERISA.
"Post-Default Rate" means when used with respect to Obligations, an per
annum interest rate equal to the Applicable Interest Rate plus 2% per annum."
"Post-Expiration Date Letter of Credit" and "Post-Expiration Date Letters
of Credit" have the meanings described in Section 2.5.3 (Terms of Letters of
Credit).
"Prepayment" means a U.S. Revolving Loan Mandatory Prepayment, a U.S.
Revolving Loan Optional Prepayment, a U.S. Term Loan Mandatory Prepayment, a
U.S. Term Loan Optional Prepayment, a Dutch Revolving Loan Mandatory Prepayment,
a Dutch Revolving Loan Optional Prepayment, a Dutch Term Loan Mandatory
Prepayment or a Dutch Term Loan Optional Prepayment, as the case may be, and
"Prepayments" mean collectively all U.S. Revolving Loan Mandatory Prepayments,
all U.S. Revolving Loan Optional Prepayments, all U.S. Term Loan Mandatory
Prepayments, all U.S. Term Loan Optional Prepayments, all Dutch Revolving Loan
Mandatory Prepayments, all Dutch Revolving Loan Optional Prepayments, all Dutch
Term Loan Mandatory Prepayments and all Dutch Term Loan Optional Prepayments.
"Prime Rate" means the floating and fluctuating per annum rate of interest
announced by the Lender from time to time as its prime rate of interest. The
Prime Rate does not necessarily represent the lowest rate of interest charged by
the Lender to borrowers.
"Proforma Balance Sheet" has the meaning described in Section 4.1.12
(Proforma Financial Statements).
"Proforma Financial Projections" has the meaning described in Section
4.1.12 (Proforma Financial Statements).
"Purchase Agreement" means that certain Share Purchaser Agreement dated
March 8, 2005 by and among the U.S. Borrower, the Dutch Borrower, NKF Vastgoed
B.V. and the Seller.
"Purchase Agreement Documents" means collectively the Purchase Agreement
and any and all other agreements, documents or instruments (together with any
and all amendments, modifications, and supplements thereto, restatements
thereof, and substitutes therefore) previously, now or hereafter executed and
delivered by any or all of the Obligors, the Seller, or any other Person in
connection with the Purchase Agreement Transaction, including (without
21
limitation) all agreements relating to the debt incurred in favor of the Seller
in consideration for a portion of the purchase price under the Purchase
Agreement.
"Purchase Agreement Rights" means collectively, the U.S. Borrower's right,
title and interest in, to, and under, the Purchase Agreement and all of the
Purchase Agreement Documents.
"Purchase Agreement Transaction" means the stock purchase transaction
contemplated by the provisions of the Purchase Agreement.
"Purchase Money Security Interest" means a purchase money security
interest, attaching at the time of acquisition, in Equipment acquired after the
date of this Agreement; provided, however, that (a) the indebtedness secured by
any such security interest shall not exceed 100% of the cost of the Equipment
covered plus finance charges, fees, costs and expenses (including attorneys
fees) of documentation, perfection, collection and enforcement, (b) each such
security interest shall attach only to the Equipment so acquired for the
purchase money for that Equipment, and (c) the acquisition to which any such
security interest relates shall not result in a Default or Event of Default
under this Agreement.
"Receivable" means each Obligor's now owned and hereafter owned, acquired
or created Accounts, Chattel Paper, General Intangibles and Instruments; and
"Receivables" means all of each Obligor's now or hereafter owned, acquired or
created Accounts, Chattel Paper, General Intangibles and Instruments, and all
cash and non-cash proceeds and products thereof.
"Reportable Event" means any of the events set forth in Section 4043(c) of
ERISA or the regulations thereunder.
"Responsible Officer" means for each Obligor, its chief executive officer
or president or any vice president or, with respect to financial matters, its
chief financial officer, treasurer or comptroller.
"Revolving Credit Unused Line Fee" and "Revolving Credit Unused Line Fees"
have the meanings described in Section 2.1.9 (Revolving Credit Unused Line Fee).
"Securities" means the collective reference to each and every certificated
or uncertificated security (as such term is defined by the Maryland Uniform
Commercial Code-Investment Securities), and all proceeds (cash and non-cash) of
the foregoing.
"Security Documents" mean collectively any assignment, pledge agreement,
security agreement, mortgage, deed of trust, deed to secure debt, financing
statement and any similar instrument, document or agreement under or pursuant to
which a Lien is now or hereafter granted to, or for the benefit of the Lender on
any real or personal property of any Person to secure all or any portion of the
Obligations, all as the same may from time to time be amended, restated,
supplemented or otherwise modified, including, without limitation, this
Agreement, the IP Pledges, the Stock Pledge Agreements, the Dutch Security
Documents, and any assignment of any letter of credit, banker's acceptance or
receivables insurance policy securing Receivables.
"Seller" means Draka Holding, N.V., the Seller under the Purchase
Agreement.
22
"Senior Debt Leverage Ratio" means, as to the U.S. Borrower and its
consolidated Subsidiaries, for any period of determination, the ratio of (a) the
outstanding Obligations to (b) EBITDA.
"Spanish Subsidiary" means the Person defined as the Spanish Subsidiary in
the preamble of this Agreement.
"State" means the State of Maryland.
"Stock Pledge Agreements" means, collectively, those certain pledge,
assignment and security agreements dated the Closing Date hereof from the U.S.
Borrower over the shares in the U.K. Subsidiaries, the Spanish Subsidiary and
the Dutch Borrower, each for the benefit of the Lender, as the same may from
time to time be amended, restated, supplemented or otherwise modified.
"Subordinated Note" means that certain Subordinated Promissory Note dated
March 8, 2005, made by the U.S. Borrower payable to the Seller in the principal
amount of Nine Million Euro ((euro)9,000,000), as the same maybe amended in
accordance with its terms.
"Subordinated Obligations" means the debt obligations of the U.S. Borrower
under the Subordinated Note.
"Subordinated Obligations Documents" means the Subordinated Note, and any
and all agreements, documents or instruments now or at any time evidencing,
securing, guarantying or otherwise executed and delivered in connection with the
Subordinated Obligations, as the same may from time to time be amended,
restated, supplemented or modified.
"Subordinated Indebtedness" means all Indebtedness incurred at any time by
any Obligor which is in amounts, subject to repayment terms, and subordinated to
the Obligations, as set forth in one or more written agreements, all in form and
substance satisfactory to the Lender in its sole and absolute discretion.
"Subsidiary" means with respect to any Obligor, any corporation,
partnership, joint venture, limited liability company or other business entity
of which more than 50% of the outstanding capital stock or other interests
having ordinary voting power to elect a majority of the board of directors or
other governing body of such entity (irrespective of whether at the time
securities or interests of any other class or classes of such entity shall or
might have voting power upon the occurrence of any contingency) is at the time,
directly or indirectly, beneficially owned by any Obligor, and "Subsidiaries"
means all such entities collectively.
"Supporting Obligation" means a letter-of-credit right, secondary
obligation, or obligation of a secondary obligor, or secondary obligation that
supports the payment or performance of an account, chattel paper, a document, a
general intangible, an instrument, or investment property.
"Taxes" means all taxes and assessments whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every character
(including all penalties or interest thereon), which at any time may be
assessed, levied, confirmed or imposed by any Governmental Authority on any or
all of the Obligors or any of their properties or assets or any part thereof or
in respect of any of its or their franchises, businesses, income or profits.
23
"Trademarks" means and includes in each case whether now existing or
hereafter arising, all of each Obligor's right, title and interest in and to (a)
any and all trademarks (including service marks), trade names and trade styles,
and applications for registration thereof and the goodwill of the business
symbolized by any of the foregoing, (b) any and all licenses of trademarks,
service marks, trade names and/or trade styles, whether as licensor or licensee,
(c) any renewals of any and all trademarks, service marks, trade names, trade
styles and/or licenses of any of the foregoing, (d) income, royalties, damages
and payments now or hereafter due and/or payable with respect thereto,
including, without limitation, damages, claims, and payments for past, present
and future infringements thereof, (e) rights to xxx for past, present and future
infringements of any of the foregoing, including the right to settle suits
involving claims and demands for royalties owing, and (f) all rights
corresponding to any of the foregoing throughout the world.
"Unused Availability" means, at any one time, the amount of the U.S.
Borrowing Base in excess of the outstanding amount of the U.S. Revolving Loan
Advances.
"U.K. Subsidiary" means each of the Persons defined as the U.K. Subsidiary
in the preamble of this Agreement, and "U.K. Subsidiaries" means the collective
reference to all Persons defined as "U.K. Subsidiaries" in the preamble to this
Agreement.
"Uniform Commercial Code" means, unless otherwise provided in this
Agreement, the Maryland Uniform Commercial Code.
"U.S. Borrower" means the Person defined as the U.S. Borrower in the
preamble of this Agreement.
"U.S. Borrowing Base" has the meaning described in Section 2.1.3 (U.S.
Borrowing Base).
"U.S. Borrowing Base Deficiency" has the meaning described in Section
2.1.3 (U.S. Borrowing Base).
"U.S. Borrowing Base Report" has the meaning described in Section 2.1.4
(U.S. Borrowing Base Report).
"U.S. Obligations" means the principal of the U.S. Revolving Loan, the
U.S. Term Loan and any Letters of Credit issued for the account of the U.S.
Borrower and any other obligations of the U.S. Borrower hereunder and under the
Financing Documents, together with any interest thereon, Fees, Enforcement Costs
and indemnifications attributable thereto.
"U.S. Origination Fees" has the meaning described in Section 2.7.2
(Origination Fees).
"U.S. Revolving Credit Commitment" means the agreement of the Lender
relating to the making of the U.S. Revolving Loan Advances subject to and in
accordance with the provisions of this Agreement.
"U.S. Revolving Credit Commitment Period" means the period of time from
the Closing Date to the Business Day preceding the U.S. Revolving Credit
Termination Date.
"U.S. Revolving Credit Committed Amount" means Five Million Dollars
($5,000,000).
24
"U.S. Revolving Credit Expiration Date" means April 1, 2007.
"U.S. Revolving Credit Facility" means the facility established by the
Lender pursuant to Section 2.1 (U.S. Revolving Credit Facility).
"U.S. Revolving Credit Termination Date" means the earlier of (a) the U.S.
Revolving Credit Expiration Date, or (b) the date on which the U.S. Revolving
Credit Commitment is terminated pursuant to Section 7.2.1 (Acceleration,
Termination) or otherwise.
"U.S. Revolving Loan" means the aggregate of all the U.S. Revolving Loan
Advances.
"U.S. Revolving Loan Account" has the meaning described in Section 2.1.8
(U.S. Revolving Loan Account).
"U.S. Revolving Loan Advance" and "U.S. Revolving Loan Advances" have the
meanings described in Section 2.1.1 (U.S. Revolving Credit Facility).
"U.S. Revolving Loan Mandatory Prepayment" and "U.S. Revolving Loan
Mandatory Prepayments" have the meanings described in Section 2.1.6 (Mandatory
Prepayments of U.S. Revolving Loan).
"U.S. Revolving Loan Optional Prepayment" and "U.S. Revolving Loan
Optional Prepayments" have the meanings described in Section 2.1.7 (Optional
Prepayments of U.S. Revolving Loan).
"U.S. Term Loan" has the meanings described in Section 2.2.1 (U.S. Term
Loan Commitment).
"U.S. Term Loan Commitment" means the agreement of the Lender to make the
U.S. Term Loan to the U.S. Borrower in accordance with the provisions of this
Agreement.
"U.S. Term Loan Committed Amount" means Nine Million One Hundred Fifty Two
Thousand Eight Hundred Seventy Dollars and Forty Cents ($9,152,870.40).
"U.S. Term Loan Scheduled Payment" means the amount of the payment on the
U.S. Term Loan which the U.S. Borrower is required to make on each U.S. Term
Loan Scheduled Payment Date in accordance with Section 2.2.3 (U.S. Term Loan
Installment Payments).
"U.S. Term Loan Scheduled Payment Date" means the first day of each month,
commencing April, 2005.
"U.S. Term Loan Mandatory Prepayment" and "U.S. Term Loan Mandatory
Prepayments" have the meanings described in Section 2.2.4 (Mandatory Prepayments
of U.S. Term Loan).
"U.S. Term Loan Maturity Date" means the earlier of April 1, 2009 or the
date that the U.S. Term Loan is accelerated under Section 7.2.1 (Acceleration,
Termination).
"U.S. Term Loan Optional Prepayment" and "U.S. Term Loan Optional
Prepayments" have the meanings described in Section 2.3.7 (Optional Prepayments
of U.S. Term Loan).
25
"Wholly Owned Subsidiary" means any United States corporation all the
shares of stock of all classes of which (other than directors' qualifying
shares) at the time are owned directly or indirectly by an Obligor, and "Wholly
Owned Subsidiaries" means all such entities collectively.
Section 1.2 Accounting Terms and Other Definitional Provisions.
Unless otherwise defined herein, as used in this Agreement and in any
certificate, report or other document made or delivered pursuant hereto,
accounting terms not otherwise defined herein, and accounting terms only partly
defined herein, to the extent not defined, shall have the respective meanings
given to them under GAAP, as consistently applied to the applicable Person.
Unless otherwise defined herein, all terms used herein which are defined by the
Uniform Commercial Code shall have the same meanings as assigned to them by the
Uniform Commercial Code unless and to the extent varied by this Agreement. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references are references to articles, sections or
subsections of, or schedules or exhibits to, as the case may be, this Agreement
unless otherwise specified. As used herein, the singular number shall include
the plural, the plural the singular and the use of the masculine, feminine or
neutral gender shall include all genders, as the context may require. Reference
to any one or more of the Financing Documents shall mean the same as the
foregoing may from time to time be amended, restated, substituted, extended,
renewed, supplemented or otherwise modified. Reference in this Agreement and the
other Financing Documents to the "Obligor", the "Obligors", "each Obligor" or
otherwise with respect to any one or more of the Obligors shall mean each and
every Obligor and any one or more of the Obligors and, subject to Section 2.9
(Limitations on Joint and Several Liability for Obligations) hereof, jointly and
severally subject to the limitations set forth herein, unless a specific Obligor
is expressly identified.
Section 1.3 Dutch Terms
In this Agreement, where it relates to the Dutch Borrower, a reference to:
a. a Lien includes any mortgage (hypotheek), pledge (pandrecht),
retention of title arrangement (eigendomsvoorbehoud), privilege (voorrecht),
right of retention (recht van retentie), right to reclaim goods (recht van
reclame), and, in general, any right in rem (beperkt recht), created for the
purpose of granting security (goederenrechtelijk zekerheidsrecht);
b. the terms receiver, trustee or liquidator (and any of those terms)
include curator and bewindvoerder;
c. the terms bankruptcy, reorganization, insolvency, readjustment of
debt, dissolution or liquidation (and any of those terms) include faillissement,
failliet verklaard, ontbonden, surseance van betaling, sureance verleend; and
d. the term attachment includes beslag.
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ARTICLE II
THE CREDIT FACILITIES
Section 2.1 The U.S. Revolving Credit Facility.
2.1.1 U.S. Revolving Credit Facility.
(a) Subject to and upon the provisions of this Agreement and relying
upon the representations and warranties herein set forth, the Lender agrees at
any time and from time to time to make advances (each a "U.S. Revolving Loan
Advance" and collectively, the "U.S. Revolving Loan Advances") to the U.S.
Borrower and to issue Letters of Credit for the account of the U.S. Borrower
from the date hereof until the U.S. Revolving Credit Termination Date in an
aggregate principal amount at any time outstanding not to exceed the lesser of
(i) the U.S. Revolving Credit Committed Amount or (ii) the U.S. Borrowing Base,
provided however that at no time may the sum of (i) the aggregate outstanding
amount of the U.S. Revolving Loan Advances and Letters of Credit issued for the
account of the U.S. Borrower, plus (ii) the aggregate outstanding amount of the
Euro Currency Equivalent of the Dutch Revolving Loan Advances and Letters of
Credit issued for the account of the Dutch Borrower exceed the Aggregate
Revolving Loan Cap; provided further, that the sum of the Outstanding Letter of
Credit Obligations shall not at any time exceed Five Hundred Thousand Dollars
($500,000.00).
(b) Each U.S. Revolving Loan Advance shall be made and repaid in
Dollars.
(c) Each U.S. Revolving Loan Advance, except as hereinafter provided,
may, at the option of the U.S. Borrower be incurred and maintained as and/or
converted into a Base Rate Loan or a LIBOR Loan, provided that all U.S.
Revolving Loan Advances made as part of the same borrowing shall, unless
otherwise specifically provided herein, consist of U.S. Revolving Loan Advances
of the same type.
2.1.2 Procedure for Making U.S. Revolving Loan Advances.
The U.S. Borrower may borrow under the U.S. Revolving Credit Facility on
any Business Day. U.S. Revolving Loan Advance shall be deposited to a demand
deposit account of the U.S. Borrower with the Lender or shall be otherwise
applied as directed by the U.S. Borrower, which direction the Lender may require
to be in writing. Not later than 1:00 p.m. (prevailing U.S. Eastern Time) two
(2) Business Days prior to the date of the requested borrowing, the U.S.
Borrower shall give the Lender a Loan Notice of the amount and (if requested by
the Lender) the purpose of the requested borrowing. Each Loan Notice shall be
irrevocable.
In addition, the U.S. Borrower hereby irrevocably authorizes the Lender at
any time without further request from or notice to the U.S. Borrower, to make
U.S. Revolving Loan Advances to cover debit balances in the U.S. Revolving Loan
Account, principal of, and/or interest (if not paid when due) on, any Loan, the
Obligations (including, without limitation, the Dutch Obligations), and/or
Enforcement Costs, prior to, on, or after the termination of other
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advances under this Agreement, regardless of whether the outstanding principal
amount of the U.S. Revolving Loan Advance which the Lender may advance hereunder
causes the U.S. Revolving Credit Committed Amount to be exceeded.
2.1.3 U.S. Borrowing Base.
As used in this Agreement, the term "U.S. Borrowing Base" means at any
time, an amount equal to the aggregate of (a) the sum of eighty-five percent
(85%) of Eligible U.S. Receivables, plus (b) thirty percent (30%) of the amount
of Eligible Inventory, less (c) the Interest Rate/Currency Protection Reserve
for the U.S. Borrower, less (d) the amount of any Dutch Borrowing Base
Deficiency which has not been paid, less (e) the amount of any reserve which the
Lender in its reasonable and good faith discretion deems appropriate to cover
any potential U.S. Borrowing Base Deficiency which the Lender determines, in its
reasonable and good faith discretion based upon information previously provided
by the Borrowers or obtained from the Lender's auditors, may have occurred since
the most recent U.S. Borrowing Base Report was provided by the U.S. Borrower.
The U.S. Borrowing Base shall be computed based on the U.S. Borrowing Base
Report most recently delivered to the Lender. In the event the U.S. Borrower
fails to furnish a U.S. Borrowing Base Report required by Section 2.1.4 (U.S.
Borrowing Base Report), or in the event the Lender reasonably determines that a
U.S. Borrowing Base Report is no longer accurate in any material respect, the
Lender may, in its sole and absolute discretion exercised from time to time and
without limiting other rights and remedies under this Agreement, suspend the
making of or limit making U.S. Revolving Loan Advances. The U.S. Borrowing Base
shall be subject to reduction by the amount of any Receivable or any Inventory
which was included in the U.S. Borrowing Base but which the Lender reasonably
determines fails to meet the respective criteria applicable from time to time
for Eligible U.S. Receivables or Eligible Inventory.
If at any time the total of the aggregate principal amount of the U.S.
Revolving Loan and the Outstanding Letter of Credit Obligations of the U.S.
Borrower exceeds an amount equal to the U.S. Borrowing Base, a borrowing base
deficiency ("U.S. Borrowing Base Deficiency") shall exist. Each time a U.S.
Borrowing Base Deficiency exists, the U.S. Borrower shall provide a current U.S.
Borrowing Base Report demonstrating that a U.S. Borrower Base Deficiency does
not exist any longer, or at the sole and absolute discretion of the Lender
exercised from time to time shall pay the U.S. Borrowing Base Deficiency ON
DEMAND to the Lender from time to time.
Without implying any limitation on the Lender's discretion with respect to
the U.S. Borrowing Base, the criteria for Eligible U.S. Receivables and for
Eligible Inventory contained in the respective definitions of Eligible U.S.
Receivables and of Eligible Inventory are in part based upon the business
operations of the U.S. Borrower existing on or about the Closing Date and upon
information and records furnished to the Lender by the U.S. Borrower. If at any
time or from time to time hereafter, the business operations of the U.S.
Borrower changes in any material respect or such information and records
furnished to the Lender is incorrect or misleading in any material respect, the
Lender in its reasonable and good faith discretion, may at any time and from
time to time during the duration of this Agreement change such criteria or add
new criteria. The Lender shall communicate such changed or additional criteria
to the U.S. Borrower from time to time either orally or in writing prior to the
application thereof.
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2.1.4 U.S. Borrowing Base Report.
The U.S. Borrower shall furnish to the Lender no less frequently than once
per month, as of the twentieth calendar day after the end of the previous month,
and at such other times as may reasonably be requested by the Lender, a report
of the U.S. Borrowing Base (each a "U.S. Borrowing Base Report"; collectively,
the "U.S. Borrowing Base Reports") in the form required from time to time by the
Lender, appropriately completed and duly signed. The U.S. Borrowing Base Report
shall contain the amount and payments on the Receivables of the U.S. Borrower,
the value of Inventory owned by the U.S. Borrower, and the calculations of the
U.S. Borrowing Base, all in such detail, and accompanied by such supporting and
other information, as the Lender may from time to time reasonably request. Upon
the Lender's request and periodically upon the creation of any Receivables by
the U.S. Borrower, or at such intervals as the Lender may reasonably require,
the U.S. Borrower shall provide the Lender with such further schedules,
documents and/or information regarding its Receivables and Inventory as the
Lender may reasonably require. The items to be provided under this subsection
shall be in form satisfactory to the Lender, and certified as true and correct
by a Responsible Officer, and delivered to the Lender from time to time solely
for the Lender's convenience in maintaining records of the Collateral. The U.S.
Borrower's failure to deliver any of such items to the Lender shall not affect,
terminate, modify, or otherwise limit the Liens of the Lender in the Collateral.
2.1.5 Promise to Pay U.S. Revolving Loan.
For value received, the U.S. Borrower promises to pay to the order of the
Lender, on the U.S. Revolving Credit Termination Date, the aggregate outstanding
amount of all U.S. Revolving Loan Advances. Additionally, the U.S. Borrower
promises to pay to the order of the Lender interest on the outstanding aggregate
principal amount (calculated on a daily basis) of all U.S. Revolving Loan
Advances in the manner, and at the times, as herein set forth. To the extent the
outstanding aggregate amount of U.S. Revolving Loan Advances plus the amount of
the Outstanding Letter of Credit Obligations of the U.S. Borrower exceeds the
U.S. Revolving Credit Committed Amount as limited by the U.S. Borrowing Base and
the Aggregate Revolving Loan Cap, the U.S. Borrower promises to pay such excess
on demand.
2.1.6 Mandatory Prepayments of U.S. Revolving Loan.
Subject to the limitations and fees of Section 2.6.4 (Indemnity), the U.S.
Borrower shall make the mandatory prepayments (each a "U.S. Revolving Loan
Mandatory Prepayment" and collectively, the "U.S. Revolving Loan Mandatory
Prepayments") of the U.S. Revolving Loan at any time and from time to time in
such amounts requested by the Lender pursuant to Section 2.1.3 (U.S. Borrowing
Base) of this Agreement in order to cover (a) any U.S. Borrowing Base Deficiency
and (b) any excess in the total aggregate principal amounts of U.S. Revolving
Loan and Outstanding Letter of Credit Obligations of the U.S. Borrower over the
U.S. Revolving Credit Committed Amount as limited by the U.S. Borrowing Base and
the Aggregate Revolving Loan Cap.
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2.1.7 Optional Prepayments of U.S. Revolving Loan.
Subject to the limitations and fees of Section 2.6.4 (Indemnity), the U.S.
Borrower shall have the option at any time and from time to time to prepay (each
a "U.S. Revolving Loan Optional Prepayment" and collectively the "U.S. Revolving
Loan Optional Prepayments") the U.S. Revolving Loan, in whole or in part without
premium or penalty.
2.1.8 U.S. Revolving Loan Account.
The Lender will establish and maintain a loan account on its books (the
"U.S. Revolving Loan Account"). The Lender will (a) debit (i) the principal
amount of each U.S. Revolving Loan Advance made by the Lender hereunder as of
the date made, (ii) the amount of any interest accrued on the U.S. Revolving
Loan as and when due, and (iii) any other amounts due and payable by the U.S.
Borrower to the Lender from time to time under the provisions of this Agreement
in connection with the U.S. Revolving Loan, including, without limitation,
Enforcement Costs, Fees and late charges, and (b) credit all payments made by
the U.S. Borrower to the Lender on account of the U.S. Revolving Loan as of the
date made. All credit entries to the U.S. Revolving Loan Account are conditional
and shall be readjusted as of the date made if final and indefeasible payment is
not received by the Lender in cash or solvent credits.
Any and all periodic or other statements or reconciliations, and the
information contained in those statements or reconciliations, of the U.S.
