SECOND AMENDMENT DATED . NOVEMBER 1998
TO
FACILITIES AGREEMENT DATED 30 OCTOBER 1997
THIS SECOND AMENDMENT (this "AMENDMENT") is dated . November 1998 and entered
into by and among:
(1) CHIREX (HOLDINGS) LIMITED, a limited company organised under the laws of
England with registered number 3080257 with its registered office at Dudley,
Xxxxxxxxxxx, Xxxxxxxxxxxxxx XX00 0XX (the "BORROWER")
(2) BANKERS TRUST INTERNATIONAL PLC and MIDLAND BANK PLC, as Joint Arrangers
("JOINT ARRANGERS")
(3) BANKERS TRUST COMPANY, as Agent ("AGENT")
(4) BANKERS TRUST COMPANY, as Security Agent ("SECURITY AGENT")
(5) the Lenders referred to in the Facilities Agreement, as defined below (the
"LENDERS"); and
(6) for purposes of Section 5 hereof, CHIREX INC., a corporation organised under
the laws of the State of Delaware with its principal office at 000 Xxxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000, U.S.A., CHIREX (DUDLEY) LIMITED, a
limited company organised under the laws of England with registered number
857670 with its registered office at Dudley, Xxxxxxxxxxx, Xxxxxxxxxxxxxx
XX00 0XX, and CHIREX (XXXXX) LIMITED, a limited company organised under the
laws of England with registered number 3417229 with its registered office at
Dudley, Xxxxxxxxxxx, Xxxxxxxxxxxxxx XX00 0XX, each as Guarantors
("GUARANTORS").
RECITALS
WHEREAS, the parties listed above, among others, are parties to that certain
GBP 62,000,000 Facilities Agreement dated 30 October 1997 as amended by the
First Amendment dated 30 July, 1998 (as such Facilities Agreement may be
amended, novated or supplemented from time to time, the "FACILITIES
AGREEMENT"). Capitalised terms used in this Amendment without definition
shall have the same meanings herein as set forth in the Facilities
Agreement;
WHEREAS, the Borrower has requested that the Lenders amend certain
provisions of the Facilities Agreement;
NOW THEREFORE, in consideration of the premises and the agreements,
provisions and covenants contained herein and the receipt of (Pounds)1, the
adequacy of which is hereby acknowledged, the parties hereto agree as
follows:
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1 AMENDMENTS
1.1 Clause 1.1 of the Facilities Agreement is hereby amended by adding the
following proviso at the end of the definition of "Margin" therein:
"Provided that, notwithstanding the above, the Margin shall be 2.00% from
the Second Amendment Effective Date until 31st December 1999, subject to the
Agent and NatWest, acting on the instructions of the Majority Banks
reviewing the level of the Margin (with a view to maintaining the Margin or
reducing it but without prejudice to the Lender's rights under the
Facilities Agreement) on a quarterly basis prior to 31 December 1999 and
subject to this proviso having no further force and effect after 31 December
1999".
1.2 Clause 13.4.1(b) of the Facilities Agreement is hereby amended by
deleting the clause in its entirety and substituting the following
therefor:
"(b) MINIMUM INTEREST COVERAGE RATIO
----
ChiRex Inc. shall maintain, as of the end of each Accounting
Quarter to occur during the periods shown below, an Interest
Coverage Ratio of not less than the minimum Interest Coverage
Ratio shown below:
---------------------------------------------------------------
PERIOD MINIMUM INTEREST COVERAGE
RATIO
===============================================================
1 October 1998 to 31 December 1998 3.0:1
Thereafter 3.5:1
---------------------------------------------------------------
1.3 Clause 13.4.1(c) of the Facilities Agreement is hereby amended by the
addition of the following paragraph (iii) at the end of the existing
paragraph (ii):
(iii) when testing Total Debt for the purposes of testing the
covenants in Clauses 13.4.1(a) and (b) of the Facilities
Agreement, any sum standing to the credit of any account of any
Obligor on any date of determination will be taken into account
to reduce the calculation of the Financial Indebtedness of that
Obligor, subject to the Borrower complying with the provisions
of Clause 9.2 below.