Revolving Loan Account shall constitute an account stated between the Lender and
the U.S. Borrower, absent manifest error, unless the Lender receives specific
written objection thereto from a U.S. Borrower within sixty (60) Business Days
after such statement or reconciliation shall have been sent by the Lender. Any
and all periodic or other statements or reconciliations, and the information
contained in those statements or reconciliations, of the U.S. Revolving Loan
Account shall be final, binding and conclusive upon the U.S. Borrower in all
respects, absent manifest error, unless the Lender receives specific written
objection thereto from the U.S. Borrower within thirty (30) Business Days after
such statement or reconciliation shall have been sent by the Lender.
2.1.9 Revolving Credit Unused Line Fee, Monitoring Fee.
The U.S. Borrower shall pay to the Lender a monthly revolving credit
facility fee (collectively, the "Revolving Credit Unused Line Fees" and
individually, a "Revolving Credit Unused Line Fee") in an amount equal to
twenty-five one hundredths of one percent (0.25%) per annum of the average daily
unused and undisbursed portion of the U.S. Revolving Credit Committed Amount in
effect from time to time accruing during each calendar month minus the average
daily disbursed portion of the Dutch Revolving Credit Committed Amount. At any
time during which the Senior Debt Leverage Ratio is greater than 2:1, the
Revolving Credit Unused Line Fee shall be increased to an amount equal to
thirty-seven and one-half hundredths of one percent (0.375%) per annum of the
average daily unused and undisbursed portion of the U.S. Revolving Credit
Committed Amount minus the average daily disbursed portion of the Dutch
Revolving Credit Committed Amount. The accrued and unpaid portion of the
Revolving Credit Unused Line Fee shall be paid by the U.S. Borrower to the
Lender on the first day of each month, commencing on the first such date
following the date hereof, and on the U.S. Revolving Credit Termination Date.
The U.S. Borrower agrees to pay to the Lender a borrowing base monitoring fee in
the amount of $150 per month (covering both the Dutch Borrowing Base and the
U.S. Borrowing Base) payable in advance on the first day of each calendar month.
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Section 2.2 The U.S. Term Loan.
2.2.1 U.S. Term Loan Commitment.
Subject to and upon the provisions of this Agreement, the Lender agrees to
make a loan (the "U.S. Term Loan") to the U.S. Borrower on the Closing Date in
the principal amount of the U.S. Term Loan Committed Amount.
2.2.2 Promise to Pay U.S. Term Loan.
For value received, the U.S. Borrower promises to pay to the order of the
Lender the U.S. Term Loan Committed Amount or so much thereof as shall be
advanced by the Lender hereunder in the manner, and at the times, as herein set
forth. Additionally, the U.S. Borrower promises to pay to the order of the
Lender interest on the outstanding principal amount (calculated on a daily
basis) of the U.S. Term Loan in the manner, and at the times, as herein set
forth.
2.2.3 U.S. Term Loan Installment Payments.
The U.S. Borrower shall pay to the Lender the principal amount of the U.S.
Term Loan in forty-eight (48) consecutive installments payable commencing on the
first U.S. Term Loan Scheduled Payment Date after the advance of the U.S. Term
Loan, and continuing on each U.S. Term Loan Scheduled Payment Date thereafter;
consisting of forty-seven (47) equal installments of principal in the amount of
One Hundred Twenty-Seven Thousand One Hundred Twenty Three Dollars and Twenty
Cents ($127,123.20) and ONE (1) FINAL INSTALLMENT on the U.S. Term Loan Maturity
Date in an amount equal to the outstanding principal amount of the U.S. Term
Loan at that time together with all other amounts outstanding hereunder
including, without limitation, accrued interest, costs and expenses.
2.2.4 Mandatory Prepayments of U.S. Term Loan.
Subject to the limitations and fees of Section 2.6.4 (Indemnity), in
addition to the payment of principal of the U.S. Term Loan described above, the
U.S. Borrower shall make mandatory prepayments (each a "U.S. Term Loan Mandatory
Prepayment" and collectively the "U.S. Term Loan Mandatory Prepayments") of the
U.S. Term Loan annually. Each U.S. Term Loan Mandatory Prepayment shall be in
the amount of twenty-five (25%) percent of the Excess Cash Flow for the then
preceding fiscal year and shall be payable on the date (the "Calculation Date")
the U.S. Borrower furnishes to the Lender the annual financial statements
referred to in Section 6.1.1 (Financial Statements). The U.S. Borrower shall pay
to the Lender on the date of each U.S. Term Loan Mandatory Prepayment accrued
interest to such date on the amount prepaid. Each U.S. Term Loan Mandatory
Prepayment shall be applied to the balloon payment due on the U.S. Term Loan
Maturity Date and then to principal against the principal installments in the
inverse order of their maturity. Notwithstanding the foregoing, if (a) during
the fiscal year prior to the Calculation Date, the U.S. Borrower's Asset
Coverage Ratio was equal to or greater than one to one (1 to 1) as of the end of
any four consecutive months, (b) as of the end of the U.S. Borrower's fiscal
year prior to the Calculation Date, the U.S. Borrower's Asset Coverage Ratio was
equal to or greater than one to one (1 to 1) , and (c) as of the end of the
month of January immediately prior to the date of such annual calculation of the
U.S. Term Loan Mandatory Prepayment, the U.S. Borrower's Asset Coverage Ratio
was equal to or greater than
31
one to one (1 to 1), then the U.S. Borrower shall need not pay to the Lender any
U.S. Term Loan Mandatory Prepayment that would otherwise be due.
2.2.5 Optional Prepayments of U.S. Term Loan.
Subject to the limitations and fees of Section 2.6.4 (Indemnity), the U.S.
Borrower may, at its option, at any time and from time to time, prepay (each a
"U.S. Term Loan Optional Prepayment" and collectively the "U.S. Term Loan
Optional Prepayments") the U.S. Term Loan, in whole or in part, upon five (5)
Business Days prior written notice, specifying the date and amount of
prepayment. The amount to be so prepaid, together with interest accrued thereon
to date of prepayment, shall be paid by the U.S. Borrower to the Lender on the
date specified for such prepayment. Partial U.S. Term Loan Optional Prepayments
shall be in an amount not less than $50,000 and shall be applied first to all
accrued and unpaid interest on the principal of the U.S. Term Loan, then to the
balloon payments due at maturity and then to principal against the principal
installments in the inverse order of their maturity.
Section 2.3 The Dutch Revolving Credit Facility.
2.3.1 Dutch Revolving Credit Facility.
(a) Subject to and upon the provisions of this Agreement and relying
upon the representations and warranties herein set forth, the Lender agrees at
any time and from time to time to make advances (each a "Dutch Revolving Loan
Advance" and collectively, the "Dutch Revolving Loan Advances") to the Dutch
Borrower and to issue Letters of Credit for the account of the Dutch Borrower
from the date hereof until the Dutch Revolving Credit Termination Date in an
aggregate principal amount at any time outstanding not to exceed the lesser of
(i) the Dutch Revolving Credit Committed Amount or (ii) the Dutch Borrowing
Base, provided however that at no time may the sum of (i) the aggregate
outstanding amount of the Euro Currency Equivalent of the Dutch Revolving Loan
Advances and Letters of Credit issued for the account of the Dutch Borrower,
plus (ii) the aggregate outstanding amount of the U.S. Revolving Loan Advances
and Letters of Credit issued for the account of the U.S. Borrower exceed the
Aggregate Revolving Loan Cap; provided further, that the sum of the Outstanding
Letter of Credit Obligations shall not at any time exceed Five Hundred Thousand
Dollars ($500,000.00).
(b) Each Dutch Revolving Loan Advance, except as hereinafter provided,
shall be made and repaid in Euros.
(c) Each Dutch Revolving Loan Advance, except as hereinafter provided,
shall be incurred and maintained as a LIBOR Loan.
2.3.2 Procedure for Making Dutch Revolving Loan Advances.
The Dutch Borrower may borrow under the Dutch Revolving Credit Facility on
any Business Day. The Dutch Revolving Loan Advances shall be deposited to a
demand deposit account of the Dutch Borrower with the Lender or shall be
otherwise applied as directed by the Dutch Borrower, which direction the Lender
may require to be in writing. Not later than 1:00 p.m. (prevailing U.S. Eastern
Time) three (3) Business Days prior to the date of the requested
32
borrowing, the Dutch Borrower shall give the Lender a Loan Notice of the amount
and (if requested by the Lender) the purpose of the requested borrowing. Each
Loan Notice shall be irrevocable.
In addition, the Dutch Borrower hereby irrevocably authorizes the Lender
at any time without further request from or notice to the Dutch Borrower, to
make Dutch Revolving Loan Advances to cover debit balances in the Dutch
Revolving Loan Account, principal of, and/or interest on (if not paid when due),
any of the Dutch Obligations and/or Enforcement Costs, prior to, on, or after
the termination of other advances under this Agreement, regardless of whether
the outstanding principal amount of the Dutch Revolving Loan which the Lender
may advance hereunder exceeds the Dutch Revolving Credit Committed Amount.
2.3.3 Dutch Borrowing Base.
As used in this Agreement, the term "Dutch Borrowing Base" means at any
time, an amount equal to sixty percent (60%) of Eligible Dutch Receivables
(other than Insured Eligible Dutch Receivables), plus seventy percent (70%) of
Insured Eligible Dutch Receivables, plus seventy percent (70%) of Insured
Eligible U.K. Receivables, plus seventy percent (70%) of Insured Eligible
Spanish Receivables, plus any Unused Availability, less (a) the Interest
Rate/Currency Protection Reserve for the Dutch Borrower, less (b) the amount of
any U.S. Borrowing Base Deficiency which has not been paid, less (c) the amount
of any reserve which the Lender in its reasonable and good faith discretion
deems appropriate to cover any potential Dutch Borrowing Base Deficiency which
the Lender determines, in its reasonable and good faith discretion based upon
information previously provided by the Borrowers or obtained from the Lender's
auditors, may have occurred since the most recent Dutch Borrowing Base Report
was provided by the Dutch Borrower.
The Dutch Borrowing Base shall be computed based on the Dutch Borrowing
Base Report most recently delivered to the Lender. In the event the Dutch
Borrower fails to furnish a Dutch Borrowing Base Report required by Section
2.3.4 (Dutch Borrowing Base Report), or in the event the Lender reasonably
determines that a Dutch Borrowing Base Report is no longer accurate in any
material respect, the Lender may, in its sole and absolute discretion exercised
from time to time and without limiting other rights and remedies under this
Agreement, suspend the making of or limit Dutch Revolving Loan Advances. The
Dutch Borrowing Base shall be subject to reduction by the amount of any
Receivable which was included in the Dutch Borrowing Base but which the Lender
reasonably determines fails to meet the respective criteria applicable from time
to time for Eligible Dutch Receivables.
If at any time the total of the aggregate principal amount of the Dutch
Revolving Loan and the Outstanding Letter of Credit Obligations of the Dutch
Borrower exceeds an amount equal to the Dutch Borrowing Base, a borrowing base
deficiency ("Dutch Borrowing Base Deficiency") shall exist. Each time a Dutch
Borrowing Base Deficiency exists, the Dutch Borrower shall provide a current
Dutch Borrowing Base Report demonstrating that a Dutch Borrower Base Deficiency
does not exist any longer, or at the sole and absolute discretion of the Lender
exercised from time to time shall pay the Dutch Borrowing Base Deficiency ON
DEMAND to the Lender from time to time.
Without implying any limitation on the Lender's discretion with respect to
the Dutch Borrowing Base, the criteria for Eligible Dutch Receivables contained
in the respective
33
definitions of Eligible Dutch Receivables are in part based upon the business
operations of the Dutch Borrower existing on or about the Closing Date and upon
information and records furnished to the Lender by the Dutch Borrower. If at any
time or from time to time hereafter, the business operations of the Dutch
Borrower changes in any material respect or such information and records
furnished to the Lender are incorrect or misleading in any material respect, the
Lender in its reasonable and good faith discretion, may at any time and from
time to time during the duration of this Agreement change such criteria or add
new criteria. The Lender shall communicate such changed or additional criteria
to the Dutch Borrower from time to time either orally or in writing prior to the
application thereof.
2.3.4 Dutch Borrowing Base Report.
The Dutch Borrower shall furnish to the Lender no less frequently than
once per month, as of the twentieth calendar day after the end of the previous
month, and at such other times as may reasonably be requested by the Lender, a
report of the Dutch Borrowing Base (each a "Dutch Borrowing Base Report";
collectively, the "Dutch Borrowing Base Reports") in the form required from time
to time by the Lender, appropriately completed and duly signed. The Dutch
Borrowing Base Report shall contain the amount and payments on the Receivables
of the Dutch Borrower and the calculations of the Dutch Borrowing Base, all in
such detail, and accompanied by such supporting and other information, as the
Lender may from time to time reasonably request. Upon the Lender's request and
periodically upon the creation of any Receivables by the Dutch Borrower, or at
such intervals as the Lender may reasonably require, the Dutch Borrower shall
provide the Lender with such further schedules, documents and/or information
regarding its Receivables as the Lender may reasonably require. The items to be
provided under this subsection shall be in form satisfactory to the Lender, and
certified as true and correct by a Responsible Officer, and delivered to the
Lender from time to time solely for the Lender's convenience in maintaining
records of the Collateral. The Dutch Borrower's failure to deliver any of such
items to the Lender shall not affect, terminate, modify, or otherwise limit the
Liens of the Lender in the Collateral.
2.3.5 Promise to Pay Dutch Revolving Loan.
For value received, the Dutch Borrower promises to pay to the order of the
Lender, on the Dutch Revolving Credit Termination Date, the aggregate
outstanding amount of all Dutch Revolving Loan Advances. Additionally, the Dutch
Borrower promises to pay to the order of the Lender interest on the outstanding
aggregate principal amount (calculated on a daily basis) of all Dutch Revolving
Loan Advances in the manner, and at the times, as herein set forth. To the
extent the outstanding aggregate amount of Dutch Revolving Loan Advances plus
the amount of the Outstanding Letter of Credit Obligations of the Dutch Borrower
exceeds the Dutch Revolving Credit Committed Amount as limited by the Dutch
Borrowing Base and the Aggregate Revolving Loan Cap, the Dutch Borrower promises
to pay such excess on demand.
2.3.6 Mandatory Prepayments of Dutch Revolving Loan.
Subject to the limitations and fees of Section 2.6.4 (Indemnity), the
Dutch Borrower shall make the mandatory prepayments (each a "Dutch Revolving
Loan Mandatory Prepayment" and collectively, the "Dutch Revolving Loan Mandatory
Prepayments") of the Dutch Revolving Loan at any time and from time to time in
such amounts requested by the
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Lender pursuant to Section 2.3.3 (Dutch Borrowing Base) of this Agreement in
order to cover (a) any Dutch Borrowing Base Deficiency and (b) any excess in the
total aggregate principal amount of the Dutch Revolving Loan and the Outstanding
Letter of Credit Obligations of the Dutch Borrower over the Dutch Revolving
Credit Committed Amount as limited by the Dutch Borrowing Base and the Aggregate
Revolving Loan Cap.
2.3.7 Optional Prepayments of Dutch Revolving Loan.
Subject to the limitations and fees of Section 2.6.4 (Indemnity), the
Dutch Borrower shall have the option at any time and from time to time to prepay
(each a "Dutch Revolving Loan Optional Prepayment" and collectively the "Dutch
Revolving Loan Optional Prepayments") the Dutch Revolving Loan, in whole or in
part without premium or penalty.
2.3.8 Dutch Revolving Loan Account.
The Lender will establish and maintain a loan account on its books (the
"Dutch Revolving Loan Account"). The Lender will (a) debit (i) the principal
amount of each Dutch Revolving Loan Advance made by the Lender hereunder as of
the date made, (ii) the amount of any interest accrued on the Dutch Revolving
Loan as and when due, and (iii) any other amounts due and payable by the Dutch
Borrower to the Lender from time to time under the provisions of this Agreement
in connection with the Dutch Revolving Loan, including, without limitation,
Enforcement Costs, Fees and late charges, and (b) credit all payments made by
the Dutch Borrower to the Lender on account of the Dutch Revolving Loan as of
the date made. All credit entries to the Dutch Revolving Loan Account are
conditional and shall be readjusted as of the date made if final and
indefeasible payment is not received by the Lender in cash or solvent credits.
Any and all periodic or other statements or reconciliations, and the
information contained in those statements or reconciliations, of the Dutch
Revolving Loan Account shall constitute an account stated between the Lender and
the Dutch Borrower, absent manifest error, unless the Lender receives specific
written objection thereto from a Dutch Borrower within sixty (60) Business Days
after such statement or reconciliation shall have been sent by the Lender. Any
and all periodic or other statements or reconciliations, and the information
contained in those statements or reconciliations, of the Dutch Revolving Loan
Account shall be final, binding and conclusive upon the Dutch Borrower in all
respects, absent manifest error, unless the Lender receives specific written
objection thereto from the Dutch Borrower within thirty (30) Business Days after
such statement or reconciliation shall have been sent by the Lender.
Section 2.4 The Dutch Term Loan.
2.4.1 Dutch Term Loan Commitment.
Subject to and upon the provisions of this Agreement, the Lender agrees to
make a loan (the "Dutch Term Loan") to the Dutch Borrower on the Closing Date in
the principal amount of the Dutch Term Loan Committed Amount.
35
2.4.2 Promise to Pay Dutch Term Loan.
For value received, the Dutch Borrower promises to pay to the order of the
Lender the Dutch Term Loan Committed Amount or so much thereof as shall be
advanced by the Lender hereunder in the manner, and at the times, as herein set
forth. Additionally, the Dutch Borrower promises to pay to the order of the
Lender interest on the outstanding principal amount (calculated on a daily
basis) of the Dutch Term Loan in the manner, and at the times, as herein set
forth.
2.4.3 Dutch Term Loan Installment Payments.
The Dutch Borrower shall pay to the Lender the principal amount of the
Dutch Term Loan in forty-eight (48) consecutive installments payable commencing
on the first Dutch Term Loan Scheduled Payment Date after the advance of the
Dutch Term Loan, and continuing on each Dutch Term Loan Scheduled Payment Date
thereafter; consisting of forty-seven (47) equal installments of principal in
the amount of Fifty Six Thousand Seven Hundred Seventy Seven Euros and Seventy
Eight Cents ((euro)56,777.78) and ONE (1) FINAL INSTALLMENT on the Dutch Term
Loan Maturity Date in an amount equal to the outstanding principal amount of the
Dutch Term Loan at that time together with all other amounts outstanding
hereunder including, without limitation, accrued interest, costs and expenses.
2.4.4 Mandatory Prepayments of Dutch Term Loan.
Subject to the limitations and fees of Section 2.6.4 (Indemnity), in
addition to the payment of principal of the Dutch Term Loan described above, the
Dutch Borrower shall make mandatory prepayments (each a "Dutch Term Loan
Mandatory Prepayment" and collectively the "Dutch Term Loan Mandatory
Prepayments") of the Dutch Term Loan annually. Each Dutch Term Loan Mandatory
Prepayment shall be in the amount of twenty-five (25%) percent of the Excess
Cash Flow for the then preceding fiscal year and shall be payable on the
Calculation Date. The Dutch Borrower shall pay to the Lender on the date of each
Dutch Term Loan Mandatory Prepayment accrued interest to such date on the amount
prepaid. Each Dutch Term Loan Mandatory Prepayment shall be applied to the
balloon payment due at Dutch Term Loan Maturity Date and then to principal
against the principal installments in the inverse order of their maturity.
Notwithstanding the foregoing, if (a) during the fiscal year prior to the
Calculation Date, the U.S. Borrower's Asset Coverage Ratio was equal to or
greater than one to one (1 to 1) as of the end of any four consecutive months,
(b) as of the end of the U.S. Borrower's fiscal year prior to the Calculation
Date, the U.S. Borrower's Asset Coverage Ratio was equal to or greater than one
to one (1 to 1) , and (c) as of the end of the month of January immediately
prior to the Calculation Date, the U.S. Borrower's Asset Coverage Ratio was
equal to or greater than one to one (1 to 1), then the Dutch Borrower shall need
not pay to the Lender any Dutch Term Loan Mandatory Prepayment that would
otherwise be due.
2.4.5 Optional Prepayments of Dutch Term Loan.
Subject to the limitations and fees of Section 2.6.4 (Indemnity), the
Dutch Borrower may, at its option, at any time and from time to time, prepay
(each a "Dutch Term Loan Optional Prepayment" and collectively the "Dutch Term
Loan Optional Prepayments") the Dutch Term Loan, in whole or in part, upon five
(5) Business Days prior written notice, specifying the date
36
and amount of prepayment. The amount to be so prepaid, together with interest
accrued thereon to date of prepayment, shall be paid by the Dutch Borrower to
the Lender on the date specified for such prepayment. Partial Dutch Term Loan
Optional Prepayments shall be in an amount not less than $50,000 and shall be
applied first to all accrued and unpaid interest on the principal of the Dutch
Term Loan, then to the balloon payments due at maturity and then to principal
against the principal installments in the inverse order of their maturity.
Section 2.5 Letter of Credit.
2.5.1 Obtaining Letters of Credit.
Subject to and upon the provisions of this Agreement, and as a part of
each of the U.S. Revolving Credit Commitment and the Dutch Revolving Credit
Commitment, each of the U.S. Borrower and the Dutch Borrower may obtain standby
and commercial letters of credit (as the same may from time to time be amended,
supplemented or otherwise modified, each a "Letter of Credit" and collectively
the "Letters of Credit") from the Lender from time to time from the Closing Date
until the Business Day preceding the U.S. Revolving Credit Termination Date and
the Dutch Revolving Credit Termination Date (as applicable) for the permitted
uses for the U.S. Revolving Loan and the Dutch Revolving Loan (as applicable).
The U.S. Borrower or the Dutch Borrower (as applicable) will not be entitled to
obtain a Letter of Credit unless (a) the U.S. Borrower or the Dutch Borrower (as
applicable) would then be able to obtain a U.S. Revolving Loan or a Dutch
Revolving Loan (as applicable) from the Lender in an amount not less than the
proposed face amount of the Letter of Credit requested, and (b) the sum of the
then Outstanding Letter of Credit Obligations (including the amount of the
requested Letter of Credit) does not exceed in the aggregate Five Hundred
Thousand Dollars ($500,000).
2.5.2 Letter of Credit Fees.
In connection with each Letter of Credit, the U.S. Borrower or the Dutch
Borrower (as applicable) shall pay to the Lender a letter of credit fee (each a
"Letter of Credit Fee" and collectively the "Letter of Credit Fees") in an
amount equal to the Applicable Margin (determined at the time the Letter of
Credit is issued) for LIBOR Loans under the U.S. Revolving Credit Facility or
the Dutch Revolving Credit Facility (as applicable), calculated on a per annum
basis and on the basis of actual number of days elapsed in a year of 360 days,
of the stated amount of each such Letter of Credit without regard for provisions
contained in the Letter of Credit that may give rise to a reduction in the
stated amount thereof unless such reduction has actually occurred. The Letter of
Credit Fees shall be paid upon the opening of each Letter of Credit and upon
each anniversary thereof, if any.
2.5.3 Terms of Letters of Credit; Post-Expiration Date Letters of Credit.
Each Letter of Credit shall (a) be opened pursuant to a Letter of Credit
Agreement and (b) expire on a date not later than the Business Day preceding the
U.S. Revolving Credit Expiration Date or the Dutch Revolving Credit Expiration
Date (as applicable); provided, however, if any Letter of Credit does have an
expiration date later than the Business Day preceding the U.S. Revolving Credit
Expiration Date or the Dutch Revolving Credit Expiration Date (as applicable)
(each a "Post-Expiration Date Letter of Credit" and collectively, the
"Post-Expiration Date
37
Letters of Credit"), effective as of the Business Day preceding the U.S.
Revolving Credit Expiration Date or the Dutch Revolving Credit Expiration Date
(as applicable) and without prior notice to or the consent of the U.S. Borrower
or the Dutch Borrower (as applicable), the Lender shall make a U.S. Revolving
Loan Advance or a Dutch Revolving Loan Advance (as applicable) for the account
of the U.S. Borrower or the Dutch Borrower (as applicable) in the aggregate face
amount of all such Letters of Credit. The Lender shall deposit the proceeds of
such advances into one or more non-interest bearing accounts with and in the
name of the Lender and over which the Lender alone shall have exclusive power of
access and withdrawal (collectively, the "Letter of Credit Cash Collateral
Account"). The Letter of Credit Cash Collateral Account is to be held by the
Lender, as additional collateral and security for any Letter of Credit
Obligations relating to the Post-Expiration Date Letters of Credit. The U.S.
Borrower and the Dutch Borrower hereby assign, pledge, grant and set over to the
Lender a first priority security interest in, and Lien on, all of the funds on
deposit in the Letter of Credit Cash Collateral Account, together with any and
all proceeds (cash and non-cash) and products thereof as additional collateral
and security for the Letter of Credit Obligations relating to the
Post-Expiration Date Letters of Credit. The U.S. Borrower and the Dutch Borrower
acknowledge and agree that the Lender shall be entitled to fund any draw or
draft on any Post-Expiration Date Letter of Credit from the monies on deposit in
the Letter of Credit Cash Collateral Account without notice to or consent of the
U.S. Borrower or the Dutch Borrower. The U.S. Borrower and the Dutch Borrower
further acknowledge and agree that the Lender's election to fund any draw or
draft on any Post-Expiration Date Letter of Credit from the Letter of Credit
Cash Collateral shall in no way limit, impair, lessen, reduce, release or
otherwise adversely affect the Letter of Credit Obligations under or relating to
the Post-Expiration Date Letters of Credit. At such time as all Post-Expiration
Date Letters of Credit have expired and all Letter of Credit Obligations
relating to the Post-Expiration Date Letters of Credit have been paid in full,
the Lender agrees to apply the amount of any remaining funds on deposit in the
Letter of Credit Cash Collateral Account to the then unpaid balance of the
Obligations under the U.S. Revolving Credit Facility and/or the Dutch Revolving
Credit Facility in such order and manner as the Lender shall determine in its
sole and absolute discretion in accordance with the provisions of this
Agreement.
Each Letter of Credit shall be issued in a stated amount at least equal to
One Hundred Thousand Dollars ($100,000) or the Euro Currency Equivalent thereof.
The aggregate face amount of all Letters of Credit at any one time outstanding
and issued by the Lender pursuant to the provisions of this Agreement,
including, without limitation, any and all Post-Expiration Date Letters of
Credit, plus the amount of any unpaid Letter of Credit Fees and unpaid letter of
credit fronting fees accrued or scheduled to accrue thereon, and less the
aggregate amount of all drafts issued under or purporting to have been issued
under such Letters of Credit that have been paid by the Lender and for which the
Lender has been reimbursed by the U.S. Borrower or the Dutch Borrower (as
applicable) in full in accordance with Section 2.5.5 (Payments of Letters of
Credit) below and the Letter of Credit Agreements, and for which the Lender has
no further obligation or commitment to restore all or any portion of the amounts
drawn and reimbursed, is herein called the "Outstanding Letter of Credit
Obligations".
2.5.4 Procedures for Letters of Credit.
The U.S. Borrower or the Dutch Borrower (as applicable) shall give the
Lender written notice at least five (5) Business Days prior to the date on which
the U.S. Borrower or the Dutch Borrower (as applicable) desires the Lender to
issue a Letter of Credit. Such notice shall be accompanied by a duly executed
Letter of Credit Agreement specifying, among other things: (a) or other document
proving to be forged, fraudulent or invalid, or the legality, validity,
regularity or enforceability of such Letter of Credit, any draft
38
the name and address of the intended beneficiary of the Letter of Credit, (b)
the requested face amount of the Letter of Credit, (c) whether the Letter of
Credit is to be revocable or irrevocable, (d) the Business Day on which the
Letter of Credit is to be opened and the date on which the Letter of Credit is
to expire, (e) the terms of payment of any draft or drafts that may be drawn
under the Letter of Credit, and (f) any other terms or provisions the U.S.
Borrower or the Dutch Borrower desire to be contained in the Letter of Credit.
Such notice shall also be accompanied by such other information, certificates,
confirmations, and other items as the Lender may require to assure that the
Letter of Credit is to be issued in accordance with the provisions of this
Agreement and a Letter of Credit Agreement. In the event of any conflict between
the provisions of this Agreement and the provisions of a Letter of Credit
Agreement, the provisions of this Agreement shall prevail and control unless
otherwise expressly provided in the Letter of Credit Agreement. Upon (x) receipt
of such notice, (y) payment of all Letter of Credit Fees and all other Fees
payable in connection with the issuance of such Letter of Credit, and (z)
receipt of a duly executed Letter of Credit Agreement, the Lender shall process
such notice and Letter of Credit Agreement in accordance with its customary
procedures and open such Letter of Credit on the Business Day specified in such
notice.
2.5.5 Payments of Letters of Credit.
The U.S. Borrower and the Dutch Borrower (as applicable) hereby promise to
pay to the Lender, ON DEMAND and in Dollars or the Euro Currency Equivalent
thereof (as applicable), the following that are herein collectively referred to
as the "Current Letter of Credit Obligations":
(a) the amount that the Lender has paid or will be required to pay under
each draft or draw on a Letter of Credit (upon presentment of such draft or draw
by the beneficiary of such Letter of Credit), whether such demand be in advance
of the Lender's payment or for reimbursement for such payment;
(b) any and all charges and expenses that the Lender has paid or incurred
relative to the Letter of Credit and/or such draws or drafts; and
(c) interest on the amounts described in (a) and (b) not paid by the U.S.
Borrower or the Dutch Borrower (as applicable) as and when due and payable under
the provisions of (a) and (b) above from the day the same are due and payable
until paid in full at a rate per annum equal to the then current highest rate of
interest on the U.S. Revolving Loan or the Dutch Revolving Loan (as applicable).
In addition, the U.S. Borrower or the Dutch Borrower (as applicable)
hereby promise to pay any and all other Letter of Credit Obligations as and when
due and payable in accordance with the provisions of this Agreement and the
Letter of Credit Agreements. The obligation of the U.S. Borrower or the Dutch
Borrower (as applicable) to pay Current Letter of Credit Obligations and all
other Letter of Credit Obligations shall be absolute and unconditional under any
and all circumstances and irrespective of any setoff, counterclaim or defense to
payment that the U.S. Borrower or the Dutch Borrower (as applicable) or any
other account party may have or have had against the beneficiary of such Letter
of Credit, the Lender or any other Person, including, without limitation, any
defense based on the failure of any draft or draw to conform to the terms of
such Letter of Credit, any draft or other document proving to be forged,
fraudulent or invalid, or the legality validity, regularity or enforceability of
such Letter of Credit, any draft
39
or other documents presented with any draft, any Letter of Credit Agreement,
this Agreement, or any of the other Financing Documents, all whether or not the
Lender had actual or constructive knowledge of the same, and irrespective of any
Collateral, security or guarantee therefor or right of offset with respect
thereto and irrespective of any other circumstances whatsoever that constitutes,
or might be construed to constitute, an equitable or legal discharge of the U.S.
Borrower and the Dutch Borrower (as applicable) for any Letter of Credit
Obligations, in bankruptcy or otherwise; provided, however, that the U.S.
Borrower and the Dutch Borrower (as applicable) shall not be obligated to
reimburse the Lender for any wrongful payment under such Letter of Credit made
as a result of the Lender's gross negligence or willful misconduct as determined
by a final non-appealable order by a court of competent jurisdiction. The
obligation of the U.S. Borrower or the Dutch Borrower (as applicable) to pay the
Letter of Credit Obligations shall not be conditioned or contingent upon the
pursuit by the Lender or any other Person at any time of any right or remedy
against any Person which may be or become liable in respect of all or any part
of such obligation or against any Collateral, security or guarantee therefor or
right of offset with respect thereto.
The Letter of Credit Obligations shall continue to be effective, or be
reinstated, as the case may be, if at any time payment of all or any portion of
the Letter of Credit Obligations is rescinded or must otherwise be restored or
returned by the Lender upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of any Person, or upon or as a result of the appointment of a
receiver, intervenor, or conservator of, or trustee or similar officer for, any
Person, or any substantial part of such Person's property, all as though such
payments had not been made.
2.5.6 Change in Law; Increased Cost.
If any change in any law or regulation or in the interpretation thereof by
any court or other Governmental Authority charged with the administration
thereof shall either (a) impose, modify or deem applicable any reserve, special
deposit or similar requirement against Letters of Credit issued by the Lender,
or (b) impose on the Lender any other condition regarding this Agreement or any
Letter of Credit, and the result of any event referred to in clauses (a) or (b)
above shall be to increase the cost to the Lender of issuing, maintaining or
extending the Letter of Credit or the cost to the Lender of funding any
obligation under or in connection with the Letter of Credit (which increase in
cost shall be the result of the Lender's appropriate allocation of the aggregate
of such cost increases resulting from such events), then, upon demand by the
Lender, the U.S. Borrower and the Dutch Borrower (as applicable) shall
immediately pay to the Lender from time to time as specified by the Lender,
additional amounts which shall be sufficient to compensate the Lender for its
allocable portion of such increased cost, together with interest on each such
amount from the date demanded until payment in full thereof at a rate per annum
equal to the then highest current rate of interest on the U.S. Revolving Loan or
the Dutch Revolving Loan (as applicable). A certificate as to such increased
cost incurred by the Lender, submitted by the Lender to the U.S. Borrower and/or
the Dutch Borrower (as applicable) shall be conclusive, absent manifest error.
2.5.7 General Letter of Credit Provisions.
The U.S. Borrower and the Dutch Borrower (as applicable) hereby instruct
the Lender to pay any draft complying with the terms of any Letter of Credit
irrespective of any instructions of the U.S. Borrower or the Dutch Borrower or
any other Person to the contrary. The U.S.
40
Borrower and the Dutch Borrower (as applicable) assume all risks of the acts and
omissions of the beneficiary and other users of any Letter of Credit. The Lender
and its branches, Affiliates and/or correspondents shall not be responsible for,
and the U.S. Borrower and the Dutch Borrower (as applicable) hereby indemnify
and hold the Lender and its branches, Affiliates and/or correspondents harmless
from and against, all liability, loss and expense (including attorney's fees and
costs) incurred by the Lender and/or its branches, Affiliates and/or
correspondents relative to and/or as a consequence of (a) any failure by the
U.S. Borrower or the Dutch Borrower (as applicable) to perform the agreements
hereunder and under any Letter of Credit Agreement, (b) any Letter of Credit
Agreement, this Agreement, any Letter of Credit and any draft, draw and/or
acceptance under or purported to be under any Letter of Credit, (c) any action
taken or omitted by the Lender and/or any of its branches, Affiliates and/or
correspondents at the request of the U.S. Borrower or the Dutch Borrower (as
applicable), (d) any failure or inability to perform in accordance with the
terms of any Letter of Credit by reason of any control or restriction rightfully
or wrongfully exercised by any de facto or de jure Governmental Authority, group
or individual asserting or exercising governmental or paramount powers, and/or
(e) any consequences arising from causes beyond the control of the Lender and/or
any of its branches, Affiliates and/or correspondents.
The Lender and its branches, Affiliates and/or correspondents, shall not
be liable or responsible in any respect for any (a) error, omission,
interruption or delay in transmission, dispatch or delivery of any one or more
messages or advices in connection with any Letter of Credit, whether transmitted
by cable, telegraph, mail or otherwise and despite any cipher or code that may
be employed, and/or (b) action, inaction or omission which may be taken or
suffered by it or them in good faith or through inadvertence in identifying or
failing to identify any beneficiary or otherwise in connection with any Letter
of Credit, provided, however, that the foregoing shall not apply in connection
with the Lender's gross negligence or willful misconduct as determined by a
final non-appealable order by a court of competent jurisdiction.
Any Letter of Credit may be amended, modified or revoked only upon the
receipt by the Lender from the U.S. Borrower or the Dutch Borrower (as
applicable) and the beneficiary (including any transferee and/or assignee of the
original beneficiary) of a written consent and request therefor.
If any Laws, order of court and/or ruling or regulation of any
Governmental Authority of the United States (or any state thereof) and/or any
country other than the United States permits a beneficiary under a Letter of
Credit to require the Lender and/or any of its branches, Affiliates and/or
correspondents to pay drafts under or purporting to be under a Letter of Credit
after the expiration date of the Letter of Credit, the U.S. Borrower or the
Dutch Borrower (as appropriate) shall reimburse the Lender for any such payment
pursuant to provisions of Section 2.5.6 (Change in Law; Increased Cost).
Except as may otherwise be specifically provided in a Letter of Credit or
Letter of Credit Agreement, the laws of the State of Maryland and the Uniform
Customs and Practice for Documentary Credits, 1993 Revision, International
Chamber of Commerce Publication No. 500 or the International Standby Practices,
International Chamber of Commerce Publication No. 590, as applicable, shall
govern the Letters of Credit. The Laws, rules, provisions and regulations of the
Uniform Customs and Practice for Documentary Credits and the International
Standby Practices, as applicable, are hereby incorporated by reference. In the
event of a conflict between the Uniform Customs and Practice for Documentary
Credits or the International Standby
41
Practices and the laws of the State of Maryland, the Uniform Customs and
Practice for Documentary Credits or the International Standby Practices, as
applicable, shall prevail.
Section 2.6 Interest.
2.6.1 Applicable Interest Rates.
(a) Each Loan shall bear interest as follows:
(i) each of the U.S. Revolving Loan and the U.S. Term Loan shall
bear interest until maturity (whether by acceleration, declaration, extension or
otherwise) at the Base Rate or the LIBOR Rate, as selected and specified by the
U.S. Borrower in an Interest Rate Election Notice furnished to the Lender in
accordance with the provisions of Section 2.6.2 (Selection of Interest Rates),
plus the Applicable Margin.
(ii) each of the Dutch Revolving Loan and the Dutch Term Loan shall
bear interest until maturity (whether by acceleration, declaration extension or
otherwise) at the LIBOR Rate plus the Applicable Margin.
(b) The Applicable Margin for each of the Credit Facilities shall be as
follows:
(i) U.S. Revolving Loan
Applicable Margin Applicable Margin
Senior Debt Leverage Ratio For LIBOR Loans For Base Rate Loans
-------------------------- --------------- -------------------
<1:1 1.75% 0%
< or = 1.5:1 and > 1:1 2.0% 0%
< or = 2:1 and > 1.5:1 2.25% 0.25%
> 2:1 2.75% 0.5%
(ii) U.S. Term Loan
Applicable Margin Applicable Margin
Senior Debt Leverage Ratio For LIBOR Loans For Base Rate Loans
-------------------------- --------------- -------------------
<1:1 2.25% 0%
< or = 1.5:1 and > 1:1 2.5% 0.25%
< or = 2:1 and > 1.5:1 2.75% 0.5%
> 2:1 3.25% 0.75%
(iii) Dutch Revolving Loan
Applicable Margin
Senior Debt Leverage Ratio For LIBOR Loans
-------------------------- ---------------
<1:1 1.75%
< or = 1.5:1 and > 1:1 2.0%
< or = 2:1 and > 1.5:1 2.25%
> 2:1 2.75%
(iv) Dutch Term Loan
42
Applicable Margin
Senior Debt Leverage Ratio For LIBOR Loans
-------------------------- ---------------
<1:1 2.25%
< or = 1.5:1 and > 1:1 2.5%
< or = 2:1 and > 1.5:1 2.75%
> 2:1 3.25%
(c) Notwithstanding the foregoing, following the occurrence and during the
continuance of a Default, at the option of the Lender and upon written notice to
the Obligors, all Loans and all other Obligations shall bear interest at the
Post-Default Rate.
2.6.2 Selection of Interest Rates.
(a) The U.S. Borrower may select the initial Applicable Interest Rate or
Applicable Interest Rates and Dollar Interest Periods applicable to the U.S.
Revolving Loan and the U.S. Term Loan and the Dutch Borrower may select the
initial Euro Interest Periods applicable to the Dutch Revolving Loan and the
Dutch Term Loan.
(b) From time to time after the date of this Agreement as provided in this
Section, by delivery of a proper and timely Interest Rate Election Notice
furnished to the Lender in accordance with the provisions of subsection (e), the
U.S. Borrower may select the Applicable Interest Rate or Applicable Interest
Rates and Dollar Interest Periods for any U.S. Revolving Loan and the U.S. Term
Loan, and the Dutch Borrower may select the Euro Interest Periods for any Dutch
Revolving Loan and the Dutch Term Loan.
(c) The selection of an Applicable Interest Rate and/or an Interest
Period, the election to convert an Applicable Interest Rate and/or an Interest
Period to another Applicable Interest Rate or Interest Period, and any other
adjustments in an interest rate are subject to the following limitations:
(i) the U.S. Borrower shall not at any time select or change to an
Interest Period that extends beyond the U.S. Revolving Credit
Expiration Date for the U.S. Revolving Loan Advances and the U.S.
Term Loan Maturity Date for the U.S. Term Loan, and the Dutch
Borrower shall not at any time select or change to an Interest
Period that extends beyond the Dutch Revolving Credit Expiration
Date for the Dutch Revolving Loan Advances and the Dutch Term Loan
Maturity Date for the Dutch Term Loan;
(ii) except as otherwise provided in Section 2.6.4 (Indemnity), no
change from the LIBOR Rate to the Base Rate shall become effective
on a day other than a Business Day and on a day which is the last
day of the then current Interest Period, no change of an Interest
Period shall become effective on a day other than the last day of
the then current Interest Period, and no change from the Base Rate
to the LIBOR Rate shall become effective on a day other than a day
which is a Business Day;
(iii) any Applicable Interest Rate change for any Loan to be
effective on a date on which any principal payment on account of
such Loan is scheduled to be paid shall be made only after such
payment shall have been made;
43
(iv) no more than five (5) different LIBOR Rates may be outstanding
at any time and from time to time with respect to each of the U.S.
Revolving Loan and the U.S. Term Loan and no more than five (5)
different LIBOR Rates may be outstanding at any time and from time
to time with respect to each of the Dutch Revolving Loan and the
Dutch Term Loan;
(v) the first date of each Interest Period shall be a Business Day;
(vi) as of the effective date of a selection, if a Default exists,
the Lender may determine not to accept selection, election or
adjustment; and
(vii) the minimum principal amount of a Dollar LIBOR Loan shall be
One Hundred Thousand Dollars ($100,000) and the minimum principal
amount of a Euro LIBOR Loan shall be the Euro Currency Equivalent of
One Hundred Thousand Dollars ($100,000).
(d) If a request for a U.S. Revolving Loan Advance is not accompanied by
an Interest Rate Election Notice or does not otherwise include a selection of an
Applicable Interest Rate and, if applicable, an Interest Period, or if, after
having made a selection of an Applicable Interest Rate and, if applicable, an
Interest Period, the U.S. Borrower or the Dutch Borrower, as applicable, fail or
are not otherwise entitled under the provisions of this Agreement to continue
such Applicable Interest Rate or Interest Period, the U.S. Borrower shall be
deemed to have selected the Base Rate and the Dutch Borrower shall be deemed to
have elected a one (1) month Euro Interest Period, until such time as the U.S.
Borrower or the Dutch Borrower, as appropriate, have selected a different
Applicable Interest Rate and specified an Interest Period in accordance with,
and subject to, the provisions of this Section.
(e) The Lender will not be obligated to make Loans, to convert the
Applicable Interest Rate on Loans to another Applicable Interest Rate, or to
change Interest Periods, unless the Lender shall have received an irrevocable
written or telephonic notice (an "Interest Rate Election Notice") from the U.S.
Borrower or the Dutch Borrower, as appropriate, specifying the following
information:
(i) the amount to be borrowed or converted;
(ii) a selection of the Base Rate or the LIBOR Rate as
to any U.S. Revolving Loans and as to the U.S. Term Loan;
(iii) the length of the Interest Period if the
Applicable Interest Rate selected is the LIBOR Rate; and
(vi) the requested date on which such election is to be
effective.
Any telephonic notice must be confirmed by written notice or e-mail within
three (3) Business Days. Each Interest Rate Election Notice under the U.S.
Revolving Credit Facility or the U.S. Term Loan must be received by the Lender
not later than 1:00 p.m. (prevailing U.S. Eastern Time) on the Business Day of
any requested borrowing or conversion in the case of selection of the Base Rate
and not later than 1:00 p.m. (prevailing U.S. Eastern Time) on the third
Business Day before the effective date of any requested borrowing or
conversation in the case of a selection of the LIBOR Rate. Each Interest Rate
Election Notice under the Dutch
44
Revolving Credit Facility or the Dutch Term Loan must be received by the Lender
by 1:00 p.m. (prevailing U.S. Eastern Time) not later than three (3) Business
Day prior to the proposed date of funding or converting the applicable Euro
LIBOR Loan.
2.6.3 Inability to Determine Dollar LIBOR Rate or Euro LIBOR Rate.
In the event that (a) the Lender shall have determined that, by reason of
circumstances affecting the London inter-bank market, adequate and reasonable
means do not exist for ascertaining the Dollar LIBOR Rate or Euro LIBOR Rate for
any Interest Period with respect to a Loan which is to be made as a LIBOR Loan
or (b) the Lender shall determine that the Dollar LIBOR Rate or Euro LIBOR Rate
for any Interest Period with respect to a Loan to be made as a LIBOR Loan does
not adequately and fairly reflect the cost to the Lender of funding or
converting such Loan, the Lender shall give telephonic or written notice of such
determination to the appropriate Borrower at least one (1) day prior to the
proposed date for funding of such Loan. If such notice is given, any Dollar
LIBOR Loan shall accrue interest at the Base Rate plus the Applicable Margin and
any Euro LIBOR Loan shall accrue interest at the rate certified by the Lender to
be the rate at which it currently offers loans in Euros to its best customers.
2.6.4 Indemnity.
The Obligors agree to indemnify and reimburse the Lender and to hold the
Lender harmless from any loss, cost (including administrative costs) or expense
(including, without limitation, any such loss or expense arising from the
reemployment of funds obtained by the Lender to maintain any LIBOR Loan or from
fees payable to terminate the deposits from which such funds were obtained)
which the Lender has sustained or incurred as a consequence of (a) a default by
either of the Borrowers in payment when due of the principal amount of or
interest on any LIBOR Loan, including any mandatory prepayments, (b) the failure
of either of the Borrowers to make, or convert the Applicable Interest Rate of,
a Loan after either of the Borrowers has given a Loan Notice or an Interest Rate
Election Notice, (c) the failure of either of the Borrowers to make any
prepayment of a LIBOR Loan after the Borrowers have given notice of such
intention to make such a prepayment, and/or (d) the making by either of the
Borrowers of a prepayment of a LIBOR Loan on a day which is not the last day of
the Interest Period for such LIBOR Loan. The Lender agrees to provide the
applicable Borrower with a written certification as to any amounts payable to
the Lender under this Section including the manner and method of calculating
such amounts.
2.6.5 Payment of Interest.
(a) Unpaid and accrued interest on any advance of the Loans shall be paid
(i) at the end of each Interest Period for any LIBOR Rate Loan, (ii) monthly, in
arrears, on the first day of each calendar month, commencing on the first such
date after the date of this Agreement, and on the first day of each calendar
month thereafter, for any Base Rate Loan and (iii) at maturity (whether by
acceleration, declaration, extension or otherwise) (each an "Interest Payment
Date").
(b) Notwithstanding the foregoing, any and all unpaid and accrued interest
on any Base Rate Loan converted to a LIBOR Loan or prepaid shall be paid
immediately upon such conversion and/or prepayment, as appropriate.
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Section 2.7 General Financing Provisions.
2.7.1 Consideration; Obligors' Representative.
Each of the Obligors hereby represents and warrants to the Lender that
each of them will derive benefits, directly and indirectly, from each Loan and
each Letter of Credit, both in their separate capacity and as a member of the
integrated group to which each of the Obligors belongs and because the
successful operation of the integrated group is dependent upon the continued
successful performance of the functions of the integrated group as a whole,
because (a) this financing is enabling the consummation by the U.S. Borrower and
the Seller of the Purchase Agreement Transaction, (b) the terms of the
consolidated financing provided under this Agreement are more favorable than
would otherwise would be obtainable by the Obligors individually, and (c) the
Obligors' additional administrative and other costs and reduced flexibility
associated with individual financing arrangements which would otherwise be
required if obtainable would substantially reduce the value to the Obligors of
the financing. The Obligors in the discretion of their respective managements
are to agree among themselves as to the allocation of the proceeds of Loans and
the benefits of the Letters of Credit, except that all Loans made to the Dutch
Borrower are to be made to and retained by the Dutch Borrower.
For administrative convenience, each Obligor hereby irrevocably appoints
the U.S. Borrower as such Obligor's attorney-in-fact, with power of substitution
(with the prior written consent of the Lender in the exercise of its sole and
absolute discretion), in the name of the U.S. Borrower or in the name of the
respective Obligor or otherwise to take any and all actions with respect to this
Agreement, the other Financing Documents, the Obligations and/or the Collateral
(including, without limitation, the proceeds thereof) as the U.S. Borrower may
so elect from time to time, including, without limitation, actions to (i)
request advances under the Loans, apply for and direct the benefits of Letters
of Credits, and direct the Lender to disburse or credit the proceeds of any Loan
directly to an account of the U.S. Borrower or the Dutch Borrower (as
appropriate), any one or more of the Obligors or otherwise, which direction
shall evidence the making of such Loan and shall constitute the acknowledgement
by each of the Obligors of the receipt of the proceeds of such Loan or the
benefit of such Letter of Credit, (ii) enter into, execute, deliver, amend,
modify, restate, substitute, extend and/or renew this Agreement, any Additional
Obligors Joinder Supplement, any other Financing Documents, security agreements,
mortgages, deposit account agreements, instruments, certificates, waivers,
letter of credit applications, releases, documents and agreements from time to
time, and (iii) endorse any check or other item of payment in the name of such
Obligor. The foregoing appointment is coupled with an interest, cannot be
revoked without the prior written consent of the Lender, and may be exercised
from time to time through the U.S. Borrower's duly authorized officer, officers
or other Person or Persons designated by the U.S. Borrower to act from time to
time on behalf of the U.S. Borrower.