2 REPRESENTATIONS AND WARRANTIES
Each of the Borrower and the Guarantors hereby represents and warrants
to the Agent and the Lenders that:
2.1 as of the date hereof, assuming that the amendments contained
herein have been effected there exists no Event of Default or
Potential Event of Default under the Facilities Agreement, and
after giving effect to this Amendment, there will exist no Event
of Default or Potential Event of Default under the Facilities
Agreement;
2.2 all representations and warranties contained in the Facilities
Agreement and the other Finance Documents are true, correct and
complete in all material respects on and as of the date hereof
except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of
such earlier date;
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2.3 as of the date hereof, the Borrower has performed all agreements
to be performed on its part as set forth in the Facilities
Agreement;
2.4 it is duly organised and validly existing under the laws of the
jurisdiction of its organisation, and has all necessary power
and authority to execute and deliver this Amendment and to
consummate the transactions contemplated hereby;
2.5 neither the execution and delivery of this Amendment, nor the
consummation of the transactions contemplated hereby, violates
(i) any law, regulation, decree or other legal restriction
applicable to it, (ii) its charter, by-laws or other
constitutional documents or (iii) any instrument or agreement to
which it or any of its assets is subject or by which it is
bound;
2.6 there is no legal requirement of any governmental authority
(including any requirement to make any declaration, filing or
registration or to obtain any consent, approval, license or
order) which is necessary to be met by it in connection with its
execution, delivery or performance of this Amendment; and
2.7 this Amendment has been duly authorised, executed and delivered
on its behalf and this Amendment, the Facilities Agreement, as
amended by this Amendment, and the other Finance Documents to
which it is a party constitute its legal, valid and binding
obligation, enforceable against it in accordance with their
terms, except as limited by the Reservations.
3 COUNTERPARTS; EFFECTIVENESS
3.1 This Amendment may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute
but one and the same instrument; signature pages may be detached
from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached
to the same document.
3.2 This Amendment shall become effective on the date (the "SECOND
AMENDMENT EFFECTIVE DATE") when the conditions have been
satisfied that (i) each of the Borrower, the Guarantors, the
Agent, the Security Agent and the Lenders shall have signed a
counterpart hereof (whether the same or different counterparts)
and shall have delivered (including by way of facsimile
transmission) the same to the Agent, (ii) the Borrower shall
have delivered to the Agent favourable opinions of Cravath,
Swaine & Xxxxx, U.S. legal advisers to the ChiRex Group, and
Dibb Xxxxxx Xxxxx, English legal advisers to the ChiRex Group,
in each case addressed to the Agent and the Lenders, dated the
effective date of this Amendment and in form and substance
satisfactory to the Agent.
3.3 On and after the Second Amendment Effective Date, each reference
in the Facilities Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the
Facilities Agreement, and each reference in the other Finance
Documents to the "Facilities Agreement", "thereunder", "thereof"
or words of like import referring to the Facilities Agreement
shall mean and be a reference to the Facilities Agreement as
amended by the first Amendment Agreement, and by this Amendment.
3.4 This Amendment is limited as specified and shall not constitute
a modification, acceptance or waiver of any other provision of
the Facilities Agreement, any provision of
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any other Finance Document or any right, power or remedy of the
Agent or any Lender under the Facilities Agreement shall remain
in full force and effect and is hereby ratified and confirmed.
3.5 Clause headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of
this Amendment for any other purposes or be given any
substantive effect.
4 GOVERNING LAW; JURISDICTION
4.1 This Amendment and the rights and obligations of the parties
hereunder shall be governed by, and shall be construed and
enforced in accordance with, the laws of England.
4.2 Each Guarantor and Borrower hereby ratifies and confirms the
application of the provisions of Clause 30 of the Facilities
Agreement to this Amendment.
5 ACKNOWLEDGEMENT AND CONSENT BY GUARANTORS
Each of the Guarantors hereby acknowledges that it has read this
Amendment and consents to the terms thereof and further hereby confirms
and agrees that, notwithstanding the effectiveness of this Amendment, the
obligations of such Guarantor under its respective Guarantee shall not be
impaired or affected and such Guarantee is, and shall continue to be, in
full force and effect and is hereby confirmed and ratified in all
respects.
6 WAIVER
6.1 PERMANENT WAIVER
6.1.1 This waiver contained in this Clause 6 shall supersede the
Limited Waiver dated 23 October 1998, by which the Lenders
waived compliance with certain provisions of the Facilities
Agreement during the period beginning 23 October 1998 and
ending on 8 December 1998 (the "OCTOBER LIMITED WAIVER") in
its entirety and the October Limited Waiver shall have no
further force or effect from and after the Second Amendment
Effective Date.
6.1.2 Subject to the other terms and conditions set forth herein
and in reliance on the representations and warranties of the
Borrower herein contained, Lenders hereby waive, with effect
solely from the Second Amendment Effective Date and in
perpetuity thereafter, any Event of Default under Clause
14.1.2 of the Facilities Agreement to the extent, and only
the extent, resulting from ChiRex Inc.'s failure to maintain
(a) a Total Debt/EBITDA Ratio for the respective periods from
1 July 1998 to 30 September 1998 and 1 August 1998 to 31
October 1998 not exceeding 4.75:1 in each case; and (b) an
Interest Coverage Ratio as of the end of the Accounting
Quarter ending 30 September 1998 not less than 3.0:1.
6.1.3 The Borrower hereby agrees (i) to deliver the consolidated
monthly management accounts for each successive fiscal month
ending during the period from the Second Amendment Effective
Date until 31 December 1999 (the "MONITORING PERIOD") and
referred to in Clause 13.3.4 (c) (including the information
required by the proviso to Clause 13.3.4 as it relates to
paragraph (c) of such clause) of the Facilities Agreement,
together with the certificate
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required in respect thereof under Clause 13.3.5 of the
Facilities Agreement, not later than the 21st day of the
following month, and (ii) during each successive week
beginning during the Monitoring Period, a forecast of
consolidated cash flow for the ChiRex Group to include for
weeks 1 and 2 an analysis of all material receipts and
payments with appropriate commentary as to the timing and
nature of such receipts and payments and an analysis of the
timing of and likely amounts of Drawdowns to be made and for
each of the succeeding 3 weeks in form and substance
satisfactory to the Agent and National Westminster Bank plc
("NATWEST"). Time is of the essence in the Borrower's
obligations under this Clause 6.1.3 and any failure by the
Borrower to comply with this Clause 6.1.3 in a full and
timely basis shall be an Event of Default under the
Facilities Agreement.
6.1.4 Subject to the other terms and conditions set forth herein
and in reliance on the representation and warranties of the
Borrower herein contained, the Lenders hereby agree with
effect solely from the Second Amendment Effective Date that
the obligation of the Borrower under Clause 6.1.1 of the
Facilities Agreement to make a repayment of
(Pounds)4,444,444.44 on the 31 December 1998 Repayment Date
(the "DECEMBER AMORTISATION") in respect of the Tranche A
Term Loan shall be deferred to the date which is eighteen
months after the Second Amendment Effective Date (the
"REVISED PAYMENT DATE") subject to the provisions of Clause
9.1 below, and the operation of the cash sweep mechanism.
6.2 LIMITATION OF WAIVER
Without limiting the generality of the provisions of Clauses 22 or 26
of the Facilities Agreement, the waiver set forth above shall be
limited precisely as written, and nothing in this Clause 6 shall be
deemed to:
6.2.1 constitute a waiver of any other term, provision or condition
of the Facilities Agreement or any other instrument or
agreement referred to therein or otherwise; or
6.2.2 prejudice any right or remedy that Agent or any Lender may
now have or may have in the future under or in connection
with the Facilities Agreement or any other instrument or
agreement referred to therein.
Except as expressly set forth therein, the terms, provisions
and conditions of the Facilities Agreement and the other
Finance Documents shall remain in full force and effect and
in all other respects are hereby ratified and confirmed.