Each of the Obligors hereby irrevocably authorizes the Lender to make
Loans to either or both of the Borrowers, and hereby irrevocably authorizes the
Lender to issue or cause to be issued Letters of Credit for the account of the
U.S. Borrower or the Dutch Borrower (as appropriate), pursuant to the provisions
of this Agreement upon the written, oral or telephone request of any one or more
of the Persons who is from time to time a Responsible Officer of the U.S.
Borrower under the provisions of the most recent certificate of corporate
resolutions and/or incumbency on file with the Lender and also upon the written,
oral or telephone request of any one of the Persons who is from time to time a
Responsible Officer of the U.S. Borrower under
46
the provisions of the most recent certificate of corporate resolutions and/or
incumbency on file with the Lender.
In the absence of the Lender's gross negligence or willful misconduct, the
Lender assumes no responsibility or liability for any errors, mistakes, and/or
discrepancies in the oral, telephonic, written or other transmissions of any
instructions, orders, requests and confirmations between the Lender and the
Obligors in connection with the Credit Facilities, any Loan, any Letter of
Credit, or any other transaction in connection with the provisions of this
Agreement. Without implying any limitation on the joint and several nature of
the Obligations, the Lender agrees that, notwithstanding any other provision of
this Agreement, the Obligors may create reasonable inter-company indebtedness
between or among the Obligors with respect to the allocation of the benefits and
proceeds of the advances and Credit Facilities under this Agreement, except that
the Dutch Revolving Loan and the Dutch Term Loan shall be made to and retained
by the Dutch Borrower and shall not be allocated or reallocated to any other
Obligor. The Obligors agree among themselves, and the Lender consents to that
agreement, that each Obligor shall have rights of contribution from all of the
other Obligor to the extent such Obligor incurs Obligations in excess of the
proceeds of the Loans received by, or allocated to purposes for the direct
benefit of, such Obligors. All such indebtedness and rights shall be, and are
hereby agreed by the Obligors to be, subordinate in priority and payment to the
indefeasible repayment in full in cash of the Obligations, and, unless the
Lender agrees in writing otherwise, shall not be exercised or repaid in whole or
in part until all of the Obligations have been indefeasibly paid in full. The
Obligors agree that all of such inter-company indebtedness and rights of
contribution are part of the Collateral and secure the Obligations. Each Obligor
hereby waives all rights of counterclaim, recoupment and offset between or among
themselves arising on account of that indebtedness and otherwise. Each Obligor
shall not evidence the inter-company indebtedness or rights of contribution by
note or other instrument, and shall not secure such indebtedness or rights of
contribution with any Lien or security.
2.7.2 Origination Fees.
The U.S. Borrower shall pay to the Lender on or before the Closing Date a
loan origination fee in the amount of one percent (1%) of the U.S. Revolving
Credit Committed Amount and one percent (1%) of the U.S. Term Loan Committed
Amount (collectively, the "U.S. Origination Fees"), which shall be deemed to be
fully earned and are non-refundable. The Dutch Borrower shall pay to the Lender
on or before the Closing Date a loan origination fee in the amount of one
percent (1%) of the Dollar Currency Equivalent of the Dutch Term Loan Committed
Amount (the "Dutch Origination Fee"), which shall be fully deemed to be earned
and is non-refundable. The U.S. Origination Fees and the Dutch Origination Fee
are collectively referred to as the "Origination Fees."
2.7.3 Field Examination Fees.
The Lender reserves the right to charge the Obligors for any and all out-
of-pocket expenses reasonably incurred in connection with the performance of
field examinations.
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2.7.4 Computation of Interest and Fees.
All applicable Fees and interest shall be calculated on the basis of a
year of 360 days for the actual number of days elapsed. Any change in the
interest rate on any of the Obligations resulting from a change in the Base Rate
shall become effective as of the opening of business on the day on which such
change in the Base Rate is announced.
2.7.5 Payments.
All payments to be made by the U.S. Borrower to the Lender under this
Agreement or any of the other Financing Documents shall be made in Dollars and
all payments to be made by the Dutch Borrower to the Lender under this Agreement
or any of the other Financing Documents shall be made in Euros (unless otherwise
agreed to or required by any Lender), without set-off or counterclaim and free
and clear of, and without deduction for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions, withholdings or restrictions or conditions of any nature whatsoever
now or hereafter imposed, levied, collected, withheld or assessed against any of
the Obligors, other than income and franchise taxes imposed on the Lender (such
non-excluded items, the "Assessments"). If any Assessments are imposed and
required to be withheld from any such payment, the Obligors shall (a) increase
the amount of such payment so that the Lender will receive a net amount (after
giving effect to the payment of such additional amount and to the deduction of
all Assessments) equal to the amount due hereunder, and (b) pay such Assessments
to the appropriate taxing authority for the account of the Lender and, as
promptly as possible thereafter, send the Lender, an original receipt (or a copy
thereof that has been stamped by the appropriate taxing authority to certify
payment) showing payment thereof, together with such additional documentary
evidence as the Lender may from time to time reasonably require. If any of the
Obligors fails to perform its obligations to the Lender under parts (a) or (b)
of the preceding sentence, the Obligors (subject to the limitations of Section
2.9 (Limitations on Joint and Several Liability for Obligations)) shall
indemnify the Lender for any such Assessments that are paid by the Lender, plus
all incremental Assessments, interest or penalties that may become payable as a
consequence of such failure.
2.7.6 Liens; Setoff.
The U.S. Borrower hereby grants to the Lender a continuing Lien in order
to secure all of the Obligations upon any and all monies, securities, and other
property of the U.S. Borrower and the proceeds thereof, now or hereafter held or
received by or in transit to, the Lender, and/or any Affiliate of the Lender,
from or for the U.S. Borrower, and also upon any and all deposit accounts
(general or special) and credits of the U.S. Borrower, if any, with the Lender
or any Affiliate of the Lender, at any time existing, excluding any deposit
accounts held by the U.S. Borrower in its capacity as trustee for Persons who
are Affiliates of the U.S. Borrower. The Dutch Borrower hereby grants to the
Lender a continuing Lien in order to secure all of the Dutch Obligations upon
any and all monies, securities, and other property of the Dutch Borrower and the
proceeds thereof, now or hereafter held or received by or in transit to, the
Lender and/or any Affiliate of the Lender, from or for the Dutch Borrower, and
also upon any and all deposit accounts (general or special) and credits of the
Dutch Borrower, if any, with the Lender or any Affiliate of the Lender, at any
time existing, excluding any deposit accounts held by the Dutch Borrower in its
capacity as trustee for Persons who are Affiliates of the Dutch Borrower.
Without implying any limitation on any other rights the Lender may have under
the Financing
48
Documents or applicable Laws, during the continuance of a Default, the Lender,
as appropriate and subject to the provisions of this Section, is hereby
authorized by the Obligors at any time and from time to time, without notice to
the Obligors, to set off, appropriate and apply any or all items hereinabove
referred to against all Obligations then outstanding (whether or not then due),
all in such order and manner as shall be determined by the Lender in its sole
and absolute discretion.
2.7.7 Requirements of Law.
In the event that the Lender shall have determined reasonably and in good
faith that (a) the adoption of any Laws regarding capital adequacy, or (b) any
change therein or in the interpretation or application thereof or (c) compliance
by the Lender or any corporation controlling the Lender with any request or
directive regarding capital adequacy (whether or not having the force of law)
from any central bank or Governmental Authority, does or shall have the effect
of reducing the rate of return on the capital of the Lender or any corporation
controlling the Lender, as a consequence of the obligations of the Lender
hereunder to a level below that which the Lender or any corporation controlling
the Lender would have achieved but for such adoption, change or compliance
(taking into consideration the policies of the Lender and the corporation
controlling the Lender, with respect to capital adequacy) by an amount deemed by
the Lender to be material, then from time to time, after submission by the
Lender to the Borrowers of a written request therefor and a statement of the
basis for such determination, the Borrowers shall pay to the Lender such
additional amount or amounts in order to compensate for such reduction, except
that the Dutch Borrower shall only be required to pay such amounts if and to the
extent they affect the Lender as a result of the Dutch Obligations.
Notwithstanding any provision contained herein to the contrary, the Lender
agrees that it shall not apply the provisions of this Section to either of the
Borrowers if it shall not at the time be the general policy or practice of the
Lender to apply provisions similar to those of this Section to other borrowers
in substantially similar circumstances under substantially comparable provisions
of other credit agreements.
Section 2.8 Guaranty.
(a) Subject to the limitations on liability of the Non-U.S. Obligors as
set forth in Section 2.9 (Limitations on Joint and Several Liability for
Obligations) with respect to all other Obligations, each Obligor hereby
unconditionally and irrevocably, guarantees to the Lender:
(i) the due and punctual payment in full (and not merely the
collectibility) by the other Obligors of the Obligations, including unpaid
and accrued interest thereon, in each case when due and payable, all
according to the terms of this Agreement and the other Financing
Documents;
(ii) the due and punctual payment in full (and not merely the
collectibility) by the other Obligors of all other sums and charges which
may at any time be due and payable in accordance with this Agreement or
any of the other Financing Documents;
(iii) the due and punctual performance by the other Obligors of all
of the other terms, covenants and conditions contained in the Financing
Documents; and
49
(iv) all the other Obligations of the other Obligors; provided,
however, that the guaranty of the Non-U.S. Obligors shall apply only to
the Dutch Obligations and not to the U.S. Obligations.
(b) The obligations and liabilities of each Obligor as a guarantor under
this Section shall be absolute and unconditional and joint and several (subject
to the limitations of Section 2.9 (Limitations on Joint and Several Liability
for Obligations), irrespective of the genuineness, validity, priority,
regularity or enforceability of this Agreement or any of the Financing Documents
or any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or guarantor. Each Obligor in its capacity as a guarantor
expressly agrees that the Lender may, in its sole and absolute discretion,
without notice to or further assent of any of the Obligors and without in any
way releasing, affecting or in any way impairing the joint and several
obligations and liabilities of such Obligors as guarantors hereunder:
(i) waive compliance with, or any defaults under, or grant any other
indulgences under or with respect to any of the Financing Documents;
(ii) modify, amend, change or terminate any provisions of any of the
Financing Documents;
(iii) grant extensions or renewals of or with respect to the Credit
Facilities or any of the other Financing Documents;
(iv) effect any release, subordination, compromise or settlement in
connection with this Agreement or any of the other Financing Documents;
(v) agree to the substitution, exchange, release or other
disposition of the Collateral or any part thereof, or any other collateral
for the Loan or to the subordination of any lien or security interest
therein;
(vi) make advances for the purpose of performing any term, provision
or covenant contained in this Agreement or any of the other Financing
Documents with respect to which any Obligor shall then be in default;
(vii) make future advances pursuant to this Agreement or any of the
other Financing Documents;
(viii) assign, pledge, hypothecate or otherwise transfer the
Commitments, the Obligations, this Agreement or any of the other Financing
Documents or any interest therein, all as and to the extent permitted by
the provisions of this Agreement;
(ix) deal in all respects with the other Obligors as if this Section
were not in effect;
(x) effect any release, compromise or settlement with any of the
other Obligors, whether in their capacity as a Obligor or as a guarantor
under this Section, or any other guarantor; and
(xi) provide debtor-in-possession financing or allow use of cash
collateral in proceedings under the Bankruptcy Code, it being expressly
agreed by all Obligors that any such financing and/or use would be part of
the Obligations.
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(c) The obligations and liabilities of each Obligor as guarantor under
this Section shall be joint and several (subject to the limitations of Section
2.9 (Limitations on Joint and Several Liability for Obligations)), primary,
direct and immediate, shall not be subject to any counterclaim, recoupment, set
off, reduction or defense based upon any claim that a Obligor may have against
any one or more of the other Obligors, the Lender and/or any other guarantor and
shall not be conditional or contingent upon pursuit or enforcement by the Lender
of any remedies it may have against the Obligors with respect to this Agreement
or any of the other Financing Documents, whether pursuant to the terms thereof
or by operation of law. Without limiting the generality of the foregoing, the
Lender shall not be required to make any demand upon any of the Obligors, or to
sell the Collateral or otherwise pursue, enforce or exhaust its or their
remedies against the Obligors or the Collateral either before, concurrently with
or after pursuing or enforcing its rights and remedies hereunder. Any one or
more successive or concurrent actions or proceedings may be brought against each
Obligor under this Section either in the same action, if any, brought against
any one or more of the Obligors or in separate actions or proceedings, as often
as the Lender may deem expedient or advisable. Without limiting the foregoing,
it is specifically understood that any modification, limitation or discharge of
any of the liabilities or obligations of any one or more of the Obligors, any
other guarantor or any obligor under any of the Financing Documents, arising out
of, or by virtue of, any bankruptcy, arrangement, reorganization or similar
proceeding for relief of debtors under federal or state law initiated by or
against any one or more of the Obligors, in their respective capacities as
borrowers and guarantors under this Section, or under any of the Financing
Documents shall not modify, limit, lessen, reduce, impair, discharge, or
otherwise affect the liability of the U.S. Borrower or each Non-U.S. Obligor
under this Section in any manner whatsoever, and this Section shall remain and
continue in full force and effect. It is the intent and purpose of this Section
that each Obligor shall and does hereby waive all rights and benefits which
might accrue to any other guarantor by reason of any such proceeding, and the
Obligors agree that they shall be liable for the full amount of the obligations
and liabilities under this Section, regardless of, and irrespective to, any
modification, limitation or discharge of the liability of any one or more of the
Obligors, any other guarantor or any obligor under any of the Financing
Documents, that may result from any such proceedings.
Without limiting the foregoing, each Obligor, as guarantor under this
Section, hereby unconditionally, jointly and severally, irrevocably and
expressly waives:
(i) presentment and demand for payment of the Obligations and
protest of non-payment;
(ii) notice of acceptance of this Section and of presentment, demand
and protest thereof;
(iii) notice of any default hereunder or any of the other Financing
Documents and notice of all indulgences;
(iv) notice of any increase in the amount of any portion of or all
of the indebtedness guaranteed by this Section;
(v) demand for observance, performance or enforcement of any of the
terms or provisions of this Agreement or any of the other Financing
Documents;
51
(vi) all errors and omissions in connection with the Lender's
administration of all indebtedness guaranteed by this Section, except
errors and omissions resulting from acts of gross negligence or willful
misconduct;
(vii) any right or claim of right to cause a marshalling of the
assets of any one or more of the other Obligors;
(viii) any act or omission of the Lender which changes the scope of
the risk as guarantor hereunder; and
(ix) all other notices and demands otherwise required by law which
the Obligors may lawfully waive.
(d) Within ten (10) days following any request of the Lender so to do,
each Obligor will furnish the Lender and such other Persons as the Lender may
direct with a written certificate, duly acknowledged stating in detail whether
or not any credits, offsets or defenses exist with respect to this Section.
Section 2.9 Limitations on Joint and Several Liability for Obligations.
Notwithstanding anything herein or in any of the other Financing Documents
to the contrary, the obligations and liabilities of one or more of the Obligors
shall be limited as and to the extent provided in this Section, as follows:
(a) the Dutch Borrower and the other Non-U.S. Obligors, as
guarantors, shall be liable for payment of only the Dutch
Obligations; and
(b) the U.S. Borrower shall be liable for all of the Obligations,
including, without limitation, the Dutch Obligations.
ARTICLE III
THE COLLATERAL
Section 3.1 Debt and Obligations Secured.
Subject to the limitations set forth in Section 2.9 (Limitations on Joint
and Several Liability for Obligations), all property and Liens assigned, pledged
or otherwise granted under or in connection with this Agreement (including,
without limitation, those under Section 3.2 (Grant of Liens) below) or any of
the Financing Documents shall secure (a) the payment of all of the Obligations,
including, without limitation, any and all outstanding Dutch Obligations and
Letter of Credit Obligations and (b) the performance, compliance with and
observance by the Obligors of the provisions of this Agreement and all of the
other Financing Documents or otherwise under the Obligations. The Lender and the
Obligors agree that the granting clauses of this ARTICLE III are intended to
grant Liens on the assets of the U.S. Borrower only and not assets of the
Non-U.S. Obligors. The Dutch Security Documents and the Stock Pledge Agreements
are intended to grant Liens on the assets of the Non-U.S. Obligors to the
Lender. Any and all references to Collateral included elsewhere in this
Agreement (other than in Section 3.2 (Grant of Liens)) are
52
intended to include and govern the Collateral of all of the Obligors, whether
the Liens on such Collateral arise under the provisions of this Agreement or
under any of the other Security Documents (including the Dutch Security
Documents).
Section 3.2 Grant of Liens.
For the purpose of securing the obligations, the U.S. Borrower hereby
assigns, pledges and grants to the Lender and agrees that the Lender shall have
a perfected and continuing security interest in, and Lien on, (a) all of the
U.S. Borrower's Accounts, Inventory, Chattel Paper, Documents, Instruments,
Equipment, Securities, and General Intangibles, Purchase Agreement Rights,
whether now owned or existing or hereafter acquired or arising, (b) all
returned, rejected or repossessed goods, the sale or lease of which shall have
given or shall give rise to an Account or Chattel Paper, (c) all insurance
policies relating to the foregoing, (d) all books and records in whatever media
(paper, electronic or otherwise) recorded or stored, with respect to the
foregoing and all equipment and general intangibles necessary or beneficial to
retain, access and/or process the information contained in those books and
records, (e) all of the U.S. Borrower's other personal property of any kind or
nature whatsoever, and (f) all cash and non-cash proceeds and products of the
foregoing. The U.S. Borrower further agrees that the Lender shall have in
respect thereof all of the rights and remedies of a secured party under the
Uniform Commercial Code as well as those provided in this Agreement, under each
of the other Financing Documents and under applicable Laws. The Obligors hereby
agree to indemnify the Lender and hold the Lender harmless from any and all
claims, actions, suits, losses, damages, costs, expenses, fees, obligations and
liabilities that may be incurred by or imposed upon the Lender by virtue of the
assignment of and Lien on each of the Obligor's rights, title and interest in,
to, and under the Purchase Agreement and the Purchase Agreement Documents. The
Obligors agree that neither the assignment to the Lender nor any other provision
contained in this Agreement or any of the other Financing Documents shall impose
on the Lender any obligation or liability of any of the Obligors under the
Purchase Agreement and/or under any of the Purchase Agreement Documents.
Section 3.3 Collateral Lists.
On or prior to the Closing Date, each of the Obligors shall deliver to the
Lender a certified list (each a "Collateral List" and, collectively the
"Collateral List") which shall contain such information with respect to each
Obligor's business and real and personal property as the Lender may require and
shall be certified by a Responsible Officer of each Obligor all in the form
provided to the Obligors by the Lender. Without implying any limitation on any
other provision of this Agreement, each Obligor, as appropriate, shall furnish
to the Lender an update of the information contained in each respective
Collateral List at any time and from time to time as may be necessary to make
the information contained in such Collateral List complete and correct in all
material respects and at other times as may reasonably be requested by the
Lender. Such updates shall be deemed to be included in the definition of
"Collateral List."
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Section 3.4 Personal Property.
The Obligors acknowledge and agree that it is the intention of the parties
to this Agreement that the Lender shall have a first priority, perfected Lien
(or its Dutch equivalent), in form and substance satisfactory to the Lender and
its counsel, on all of each Obligor's personal property of any kind and nature
whatsoever, whether now owned or hereafter acquired, subject only to the
Permitted Liens, if any. In furtherance of the foregoing:
3.4.1 Securities, Chattel Paper, Promissory Notes, etc.
(a) On the Closing Date and without implying any limitation on the scope
of Section 3.2 (Grant of Liens), each Obligor shall deliver to the Lender all
originals of all of each Obligor's Letters of Credit, Securities, Chattel Paper,
Documents and Instruments and, if the Lender so requires, shall execute and
deliver and use reasonable efforts to cause the issuer of any letters of credit
or other Supporting Obligations to execute and deliver, a separate pledge,
assignment and security agreement in form and content acceptable to the Lender,
which pledge, assignment and security agreement shall assign, pledge and xxxxx x
Xxxx to the Lender on all of each Obligor's letters of credit, Securities,
Chattel Paper, Documents and Instruments, subject to the limitations set forth
in Section 2.9 (Limitations on Joint and Several Liability for Obligations) and
subject to the limitations on the pledge of the capital stock set forth in the
Stock Pledge Agreements.
(b) In the event that any of the Obligors shall acquire after the Closing
Date any Letters of Credit, Securities, Chattel Paper, Documents or Instruments,
each such Obligor shall promptly so notify the Lender and deliver the originals
of all of the foregoing to the Lender promptly and in any event within ten (10)
days of each acquisition.
(c) All Letters of Credit, Securities, Chattel Paper, Documents and
Instruments shall be delivered to the Lender endorsed and/or assigned as
required by the pledge, assignment and security agreement and/or as the Lender
may require and, if applicable, shall be accompanied by blank irrevocable and
unconditional stock or bond powers.
3.4.2 Patents, Copyrights and Other Property Requiring Additional Steps to
Perfect.
On the Closing Date and without implying any limitation on the scope of
Section 3.2 (Grant of Liens), the Obligors shall take all actions requested by
the Lender in order to perfect a first priority assignment of all United States
and Dutch Patents, Copyrights, Trademarks, customer lists or any other type or
kind of intellectual property acquired by any of the Obligors after the Closing
Date, subject to the limitations set forth in Section 2.9 (Limitations on Joint
and Several Liability for Obligations).
Section 3.5 Record Searches.
As of the Closing Date and thereafter at the time any Financing Document
is executed and delivered by the Obligors pursuant to this Section, the Lender
shall have received, in form and substance satisfactory to the Lender, such Lien
or record searches with respect to all of the Obligors and/or any other Person,
as appropriate, and the property covered by such Financing
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Document showing that the Lien of such Financing Document will be a perfected
first priority Lien on the property covered by such Financing Document subject
only to Permitted Liens or to such other matters as the Lender may approve.
Section 3.6 Costs.
Subject to the limitations set forth in Section 2.9 (Limitations on Joint
and Several Liability for Obligations), the Obligors agree to pay, as part of
the Enforcement Costs and to the fullest extent permitted by applicable Laws, on
demand all costs, fees and expenses incurred by the Lender in connection with
the taking, perfection, preservation, protection and/or release of a Lien on the
Collateral, including, without limitation:
(a) fees and expenses of counsel incurred by the Lender in preparing,
reviewing, negotiating and finalizing the Financing Documents in connection with
their execution (including, without limitation, attorneys' fees incurred in
connection with preparing, reviewing, negotiating, and finalizing any amendments
and supplements thereto);
(b) all filing and/or recording taxes or fees;
(c) all costs of Lien and record searches;
(d) attorneys' fees in connection with all legal opinions required;
(e) appraisal and/or survey costs; and
(f) all related closing or Enforcement Costs, fees and expenses.
Section 3.7 Release.
Upon the payment and performance of all Obligations of the Obligors and
all obligations and liabilities of any other Person under this Agreement and all
other Financing Documents, the termination and/or expiration of all of the
Commitments, all Letters of Credit and all Outstanding Letter of Credit
Obligations, upon the Obligors' request and at the Obligor' sole cost and
expense, the Lender shall release and/or terminate any Financing Document but
only if and provided that there is no commitment or obligation (whether or not
conditional) of the Lender to re-advance amounts which would be secured thereby
and/or no commitment or obligation of the Lender to issue any Letter of Credit
or return or restore any payment of any Current Letter of Credit Obligations.
Section 3.8 Inconsistent Provisions.
In the event that the provisions of any Financing Document directly
conflict with any provision of this Agreement, the provisions of this Agreement
govern.
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Section 3.9 Ranking of Lien Priorities.
Notwithstanding anything herein or in any of the other Financing Documents
to the contrary, the Lender agrees that the Dutch Collateral shall secure only
the Dutch Obligations and shall not secure any of the other Obligations. The
Collateral, other than the Dutch Collateral, shall secure first payment and
performance of all Obligations under and relating to the U.S. Revolving Credit
Facility and the U.S. Term Loan and then shall secure payment and performance of
the Dutch Obligations.
Section 3.10 Authorization to File Financing Statements.
The security interest created by this Agreement shall be perfected by the
filing of financing statements which fully comply with the Uniform Commercial
Code-Secured Transactions, as adopted in the state of Delaware. For purposes of
the Uniform Commercial Code-Secured Transactions, the U.S. Borrower hereby
authorize the Lender to file all financing statements covering the Collateral in
any appropriate jurisdiction, and to amend any financing statements previously
filed to more consistently identify the Collateral pledged by the U.S, Borrower.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties.
The Obligors for themselves and for each other represent and warrant to
the Lender as follows:
4.1.1 Subsidiaries.
As of the Closing Date, Optelecom UK Limited and the Dutch Borrower are
the Wholly Owned Subsidiaries of the U.S. Borrower. Optelecom Europe Limited is
owned ninety-nine and eighty-nine one hundredths percent (99.89%) by the U.S.
Borrower and eleven one hundredths percent (.11%) by Optelecom Europe Limited.
As of the Closing Date, the Spanish Subsidiary is the Wholly Owned Subsidiary of
the Dutch Borrower. The Obligors have no Subsidiaries other than as disclosed in
this Section. At all times after the Closing Date, the Obligors have only those
Subsidiaries permitted by the terms of this Agreement.