6.3 FINANCE PARTY EXPENSES; CERTAIN AGENCY MATTERS
6.3.1 Without limitation to Clauses 11 (Fees, Expenses and Stamp
Duties) and 27 (Indemnities) of the Facilities Agreement but
without duplication, the Borrower hereby agrees that it will
on demand pay and reimburse, on the basis of a full
indemnity, all reasonable costs and expenses (including
reasonable accounting, legal and engineering consultancy fees
and expenses, recordation fees and other out-of-pocket
expenses, including for the avoidance of doubt the
professional fees of Ernst & Young and Linklaters & Paines,
and any VAT or
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other similar Tax on any of the foregoing) incurred by the
Agent, the Security Agent or NatWest in connection with:
(a) this Amendment and any subsequent variation, recordation,
amendment, supplement, restatement, waiver, consent or
suspension of rights (or any proposal for any of the same or
negotiations in connection with the same) relating to any of
the Finance Documents (and documents, matters or things
referred to therein); and
(b) the investigation of the prospects, financial condition,
business, assets and/or revenues of the Borrower, its
subsidiaries and its affiliates.
6.3.2 Each Lender reaffirms the appointment of NatWest to act as
its representative in assisting the Agent and otherwise in
investigating the prospects, financial condition, business,
assets and revenues of the Borrower, its subsidiaries and its
affiliates, and agrees that NatWest shall be entitled in such
capacity to the benefits of Clause 16 (including without
limitation the indemnities therein and exculpatory provisions
thereof) of the Facilities Agreement as if references to the
Agent therein were also to NatWest, mutatis mutandis.
7 KEY PERFORMANCE INDICATORS
The parties to this Amendment hereby agree as follows:
7.1 Ernst & Young, in consultation with the Borrower will establish
criteria ("KEY PERFORMANCE INDICATORS") within 7 days from the
Second Amendment Effective Date, which the Agent will use to
monitor the performance of the Borrower in meeting its
obligations under the Facilities Agreement.
7.2 For the purposes of this sub-clause the Agent and NatWest act at
all times on the instructions of the Majority Lenders and after
receiving the advice of Ernst & Young. If the Agent and NatWest
determine, save in the case of manifest error, that the Borrower
has breached Key Performance Indicators, and in the reasonable
opinion of the Agent and NatWest, the breaches of those Key
Performance Indicators indicate that the Borrower is likely to
breach the terms and conditions of the Facilities Agreement, in
any material way then the Agent and NatWest, will request that
the Borrower provide an explanation as to either why it believes
the terms and conditions of the Facilities Agreement will not be
materially breached and/or or what steps the Borrower is taking
to avoid such material breach and the Agent and NatWest will
agree to consider any such explanation in good faith but if the
Agent and NatWest are not satisfied with such explanation or no
such explanation is provided within a reasonable period of being
requested, the Agent and NatWest may take such action as they
think fit to enforce their rights under the Facilities Agreement.
7.3 No amendment will be made to the Key Performance Indicators
except as agreed by NatWest and the Agent, acting on the
instructions of the Majority Banks.
8 FEES
In consideration of the amendments to the Facilities Agreement made
pursuant to Clause 1 above and the waiver and modification agreed by
the Lenders pursuant to Clauses 6.1.2 and
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6.1.4 above, the Borrower agrees to pay to the Agent for the account
of each Lender, the following (together the "SECOND AMENDMENT FEES"):
8.1 an amendment fee of (Pounds)810,000 to be paid on 30 June 1999;
and
8.2 an additional monitoring fee of (Pounds)240,000 in total;
the first payment of (Pounds)120,000 to be due on the Second
Amendment Effective Date but payment to be deferred until the earlier
of (i) the date upon which a restructuring or refinancing as
described in Clause 9.3 below is effected by the Borrower in which
case the second payment of (Pounds)120,000 shall never become payable
or (ii) 31 March 1999;
and the second payment of (Pounds)120,000 to be due on 1 April 1999
but payment to be deferred until the earlier of (i) the date upon
which a restructuring or refinancing as described in Clause 9.3 below
is effected by the Borrower or (ii) 30 June 1999;
with each payment of (Pounds)120,000 being apportioned as follows:
and
APPOINTMENT OF MONITORING FEE PER QUARTER
(Pounds) 30,000 to The Agent
(Pounds) 30,000 to NatWest
(Pounds) 60,000 ((Pounds)6,000 to each Lender)
(Pounds)120,000 TOTAL
8.3 the fees payable pursuant to Clause 9.4 below.
Notwithstanding the above, the Borrower hereby confirms that the
Fees Letter from the Agent to the Borrower dated 23 October 1998
(the "WAIVER FEES LETTER"), remains in full force and effect,
notwithstanding the supersession of the October Limited Waiver
by Clause 6 of this Amendment, except that for the purposes of
the Waiver Fees Letter and from the Second Amendment Effective
Date, the references to
(i) "Limited Waiver" therein shall refer to this
Amendment and
(ii) the Facility Agreement dated 30 October 1997 as
amended by the First Amendment dated 30 July 1998
shall refer to the Facilities Agreement as further
amended by this Amendment.
9 CASH SWEEP AND UNDERTAKINGS
9.1 The Borrower undertakes
(i) to put into effect by 1 January 1999 a cash sweep
mechanism (on terms to be agreed between the Borrower
and Ernst & Young within 7 days of the Second
Amendment Effective Date which are satisfactory to
NatWest and the Agent acting on the instructions of
the Majority Lenders) to the intent that any cash
generated as a result of such mechanism and received
by the Agent shall be applied by the Agent
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against the December Amortisation prior to the
Revised Payment Date; and
(ii) to repay in full the December Amortisation, including
all principal, interest and any other sums then due
or owing in respect of the December Amortisation
whether by cash sweep mechanism or otherwise, by the
Revised Payment Date; and
(iii) to pay any sums due owing or incurred pursuant to
this agreement, including but not limited to those
sums becoming due under Clauses 6.3 and 8 above, on
the due date for payment.
9.2 If on a Repayment Date relating to repayment of Advances under
the Tranche B Multicurrency Revolving Facility, which is also a
date of determination for the purposes of calculating Total Debt
in accordance with the financial covenants at Clauses 13.4.1(a)
and (b), there are sums standing to the credit of the Borrower's
account which are taken into account in reducing the Borrower's
Financial Indebtedness as part of the testing of Total Debt but
which have not been paid to the Agent on that Repayment Date, the
Borrower undertakes to pay such sums to the Agent, on the next
Business Day following the relevant Repayment Date.
9.3 The Borrower undertakes that by 31 December 1999 it will use its
reasonable endeavours to either:
9.3.1 enter into an agreement providing for the effective
restructuring of the Facilities on terms acceptable to
NatWest and the Agent acting on the instructions of the
Majority Banks; or
9.3.2 refinance all sums outstanding pursuant to the Facilities
(including any sums, costs, expenses and fees payable
pursuant to the Facilities Agreement in particular but not
limited to the Second Amendment Fees and fees payable
under the Waiver Fees Letter);
9.4 Furthermore, in any event (i) if such restructuring or
refinancing has not been effected by the Borrower by 30 June
1999, the Borrower shall pay a further fee of (Pounds)250,000 to
the Agent for the account of each Lender such sum to become due
and immediately payable on 30 September 1999 and (ii) if such
restructuring or refinancing has not been effected by the
Borrower by 30 September 1999, the Borrower shall pay a further
fee of (Pounds)250,000 to the Agent for the account of each
Lender such sum to become due and immediately payable on 31
December 1999 and (iii) if such restructuring or refinancing has
not been effected by the Borrower by 31 December 1999 the
Borrower agrees that it will discuss with the Agent and NatWest
acting on the instructions of the Majority Lenders the level of
further fees payable thereafter.
9.5 Any failure by the Borrower to fulfil its undertakings under
Clauses 9.1, 9.2 and 9.4 (i) and (ii) above (including
undertakings to make payments) in full and at or by the times
indicated above shall constitute an Event of Default.