4.1.2 Good Standing.
Each Obligor and its Subsidiaries, if any (a) is a corporation duly
organized, existing and in good standing under the laws of the jurisdiction of
its incorporation, (b) has the corporate power to own its property and to carry
on its business as now being conducted, and (c) is duly qualified to do business
and is in good standing in each jurisdiction in which the character of the
properties owned by it therein or in which the transaction of its business makes
such
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qualification necessary, except where such failure to qualify would not cause a
Material Adverse Effect.
4.1.3 Power and Authority.
Each Obligor has full power and authority to execute and deliver this
Agreement, and the other Financing Documents to which it is a party, to make the
borrowings under this Agreement, and to incur and perform the Obligations
whether under this Agreement, the other Financing Documents or otherwise, all of
which have been duly authorized by all proper and necessary corporate action. No
consent or approval of shareholders or any creditors of any Obligor, and no
consent, approval, filing or registration with or notice to any Governmental
Authority on the part of any Obligor, is required as a condition to the
execution, delivery, validity or enforceability of this Agreement, of the other
Financing Documents, or the performance by any Obligor of the Obligations,
except for consents, approvals, filings, registrations and notices that shall be
received, given or accomplished on or before the Closing Date and except for
filings necessary for perfection of Liens in favor of the Lender.
4.1.4 Binding Agreements.
This Agreement and the other Financing Documents executed and delivered by
the Obligors have been properly executed and delivered and constitute the valid
and legally binding obligations of the Obligors and are fully enforceable
against each of the Obligors in accordance with their respective terms, subject
to bankruptcy, insolvency, reorganization, moratorium and other laws of general
applications affecting the rights and remedies of creditors and secured parties,
and general principles of equity regardless of whether applied in a proceeding
in equity or at law.
4.1.5 No Conflicts.
Neither the execution, delivery and performance of the terms of this
Agreement or of any of the other Financing Documents executed and delivered by
any Obligor nor the consummation of the transactions contemplated by this
Agreement will conflict with, violate or be prevented by (a) any Obligor's
charter or bylaws or other organizational and operational documents, (b) any
existing mortgage, indenture, contract or agreement binding on any Obligor or
affecting its property, or (c) any Laws, except where such conflict would not
cause a Material Adverse Effect.
4.1.6 No Defaults, Violations.
(a) No Default or Event of Default has occurred and is continuing.
(b) None of the Obligors nor any of their Subsidiaries is in default under
or with respect to any obligation under any existing mortgage, indenture,
contract or agreement binding on it or affecting its property in any respect
which default would cause a Material Adverse Effect.
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4.1.7 Compliance with Laws.
Except as set forth in Schedule 4.1.7, to the knowledge of each Obligor,
neither such Obligor nor any of its Subsidiaries is in violation of any
applicable Laws (including, without limitation, any Laws relating to employment
practices, to environmental, occupational and health standards and controls, the
foreign assets control regulations of the United States Treasury Department or
order, writ, injunction, decree or demand of any court, arbitrator, or any
Governmental Authority affecting such Obligor; any Subsidiary or any of their
respective properties, the violation of which, considered in the aggregate,
would cause a Material Adverse Effect.
4.1.8 Margin Stock.
None of the proceeds of the Loans will be used, directly or indirectly, by
any Obligor for the purpose of purchasing or carrying, or for the purpose of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry, any "margin security" within the meaning of Regulation G (12 CFR Part
207), or "margin stock" within the meaning of Regulation U (12 CFR Part 221), of
the Board of Governors of the Federal Reserve System or for any other purpose
which might make the transactions contemplated in this Agreement a "purpose
credit" within the meaning of said Regulation G or Regulation U, or cause this
Agreement to violate any other regulation of the Board of Governors of the
Federal Reserve System or the Securities Exchange Act of 1934 or the Small
Business Investment Act of 1958, as amended, or any rules or regulations
promulgated under any of such statutes.
4.1.9 Investment Company Act; Margin Securities.
No Obligor is an investment company within the meaning of the Investment
Company Act of 1940, as amended, nor is it, directly or indirectly, controlled
by or acting on behalf of any Person which is an investment company within the
meaning of said Act. None of the Obligors is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of
purchasing or carrying "margin security" within the meaning of Regulation G (12
CFR Part 207), or "margin stock" within the meaning of Regulation U (12 CFR Part
221), of the Board of Governors of the Federal Reserve System.
4.1.10 Litigation.
Except as otherwise disclosed on Schedule 4.1.10 attached to and made a
part of this Agreement, there are no proceedings, actions or investigations
pending or, so far as any Obligor knows, threatened before or by any court,
arbitrator or any Governmental Authority which, in any one case or in the
aggregate, if determined adversely to the interests of any Obligor, would have a
Material Adverse Effect.
4.1.11 Financial Condition.
The financial statements of the U.S. Borrower and its Subsidiaries (other
than the Dutch Borrower) for the period ended December 31, 2004, are complete
and correct and fairly present the financial position of the U.S. Borrower and
its Subsidiaries (other than the Dutch Borrower) and the results of their
operations and transactions in their surplus accounts as of the date and for
58
the period referred to and have been prepared in accordance with GAAP applied on
a consistent basis throughout the period involved. Except as has been disclosed
on Schedule 4.1.11, there are no material liabilities, direct or indirect, fixed
or contingent, of the U.S. Borrower or its Subsidiaries (other than the Dutch
Borrower) as of the date hereof which are not reflected in such financial
statements or in the notes thereto. There has been no adverse change in any
material respect in the financial condition or operations of the U.S. Borrower
or its Subsidiaries(other than the Dutch Borrower) since the date of such
financial statements and to the Obligors' knowledge no such adverse change is
pending or threatened. To the Obligors' knowledge, no Obligor has guaranteed the
obligations of, or made any investment in or advances to, any Person, except as
disclosed in such financial statements. The representations and warranties
contained in this Section shall also cover financial statements of the Obligors
furnished from time to time to the to the Lender pursuant to Section 6.1.1
(Financial Statements) (subject to normal year-end adjustments in the case of
interim statements and the absence of footnotes in the case of interim
statements).
4.1.12 Proforma Financial Statements.
The Obligors have furnished to the Lender a Proforma consolidated balance
sheet (the "Proforma Balance Sheet") of the U.S. Borrower and its Subsidiaries
as of immediately after consummation of the Purchase Agreement Transaction
together with Proforma financial projections for the three (3) year period
subsequent to the Purchase Agreement Transaction (the "Proforma Financial
Projections"). A copy of the Proforma Balance Sheet and the Proforma Financial
Projections are attached hereto as EXHIBIT B-1 and EXHIBIT B-2, respectively. No
Obligor makes any representation or warranty regarding the accuracy of the
Proforma Balance Sheet and the Proforma Financial Projections or as to whether
they will be achieved, except that (a) the Proforma Balance Sheet and the
Proforma Financial Projections were (i) prepared in good faith and in a
reasonable manner, and (ii) based on assumptions that the Obligors on the date
hereof still believe to be reasonable and conservative, and (b) no Obligor has
any information as of the date of this Agreement that when taken into account
would make the Proforma Balance Sheet and the Proforma Financial Projections
materially inaccurate.
4.1.13 Full Disclosure.
The financial statements referred to in Section 4.1.11 (Financial
Condition), the representations and warranties of the Obligors in the Financing
Documents (including, without limitation, this Agreement), and the statements,
reports or certificates furnished by any Obligor in connection with the
Financing Documents (a) do not contain any untrue statement of a material fact
and (b) when taken in their entirety, do not omit any material fact necessary to
make the statements contained therein not misleading. As of the Closing Date,
there is no fact known to any Obligor which such Obligor has not disclosed to
the Lender in writing prior to the date of this Agreement with respect to the
transactions contemplated by the Financing Documents which would have a Material
Adverse Effect.
4.1.14 Indebtedness for Borrowed Money.
Except for the Obligations and as set forth in Schedule 4.1.14, and as
otherwise expressly permitted by this Agreement, none of the Obligors has
Indebtedness for Borrowed Money. The Lender has received photocopies of all
promissory notes evidencing any Indebtedness for
59
Borrowed Money set forth in Schedule 4.1.14, together with any and all
subordination agreements, other agreements, documents, or instruments securing,
evidencing, guarantying or otherwise executed and delivered in connection
therewith.
4.1.15 Taxes.
Except as disclosed on Schedule 4.1.15, each of the Obligors and their
Subsidiaries have filed all returns, reports and forms for Taxes which, to the
knowledge of the Obligors, are required to be filed, and has paid all Taxes as
shown on such returns or on any assessment received by it, to the extent that
such Taxes have become due, unless and to the extent only that such Taxes,
assessments and governmental charges are currently contested in good faith and
by appropriate proceedings by a Obligor, such Taxes are not the subject of any
Liens other than Permitted Liens, and adequate reserves therefor have been
established as required under GAAP. All tax liabilities of the Obligors were as
of the date of audited financial statements referred to in Section 4.1.11
(Financial Condition), and are now, adequately provided for on the books of the
Obligors and their Subsidiaries, as appropriate.
4.1.16 ERISA.
With respect to any "pension plan" as defined in Section 3(2) of ERISA,
which plan is now or previously has been maintained or contributed to by any one
or more of the Obligors and/or to any Obligor's knowledge by any Commonly
Controlled Entity: (a) no "accumulated funding deficiency" as defined in Code
Section 412 or ERISA Section 302 has occurred, whether or not that accumulated
funding deficiency has been waived; (b) no Reportable Event has occurred which
would have a Material Adverse Effect; (c) no termination of any plan subject to
Title IV of ERISA has occurred which would have a Material Adverse Effect; (d)
no Obligor, nor to any Obligor's knowledge any commonly controlled entity (as
defined under ERISA), has incurred a "complete withdrawal" within the meaning of
ERISA Section 4203 from any Multi-employer Plan; (e) no Obligor, nor to any
Obligor's knowledge any commonly controlled entity, has incurred a "partial
withdrawal" within the meaning of ERISA Section 4205 with respect to any
Multi-employer Plan; and (f) no Multi-employer Plan to which any Obligor or to
any Obligor's knowledge any Commonly Controlled Entity has an obligation to
contribute is in "reorganization" within the meaning of ERISA Section 4241 nor
has notice been received by any Obligor or any commonly controlled entity that
such a Multi-employer Plan will be placed in "reorganization".
4.1.17 Title to Properties.
Except for leased property, each of the Obligors has good title to all of
its respective properties, including, without limitation, the Collateral and, as
of the date of the balance sheets, the properties and assets reflected in the
balance sheets described in Section 4.1.11 (Financial Condition) subject to the
Permitted Liens. Except for leased property, each Obligor has legal, enforceable
and uncontested rights to use freely such property and assets subject to the
Permitted Liens.
4.1.18 Patents, Trademarks, Etc.
Each of the Obligors owns, possesses, or has the right to use all
necessary Patents, licenses, Trademarks, Copyrights, permits and franchises to
own its properties and to conduct its
60
business as now conducted, without known conflict with the rights of any other
Person. Any and all obligations to pay royalties or other charges with respect
to such properties and assets are properly reflected on the financial statements
furnished from time to time and described in Section 4.1.11 (Financial
Condition).
4.1.19 Employee Relations.
Except as disclosed on Schedule 4.1.19 attached hereto and made a part
hereof, as of the Closing Date, (a) no Obligor nor any of the Obligor's
employees is subject to any collective bargaining agreement, (b) no petition for
certification or union election is pending with respect to the employees of any
Obligor and no union or collective bargaining unit has sought such certification
or recognition with respect to the employees of any Obligor, (c) there are no
strikes, slowdowns, work stoppages or controversies pending or, to the best
knowledge of the Obligors after due inquiry, threatened between any Obligor and
its employees, and (d) except as set forth on Schedule 4.1.19, no Obligor
thereof is subject to an employment contract, severance agreement, commission
contract, consulting agreement or bonus agreement which provides for anything
other than reasonable compensation for services rendered. Hours worked and
payments made to the employees of any one or more of the Obligors have not been
in violation of the Fair Labor Standards Act, if applicable, in any material
respect or, to the extent the violation of which would result in a Material
Adverse Effect, any other applicable Law dealing with such matters. All material
payments due from any one or more of the Obligors or for which any claim may be
made against any Obligor, on account of wages and employee and retiree health
and welfare insurance and other benefits have been paid or accrued as a
liability on its books in accordance with applicable Laws. The consummation of
the transactions contemplated by this Agreement or any of the other Financing
Documents will not give rise to a right of termination or right of renegotiation
on the part of any union under any collective bargaining agreement to which any
Obligor is a party or by which it is bound.
4.1.20 Presence of Hazardous Materials or Hazardous Materials Contamination.
Except as disclosed to the Lender in writing prior to the Closing Date or
as disclosed in Schedule 4.1.20, to the best of each Obligor's knowledge, (a) no
Hazardous Materials are located on any real property owned, controlled or
operated by any Obligor or for which any Obligor is, or is claimed to be,
responsible, except for reasonable quantities of necessary supplies for use by a
Obligor in the ordinary course of its business and stored, used, managed after
use and disposed of in compliance in all material respects with applicable Laws
or in an amount and manner which would not have a Material Adverse Effect; and
(b) no property owned, controlled or operated by any Obligor or for which any
Obligor has, or is claimed to have, responsibility, to the knowledge of the
Obligors, has ever been used as a manufacturing or dump site for Hazardous
Materials nor is affected by Hazardous Materials Contamination at any other
property in either case, in any manner which would cause a Material Adverse
Effect.
4.1.21 Perfection and Priority of Collateral.
Subject to the limitations set forth in Section 2.9 (Limitations on Joint
and Several Liability for Obligations), the Lender has, or upon execution and
recording of this Agreement and the Security Documents will have, and will
continue to have as security for the Obligations, a valid and perfected Lien (or
its Dutch equivalent) on and security interest in all Collateral, free
61
of all other Liens, claims and rights of third parties whatsoever except
Permitted Liens, including, without limitation, those described on Schedule
4.1.21.
4.1.22 Places of Business and Location of Collateral.
The information contained in each Collateral List is complete and correct
except to the extent that such information is amended or supplemented by the
applicable Obligor. Each Collateral List completely and accurately identify the
address of (a) the place of incorporation and the chief executive office of each
Obligor, (b) any and each other place of business of each Obligor, (c) the
location of all books and records pertaining to the Collateral, (d)
organizational identification numbers, and (e) each location, other than the
foregoing, where any of the Collateral is located. The U.S. Borrower is only
incorporated in the State of Delaware.
4.1.23 Business Names and Addresses.
Except as disclosed in Schedule 4.1.23, in the twelve (12) years preceding
the date hereof, no Obligor has changed its name, identity or corporate
structure, has conducted business under any name other than its current name,
and has not conducted its business in any jurisdiction other than those
disclosed within the Collateral Lists.
4.1.24 Equipment.
All Equipment of each Obligor is personalty and is not and will not be
affixed to real estate in such manner as to become part of such real estate. No
equipment is held by any Obligor on a sale on approval basis.
4.1.25 Inventory.
Except as disclosed in Schedule 4.1.25, as of the Closing Date and except
to the extent from time to time disclosed in U.S. Borrowing Base Reports and
Dutch Borrowing Base Reports provided to the Lender, the Inventory of the
Obligors is (a) of good and merchantable quality, free from defects, (b) not
stored with a bailee, warehouseman, carrier, or similar party, (c) except as
permitted by Section 6.2.8 (Liens), not on consignment, sale on approval, or
sale or return, and (d) located at the places of business set forth on the
Collateral Lists. No goods offered for sale by any Obligor are consigned to or
held on sale or return terms by that Obligor.
4.1.26 Accounts.
Except as disclosed in Schedule 4.1.26 or as disclosed in the U.S.
Borrowing Base Report or Dutch Borrowing Base Report, with respect to all
Accounts and to the best of the Obligors' knowledge (a) they are genuine, and in
all respects what they purport to be, and are not evidenced by a judgment, an
Instrument, or Chattel Paper (unless such judgment has been assigned and such
Instrument or Chattel Paper has been endorsed and delivered to the Lender; (b)
they represent bona fide transactions completed in accordance with the terms and
provisions contained in the invoices, purchase orders and other contracts
relating thereto, and the underlying transaction therefor is in accordance with
all applicable Laws; (c) the amounts shown on the respective Obligor's books and
records, with respect thereto are actually and absolutely owing to that Obligor
and are not contingent or subject to reduction for any reason other than regular
62
discounts, credits or adjustments allowed by that Obligor in the ordinary course
of its business; (d) no payments have been or shall be made thereon except
payments turned over to the Lender by the Obligors; (e) all Account Debtors
thereon have the capacity to contract; and (f) the goods sold, leased or
transferred or the services furnished giving rise thereto are not subject to any
Liens except the security interest granted to the Lender by this Agreement
and/or any of the Security Documents, and Permitted Liens.
4.1.27 Compliance with Eligibility Standards.
Except as disclosed in Schedule 4.1.27, to the best of the Obligors'
knowledge in the exercise of diligence, each Account and all Inventory included
in the calculation of the Borrowing Base or the Dutch Borrowing Base does, as of
the time of the most recent Borrowing Base Report and Dutch Borrowing Base
Report, as appropriate, meet and comply with all of the standards for Eligible
U.S. Receivables, Eligible Inventory, Insured Eligible Spanish Receivables,
Insured Eligible U.K. Receivables, Eligible Dutch Receivables and Insured
Eligible Dutch Receivables, as appropriate. With respect to those Accounts which
the Lender has deemed Eligible U.S. Receivables, Insured Eligible Spanish
Receivables, Insured Eligible U.K. Receivables, Eligible Dutch Receivables or
Insured Eligible Dutch Receivables (a) there are no facts, events or occurrences
known to any Obligor which in any way impair the validity, collectibility or
enforce ability thereof or tend to reduce the amount payable thereunder; and (b)
there are no proceedings or actions known to any Obligor which are threatened or
pending against any Account Debtor which might result in any material adverse
change in the U.S. Borrowing Base or in the Dutch Borrowing Base.
4.1.28 Stock.
No Obligor has issued any option or similar type of beneficial ownership
interest, warrant, convertible or non-convertible bonds or any other right which
may entitle the holder thereof to any shares of such Obligor.
4.1.29 Purchase Agreement Transaction.
The Lender has received true and correct photocopies of the Purchase
Agreement and each of the other Purchase Agreement Documents, executed,
delivered and/or furnished on or before the Closing Date in connection with the
Purchase Agreement Transaction. Neither the Purchase Agreement nor any of the
other Purchase Agreement Documents have been modified, changed, supplemented,
canceled, amended or otherwise altered or affected, except as otherwise
disclosed to the Agent in writing on or before the Closing Date. The Purchase
Agreement Transaction has been effected, closed and consummated pursuant to, and
in accordance with, the terms and conditions of the Purchase Agreement and with
all applicable Laws.
4.1.30 Centre of Main Interest.
The Dutch Borrower has its centre of main interest, within the meaning of
Council Regulation (EC) No. 1346/2000 of 29 May 2000 on Insolvency Procedures,
in the Netherlands and that it has not been subjected to any one or more of the
insolvency and winding-up proceedings listed in Annex A or Annex B to the
Regulation in any EU Member State other than in the Netherlands.
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Section 4.2 Survival; Updates of Representations and Warranties.
All representations and warranties contained in or made under or in
connection with this Agreement and the other Financing Documents shall survive
the Closing Date, the making of any advance under the Loans, the issuance of any
Letter of Credit and extension of credit made hereunder, and the incurring of
any other Obligations and shall be deemed to have been made at the time of each
request for, and again at the time the making of, each advance under the Loans
and/or the issuance of each Letter of Credit, except that the representations
and warranties which relate to financial statements which are referred to in
Section 4.1.11 (Financial Condition), shall also be deemed to cover financial
statements furnished from time to time to the Lender pursuant to Section 6.1.1
(Financial Statements).
ARTICLE V
CONDITIONS PRECEDENT
Section 5.1 Conditions to the Initial Advance.
The making of the initial advance under the Loans are subject to the
fulfillment on or before the Closing Date of the following conditions precedent
in a manner satisfactory in form and substance to the Lender:
5.1.1 Organizational Documents - Obligors.
The Lender shall have received for each Obligor:
(a) for the U.S. Borrower only, a certificate of good standing certified
by the Secretary of State, or other appropriate Governmental Authority, of the
State of Delaware;
(b) for the U.S. Borrower only, a certificate of qualification to do
business for the U.S. Borrower certified by the Secretary of State or other
Governmental Authority of each state in which the U. S. Borrower's business
requires such qualification, except for those states where the failure to so
qualify would not cause a Material Adverse Effect;
(c) a certificate dated as of the Closing Date by the Secretary, Managing
Director or Manager (as applicable) of each Obligor covering:
(i) true and complete copies of such Obligor's corporate charter,
bylaws, other organizational and operational documents, and all amendments
thereto;
(ii) true and complete copies of the resolutions of its Board of
Directors and, in the case of the Non-U.S. Obligors, their shareholders,
authorizing as appropriate (A) the execution, delivery and performance of
the Financing Documents and the Purchase Agreement Documents, (B) the
borrowings hereunder, (C) the granting of the Liens contemplated by this
Agreement and the Financing Documents to which such Obligor is a party,
and (D) the Purchase Agreement Transaction;
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(iii) the incumbency, authority and signatures of the officers of
such Obligor authorized to sign this Agreement and the other Financing
Documents to which such Obligor is a party;
(iv) the identity of such Obligor's current directors or managers,
as the case may be, common stockholders and other equity holders for each
Obligor other than the U.S. Borrower whose shares are publicly traded, as
well as their respective percentage ownership interests; and
(v) in the case of the Dutch Borrower, (a) the corporate purpose of
the transactions described in the Financing Documents and the Purchase
Agreement Documents, and (b) the use of proceeds of the Credit Facilities
in compliance with Dutch Financial Assistance Law.
5.1.2 Approval of Dutch Borrower's Works Council.
The Lender shall have received evidence of the approval by the Dutch
Borrower's Works Council of the transactions described in the Financing
Documents and the Purchase Agreement Documents or evidence that such approval is
not required.
5.1.3 Opinions of Obligors' Counsel in U.S., U.K. and The Netherlands.
The Lender shall have received the favorable opinions of U.S., U.K. and
Dutch counsel for the Obligors addressed to the Lender in form satisfactory to
the Lender.
5.1.4 Consents, Licenses, Approvals, Etc.
The Lender shall have received copies of all consents, licenses and
approvals, required in connection with the execution, delivery, performance,
validity and enforceability of the Financing Documents and the Purchase
Agreement Documents and such consents, licenses and approvals shall be in full
force and effect.
5.1.5 Financing Documents and Collateral.
Each Obligor shall have executed and delivered the Financing Documents to
be executed by it, and shall have delivered original Chattel Paper, Instruments,
Securities, and related Collateral and all opinions, and other documents
contemplated by ARTICLE III (The Collateral).
5.1.6 Other Financing Documents.
In addition to the Financing Documents to be delivered by the Obligors,
the Lender shall have received the Financing Documents duly executed and
delivered by Persons other than the Obligors, including (without limitation) an
assignment to the Lender of all existing receivables insurance policies
acknowledged by the insurer.
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5.1.7 Other Documents, Etc.
The Lender shall have received such other certificates, opinions,
documents and instruments confirmatory of or otherwise relating to the
transactions contemplated hereby as may have been reasonably requested by the
Lender.
5.1.8 Payment of Fees and Reimbursements.
The Lender shall have received payment of any Fees due on or before the
Closing Date, and the lender shall have received reimbursement for all
out-of-pocket expenses related to the closing of the Credit Facilities,
including, without limitation, reasonable attorneys' fees.
5.1.9 Collateral Lists.
Each of the Obligors shall have delivered the Collateral Lists required
under the provisions of Section 3.3 (Collateral Lists) duly executed by a
Responsible Officer of each such Obligor.
5.1.10 Recordings and Filings.
Each Obligor shall have: (a) executed and delivered all Financing
Documents in form and in sufficient number for filing, registration, and
recording in each office in each jurisdiction in which such filings,
registrations and recordations are required, and (b) delivered such evidence as
the Lender may deem satisfactory that all necessary filing fees and all
recording and other similar fees, and all Taxes and other expenses related to
such filings, registrations and recordings will be or have been paid in full.
5.1.11 Receivables Insurance Policy.
The Obligors have provided to the Lender a copy of all existing
receivables insurance policies.
5.1.12 Evidence of Insurance.
The Lender shall have received evidence of insurance coverage of the
Obligors satisfying the requirements of Section 6.1.8 (Insurance) and Section
6.1.20 (Insurance With Respect to Equipment and Inventory).
5.1.13 Landlord's and Mortgagee's Waivers.
The Lender shall have received a Landlord's and Mortgagee's waiver from
each Landlord and Mortgagee of each and every business premise leased by the
U.S. Obligor or the Dutch Borrower, if any, and on which any of the Collateral
is or may hereafter be located, which waivers must be reasonably acceptable to
the Lender and its counsel in their sole and absolute discretion.
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5.1.14 Bailee Acknowledgements.
The Lender shall have received an agreement acknowledging the Liens of the
Lender from each bailee, warehouseman, consignee or similar third party, if any,
which has possession of any of the Collateral, which agreements must be
reasonably acceptable to the Lender and its counsel in their sole and absolute
discretion.
5.1.15 Field Examination.
The Lender shall have completed a field examination and audit of the U.S.