10 SECURITY ISSUES
Each of the Borrower and the Guarantors undertake that within 21 days
of the Second Amendment Effective Date:
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10.1 they will execute an agreement subordinating all indebtedness
between companies forming part of the ChiRex Group to the sums
owing pursuant to the Facilities Agreement; and
10.2 (unless they are able to satisfy the Agent and NatWest acting
reasonably on the instructions of the Majority Banks that there
are valid legal and/or commercial reasons for not doing so; the
Agent and NatWest to notify the Borrower and the Guarantors of
the decision in writing) they will procure that ChiRex America
Inc. and ChiRex Technology Center Inc. become Guarantors
pursuant to the Facilities Agreement and that ChiRex America
Inc. will provide security in respect of any Intellectual
Property owned by it, in form and substance acceptable to the
Security Trustee and NatWest; and
10.3 they will procure that the relevant companies forms 403a are
filed at Companies House in relation to the following charges
granted in favour of Midland Bank plc by the Borrower:
---------------------------------------------------------------
DATE OF CHARGE TYPE OF CHARGE
===============================================================
10/8/95 Fixed and Floating Charge
30/11/95 Pledge Agreement over
Share Capital in Xxxxx
Xxxxxx Limited ("Dudley")
---------------------------------------------------------------
10.4 they will procure that the Articles of Association of ChiRex
(Dudley) Limited and ChiRex (Xxxxx) Limited will be amended to
remove the provision that grants their Directors an absolute
discretion to refuse to register transfers of shares.
10.5 Any failure by the Borrower and the Guarantors to fulfil their
undertakings under this Clause 10 in full and at or by the times
indicated above shall constitute an Event of Default.
11 AGENTS APPLICATION OF FEES
If any fees are paid to the Agent by the Borrower in accordance with
Clauses 8 and 9.3 above, the Agent agrees to pay such sums as are for
the account of each Lender to that Lender within 2 business days of
receipt by the Agent of such fees.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto
duly authorised as of the date first written above.
CHIREX (HOLDINGS) LIMITED, in its capacity as the Borrower
By: (s)
Print Name:
Title:
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CHIREX INC., in its capacity as a Guarantor
By: (s)
Print Name:
Title:
CHIREX (DUDLEY) LIMITED, in its capacity as a Guarantor
By: (s)
Print Name:
Title:
CHIREX (XXXXX) LIMITED, in its capacity as a Guarantor
By: (s)
Print Name:
Title:
BANKERS TRUST INTERNATIONAL PLC, in its capacity as a Joint Arranger
By: (s)
Print Name:
Title:
MIDLAND BANK PLC, in its capacity as a Joint Arranger and a Lender
By: (s)
Print Name:
Title:
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BANKERS TRUST COMPANY, in its capacities as a Lender, Agent and Security Agent
By: (s)
Print Name:
Title:
THE GOVERNOR AND COMPANY OF
BANK OF IRELAND, in its capacity as a Lender
By: (s)
Print Name:
Title:
BANQUE ET CAISSE D'EPARGNE DE L'ETAT, in its capacity as a Lender
By: (s)
Print Name:
Title:
By: (s)
Print Name:
Title:
DE NATIONALE INVESTERINGSBANK N.V., in its capacity as a Lender
By: (s)
Print Name:
Title:
By: (s)
Print Name:
Title:
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IKB DEUTSCHE INDUSTRIEBANK AG, in its capacity as a Lender
By: (s)
Print Name:
Title:
By: (s)
Print Name:
Title:
AIB CAPITAL MARKETS PLC, in its capacity as a Lender
By: (s)
Print Name:
Title:
MITSUBISHI TRUST & BANKING CORPORATION, in its capacity as a Lender
By: (s)
Print Name:
Title:
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION EUROPEENNE, in its capacity as a
Lender
By: (s)
Print Name:
Title:
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By: (s)
Print Name:
Title:
NATIONAL WESTMINSTER BANK PLC, in its capacity as a Lender
By: (s)
Print Name:
Title:
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