Borrower's and the Dutch Borrower's business, operations and income, the results
of which field examination and audit shall be in all respects acceptable to the
Lender in its sole and absolute discretion and shall include reference
discussions with key customers and vendors.
5.1.16 Equipment Appraisal.
The Lender shall have received an appraisal of the Equipment owned by the
U.S. Borrower in form and substance satisfactory to the Lender.
5.1.17 Proforma Balance Sheet and Projections.
The Lender shall have received and approved the Obligors' Proforma Balance
Sheet and Proforma Financial Projections, which Proforma Balance Sheet and
Proforma Financial Projections must be in form and content acceptable to the
Lender in its sole and absolute discretion.
5.1.18 Subordinated Obligations Documents.
The Lender shall have received and approved copies of the fully executed
Subordinated Note and other Subordinated Obligations Documents, all of which
must be in form and content acceptable to the Lender.
5.1.19 Subordinated Obligations.
The Lender shall have received a certificate signed by a Responsible
Officer of the U.S. Borrower, certifying to the Lender that the U.S. Borrower
has executed and delivered the Subordinated Note to the Seller in payment of a
portion of the purchase price under the Purchase Agreement Documents, thereby
incurring the Subordinated Obligations.
5.1.20 Purchase Agreement Transaction.
The Purchase Agreement Transaction shall have been completed and closed
prior to or simultaneously herewith upon terms and conditions satisfactory to
the Lender, in accordance with the Purchase Agreement and applicable Laws.
The Lender shall have received photocopies of all Purchase Agreement
Documents executed, delivered and/or furnished in connection with the Purchase
Agreement Transaction, together with a certificate signed by a Responsible
Officer of the U.S. Borrower certifying (a)
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that the Purchase Agreement and the other Purchase Agreement Documents furnished
to the Lender are true, correct, in full force and effect and the provisions
thereof have not been in any way modified, amended or waived, (b) the Purchase
Agreement Transaction has been closed and completed in accordance with the
Purchase Agreement and the other Purchase Agreement Documents furnished to the
Lender and in accordance with all applicable Laws, including, any and all
applicable antitrust and labor Laws, (c) the U.S. Borrower has obtained any
consents, licenses and approvals necessary to permit it to own the stock of the
Dutch Borrower.
With respect to the obligations and liabilities of the Seller assumed by
the Obligors under, and in connection with, the Purchase Agreement, the Lender
shall have received from the Obligors a list setting forth the name of each
Person to whom such obligations and liabilities are owed, the amount owed to
such Person, and the due date or maturity date of each such amount.
In addition, the Lender shall have received all opinions of counsel for
the Seller and the Obligors required under or in connection with the Purchase
Agreement, the other Purchase Agreement Documents and the Purchase Agreement
Transaction, on which opinions the Lender must be authorized to rely.
Section 5.2 Conditions to all Extensions of Credit.
The making of all advances under the Loans and the issuance of each Letter
of Credit is subject to the fulfillment of the following conditions precedent in
a manner satisfactory in form and substance to the Lender.
5.2.1 Borrowing Base.
The U.S. Borrower and the Dutch Borrower shall have furnished all U.S.
Borrowing Base Reports and Dutch Borrowing Base Reports required by Section
2.1.4 (U.S. Borrowing Base Report) and Dutch Borrowing Base Reports required by
Section 2.3.4 (Dutch Borrowing Base Report), there shall exist no U.S. Borrowing
Base Deficiency or Dutch Borrowing Base Deficiency, and as evidence thereof, the
Obligors shall have furnished to the Lender such reports, schedules,
certificates, records and other papers as may be requested by the Lender.
5.2.2 Default.
There shall exist no Event of Default (including, without limitation, an
Event of Default under Section 7.1.14 (Material Adverse Effect)) or Default
hereunder, and none shall arise immediately before and immediately after the
making of the advance.
5.2.3 Representations and Warranties.
The representations and warranties of the Obligors contained among the
provisions of each of this Agreement shall be true in all material respects and
with the same effect as though such representations and warranties had been made
at the time of the making of, and of the request for, each advance under the
Loans and the issuance of each Letter of Credit, except that the representations
and warranties which relate to financial statements which are referred to in
Section 4.1.11 (Financial Condition), shall also be deemed to cover financial
statements
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furnished from time to time to the Lender pursuant to Section 6.1.1 (Financial
Statements) and except to the extent such representations were made only as of a
specific date.
5.2.4 Legal Matters.
All legal documents incident to each advance under the Loans and each
issuance of the Letters of Credit shall be reasonably satisfactory to counsel
for the Lender.
ARTICLE VI
COVENANTS OF THE OBLIGORS
Section 6.1 Affirmative Covenants.
So long as any of the Obligations (or any the Commitments therefor) shall
be outstanding hereunder, the Obligors agree jointly and severally with the
Lender as follows (except with the prior written consent of the Lender):
6.1.1 Financial Statements.
(a) Annual Statements. The Obligor shall furnish to the Lender as soon as
it is filed with the U.S. Securities and Exchange Commission, a copy of the
annual 10-K Report of the U.S. Borrower and its Subsidiaries.
(b) Quarterly Statements and Quarterly Compliance Certificates. The
Obligors shall furnish to the Lender (i) as soon as available, but in no event
more than forty-five (45) days after the close of each fiscal quarter, balance
sheets and income statements of the Dutch Borrower and the consolidated and
consolidating balance sheet and income statements of the U.S. Borrower; (ii) as
soon as it is filed with the U.S. Securities and Exchange Commission, a copy of
the quarterly 10-Q report of the U.S. Borrower and its Subsidiaries and (iii)
within thirty (30) days of the filing of each 10-Q Report, a Compliance
Certificate, in substantially the form attached to this Agreement as EXHIBIT C,
containing a detailed computation of each financial covenant in this Agreement
and a certification that no change has occurred to the information contained in
the Collateral Lists (except as set forth on any schedule attached to the
certification), all as prepared and certified by a Responsible Officer of the
U.S. Borrower and accompanied by a certificate of that officer stating whether
any event has occurred which constitutes a Default or an Event of Default
hereunder, and, if so, stating the facts with respect thereto.
(c) Monthly reports. The U.S. Borrower and the Dutch Borrower shall
furnish to the Lender on an individual basis, within twenty (20) days after the
end of each month or more frequently if requested by the Lender (i) a U.S.
Borrowing Base Report or a Dutch Borrowing Base Report, as applicable, and (ii)
a report containing the following information:
(1) a detailed aging schedule of all Receivables by Account
Debtor, in such detail, and accompanied by such supporting
information required to establish the eligibility of Receivables
under the U.S. Borrowing Base or the Dutch Borrowing Base (as
applicable), as the Lender may from time to time reasonably request;
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(2) for the U.S. Borrower only, a detailed report of Inventory
containing such supporting information required to establish the
eligibility of Inventory under the U.S. Borrowing Base; and
(3) such other information as the Lender may reasonably
request.
(d) Additional Reports and Information. The Obligors shall furnish to the
Lender, such additional information, reports or statements as the Lender may
from time to time reasonably request.
6.1.2 Reports to SEC and to Stockholders.
The U.S. Borrower shall furnish to the Lender, promptly upon the filing or
making thereof, at least one (l) copy of all financial statements, reports,
notices and proxy statements sent by the U.S. Borrower to its stockholders, and
of all regular and other reports filed by any Borrower with any securities
exchange or with the Securities and Exchange Commission.
6.1.3 Recordkeeping, Rights of Inspection, Field Examination, Etc.
(a) Each of the Obligors shall, and shall cause each of its Subsidiaries
to, maintain (i) a system of accounting in accordance with GAAP and (ii) proper
books of record and account in which entries full, true and correct in all
material respects are made of all dealings and transactions in relation to its
properties, business and activities.
(b) Each of the Obligors shall, and shall cause each of its Subsidiaries
to, permit authorized representatives of the Lender to visit and inspect the
properties of each of the Obligors, to review, audit, check and inspect the
Collateral at any time with or without notice, to review, audit, check and
inspect each of the Obligor's other books of record at any time with or without
notice and to make abstracts and photocopies thereof, and to discuss the
affairs, finances and accounts of each Obligor and its Subsidiaries, with the
officers, directors, employees and other representatives of such Obligor and its
Subsidiaries and their respective accountants, all at such times during normal
business hours and other times and as often as the Lender may reasonably
request.
(c) Each of the Obligors hereby irrevocably authorizes and directs all
accountants and auditors employed by any of the Obligors at any time prior to
the repayment in full of the Obligations to discuss freely with the Lender any
information they may have concerning the financial status and business
operations of any or all of the Obligor.
(d) Any and all out-of-pocket costs and expenses reasonably incurred by,
or on behalf of, the Lender in connection with the conduct of any of the
foregoing shall be part of the Enforcement Costs and shall be payable to the
Lender upon demand. The Obligors acknowledge and agree that such expenses may
include, but shall not be limited to, any and all out-of-pocket reasonable costs
and expenses (no airfare other than "coach") of the Lender's employees and
Lender in, and when, traveling to any of the Obligor's facilities.
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6.1.4 Corporate Existence.
Each of the Obligors shall maintain, its corporate existence in good
standing in the jurisdiction in which it is incorporated and in each other
jurisdiction where it is required to register or qualify to do business if the
failure to do so in such other jurisdiction would have a Material Adverse
Effect.
6.1.5 Compliance with Laws.
Each of the Obligors shall comply with all applicable Laws, including,
without limitation, the Patriot Act and the foreign assets control regulations
of the United States Treasury Department, and observe the valid requirements of
Governmental Authorities, the noncompliance with or the nonobservance of which
would have a Material Adverse Effect.
6.1.6 Preservation of Properties.
Each of the Obligors will, and will cause each of its Subsidiaries to, at
all times (a) maintain, preserve, protect and keep its properties which are
material in value or are necessary for the conduct of its business, whether
owned or leased, in good operating condition, working order and repair (ordinary
wear and tear excepted), and from time to time will make all proper repairs,
maintenance, replacements, additions and improvements thereto needed to maintain
such properties in good operating condition, working order and repair, and (b)
do or cause to be done all things necessary to preserve and to keep in full
force and effect its material franchises, leases of real and personal property,
trade names, patents, trademarks and permits which are necessary for the orderly
continuance of its business.
6.1.7 Line of Business.
Each of the Obligors will continue to engage substantially only in the
business of the manufacture, production, marketing, distribution and sale of
advanced communication platforms that transport data, video, and audio over
networks.
6.1.8 Insurance.
Each of the Obligors will, at all times, maintain with B+ or better by
A.M. Best Company insurance companies such insurance as is required by
applicable Laws and such other insurance, in such amounts, of such types and
against such risks, hazards, liabilities, casualties and contingencies as are
usually insured against in the same geographic areas by business entities
engaged in the same or similar business. In the event an insurance company's
rating at any time falls below B+ or better by A.M. Best Company, the Obligors
will replace the insurance company at the next policy renewal date or, if the
Lender determines that the insurance company is financially unsound, the
Obligors will use their best and continuous efforts to replace the insurance
company at the earliest possible date. Without limiting the generality of the
foregoing, each Obligor will keep adequately insured all of its property against
loss or damage resulting from fire or other risks insured against by extended
coverage and maintain public liability insurance against claims for personal
injury, death or property damage occurring upon, in or about any properties
occupied or controlled by it, or arising in any manner out of the businesses
carried on by it, all in such amounts not less than the Lender shall reasonably
determine from
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time to time based on the foregoing standard. Each of the Obligors has delivered
to the Lender (and will deliver thereafter on each date there is a material
change in the insurance coverage) a certificate of a Responsible Officer of that
Obligor containing a detailed list of the insurance then in effect and stating
the names of the insurance companies, the types, the amounts and rates of the
insurance, dates of the expiration thereof and the properties and risks covered
thereby. Within thirty (30) days after notice in writing from the Lender, the
Obligors shall obtain such additional insurance as the Lender may reasonably
request.
6.1.9 Taxes.
Except to the extent that the validity or amount thereof is being
contested in good faith and by appropriate proceedings, each of the Obligors
will pay and discharge all Taxes prior to the date when any interest or penalty
would accrue for the nonpayment thereof. Each of the Obligors shall furnish to
the Lender at such times as the Lender may require proof satisfactory to the
Lender of the making of payments or deposits required by applicable Laws
including, without limitation, payments or deposits with respect to amounts
withheld by any of the Obligors from wages and salaries of employees and amounts
contributed by any of the Obligors on account of federal and other income or
wage taxes and amounts due under the Federal Insurance Contributions Act, as
amended, or under any similar laws of any jurisdiction in which any Non-U.S.
Obligor is operating and existing.
6.1.10 ERISA.
The U.S. Borrower will, and will cause each of its Affiliates to, comply
in all material respects with the funding requirements of ERISA with respect to
employee pension benefit plans for its respective employees. The U.S. Borrower
will not permit with respect to any employee benefit plan or plans covered by
Title IV of ERISA (a) any prohibited transaction or transactions under ERISA or
the Internal Revenue Code, which would result in a Material Adverse Effect, or
(b) any Reportable Event if, upon termination of the plan or plans with respect
to which one or more such Reportable Events shall have occurred, there is or
would be any material liability of the U.S. Borrower or any of its Affiliates to
the PBGC which would result in a Material Adverse Effect. Upon the Lender's
request, the U.S. Borrower will deliver to the Lender a copy of the most recent
actuarial report, financial statements and annual report completed with respect
to any "defined benefit plan", as defined in ERISA. The Non-U.S. Obligors agree
to comply in all material respects with any similar Laws of any jurisdiction in
which they are operating and existing.
6.1.11 Notification of Events of Default and Adverse Developments.
Each of the Obligors shall promptly notify the Lender upon obtaining
knowledge of the occurrence of:
(a) any Event of Default;
(b) any Default;
(c) any litigation instituted or threatened against any of the Obligors or
any of their Subsidiaries and of the entry of any judgment or Lien (other than
any Permitted Liens) against any of the assets or properties of any of the
Obligors where the claims against any Obligor
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exceed One Hundred Thousand Dollars ($100,000) or the Euro Currency Equivalent
thereof and are not covered by insurance;
(d) any event, development or circumstance whereby the financial
statements furnished hereunder fail in any material respect to present fairly,
in accordance with GAAP, the financial condition and operational results of any
of the Obligors or any of their respective Subsidiaries;
(e) any judicial, administrative or arbitral proceeding pending against
any of the Obligors or any of their respective Subsidiaries and any judicial or
administrative proceeding known by any of the Obligors to be threatened against
any Obligor which, if adversely decided, would have a Material Adverse Effect;
(f) the receipt by any of the Obligors of any notice, claim or demand from
any Governmental Authority which alleges that any Obligor is in violation of any
of the material terms of, or has failed to comply in any material respect with
any applicable Laws regulating its operation and business, including, but not
limited to, the Occupational Safety and Health Act and the Environmental
Protection Act or similar laws of any jurisdiction in which any Non-U.S. Obligor
is operating and existing;
(g) any other development in the business or affairs of any of the
Obligors or any of their Subsidiaries which has had, or which the senior
management of any of the Obligors believes will have, a Material Adverse Effect;
and
in each case describing in detail reasonably satisfactory to the
Lender the nature thereof and the action the Obligors propose to take with
respect thereto.
6.1.12 Hazardous Materials; Contamination.
Each of the Obligors agrees to:
(a) give notice to the Lender reasonably promptly upon acquiring knowledge
of the presence of any Hazardous Materials or any Hazardous Materials
Contamination on any property owned, operated or controlled by any Obligor or
for which any Obligor is, or is claimed to be, responsible (provided that such
notice shall not be required for Hazardous Materials which are placed or stored
on such property in accordance with applicable Laws in the ordinary course of
the Obligor's line of business described in Section 6.1.7 (Line of Business) or
which would not have a Material Adverse Effect), with a full description
thereof;
(b) promptly comply in all material respects with any Laws requiring the
removal, treatment or disposal of Hazardous Materials or Hazardous Materials
Contamination and, upon the written request of the Lender, provide the Lender
with satisfactory evidence of such compliance; and
(c) as part of the Obligations, defend, indemnify and hold harmless the
Lender and its agents, employees, trustees, successors and assigns from any and
all claims which may now or in the future (whether before or after the
termination of this Agreement) be asserted as a result of the presence of any
Hazardous Materials or any Hazardous Materials Contamination (except as a result
of the gross negligence or willful misconduct of the Lender or its agents,
employees, trustees, successors and assigns) on any property owned, operated or
controlled by any Obligor
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for which any Obligor is, or is claimed to be, responsible; subject, however, to
the limitations set forth in the next sentence. Each Obligor acknowledges and
agrees that this indemnification shall survive the termination of this Agreement
and the Commitments and the payment and performance of all of the other
Obligations; provided, however, that this indemnification shall not apply to any
claims resulting from the ownership, operation or other conduct of any
subsequent owner, operator or lessee with respect to any such property which may
be asserted after the termination of this Agreement.
6.1.13 Disclosure of Significant Transactions.
Each of the Obligors shall deliver to the Lender a written notice
describing in reasonable detail each transaction by it involving the purchase,
sale, lease, or other acquisition or loss or casualty to or disposition of an
interest in Fixed or Capital Assets which exceeds Two Hundred Thousand Dollars
($200,000) or the Euro Currency Equivalent thereof, said notices to be delivered
to the Lender within thirty (30) days of the occurrence of each such
transaction.
6.1.14 Financial Covenants.
(a) Fixed Charge Coverage Ratio. The U.S. Borrower will maintain, on a
consolidated basis and tested as of the last day of each of the U.S. Borrower's
fiscal quarters for the four (4) quarter period ending on that date, a Fixed
Charge Coverage Ratio of not less than 1.15 to 1.0.
(b) Senior Debt Coverage Ratio. The U.S. Borrower will maintain, on a
consolidated basis and tested as of the last day of each of the U.S. Borrower's
fiscal quarters for the four (4) quarter period ending in that date, a Senior
Debt Leverage Ratio of not greater than 2.5 to 1.0.
6.1.15 Collection of Receivables.
Until a Default shall have occurred and be continuing and the Lender shall
have notified the Obligors of the revocation of such privilege, the Obligors and
their Subsidiaries shall at their own expense have the privilege for the account
of, and in trust for, the Lender of collecting their Receivables and receiving
in respect thereto all Items of Payment and shall otherwise completely service
all of the Receivables including (a) the billing, posting and maintaining of
complete records applicable thereto, (b) the taking of such action with respect
to the Receivables, as each of the Obligors and each of the Subsidiaries may
deem advisable; and (c) the granting, in the ordinary course of business, to any
Account Debtors rebates, refunds or adjustments, and may accept, in connection
therewith, the return of goods, the sale or lease of which shall have given rise
to a Receivable and may take such other actions relating to the settling of any
Account Debtor's claim as may be commercially reasonable. The Lender may, at its
option, at any time or from time to time after and during the continuance of a
Default hereunder, revoke the collection privilege given in this Agreement to
the Obligors and each of the Subsidiaries by either giving notice of its
assignment of, and Lien on the Collateral to the Account Debtors or giving
notice of such revocation to the Obligors. The Lender shall not have any duty
to, and the Obligors hereby release the Lender from all claims of loss or damage
caused by the delay or failure to, collect or enforce any of the Receivables or
to preserve any rights against any other party with an interest in the
Collateral.
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6.1.16 Assignments of Receivables.
Subject to the limitations set forth in Section 2.9 (Limitations on Joint
and Several Liability for Obligations), each of the Obligors will, following a
Default which is continuing, promptly, upon request, execute and deliver to the
Lender written assignments, in form and content acceptable to the Lender, of
specific Receivables or groups of Receivables; provided, however, the Lien
and/or security interest granted to the Lender under this Agreement shall not be
limited in any way to or by the inclusion or exclusion of Receivables within
such assignments. Receivables so assigned shall secure payment of the
Obligations and are not sold to the Lender whether or not any assignment
thereof, which is separate from this Agreement, is in form absolute. The
Obligors agree that neither any assignment to the Lender nor any other provision
contained in this Agreement or any of the other Financing Documents shall impose
on the Lender any obligation or liability of any Obligor with respect to that
which is assigned and the Obligors hereby agree (subject to the limitations set
forth in Section 2.9 (Limitations on Joint and Several Liability for
Obligations)) jointly and severally to indemnify the Lender and hold the Lender
harmless from any and all claims, actions, suits, losses, damages, costs,
expenses, fees, obligations and liabilities which may be incurred by or imposed
upon the Lender by virtue of the assignment of and Lien on any Obligor's rights,
title and interest in, to, and under the Collateral.
6.1.17 Government Accounts.
Each of the Obligors will promptly notify the Lender if any of the
Receivables arise out of contracts with the United States or with any other
Governmental Authority, and, as appropriate, execute any instruments and take
any steps reasonably required by the Lender in order that all moneys due and to
become due under such contracts shall be assigned to the Lender and notice
thereof given to the Governmental Authority under the Federal Assignment of
Claims Act or any other applicable Laws.
6.1.18 Notice of Returned Goods, etc.
Each of the Obligors will promptly notify, and will cause the Subsidiaries
to promptly notify, the Lender of the return, rejection or repossession of any
goods sold or delivered in respect of any Receivables, and of any claims made in
regard thereto to the extent that the aggregate purchase price of any such goods
in any given calendar month exceeds in the aggregate One Hundred Thousand
Dollars ($100,000) or the Euro Currency Equivalent thereof for such month.
6.1.19 Inventory.
With respect to the Inventory, the U.S. Borrower and the Dutch Borrower
will: (a) as soon as possible upon demand by the Lender from time to time,
prepare and deliver to the Lender designations of Inventory specifying the cost
of Inventory and such other matters and information relating to the Inventory as
the Lender may reasonably request; (b) keep correct and accurate records
itemizing and describing the kind, type, quality and quantity of Inventory, the
cost therefor and the selling price thereof, all of which records shall be
available to the officers, employees or agents of the Lender upon demand in
accordance with the terms hereof for inspection and copying thereof; and (c)
except for incidental, short-term storage or as disclosed on Schedule 6.1.19,
not store any Inventory with an aggregate value in excess of the One
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Hundred Thousand Dollars ($100,000) with a bailee, warehouseman or similar
Person without the Lender's prior written consent, which consent shall not be
unreasonably withheld and may be conditioned on prior to storage (i) the filing
of appropriate financing statements in the jurisdiction in which such warehouse
or other facility is located, (ii) delivery by the bailee, warehouseman or
similar Person to the Lender of (A) warehouse receipts, in form acceptable to
the Lender, in the name of the Lender evidencing the storage of Inventory and
the interests of the Lender therein and (B) an acknowledgment of receipt of
notice of the Liens of the Lender in each Borrower's Inventory, and (iii) other
reasonable conditions.
6.1.20 Insurance With Respect to Equipment and Inventory.
Each of the Obligors will (a) maintain and cause each of its Subsidiaries
to maintain hazard insurance with fire and extended coverage and naming the
Lender as additional insured with loss payable to the Lender as its interest may
appear on the Equipment and Inventory in an amount at least equal to the lesser
amount of the outstanding principal amount of the Obligations or the fair market
value of the Equipment and Inventory (but in any event sufficient to avoid any
co-insurance obligations) and with a specific endorsement to each such insurance
policy pursuant to which the insurer agrees to give the Lender at least thirty
(30) days written notice before any alteration or cancellation of such insurance
policy and that no act or default of any of the Obligors shall affect the right
of the Lender to recover under such policy in the event of loss or damage; (b)
file, and cause each of its Subsidiaries to file, with the Lender, upon its
request, a detailed list of the insurance then in effect and stating the names
of the insurance companies, the amounts and rates of the insurance, dates of the
expiration thereof and the properties and risks covered thereby; and (c) within
thirty (30) days after notice in writing from the Lender, obtain, and cause each
of its Subsidiaries to obtain, such additional insurance as the Lender may
reasonably request. Unless a Default has occurred and is continuing, if net
insurance proceeds aggregate less than $200,000 or the Euro Currency Equivalent
thereof, they must be applied to the restoration or replacement of the damaged
property in which case such proceeds shall be held by the Lender as additional
security for the Obligations. If a Default has occurred and is continuing or
either (i) the cost to replace, repair or restore the damaged property or (ii)
the net insurance proceeds aggregate $200,000 or the Euro Currency Equivalent
thereof or more, the Lender shall determine, in its sole discretion, the manner
in which net insurance proceeds are to be applied. Unless a Default has occurred
and is continuing, the Obligors shall have the right to settle any insurance
claim not exceeding $200,000 or the Euro Currency Equivalent thereof, and the
Lender shall have the right to settle for the Obligors any insurance claim in
excess of $200,000 or the Euro Currency Equivalent thereof or any amount during
the continuance of a Default.
6.1.21 Maintenance of the Collateral.
The Obligors will maintain the Collateral in good working order, saving
and excepting ordinary wear and tear, and will not permit anything to be done to
the Collateral that may materially impair the value thereof.
6.1.22 Equipment.
No Obligor shall hold any Equipment on a sale on approval basis. Each
Obligor hereby declares its intent that, notwithstanding the means of
attachment, no goods of such Obligor
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hereafter attached to any realty shall be deemed a fixture, which declaration
shall be irrevocable, without the Lender's consent, until all of the Obligations
have been paid in full and all of the Commitments have been terminated or have
expired.
6.1.23 Defense of Title and Further Assurances.
At their expense, the Obligors will defend the title to the Collateral
(and any part thereof), and will immediately execute, acknowledge and deliver
any financing statement, renewal, affidavit, deed, assignment, continuation
statement, security agreement, certificate or other document which the Lender
may require in order to perfect, preserve, maintain, continue, protect and/or
extend the Lien or security interest granted to the Lender under this Agreement,
under any of the other Financing Documents and the first priority of that Lien,
subject only to the Permitted Liens. The Obligors will from time to time do
whatever the Lender may reasonably require by way of obtaining, executing,
delivering, and/or filing financing statements, landlords' or mortgagees'
waivers, notices of assignment and other notices and amendments and renewals
thereof and the Obligors will take any and all steps and observe such
formalities as the Lender may require, in order to create and maintain a valid
Lien upon, pledge of, or paramount security interest in, the Collateral, subject
to the Permitted Liens. The Obligors shall pay to the Lender on demand all
taxes, costs and expenses incurred by the Lender in connection with the
preparation, execution, recording and filing of any such document or instrument.
To the extent that the proceeds of any of the Accounts or Receivables of any of
the Obligors is expected to become subject to the control of, or in the
possession of, a party other than the Obligors or the Lender, the Obligors shall
cause all such parties to execute and deliver on the Closing Date security
documents, financing statements or other documents as requested by the Lender
and as may be necessary to evidence and/or perfect the security interest of the
Lender in those proceeds. The Obligors agree that a copy of a fully executed
security agreement and/or financing statement shall be sufficient to satisfy for
all purposes the requirements of a financing statement as set forth in Article 9
of the applicable Uniform Commercial Code. Each Obligor hereby irrevocably
appoints the Lender as that Obligor's attorney-in-fact, with power of
substitution, in the name of the Lender or in the name of that Obligor or
otherwise, for the use and benefit of the Lender, but at the cost and expense of
the Obligors and without notice to the Obligors, to execute and deliver any and
all of the instruments and other documents and take any action which the Lender
may require pursuant to the foregoing provisions of this Section 6.1.23.
6.1.24 Business Names; Locations.
Each Obligor will notify and cause each of the Subsidiaries to notify the
Lender not less than thirty (30) days prior to (a) any change in the name under
which such Obligor or the applicable Subsidiary conducts its business, (b) any
change of the location of the chief executive office of the applicable Obligor
or Subsidiary, (c) any change in the jurisdiction of incorporation of any
Obligor or Subsidiary, and (d) the opening of any new place of business or the
closing of any existing place of business, and any change in the location of the
places where the Collateral, or any part thereof, or the books and records, or
any part thereof, are kept.
6.1.25 Subsequent Opinion of Counsel as to Recording Requirements.
In the event that any Obligor shall transfer its jurisdiction of
incorporation or principal place of business or the office where it keeps its
records pertaining to the Collateral, upon the
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Lender's request, the Obligors will provide to the Lender a subsequent opinion
of counsel as to the filing, recording and other requirements with which the
Obligors and their Subsidiaries have complied to maintain the Lien and security
interest in favor of the Lender in the Collateral.
6.1.26 Use of Premises and Equipment.
The Obligors agree that until the Obligations are fully paid and all of
the Commitments have been terminated or have expired, the Lender (a) after and
during the continuance of a Default, may use the Obligors' owned or leased
lifts, hoists, trucks and other facilities or equipment for handling or removing
the Collateral; and (b) in connection with the Lender's right to inspect the
Collateral and exercise rights and remedies during a Default, shall have, and
are hereby granted, a right of ingress and egress to the places where the
Collateral is located, and may proceed over and through any Obligor's owned or
leased property.
6.1.27 Protection of Collateral.
The Obligors agree that the Lender may at any time following a Default
which is continuing take such steps as the Lender deems reasonably necessary to
protect the interest of the Lender in, and to preserve the Collateral,
including, the hiring of such security guards or the placing of other security
protection measures as the Lender deems appropriate, may employ and maintain at
any of the Obligors' premises a custodian who shall have full authority to do
all acts necessary to protect the interests of the Lender in the Collateral and
may lease warehouse facilities to which the Lender may move all or any part of
the Collateral to the extent commercially reasonable. The Obligors agree to
cooperate fully with the Lender's efforts to preserve the Collateral and will
take such actions to preserve the Collateral as the Lender may reasonably
direct. All of the reasonable expenses of the Lender of preserving the
Collateral, including any reasonable expenses relating to the compensation and
bonding of a custodian, shall be part of the Enforcement Costs.
Section 6.2 Negative Covenants.
So long as any of the Obligations or the Commitments shall be outstanding
hereunder, the Obligors agree with the Lender, that without the prior written
consent of the Lender:
6.2.1 Merger, Acquisition or Sale of Assets.
None of the Obligors will enter into any merger except as permitted by
Section 6.2.6 (Stock of Subsidiaries)) or consolidation or amalgamation, windup
or dissolve itself (or suffer any liquidation or dissolution), or make any Asset
Disposition except for sales permitted by Section 6.2.16 (Disposition of
Collateral). Any consent of the Lender to the disposition of any assets not
specifically permitted hereby may be conditioned on a specified use of the
proceeds of disposition.
6.2.2 Subsidiaries.
None of the Obligors will create or acquire any Subsidiaries other than
Subsidiaries approved by the Lender in the exercise of its reasonable
discretion, which approval shall be
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conditioned, among other things, on the execution and delivery of an Additional
Obligor Joinder Supplement and such other Financing Documents as the Lender may
require.
6.2.3 Purchase or Redemption of Securities, Dividend Restrictions.
None of the Obligors (a) will purchase, redeem or otherwise acquire any
shares of its capital stock or warrants now or hereafter outstanding, declare or
pay any dividends thereon (other than stock dividends), apply any of its
property or assets to the purchase, redemption or other retirement of, set apart
any sum for the payment of any dividends on, or for the purchase, redemption, or
other retirement of, make any distribution by reduction of capital or otherwise
in respect of, any shares of any class of capital stock of any Obligor, or any
warrants, permit any Subsidiary to purchase or acquire any shares of any class
of capital stock of, or warrants issued by, any Obligor, make any distribution
to stock holders or set aside any funds for any such purpose, except for (i)
dividends by any Subsidiary of the Obligor to a Obligor, (ii) payments under the
Subordinated Note which are expressly permitted under its terms or payments
under the Subordinated Note which are expressly permitted by the ender in
writing and (iii) payment of amounts required for any repurchase, redemption or
other acquisition for value of any capital stock or options held by any member
of any Obligor's management or employees pursuant to any management equity
subscription agreement or stock option agreement or similar agreement or
otherwise upon their death, disability, retirement or termination of employment
or departure from the Board of Directors (provided that the aggregate price paid
for all such repurchased, redeemed, acquired or retired capital stock or options
shall not exceed One Hundred Thousand Dollars ($100,000) or the Euro Currency
Equivalent thereof in any twelve month period), and (b) will not prepay,
voluntarily purchase or voluntarily redeem any Indebtedness for Borrowed Money
other than the Obligations, unless such prepayment is not prohibited by the
terms of the subordination applicable to the Subordinated Indebtedness.
6.2.4 Indebtedness.
None of the Obligors will create, incur, assume or suffer to exist any
Indebtedness for Borrowed Money or permit any Subsidiary to do so, except:
(a) the Obligations;
(b) Indebtedness for Borrowed Money secured by Permitted Liens;
(c) Capital Leases permitted by the terms of this Agreement;
(d) Subordinated Indebtedness;
(e) Indebtedness for Borrowed Money of the Obligors to non-related
entities described on Schedule 4.1.14 (Indebtedness for Borrowed Money);
(f) Liabilities under Interest Rate/Currency Protection Agreements entered
into in the ordinary course of business with respect to permitted Indebtedness
for Borrowed Money or short-term currency needs and not for speculative
purposes;
(g) additional Indebtedness for Borrowed Money not exceeding in the
aggregate One Hundred Thousand Dollars ($100,000) or the Euro Currency
Equivalent thereof;
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(h) indebtedness under loans permitted by Section 6.2.16(b)(i)
(Disposition of Collateral); and
(i) intercompany transactions classified as loans, advances and all
past-due trade accounts payable by one or more of the Obligors to any other
Obligor.
6.2.5 Investments, Loans and Other Transactions.
Except as otherwise provided in this Agreement, none of the Obligors will
or will permit any of the Subsidiaries to, (a) make, assume, acquire or continue
to hold any investment in any real property (unless used in connection with
their business and treated as a Fixed or Capital Asset of any Obligor) or any
Person, whether by stock purchase, capital contribution, acquisition of
indebtedness of such Person, acquisition of all or substantially all the assets
of any Person, or otherwise (including, without limitation, investments in any
joint venture or partnership), (b) guaranty or otherwise become contingently
liable for the Liabilities or obligations of any Person, or (c) make any loans
or advances, or otherwise extend credit to any Person, except:
(i) any advance to an officer or employee of any Obligor for travel or
other business expenses in the ordinary course of business, provided that the
aggregate amount of all such advances by all of the Obligors (taken as a whole)
outstanding at any time shall not exceed in the aggregate One Hundred Thousand
Dollars ($175,000) or the Euro Currency Equivalent thereof;
(ii) any advance to an officer or employee of any Obligor for housing
purposes, provided that the aggregate amount of all such advances by all of the
Obligors (taken as a whole) outstanding at any time shall not exceed in the
aggregate One Hundred Thousand Dollars ($100,000) or the Euro Currency
Equivalent thereof;
(iii) the endorsement of negotiable instruments for deposit or collection
or similar transactions in the ordinary course of business;
(iv) any investment in Cash Equivalents, which are pledged to the Lender
as collateral and security for the Obligations;
(v) trade credit extended to customers in the ordinary course of business;
and
(vi) advance payment guarantees by any Obligor of progress payments made
by the purchasers of products manufactured by any of the Obligors, the
obligations under which do not exceed in the aggregate not exceeding in the
aggregate One Hundred Thousand Dollars ($100,000) or the Euro Currency
Equivalent thereof at any one time outstanding.
6.2.6 Stock of Subsidiaries.
None of the Obligors will sell or otherwise dispose of any shares of
capital stock of any Subsidiary (except in connection with a merger or
consolidation of any one Obligor into any of the other Obligors.
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6.2.7 Subordinated Indebtedness.
None of the Obligors will, or will permit any Subsidiary to, make any
payment of principal of, or interest on, the Subordinated Obligations or any
other Subordinated Indebtedness if such payment is not permitted by the terms of
the Subordinated Note, by terms applicable to such other Subordinated
Indebtedness or is not permitted by the terms of this Agreement.
6.2.8 Liens.
Each Obligor agrees that it (a) will not create, incur, assume or suffer
to exist any Lien upon any of its properties or assets, whether now owned or
hereafter acquired, or permit any Subsidiary so to do, except for Liens securing
the Obligations and Permitted Liens, (b) will not agree to, assume or suffer to
exist any provision in any instrument or other document for confession of
judgment, cognovit or other similar right or remedy, (c) will not allow or
suffer to exist any Permitted Liens, except permitted purchase money Liens and
Liens under the Subordinated Obligations Documents, to be superior to Liens
securing the Obligations, (d) without the prior written consent of the Lender
(which consent shall not be unreasonably withheld but may be conditioned on the
execution and delivery of an intercreditor agreement reasonably satisfactory to
the Lender), will not enter into any contracts for the consignment of goods,
will not execute or suffer the filing of any financing statements or the posting
of any signs giving notice of consignments, and will not, as a material part of
its business, engage in the sale of goods belonging to others, and (e) will not
allow or suffer to exist the failure of any Lien described in the Security
Documents to attach to, and/or remain at all times perfected, as applicable, on,
any of the property described in the Security Documents.
6.2.9 Transactions with Affiliates.
Except as permitted in Section 6.2.3 (Purchase or Redemption of
Securities, Dividend Restrictions) or in Section 6.2.13 (Compensation), none of
the Obligors nor any of their Subsidiaries will enter into or participate in any
transaction with any Affiliate on terms which are not fair and reasonable and
which are no less favorable than would be obtained in a comparable arms-length
transaction with a Person who is not an Affiliate.
6.2.10 ERISA Compliance.
None of the Obligors nor any Commonly Controlled Entity shall: (a) engage
in or permit any "prohibited transaction" (as defined in ERISA); (b) cause any
"accumulated funding deficiency" as defined in ERISA and/or the Internal Revenue
Code; (c) terminate any pension plan in a manner which could result in the
imposition of a lien on the property of any Obligor pursuant to ERISA; (d)
terminate or consent to the termination of any Multi-employer Plan; or (e) incur
a complete or partial withdrawal with respect to any Multi-employer Plan, which
with respect to any of the events set forth in clauses (a) through (e) would
cause a Material Adverse Effect.
6.2.11 Prohibition on Hazardous Materials.
None of the Obligors shall place, manufacture or store or permit to be
placed, manufactured or stored any Hazardous Materials on any property owned,
operated or controlled
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by any Obligor or for which any Obligor is responsible other than Hazardous
Materials placed, manufactured or stored on such property in compliance in all
material respects with applicable Laws in the ordinary course of a Obligor's
business expressly described in this Agreement.
6.2.12 Method of Accounting; Fiscal Year.
Each Obligor agrees that:
it shall not change the method of accounting employed in the preparation
of any financial statements furnished to the Lender under the provisions of
Section 6.1.1 (Financial Statements), unless required to conform to GAAP and on
the condition that the Obligors' accountants shall furnish such information as
the Lender may request to reconcile the changes with the Obligors' prior
financial statements; and
it will not change its fiscal year from a year ending on December 31.
6.2.13 Compensation.
None of the Obligors will pay any bonuses, fees, compensation,
commissions, salaries, drawing accounts, or other payments (cash and non-cash),
whether direct or indirect, to any stockholders of any Obligor, or any Affiliate
of any Obligor, other than reasonable compensation for actual services rendered
by stockholders in their capacity as officers or employees, except for, (a)
reasonable director's fees, (b) reasonable and customary indemnification of
officers, directors, employees and consultants, and (c) the reimbursement of
reasonable travel and other out-of-pocket expenses reasonably incurred by the
Obligors' directors in the performance of their duties with respect to the
Obligors.
6.2.14 Transfer of Collateral.
None of the Obligors nor any of their Subsidiaries will transfer, or
permit the transfer, to another location of any of the Collateral or the books
and records related to any of the Collateral unless the notice required by
Section 6.1.24 (Business Names; Locations) has been given and, if required, the
Liens of the Lender have been perfected by filing in that location.
6.2.15 Sale and Leaseback.
None of the Obligors nor any of their Subsidiaries will directly or
indirectly enter into any arrangement to sell or transfer all or any substantial
part of its fixed assets and thereupon or within one year thereafter rent or
lease the assets so sold or transferred.
6.2.16 Disposition of Collateral.
None of the Obligors will sell, discount, allow credits or allowances,
transfer, assign, extend the time for payment on, convey, lease, assign,
transfer or otherwise dispose of the Collateral, except, prior to a Default
which is continuing (a) dispositions that are not Asset Dispositions, and (b)
the sale of unnecessary or obsolete Equipment, but only if the proceeds of the
sale of such Equipment are (i) used to purchase other Equipment with a
transaction or book value not to exceed in the aggregate, in any twelve (12)
month period, Two Hundred Thousand
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Dollars ($200,000) or the Euro Currency Equivalent thereof or (ii) immediately
turned over to the Lender for application to the Obligations in such order as
the Lender may determine in the exercise of its sole and absolute discretion.
6.2.17 Amendments or Modification to Charter Documents.
None of the Obligors shall permit any amendment or modification to their
Charter Documents or to the Charter Documents of any of their Subsidiaries.
ARTICLE VII
DEFAULT AND RIGHTS AND REMEDIES
Section 7.1 Events of Default.
The occurrence of any one or more of the following events shall constitute
a default under the provisions of this Agreement, and the term "Default" shall
mean, whenever it is used in this Agreement, any one or more of the following
events after giving effect to the giving of notice, the lapse of time, or both,
as herein provided (and the term "Event of Default" as used herein means one or
more of the following events, whether or not any requirement for the giving of
notice, the lapse of time, or both has been satisfied):
7.1.1 Failure to Pay.
The failure of the Obligors to pay any of the Obligations as and when due
and payable in accordance with the provisions of this Agreement and/or any of
the other Financing Documents, and, except in the case of the failure to make
any payment of principal and in the case of the failure to pay any Obligation at
its maturity (whether by acceleration or otherwise) or when due on demand, such
failure continues uncured for a period of five (5) Business Days.
7.1.2 Breach of Representations and Warranties.
Any representation or warranty made in this Agreement or in any report,
statement, schedule, certificate, opinion (including any opinion of counsel for
any Obligor), financial statement or other document furnished in connection with
this Agreement, any of the other Financing Documents, or the Obligations, is
false or misleading when made (or, if applicable, when reaffirmed) in any
material respect.
7.1.3 Failure to Comply with Certain Covenants.
The failure of the Obligors to perform, observe or comply with any of the
provisions of Section 6.1.1 (Financial Statements) and 6.1.2 (Reports to SEC and
Stockholders) of this Agreement or of Section 6.2 (Negative Covenants) of this
Agreement.
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7.1.4 Failure to Comply with Other Covenants.
The failure of the Obligors to perform, observe or comply with any of the
provisions of this Agreement other than those covered by Section 7.1.1 (Failure
to Pay), Section 7.1.2 (Breach of Representations and Warranties) and Section
7.1.3 (Failure to Comply with Certain Covenants) of this Agreement, and such
failure is not cured to the satisfaction of the Lender within a period of thirty
(30) days.
7.1.5 Default Under Other Financing Documents.
The occurrence of a default (as defined and described therein) under the
provisions of any of the other Financing Documents which is not cured within
applicable cure periods, if any; or to the extent there is no default defined in
such Financing Document a material failure to perform under such Financing
Document.
7.1.6 Insolvency.
If the U.S. Borrower on a consolidated basis shall become insolvent and/or
admit its inability to pay its debts as they mature.
7.1.7 Bankruptcy.
If proceedings in Bankruptcy, or for reorganization of any or all of the
Obligors, or for the readjustment of any or all of the Obligor's debts, under
the United States Bankruptcy Code (as amended), or in the case of the Dutch
Borrower having filed a notice under section 36 of the Tax Collection Act of the
Netherlands (Invorderingswet 1990) or section 16d of the Social Insurance
Co-ordination Act of the Netherlands (Coordinatiewet Sociale Verzekeringen) or
any part thereof, or under any other applicable laws, whether state or federal,
for the relief of debtors, now or hereafter existing, shall be commenced against
or by any or all of the Obligors and, except with respect to any such
proceedings instituted by any or all of the Obligors, shall not be discharged
within sixty (60) days of their commencement.
7.1.8 Receivership.
A receiver or trustee shall be appointed for any or all of the Obligors or
for any substantial part of any or all of the Obligor's assets, or any
proceedings shall be instituted for the dissolution or the full or partial
liquidation of any or all of the Obligors and, except with respect to any such
appointments requested or instituted by any of the Obligors, such receiver or
trustee shall not be discharged within sixty (60) days of his or her
appointment, and, except with respect to any such proceedings instituted by the
Borrower, such proceedings shall not be discharged within sixty (60) days of
their commencement.
7.1.9 Judgment.
One or more judgments or decrees shall be entered against any or all of
the Obligors involving in the aggregate liability in excess of Two Hundred
Thousand Dollars ($200,000), and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within thirty (30)
days after the entry thereof.
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7.1.10 Execution; Attachment.
Any execution or attachment shall be levied against the Collateral, or any
part thereof, and such execution or attachment shall not be set aside,
discharged or stayed within thirty (30) days after the same shall have been
levied.
7.1.11 Default Under Other Borrowings.
Default shall be made with respect to any Indebtedness for Borrowed Money
of any Obligor (other than the Loans) for an amount in excess of Two Hundred
Thousand Dollars ($200,000) in the aggregate if the effect of such default is to
accelerate the maturity of such Indebtedness for Borrowed Money or to permit the
holder or obligee thereof or other party thereto to cause such Indebtedness for
Borrowed Money to become due prior to its stated maturity.
7.1.12 Unenforceable Liens.
If the Lender in good faith reasonably determines a material portion of
the Lender's Liens on the Collateral is invalid or unenforceable, or if Lender
reasonably determines that it does not have the lien position on the Collateral
that was contemplated under the terms of this Agreement and the other Financing
Documents.
7.1.13 Challenge to Agreements.
Any Obligor or any guarantor shall challenge the validity and binding
effect of any provision of any of the Financing Documents or shall state its
intention to make such a challenge of any of the Financing Documents or any of
the Financing Documents shall for any reason (except to the extent permitted by
its express terms) cease to be effective or to create a valid and perfected
first priority Lien (except for Permitted Liens) on, or security interest in,
any of the Collateral purported to be covered thereby.
7.1.14 Material Adverse Effect.
An event has occurred which has a Material Adverse Effect.
7.1.15 Change in Control.
The occurrence of any Change of Control.
7.1.16 Liquidation, Termination, Dissolution.
Any Obligor shall liquidate, dissolve or terminate its existence without
the prior written consent of the Lender.
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7.1.17 Suit by Seller.
If the Seller should bring suit or other legal action for breach of
contract or non-performance under the Purchase Agreement following the U.S.
Borrower's failure to pay the amount in excess of Two Hundred Thousand Dollars
($200,000) of any Cash Tax Benefit (as such term is defined in the Purchase
Agreement) due under the terms of the Purchase Agreement determined by an
accounting firm (acceptable to the Lender in its reasonable discretion) on the
date when due in accordance with the terms of the Purchase Agreement.
Section 7.2 Remedies.
Upon the occurrence of a Default, the Lender may, in the exercise of its
or their sole and absolute discretion from time to time, at any time thereafter
exercise any one or more of the following rights, powers or remedies:
7.2.1 Acceleration, Termination.
The Lender may (i) declare the Commitments and the Credit Facilities and
any obligation or commitment of the Lender hereunder to make Loans to the
Borrowers or to issue Letters of Credit for the account of the Borrowers to be
terminated, whereupon the same shall forthwith terminate, and (ii) declare the
unpaid principal amount of the Loans, together with accrued and unpaid interest
thereon, and all other Obligations then outstanding to be immediately due and
payable, whereupon the same shall become and be forthwith due and payable by the
Obligors to the Lender, without presentment, demand, protest or further notice
of any kind, all of which are expressly waived by the Obligors; provided, that,
in the case of any Default referred to in Section 7.1.6 (Insolvency), Section
7.1.7 (Bankruptcy), and 7.1.8 (Receivership) above, the Commitments and the
Credit Facilities and any obligation or commitment of the Lender hereunder to
make Loans to the Borrowers Obligors or to issue Letters of Credit for the
account of the Borrowers shall immediately and automatically terminate and the
unpaid principal amount of the Loans, together with accrued and unpaid interest
thereon, and all other Obligations then outstanding shall be automatically and
immediately due and payable by the Obligors to the Lender without notice,
presentment, demand, protest or other action of any kind, all of which are
expressly waived by the Obligors.
7.2.2 Uniform Commercial Code.
The Lender shall have all of the rights and remedies of a secured party
under the applicable Uniform Commercial Code and other applicable Laws. Upon the
occurrence and during the continuation of a Default, to the extent permitted
under applicable law, upon demand by the Lender, the Obligors shall assemble the
Collateral and make it available to the Lender at a place designated by the
Lender. Upon the occurrence and during the continuation of a Default, the Lender
may without notice from time to time enter upon any Obligor's premises to take
possession of the Collateral, to remove it, to render it unusable, to process it
or otherwise prepare it for sale, or to sell or otherwise dispose of it. Upon
the occurrence and during the continuation of a Default, at the Lender's
direction, the Obligors shall cease to process, prepare for sale, sell or
otherwise dispose of the Collateral.
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Any written notice of the sale, disposition or other intended action by
the Lender with respect to the Collateral which is sent by regular mail, postage
prepaid, to the Obligors at the address set forth in Section 8.1 (Notices) of
this Agreement, or such other address of the Obligors which may from time to
time be shown on the Lender's records, at least ten (10) days prior to such
sale, disposition or other action, shall constitute commercially reasonable
notice to the Obligors. The Lender may alternatively or additionally give such
notice in any other commercially reasonable manner. Nothing in this Agreement
shall require the Lender to give any notice not required by applicable Laws.
If any consent, approval, or authorization of any state, municipal or
other Governmental Authority or of any other Person or of any Person having any
interest therein, should be necessary to effectuate any sale or other
disposition of the Collateral, the Obligors agree to execute all such
applications and other instruments, and to take all other action, as may be
required in connection with securing any such consent, approval or
authorization.
The Obligors recognize that the Lender may be unable to effect a public
sale of all or a part of the Collateral consisting of Securities by reason of
certain prohibitions contained in the Securities Act of 1933, as amended, and
other applicable Federal and state Laws. The Lender may, therefore, in its
discretion, take such steps as it may deem appropriate to comply with such Laws
and may, for example, at any sale of the Collateral consisting of securities
restrict the prospective bidders or purchasers as to their number, nature of
business and investment intention, including, without limitation, a requirement
that the Persons making such purchases represent and agree to the satisfaction
of the Lender that they are purchasing such securities for their account, for
investment, and not with a view to the distribution or resale of any thereof.
The Obligors covenant and agree to do or cause to be done promptly all such acts
and things as the Lender may request from time to time and as may be necessary
to offer and/or sell the securities or any part thereof in a manner which is
valid and binding and in conformance with all applicable Laws. Upon any such
sale or disposition, the Lender shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral consisting of securities so
sold.
7.2.3 Standard of Care.
To the extent that applicable law may impose duties on the Lender to
exercise remedies in a commercially reasonable manner, the Obligors acknowledges
and agrees that it is not commercially unreasonable for the Lender (a) to fail
to incur expenses reasonably deemed significant by the Lender to prepare any of
the Collateral for disposition or otherwise to fail to complete raw material or
work in process into finished goods or other finished products for disposition,
(b) to fail to obtain third party consents for access to the Collateral to be
disposed of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of the
Collateral to be collected or disposed of, (c) to fail to exercise collection
remedies against account debtors or other Persons obligated on the Collateral or
to fail to remove liens or encumbrances on or any adverse claims against the
Collateral, (d) to exercise collection remedies against account debtors and
other Persons obligated on the Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of the Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (f) to
contact other Persons, whether or not in the same business as the Obligors, for
expressions of interest in acquiring all or any portion of the Collateral, (g)
to hire one or more professional auctioneers to assist in the disposition of the
Collateral, whether or not the collateral is of a specialized nature, (h) to
dispose
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of the Collateral by utilizing Internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets, (i) to
dispose of assets in wholesale rather than retail markets, (j) to disclaim
disposition warranties, (k) to purchase insurance or credit enhancements to
insure the Lender against risks of loss, collection or disposition of Collateral
or to provide to the Lender a guaranteed return from the collection or
disposition of Collateral, or (l) to the extent deemed appropriate by the
Lender, to obtain the services of other brokers, investment bankers, consultants
and other professionals to assist the Lender in the collection or disposition of
any of the Collateral.
7.2.4 Specific Rights With Regard to Collateral.
Upon the occurrence and during the continuation of a Default, in addition
to all other rights and remedies provided hereunder or as shall exist at law or
in equity from time to time, the Lender may (but shall be under no obligation
to), without notice to the Obligors, and each Obligor hereby irrevocably
appoints the Lender as its attorney-in-fact, with power of substitution, in the
name of the Lender and/or in the name of any or all of the Obligors or
otherwise, for the use and benefit of the Lender, but at the cost and expense of
the Obligors and without notice to the Obligors:
(a) request any Account Debtor obligated on any of the Accounts to make
payments thereon directly to the Lender, with the Lender taking control of the
cash and non-cash proceeds thereof;
(b) compromise, extend or renew any of the Collateral or deal with the
same as it may deem advisable;
(c) make exchanges, substitutions or surrenders of all or any part of the
Collateral;
(d) copy, transcribe, or remove from any place of business of any Obligor
all books, records, ledger sheets, correspondence, invoices and documents,
relating to or evidencing any of the Collateral or without cost or expense to
the Lender make such use of any Obligor's place(s) of business as may be
reasonably necessary to administer, control and collect the Collateral;
(e) repair, alter or supply goods if necessary to fulfill in whole or in
part the purchase order of any Account Debtor;
(f) demand, collect, receipt for and give renewals, extensions, discharges
and releases of any of the Collateral;
(g) institute and prosecute legal and equitable proceedings to enforce
collection of, or realize upon, any of the Collateral;
(h) settle, renew, extend, compromise, compound, exchange or adjust claims
in respect of any of the Collateral or any legal proceedings brought in respect
thereof;
(i) endorse or sign the name of any Obligor upon any items of payment,
certificates of title, instruments, securities, stock powers, documents,
documents of title, financing statements, assignments, notices or other writing
relating to or part of the Collateral and on any proof of claim in bankruptcy
against an Account Debtor;
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(j) notify the Post Office authorities to change the address for the
delivery of mail to the Obligors to such address or Post Office Box as the
Lender may designate and receive and open all mail addressed to any of the
Obligors (which the Lender reasonably believes to be related to an Account of
any of the Obligors; and
(k) take any other action reasonably necessary to realize upon or dispose
of the Collateral or to carry out the terms of this Agreement.
The Obligors further acknowledge and agree that following the occurrence
and during the continuation of a Default, the Lender, shall be entitled to
enforce any and all rights and remedies available to any or all of the Obligors
under the Purchase Agreement and/or under any or all of the Purchase Agreement
Documents and/or applicable Laws with respect to the Purchase Agreement
Transaction, including (without limitation) rights to indemnification for breach
of representations, warranties and covenants.
7.2.5 Application of Proceeds.
Any proceeds of sale or other disposition of the Collateral will be
applied by the Lender to the payment first of any and all Enforcement Costs, and
thereafter to the Obligations in such order and manner as the Lender may
determine in its sole and absolute discretion; provided that any proceeds of
sale or other disposition of the Dutch Collateral will be applied by the Lender
only to the payment of the Dutch Obligations in such order and manner as the
Lender shall determine in its sole and absolute discretion. If the sale or other
disposition (by foreclosure, liquidation or otherwise) of the Collateral fails
to fully satisfy the Obligations, the Obligors shall remain liable to the Lender
for any deficiency, as appropriate, subject to the limitations provided in
Section 2.9 (Limitations on Joint and Several Liability for Obligations).
7.2.6 Performance by Lender.
If the Obligors shall fail to pay the Obligations or otherwise fail to
perform, observe or comply with any of the conditions, covenants, terms,
stipulations or agreements contained in this Agreement or any of the other
Financing Documents, the Lender without notice to or demand upon the Obligors
and without waiving or releasing any of the Obligations or any Default or Event
of Default, may following the occurrence and during the continuation of a
Default (but shall be under no obligation to) at any time thereafter make such
payment or perform such act for the account and at the expense of the Obligors,
and may enter upon the premises of the Obligors for that purpose and take all
such action thereon as the Lender may reasonably consider necessary or
appropriate for such purpose and each of the Obligors hereby irrevocably appoint
the Lender as its attorney-in-fact to do so, with power of substitution, in the
name of the Lender, or in the name of any or all of the Obligors or otherwise,
for the use and benefit of the Lender but at the cost and expense of the
Obligors and without notice to the Obligors. All sums so paid or advanced by the
Lender, together with interest thereon from the date of payment, advance or
incurring until paid in full at the Post-Default Rate and all costs and
expenses, shall be deemed part of the Enforcement Costs, shall be paid by the
Obligors to the Lender on demand, and shall constitute and become a part of the
Obligations.
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7.2.7 Other Remedies.
The Lender may from time to time proceed to protect or enforce the rights
of the Lender by an action or actions at law or in equity or by any other
appropriate proceeding, whether for the specific performance of any of the
covenants contained in this Agreement or in any of the other Financing
Documents, or for an injunction against the violation of any of the terms of
this Agreement or any of the other Financing Documents, or in aid of the
exercise or execution of any right, remedy or power granted in this Agreement,
the Financing Documents, and/or applicable Laws. The Lender is authorized to
offset and apply to all or any part of the Obligations all moneys, credits and
other property of any nature whatsoever of any or all of the Obligors now or at
any time hereafter in the possession of, in transit to or from, under the
control or custody of, or on deposit with, the Lender or any Affiliate of the
Lender.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices.
All notices, requests and demands to or upon the parties to this Agreement
shall be in writing, or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including but not limited to, delivery by overnight mail or
courier service, (b) five (5) days after it shall have been deposited in the
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by a telecommunications device, when properly transmitted, in
each case addressed to the party to be notified as follows:
Obligors: Optelecom, Inc.
00000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxxxxx
Facsimile:
E-mail:
with a copy to: Xxxxxxx LLP
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxx
Facsimile:
E-mail: xxxxxxxx@xxxxxxx.xxx
Lender: Manufacturers and Traders Trust Company
0000 Xxx Xxxx, Mail Code 261-012
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx
Facsimile:
E-mail: xxxxxx@xxxxxxxxx.xxx
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with a copy to: Xxxxxxx X. Xxxxxx
Xxxxx & Stockbridge P. C.
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: 410-385-3700
E-mail: xxxxxxx@xxxxxxxxxxxxxxxx.xxx
By written notice, each party to this Agreement may change the address to which
notice is given to that party, provided that such changed notice shall include a
street address to which notices may be delivered by overnight courier in the
ordinary course on any Business Day.
Section 8.2 Amendments; Waivers.
This Agreement and the other Financing Documents may not be amended,
modified, or changed in any respect except by an agreement in writing signed by
the Lender and the Obligors. No waiver of any provision of this Agreement or of
any of the other Financing Documents, nor consent to any departure by the
Obligors therefrom, shall in any event be effective unless the same shall be in
writing signed by the Lender. No course of dealing between the Obligor and the
Lender and no act or failure to act from time to time on the part of the Lender
shall constitute a waiver, amendment or modification of any provision of this
Agreement or any of the other Financing Documents or any right or remedy under
this Agreement, under any of the other Financing Documents or under applicable
Laws. Without implying any limitation on the foregoing:
Any waiver or consent shall be effective only in the specific instance,
for the terms and purpose for which given, subject to such conditions as the
Lender may specify in any such instrument.
No waiver of any Default or Event of Default shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereto.
No notice to or demand on the Obligors in any case shall entitle the
Obligors to any other or further notice or demand in the same, similar or other
circumstance.
No failure or delay by the Lender to insist upon the strict performance of
any term, condition, covenant or agreement of this Agreement or of any of the
other Financing Documents, or to exercise any right, power or remedy consequent
upon a breach thereof, shall constitute a waiver, amendment or modification of
any such term, condition, covenant or agreement or of any such breach or
preclude the Lender from exercising any such right, power or remedy at any time
or times.
By accepting payment after the due date of any amount payable under this
Agreement or under any of the other Financing Documents, the Lender shall not be
deemed to waive the right either to require prompt payment when due of all other
amounts payable under this Agreement or under any of the other Financing
Documents, or to declare a default for failure to effect such prompt payment of
any such other amount.
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Section 8.3 Cumulative Remedies.
The rights, powers and remedies provided in this Agreement and in the
other Financing Documents are cumulative, may be exercised concurrently or
separately, may be exercised from time to time and in such order as the Lender
shall determine, subject to the provisions of this Agreement, and are in
addition to, and not exclusive of, rights, powers and remedies provided by
existing or future applicable Laws. In order to entitle the Lender to exercise
any remedy reserved to it in this Agreement, it shall not be necessary to give
any notice, other than such notice as may be expressly required in this
Agreement. Without limiting the generality of the foregoing and subject to the
terms of this Agreement, the Lender may, subject to the limitations set forth in
Section 2.9 (Limitations on Joint and Several Liability for Obligations):
(a) proceed against any one or more of the Obligors with or without
proceeding against any other Person (including, without limitation, any
guarantor) who may be liable (by endorsement, guaranty, indemnity or otherwise)
for all or any part of the Obligations;
(b) proceed against any one or more of the Obligors with or without
proceeding under any of the other Financing Documents or against any Collateral
or other collateral and security for all or any part of the Obligations;
(c) without reducing or impairing the obligation of the Obligors and
without notice, release or compromise with any guarantor or other Person liable
(by endorsement, guaranty, indemnity or otherwise) for all or any part of the
Obligations under the Financing Documents or otherwise;
(d) without reducing or impairing the obligations of the Obligors and
without notice thereof: (i) fail to perfect the Lien in any or all Collateral or
to release any or all the Collateral or to accept substitute Collateral, (ii)
approve the making of U.S. Revolving Loan Advances and/or the Dutch Revolving
Loan Advances under this Agreement, (iii) waive any provision of this Agreement
or the other Financing Documents, (iv) exercise or fail to exercise rights of
set-off or other rights, or (v) accept partial payments or extend from time to
time the maturity of all or any part of the Obligations.
Section 8.4 Severability.
In case one or more provisions, or part thereof, contained in this
Agreement or in the other Financing Documents shall be invalid, illegal or
unenforceable in any respect under any Law, then without need for any further
agreement, notice or action:
(a) the validity, legality and enforceability of the remaining provisions
shall remain effective and binding on the parties thereto and shall not be
affected or impaired thereby;
(b) the obligation to be fulfilled shall be reduced to the limit of such
validity;
(c) if such provision or part thereof pertains to repayment of the
Obligations then, at the sole and absolute discretion of the Lender, all of the
Obligations of the Obligors to the Lender shall become immediately due and
payable; and
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(d) if the affected provision or part thereof operates or would
prospectively operate to invalidate this Agreement in whole or in part, then
such provision or part thereof only shall be void, and the remainder of this
Agreement shall remain operative and in full force and effect.
Section 8.5 Assignments and Participations by Lender.
The Lender may, without notice to or consent of the Obligor, sell, dispose
of, assign or transfer to any Person or Persons, all or any part of the
Obligations or all or any part of the Financing Documents and each such Person
or Persons shall have the right to enforce the provisions of the Financing
Documents and any of the Obligations as fully as the Lender, provided that the
Lender shall continue to have the unimpaired right to enforce the provisions of
the Financing Documents and any of the Obligations as to so much of the
Financing Documents and/or the Obligations that it has not sold, assigned or
transferred. Additionally, the Lender may sell or grant to any other Person or
Persons participations in all or any part of the Obligations or all or any part
of the Financing Documents. The Obligor will fully cooperate with the Lender in
connection with any such assignment and will execute and deliver such consents
and acceptances to any such assignment, amendments to this Agreement in order to
effect any such assignment (including, without limitation, the appointment of
the Lender as agent for itself and all assignees); provided, that the Obligor's
indebtedness, obligations and liabilities under this Agreement and the other
Financing Documents will not be increased by reason of any such assignment.
Section 8.6 Disclosure of Information by Lender.
In connection with any sale, transfer, assignment or participation by the
Lender in accordance with Section 8.5 (Assignments and Participations by
Lender), the Lender shall have the right to disclose to any actual or potential
purchaser, assignee, transferee or participant all financial records,
information, reports, financial statements and documents obtained in connection
with this Agreement and/or any of the other Financing Documents or otherwise,
provided that any such purchaser, assignee, transferee or participant agrees to
treat such information as confidential.
Section 8.7 Successors and Assigns.
This Agreement and all other Financing Documents shall be binding upon and
inure to the benefit of the Obligors and the Lender and their respective
successors and assigns, except that the Obligors shall not have the right to
assign their rights hereunder or any interest herein without the prior written
consent of the Lender.
Section 8.8 Continuing Agreements.
All covenants, agreements, representations and warranties made by the
Obligors in this Agreement, in any of the other Financing Documents, and in any
certificate delivered pursuant hereto or thereto shall survive the making by the
Lender of the Loans and the execution and
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delivery of this Agreement, shall be binding upon the Obligors regardless of how
long before or after the date hereof any of the Obligations were or are
incurred, and shall continue in full force and effect so long as any of the
Obligations are outstanding and unpaid.
Section 8.9 Enforcement Costs.
Subject to the limitations set forth in Section 2.9 (Limitations on Joint
and Several Liability for Obligations), the Obligors agree to pay to the Lender
on demand all Enforcement Costs, together with interest thereon from the date
which is five (5) Business Days after written notice of demand until paid in
full at a per annum rate of interest equal at all times to the Post-Default
Rate. Enforcement Costs shall be immediately due and payable at the time
advanced or incurred, whichever is earlier. Without implying any limitation on
the foregoing, the Obligors agree, as part of the Enforcement Costs, to pay upon
demand any and all stamp and other Taxes and fees payable or determined to be
payable in connection with the execution and delivery of this Agreement and the
other Financing Documents and to save the Lender harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay any Taxes or fees referred to in this Section. The provisions of
this Section shall survive the execution and delivery of this Agreement, the
repayment of the other Obligations and shall survive the termination of this
Agreement.
Section 8.10 Applicable Law; Jurisdiction.
8.10.1 Applicable Law.
As a material inducement to the Lender to enter into this Agreement, the
Obligors acknowledge and agree that the Financing Documents, including, this
Agreement, shall be governed by the Laws of the State, as if each of the
Financing Documents and this Agreement had each been executed, delivered,
administered and performed solely within the State even though for the
convenience and at the request of the Obligors, one or more of the Financing
Documents may be executed elsewhere. The Lender acknowledges, however, that
remedies under certain of the Financing Documents that relate to property
outside the State may be subject to the laws of the jurisdiction in which the
property is located.
8.10.2 Submission to Jurisdiction.
The Obligors irrevocably submit to the jurisdiction of any state or
federal court sitting in the State over any suit, action or proceeding arising
out of or relating to this Agreement or any of the other Financing Documents.
Each of the Obligors irrevocably waives, to the fullest extent permitted by law,
any objection that it may now or hereafter have to the laying of the venue of
any such suit, action or proceeding brought in any such court and any claim that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum. Final judgment in any such suit, action or proceeding
brought in any such court shall be conclusive and binding upon the Obligors and
may be enforced in any court in which the Obligors are subject to jurisdiction,
by a suit upon such judgment, provided that service of process is effected upon
the Obligors in one of the manners specified in this Section or as otherwise
permitted by applicable Laws.
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8.10.3 Appointment of Agent for Service of Process.
Each of the Non- U.S. Obligors hereby irrevocably designates and appoints
Harvard Business Services as that Non-U.S. Obligor's authorized agent to receive
on such Non-U.S. Obligor's behalf service of any and all process that may be
served in any suit, action or proceeding of the nature referred to in this
Section in any state or federal court sitting in the State. If such agent shall
cease so to act, each of the Non- U.S. Obligors shall irrevocably designate and
appoint without delay another such authorized agent in the State satisfactory to
the Lender and shall promptly deliver to the Lender evidence in writing of such
other agent's acceptance of such appointment and its agreement that such
appointment shall be irrevocable.
8.10.4 Service of Process.
The Obligors hereby consent to process being served in any suit, action or
proceeding of the nature referred to in this Section by (a) the mailing of a
copy thereof by registered or certified mail, postage prepaid, return receipt
requested, to the Obligors at the Obligors' address designated in or pursuant to
Section 8.1 (Notices), and (b) serving a copy thereof upon the agent, if any,
designated and appointed by each Obligor as the Obligor's agent for service of
process by or pursuant to this Section. Each of the Obligors irrevocably agrees
that such service (y) shall be deemed in every respect effective service of
process upon the Obligors in any such suit, action or proceeding, and (z) shall,
to the fullest extent permitted by law, be taken and held to be valid personal
service upon the Obligors. Nothing in this Section shall affect the right of the
Lender to serve process in any manner otherwise permitted by law or limit the
right of the Lender otherwise to bring proceedings against any or all of the
Obligors in the courts of any jurisdiction or jurisdictions.
Section 8.11 Duplicate Originals and Counterparts; Counterpart Facsimile
Execution.
This Agreement may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be deemed
to be an original and all taken together shall constitute but one and the same
instrument. For purposes of executing this Agreement, a document signed and
transmitted by facsimile machine or telecopier is to be treated as an original
document. The signature of any party thereon, for purposes hereof, is to be
considered as an original signature, and the document transmitted is to be
considered to have the same binding effect as an original signature on an
original document. At the request of any party, any facsimile or telecopy
document is to be re-executed in original form by the parties who executed the
facsimile or telecopy document. No party may raise the use of a facsimile
machine or telecopier or the fact that any signature was transmitted through the
use of a facsimile or telecopier machine as a defense to the enforcement of this
Agreement or any amendment or other document executed in compliance with this
Section.
Section 8.12 Headings.
The headings in this Agreement are included herein for convenience only,
shall not constitute a part of this Agreement for any other purpose, and shall
not be deemed to affect the meaning or construction of any of the provisions
hereof.
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Section 8.13 No Agency.
Nothing herein contained shall be construed to constitute the Obligors as
agents of any of the Lender for any purpose whatsoever or to permit the Obligors
to pledge any of the credit of the Lender. The Lender shall not be responsible
or liable for any shortage, discrepancy, damage, loss or destruction of any part
of the Collateral wherever the same may be located and regardless of the cause
thereof other than through the Lender's gross negligence or willful misconduct.
The Lender shall not, by anything herein or in any of the Financing Documents or
otherwise, assume the Obligors' obligations under any contract or agreement
assigned to the Lender, and the Lender shall not be responsible in any way for
the performance by the Obligors of any of the terms and conditions thereof.
Section 8.14 Date of Payment.
Should the principal of or interest on the Loans become due and payable on
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and in the case of principal, interest shall be payable
thereon at the rate per annum specified herein during such extension.
Section 8.15 Entire Agreement.
This Agreement and the other Financing Documents are intended by the
Lender and the Obligors to be a complete, exclusive and final expression of the
agreements contained herein. None of the Obligors or the Lender shall hereafter
have any rights under any prior agreements pertaining to the matters addressed
by this Agreement but shall look solely to this Agreement for definition and
determination of all of their respective rights, liabilities and
responsibilities under this Agreement.
Section 8.16 Liability of the Lender.
The Obligors hereby agree that in the absence of the Lender's gross
negligence or willful misconduct, the Lender shall not be chargeable for any
mistake, act or omission of any accountant, examiner, agency or attorney
employed by the Lender in making examinations or investigations or otherwise in
perfecting, maintaining or protecting upon any Lien or security interest or any
other interest in the Collateral or other security for the Obligations.
By inspecting the Collateral or any other properties of any Obligor or by
accepting or approving anything required to be observed, performed or fulfilled
by any Obligor or to be given to the Lender pursuant to this Agreement or any of
the other Financing Documents, the Lender shall not be deemed to have warranted
or represented the condition, sufficiency, legality, effectiveness or legal
effect of the same, and such acceptance or approval shall not constitute any
warranty or representation with respect thereto by the Lender.
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Section 8.17 Patriot Act Notice.
The Each Lender hereby notifies the Obligors that pursuant to the
requirements of the Patriot Act, the Lender is required to obtain, verify and
record information that identifies the Obligors, which information includes the
name and address of the Obligors and other information that will allow such
Lender to identify the Obligors in accordance with the Act.
Section 8.18 Waiver of Trial by Jury.
EACH OF THE OBLIGORS AND THE LENDER HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION OR PROCEEDING TO WHICH ANY OR ALL OF THE OBLIGORS AND THE LENDER MAY BE
PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING TO (A) THIS AGREEMENT, (B) ANY
OF THE FINANCING DOCUMENTS, OR (C) THE COLLATERAL. THIS WAIVER CONSTITUTES A
WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR
PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS
AGREEMENT.
This waiver is knowingly, willingly and voluntarily made by the Obligors
and the Lender, and the Obligors and the Lender hereby represent that no
representations of fact or opinion have been made by any individual to induce
this waiver of trial by jury or to in any way modify or nullify its effect. The
Obligors and the Lender further represent that they have been represented in the
signing of this Agreement and in the making of this waiver by independent legal
counsel, selected of their own free will, and that they have had the opportunity
to discuss this waiver with counsel.
(SIGNATURES FOLLOW ON NEXT PAGE)
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WITNESS WHEREOF, each of the parties hereto have executed and delivered
this Agreement under their respective seals as of the day and year first written
above.
WITNESS OR ATTEST: OPTELECOM, INC.
/s/ Xxxxx Xxxxxxxxx BY: /s/ Xxxxxx Xxxxxx (SEAL)
----------------------- ------------------------
Xxxxx Xxxxxxxxx Xxxxxx Xxxxxx, President and CEO
------------------- ------------- -----------------
(NAME) (NAME) (TITLE)
WITNESS OR ATTEST: OPTELECOM EUROPE LIMITED
/s/ Xxxxx Xxxxxxxxx BY: /s/ Xxxxxx Xxxxxx (SEAL)
----------------------- ------------------------
Xxxxx Xxxxxxxxx Xxxxxx Xxxxxx, President and CEO
------------------- ------------- -----------------
(NAME) (NAME) (TITLE)
WITNESS OR ATTEST: OPTELECOM UK LIMITED
/s/ Xxxxx Xxxxxxxxx BY: /s/ Xxxxxx Xxxxxx (SEAL)
----------------------- ------------------------
Xxxxx Xxxxxxxxx Xxxxxx Xxxxxx, President and CEO
------------------- ------------- -----------------
(NAME) (NAME) (TITLE)
WITNESS OR ATTEST: NKF ELECTRONICS, B. V.
OPTELECOM, INC. ITS MANAGING DIRECTOR
/s/ Xxxxx Xxxxxxxxx BY: /s/ Xxxxxx Xxxxxx (SEAL)
----------------------- ------------------------
Xxxxx Xxxxxxxxx Xxxxxx Xxxxxx, President and CEO
------------------- ------------- -----------------
(NAME) (NAME) (TITLE)
WITNESS OR ATTEST: NKF ELECTRONICS IBERICA S.L., FORMERLY KNOWN AS
NKF IBERICA S.L.
_______________________ BY: /s/ T.W. M Overwijn (SEAL)
--------------------------
_______________________ T.W.M Overwijn, Director
-------------- --------
(NAME) (NAME) (TITLE)
WITNESS OR ATTEST: MANUFACTURERS AND TRADERS TRUST
COMPANY
_______________________
BY: /s/ Xxxx X. Xxxxx, III, (SEAL)
_______________________ ------------------------------
(NAME) XXXX X. XXXXX III, ASSISTANT VICE PRESIDENT
98
